Four Companies with Secret (and Not-So-Secret) Shady Sides

Remy Merritt |

corporations acting poorly, corporate greed, illegal corporate act, evil corporationsEveryone has heard about the Amazon (AMZN) warehouse scandals and Nike’s (NKE) sweatshops, but they’re the ones that got caught. But it’s not just the well-publicized scandals that are out there — every company has a few skeletons in its closet. Here are four more corporations with lesser-known shady sides that haven’t hit the news.

Nestle ($NSRGY): Watering Down Controversy While Drying Up Communities

Swiss giant Nestle owns 8,000 brands worldwide, from Haagen-Dazs to Gerber to Friskies cat food. The corporation owns a 30% stake in L’Oreal, which includes Garnier, Maybelline, and The Body Shop storefronts.

On the controversy and criticism front, Nestle has repeatedly come under fire for turning water, the Earth’s most precious resource, into a vendible product. The company has tapped into rural communities like Eustace, Tex. without regard for local usage and conservation efforts, and its sheer size has made it near impossible to defeat in court.

In the midst of a severe drought in California that has prompted fines of up to $500 for irresponsible overuse, Nestle Waters North America, Inc. continues to operate a massive 383,000 square-foot Arrowhead bottling plant in Cabazon, Calif. The surrounding area is a flat, arid desert nestled between Palm Springs and the San Bernadino National Forest and claimed as a Morongo Indian reservation. Nestle’s private interests are syndicate with those of the Morongo tribe, who operate the reservation as a sovereign nation and are thus exempt from local water officials’ requests.

Nestle hasn’t released a data report on the amount of water extracted since 2009; local water agencies estimate 200 million gallons were pumped from the Millard Canyon spring in 2013 — enough water for 400 standard desert homes. In response to the investigative documentary “Bottled Life,” CEO Peter Brabeck claimed, “in its worldwide bottled water business, Nestlé uses a total of 0.0009% of the global water withdrawal.” While it may appear modest, that figure does not take into account the specific percentage taken from pumping areas. For the desert territories, individual extraction totals are much higher. The Morongo tribe currently holds a 25-year deal with Nestle to produce Arrowhead water on the land while the aquifer’s water stores are on the decline.

Nestle’s honorary chairman Helmut Maucher has led the International Chamber of Commerce, the European Round Table of Industrialists, and the Geneva Business Dialogues for years, earning him prime opportunities to promote corporate interests in the WTO, UN, G8 and OECD.

The struggle against Nestle’s bottled water business is not limited to H2O. Environmental concerns have been raised over the company’s role in rainforest destruction in Indonesia, primarily for palm oil extraction on the island of Borneo. Palm oil is a main ingredient in Kit Kat bars, and while Nestle said “Gimme a break” to Greenpeace and agreed to find palm oil suppliers approved by the environmental NGO, it has not stopped using the ingredient in its crunchy chocolate bars.

Additionally, in February of 2013, Nestle’s chilled Buitoni beef pasta dinners were found to include horsemeat. Yum.

Chiquita (CQB) Earns Big on Bananas Amid Bloody Civil War

Have you ever heard the expression “banana republic” in reference to something other than the clothing store? The term originated in 1907 with author O. Henry who was inspired by his experiences in Honduras in the late 1800s. It was there that he observed a dictatorship supported by the exploitation of large-scale agriculture, primarily bananas, and by companies based outside the producing country.

The manipulative history of Latin American banana production goes back to 1870, and its legacy has continued through three monolithic companies. The largest are Dole (DOLE) , Chiquita, and Del Monte (FDP) , all of which are US-based; Chiquita’s recent acquisition of fourth-largest Fyffes (FYFFF) has it slated to become the largest banana producer holding 29% of the world banana trade. The merger will result in ChiquitaFyffes, with a combined equity value of $1.07 billion and earning $4.6 billion in annual revenue.

 

The company, formerly known as United Fruit Company, has had a notoriously poor reputation involving worker mistreatment, environmental pollution, and support for domestic militant guerilla factions. In true “banana republic” fashion, Chiquita maintained ties to Colombian paramilitary factions — the company made payments to multiple groups listed on the US Foreign Terrorist Organizations, including $1.7 million to the Revolutionary Armed Forces of Colombia (FARC), in return for plantation protection. Since the payments were made, the banana giant has been slapped with billions of dollars in lawsuits from U.S.-based Colombians who claim Chiquita’s payments to the militants fueled the bloody civil war that has claimed the lives of their relatives.

Surprise: Facebook (FB) Messenger Is Looking At Your “Private” Smartphone Files

Few things truly are private anymore. Facebook has taken serious heat lately from users concerned about a rather shady privacy policy. The Facebook Messenger app appears particularly demanding of not just users’ information and data, but it also accesses other smartphone features. Its Android application permissions through Google Play include, verbatim:

-       Under “Photos/files/storage: test access to protected storage, modify or delete the contents of your USB storage

-       Under “SMS”: read your text messages

-       Under “Other”: download files without notification

There were multiple other permission requests under each category and various other categories, but Facebook Messenger’s foray into protected storage separate from the application is somewhat fishy. Most publicly controversial are the app’s requests to take pictures and videos as well as record audio, but, while these are creepy at first glance, they make sense for an app that allows the user to send media through its interface. In order for the photo, video, and audio features to function, Messenger understandably requires permission to operate smartphone features.

No one is sure where this information goes, though. Facebook’s terms and conditions grant it unrestricted internal usage of users’ data, and the social media’s data headquarters is free to run experiments like the recent emotion manipulation case study in which the website gauged the influence of positive and negative advertisements on users’ site activity.

If data is to leave the headquarters, Facebook claims it is fully anonymized and de-identified, but the truth behind those claims is debatable — for data to be useful to marketing analysts and scientists, certain demographic characteristics must accompany the data. And while Facebook does provide data to third parties, much of the analysis is conducted internally and without regulations.

If you have the application, you’ve granted Facebook access to your private files. You may want to go delete those nudes.

Ryanair (RYAAY) Isn’t Afraid of Its Crappy Customer Experience

Ryanair takes no frills to the extreme. New aircraft have been remodeled to have non-reclining seats, no seat-back pockets, safety cards stuck on the back of the seats and life jackets stowed overhead rather than under the seat.

Ryanair CEO Michael O’Leary is a notorious penny pincher, cutting costs in ludicrous ways that include proposals for removing aircraft window shades, charging extra for overweight passengers, installing “vertical seats” to allow standing passengers, requiring payment for use of onboard toilets and asking passengers to carry their checked-in luggage to the plane.

The company also has a legacy of union discouragement, and in 2011 a former Ryanair pilot was fired for “gross misconduct” after giving a stewardess a union form while on duty. Ryanair’s justification was that it was a safety breach, claiming the pilot’s actions left the plane unattended and threatened the safety of passengers. However, the plane was on autopilot at the time of the incident and the co-pilot was in the cockpit.

Now a freelance pilot, the former Ryanair captain settled for £40,000 in a lawsuit against the airline. Though Ryanair’s executives haven’t outright broken laws regarding union busting, intimidation and scorn over union discussions among employees have created a culture of embarrassment and fear when coalitions are involved.

Additionally, staff members are banned from charging mobile phones using company outlets while at work and must pay for their own uniforms, with a Ryanair spokeswoman proposing the justification that “every penny saved counts and all savings go towards lowering fares for European consumers.” However, 2014 has marked a shift in O’Leary’s opinion of Ryanair’s ideal customer service, and at the company’s annual AGM he conceded that the airline needed to “stop unnecessarily pissing people off.”

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 119.68 0.77 0.65 17,464,736
RYAAY Ryanair Holdings plc American Depositary Shares ea 84.26 -0.46 -0.54 294,547
FDP Fresh Del Monte Produce Inc. 61.09 2.33 3.97 504,982
AMZN Amazon.com Inc. 768.66 1.33 0.17 2,470,923
NKE Nike Inc. 51.72 0.17 0.33 5,869,828
PLT:PUR Parallel Energy n/a n/a n/a 0

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