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Citation: Time Nov 30 1998, 52(1)
Author: Barlett, onald L.
Title: The Empire Of The Pigs: A LITTLE-KNOWN COMPANY IS A
MASTER AT MILKING GOVERNMENTS FOR WELFARE.(Seaboard
Corp)(Company Profile) by Donald L. Barlett and James
B. Steele
------------------------------------------------------------------------
COPYRIGHT 1998 Time Inc. All rights reserved.
With reporting by Laura Karmatz and Aisha Labi, and research by Joan
Levinstein Oklahoma; Harry Bresky See also page 66 of same issue
"This is quite a Christmas present," said Harlan Nelson, then mayor of
Albert Lea, Minn., on that December day in 1990 when he learned that a closed
factory in the town would reopen. "Fairy tales do come true!"
The fairy godmother turned out to be Seaboard Corp., a giant of agribusiness
with headquarters in Merriam, Kans., and controlled out of Chestnut Hill,
Mass. Seaboard officials announced that they would restart the shuttered
pork-processing plant that had once been the town's largest employer--if the
city offered a little help. Albert Lea responded by giving Seaboard a $2.9
million low-interest loan and a special deal on its sewer bill and grading and
paving parking lots for employees. And before long, the plant reopened, and
several hundred workers were back on the job.
That's when the process began by which the fairy tale turned into a very bad
dream. Just four years later, in 1994, Seaboard phased out the plant and moved
its hog-slaughtering operations to another town 800 miles away, which came up
with an even larger corporate-welfare package. Albert Lea was left saddled
with debt, higher utility bills and an abandoned slaughterhouse. The entire
episode, says City Manager Paul Sparks, was a "disaster."
This is the story of how an extremely resourceful corporation plays the
welfare game, maximizing the benefits to itself, often to the detriment of
those who provide them. It's also a vivid reminder to cities and towns
everywhere about the potential long-term liabilities they may one day face by
spending public funds to get results that are best achieved by the free
market.
Seaboard is a publicly owned company, but in fact it is the fiefdom of a
reclusive Boston-area family (more on that later). A sort of
mini-conglomerate, Seaboard has interests in hogs, strawberries, chickens,
shrimp, salmon, flour and wine. Its operations span four continents and nearly
two dozen countries and range from cargo ocean liners to sugarcane. And like
other profitable businesses, it collects subsidies--or, more accurately,
corporate welfare--from local, state and federal governments. Indeed,
officials trip over one another in the rush to extend taxpayer support to
Seaboard--from the Federal Government's Overseas Private Investment Corp.
(OPIC) in Washington to the Kansas state agency responsible for industrial
development, to the utility authority in little Guymon, Okla. Wherever
Seaboard is, there is a government throwing money at it. Money the company
uses to build and equip plants, hire and train workers, export its products
and expand overseas.
THIS LITTLE PIGGY SKIPPED TOWN
For a closeup view of Seaboard, let's begin with Albert Lea. For most of
this century, Wilson Foods operated that pork plant and was the town's largest
employer. Wilson fell on hard times in the early 1980s, cut workers' average
annual pay from $22,200 to $16,600 and eventually sold the plant to Farmstead
Foods. In turn, that company went belly-up a few years later, after it lost
its biggest customer--Wilson. Then, in December 1990, just as workers were
receiving the last of their unemployment checks, Seaboard appeared.
Once the company negotiated its sweetheart deal with the city, the Chamber
of Commerce erected a billboard declaring, 35,000 FRIENDLY PEOPLE WELCOME
SEABOARD CORP. At an appreciation luncheon, Rick Hoffman, Seaboard's vice
president of finance, observed that it is "really a pleasure to be associated
with such a fine community and to have such a quality work force."
The more than $3 million Albert Lea handed out to help reopen the plant
represented only the latest installment in corporate-welfare payouts. Because
hog killing created serious pollution problems, Albert Lea earlier had kicked
in $3.4 million to build a wastewater-treatment plant devoted mostly to
servicing the pig factory. The hogs had your help as well: the Federal
Government contributed $25.5 million, while the state of Minnesota gave $5.1
million. Total cost of the sewage plant: $34 million. The city also built new
roads and water lines to the plant, built a parking lot and came up with $1
million to help erect a hog-slaughtering building.
Hoffman, Seaboard's vice president of finance, took note during that
luncheon of the stream of government aid: "We're especially grateful to the
state of Minnesota and the city of Albert Lea, who together since 1984 have
supplied literally millions of dollars in the form of grants, tax incentives
and loans to the facility. They had a lot of confidence in it... Truly this
has been a lesson in economic development."
A lesson was about to unfold, all right--a textbook study of the fickle
results of corporate welfare. Seaboard was unable to attract enough workers
from Albert Lea to run the plant. Many former Farmstead employees had already
left the area in search of work. More than 100 had retired. Still others
declined to work for Seaboard wages--$4,500 a year less than the plant's 1983
wage, and no vacation the first year on the job.
Seaboard's solution: recruit Hispanic laborers from other areas of the U.S.
as well as from Mexico and Central American countries like Guatemala. Soon the
recently arrived immigrants began to stream into Albert Lea--with no money and
no place to stay. It was a practice Seaboard would repeat in other towns, in
other states.
It became common for several workers to share a room. Families couldn't
afford local rents on a Seaboard wage. Eventually some went on welfare. In
short, corporate welfare begot individual welfare.
Meantime, Seaboard failed to invest in upgrading its sewage-pretreatment
facility. As a result, its waste began to overwhelm the city's municipal
treatment plant. The city normally placed its treated sludge on soybean
cropland, but by the second summer, city officials were in search of more
land. As Sparks recalls, "We had so much sludge accumulation that...we had to
go out in the middle of the summer, buy a crop [for $36,000] and plow it under
because our storage capacity was exceeded."
Rather than overhaul the plant, Seaboard responded in the classic manner of
corporate-welfare artists: it began quietly looking around for another town,
another state. Alarmed, Albert Lea and Minnesota came up with an additional
$12.5 million in incentives to keep the plant. But Seaboard had found a bigger
patsy--Guymon (pop. 7,700), in Texas County, Okla. Guymon, the county and the
state put together an economic incentive package worth $21 million to entice
Seaboard to the Oklahoma Panhandle, a section of the country where hogs and
cattle far outnumber people.
Among the subsidies: Texas County borrowed $8 million to plow into the
company up front. To pay off the loan, the county enacted a 1% sales tax. The
state granted a $4 million, 10-year income tax credit with the understanding
that it was "unlikely" the company would pay any income tax during those 10
years. The state spent $600,000 to train Seaboard's workers. The company
received grants and low-interest loans to finance a waste-pretreatment plant.
(Remember the one in Albert Lea?) The company was excused from paying $2.9
million in real estate taxes.
As always, local and state officials were on hand when Seaboard announced in
August 1992 that it would employ as many as 1,500 workers at its new
pork-production facility. In time the plant will slaughter 4 million pigs a
year. Oklahoma Governor David Walters declared the plant "a huge and much
deserved economic boost to the entire Panhandle area, and to the state."
Meanwhile, back in Minnesota, Seaboard's local president was reassuring
newspapers that the Albert Lea plant would remain open.
That was in August 1992. Seventeen months later, in January 1994, Seaboard
announced that it would shutter its hog-slaughtering operations and lay off
upwards of 600 employees. The company said it would keep about 300 workers to
process and produce ready-to-buy meats like bacon, sausage and ham. (The
number of employees eventually dropped to about 200, and Seaboard sold the
business.)
It was not just Oklahoma's subsidies that persuaded Seaboard to relocate.
The Albert Lea work force was unionized; wages had risen to $19,100 a
year--still $3,100 below their level in 1983, but too rich for Seaboard's
blood. Guymon, by contrast, promised low-wage, nonunion labor. Also, Seaboard
had decided it wanted to raise its own hogs for slaughter, not just buy them
from farmers. Minnesota banned corporate hog farms. Oklahoma had had a similar
ban but had repealed it before Seaboard came along.
When Seaboard moved on to Guymon, it left behind in Albert Lea the abandoned
hog-slaughtering building, empty parking lots, a waste-treatment plant that
now operates at only 50% of capacity and higher sewer bills to pay for it. And
when Seaboard walked, the state had to come up with some $700,000 to retrain
displaced workers or help them find new jobs.
"For 15 years, the community devoted the major portion of its federal and
state legacy and a good share of local money to providing improvements to keep
the slaughtering plant in our community [for Seaboard and its predecessor],"
says Sparks. "In retrospect," he says ruefully, "the money could have been
better used."
EVER BUY A PIG IN A POKE?
In Oklahoma, it was starting to seem like deja vu all over again. The $21
million that state and local governments put up to bring Seaboard to the
Panhandle was just the start. Guymon, like Albert Lea, couldn't supply the
work force required by Seaboard. In time the company would need workers by the
thousands. That's because the turnover rate in all processing plants runs
close to 100% a year owing to the low wages. This slaughterhouse, one of the
world's largest, will eventually kill an average of eight hogs a minute, 24
hours a day, 365 days a year--more than 4 million annually. So Seaboard
repeated the Albert Lea hiring process--it attracted immigrant workers, some
Laotian and Vietnamese, but most from Mexico, Guatemala, Honduras and other
Central and South American countries. Some turned out to be illegal
immigrants.
Just getting there was no easy feat, since Guymon, which calls itself "An
American Original," is located in a less than convenient spot--320 miles east
of Santa Fe, N.M., 335 miles west of Tulsa, 125 miles north of Amarillo,
Texas, and 500 miles from the Mexican border. The nearest bus stops are in
Liberal, Kans., 40 miles to the north, and Stratford, Texas, 40 miles to the
south. As was the case in Albert Lea, the freshly arrived immigrants had no
place to stay, and the town that had never had a homeless shelter was forced
to open one. Volunteers cleaned, repaired and painted a vacant motel.
Unemployed individuals and families could stay up to one week at a cost of $10
a day, which included two meals. If they found work--largely at Seaboard--they
could stay up to 90 days while they saved money for a permanent home.
Simultaneously, the state began training Seaboard workers even before the
plant opened. Curriculums were provided in English, Spanish, Laotian and
Vietnamese. In all, 3,300 Seaboard workers received training. The cost to
taxpayers: $617,168.
Other costs began to pop up. By 1997 the Guymon schools bulged with new
students. All grades exceeded the state-mandated teacher-pupil ratio. And
enrollment is expected to jump one-third by the year 2000. Adding to the
turmoil of overcrowding was the confusion about language. The district was
compelled to add English-as-a-second-language classes. This year about 450
students, or 21%, were judged to have limited proficiency in English.
Some parents began to complain that their children were getting no education
at all. But when the school district proposed $1.6 million in bond issues for
new classrooms, equipment and buses, voters said no. The reason? A general
anger directed at the huge hog farms. And a belief that Seaboard Corp. was not
paying its way. Which, of course, it was not.
In 1997 the Oklahoma legislature agreed to spend $700 million on state roads
and bridges. Of that figure, Guymon's and Texas County's share amounted to
$37.3 million. That worked out to a per capita highway spending in Texas
County of $2,200--or some 10 times what was earmarked for the rest of the
state. Needless to say, most of the roadwork benefited Seaboard.
In addition, $47 million--a disproportionate amount--of the state's
five-year capital-improvement program was set aside for Texas County for
highway work to accommodate Seaboard truck convoys, which in time would haul
10,000 hogs a day into Guymon from all directions.
Then there was the local tax relief. For the 1996-97 fiscal year, Seaboard's
Texas County tax bill totaled $1,118,000, according to John DeSpain, then
county assessor. The state tax commission excused Seaboard from $700,000 of
those taxes--on the grounds that the new hog farms and slaughterhouse
qualified as "manufacturing." The state, in turn, sent Texas County that sum
from a special fund. In short, all other Oklahoma taxpayers picked up 63% of
Seaboard's tax bill.
There's more: the company didn't even want to pay all the remaining
$418,000, so it appealed. It won, and the state agreed to absorb an additional
$193,000. In other words, the state paid 78% of Seaboard's real estate taxes.
As for the 1997-98 fiscal year, DeSpain said, Seaboard's tax bill increased
to $1,580,000. The company was immediately excused from paying $1,090,000 of
that--again, money that all other Oklahoma taxpayers must pay. Once more,
Seaboard was dissatisfied and appealed. And again, the state consented to pick
up $226,000 more. The bottom line: Seaboard was obliged to come up with just
17% of the taxes owed.
It should be noted that Seaboard did agree early on to contribute $175,000
to the Guymon schools each year--on the grounds that the old plant it replaced
in 1992 had been taxed that amount. Even with that donation, its payments fall
far short of what the company really owes. And it doesn't come close to
providing the schools with the revenue needed to pay for Seaboard's presence
in the community. One might think that would discourage other school districts
from negotiating similar agreements. One would be wrong.
In December 1997 Seaboard promised to pay $125,000 to the Keyes schools in
Cimarron County, which adjoins Texas County to the west. The money would allow
the school system to replace the wiring and reopen a shuttered elementary
school. In turn, Keyes agreed it would not oppose company plans to build a
feed mill and 400 barns to house an additional 400,000 hogs.
Besides ballooning school costs, Keyes also may look forward to another set
of rising statistics: crime. From 1991 to 1997 in Guymon, serious crimes went
up 61%. Larcenies increased 50%, assaults jumped 96%, and auto theft shot up
200%. Rapes went from none to five. And for the first time, youth gangs
appeared on Guymon streets. A resident says that "some students have expressed
fear of even going to the rest room in the high school."
HOG HEAVEN? TRY HOG HELL
In a way, Guymon is fortunate that it has little available housing. If it
did, the social costs it is paying for Seaboard's presence would have been
worse. As it is, Seaboard workers often must settle in distant areas, like
Liberal, Kans., another meat-packing center and magnet for immigrant workers.
When Seaboard proposed establishing a hog farm in Seward County, where Liberal
is the largest community, residents voted 3 to 1 to block construction.
Nevertheless, Kansas state officials reportedly have assured Seaboard that the
referendum is not binding.
The company already operates huge hog farms in five southwestern Kansas
counties, where it accounts for more than one-quarter of the state's 1.5
million pig population. The pigs are raised in Kansas until they are ready for
slaughter and are then trucked to the processing plant in Guymon. Kansas
issued $9.6 million in industrial revenue bonds to help Seaboard develop the
farms.
Actually, the term farm is a misnomer, for corporate hog farms bear no
resemblance to traditional family farms. Instead, they are massive industrial
operations. Call them pig factories.
In a long barn that houses about 1,000 animals, the hogs spend their days
jammed next to one another, eating constantly until they grow from about 55
lbs. to 250 lbs. They stand on slatted floors so their wastes drop into a
trough below that is flushed periodically into a nearby cesspit. The number of
cesspits is exploding. From 1990 to 1998, the Oklahoma pig population soared
761%, jumping from 230,000 to 1.98 million, with Seaboard accounting for about
80% of that number.
It is not pleasant living amid this. Just ask Julia Howell and her husband
Bob. The couple live on a farm near Hooker, about midway between Guymon and
Liberal, where four generations of Howells have grown wheat and raised
families. Now feisty Julia Howell, 69, talks about her "40,000 neighbors" and
explains why she seals the farmhouse windows, stuffs pillows into the chimney
and seldom ventures outdoors without a face mask.
It's the ever present stench--the overpowering smell from Seaboard's 40,000
hogs closely confined in 44 metal buildings, where exhaust fans continuously
pump out tons of pungent ammonia, mixed with tons of grain dust and fecal
matter, scented with the noxious odor of hydrogen sulfide (a poisonous gas
produced by decaying manure that smells like rotten eggs), all combined with
another blend of aromas wafting from five cesspits each 25 ft. deep and the
size of a football field. They are, in effect, open-air sewage ponds, and 75
ft. below lies the Ogallala aquifer, which provides drinking and irrigation
water for much of that part of the country.
Think of all that waste this way: imagine that you are sitting on the front
porch of your farmhouse on the prairie, surrounded by four Washington
Monuments, each filled to the top with pig manure. And then there are all the
dead pigs lying about. By law, the carcasses are supposed to be deposited in
Dumpsters with the lids tightly closed, and the contents disposed of daily.
But with hundreds of thousands of hogs dying before their time each year,
Seaboard often falls behind in disposing of them. Sometimes the overflow from
Dumpsters is stacked nearby. Sometimes dead hogs are piled up beside barns,
sometimes at the side of the road. And sometimes they lie about so long that
the flesh rots away.
After issuing repeated warnings to Seaboard, the Oklahoma agriculture
department fined the firm $157,500 in December 1997 for improper disposal.
After an appeal, the company paid the state $88,200 for the infractions. In
all, the Seaboard death toll reached 48 hogs an hour in 1997--420,000 for the
year. And the carcasses are picked up only once a day--assuming the dead-pig
truck is on schedule. Sometimes it isn't. Which is why at any given moment
during the day there are hundreds of dead hogs lying about the fields of Texas
County.
For the past two years, Julia Howell has recorded in a diary life with the
blended smells from rotting hogs and cesspools and the breezes from hog barns:
Monday, July 1, 1996: "80[degrees]. Calm. Tried to sit outside a while.
Impossible without a mask. What a life!!"
Monday, July 8, 1996: "Had a storm at 70[degrees]. It rained toxic fumes
7:30 p.m. Horrible during rain!!!"
Wednesday, July 24, 1996: "Calm. 80[degrees]. 9:30 p.m. It would take two
masks tonight."
The smell has forever altered the Howells' way of life. "We celebrated our
50th anniversary here this year," she says. "But, you know, when the hog fumes
come rolling in, you can't plan on anything. I haven't had people in for
dinner [for two years] because I'd probably have to meet them out on the
driveway with a mask for them to get to the house.
"We thought we were at the point that we could retire. And, of course, the
rhetoric from Seaboard is, 'Well, my goodness, your land, your home, it's
worth more than you ever dreamed because of us coming in next to you...' Our
kids couldn't sell this if they needed the money to bury us with. It's just
devaluated to nothing as far as the market's concerned."
The story is much the same for Vancy Elliott and her husband Delmer, who
live about three miles from Guymon and whose land abuts a Seaboard hog farm.
"We have to put flytraps out in the summer," says Elliott. "But we even have
flies occasionally in the winter now, and we've never had that before. Rats
and mice are a real problem because they have so many pigs that are dying."
To help staff its hog-processing plant and farms, Seaboard has re-created
the corporate model employed by the coal barons of the 1800s, whose workers
lived in company-owned houses and shopped in company-owned stores.
In Guymon, Seaboard and local business leaders invested in an apartment
complex and trailer parks to house the company's employees. Rent is
automatically deducted from the paychecks of Seaboard workers. So, too, is the
cost of meals that they eat at the plant. A two-bedroom apartment goes for
$420 a month; for three bedrooms, $485. A Seaboard worker earns about $300 a
week--before Social Security and income taxes are deducted.
"The people never see this money," said Carla Smalts, a rancher who
campaigned against corporate hog farming while at the same time waging an
ultimately losing battle against cancer. "It comes off the top of their
paycheck right to Seaboard," she told TIME in December 1997. "By the time they
pay Seaboard their rent and the meals are taken off out at the plant--and most
of them eat at least one or two meals out there--they don't have a whole lot
left. There's no way these people are going to buy houses." Carla Smalts died
in August 1998 at age 52.
BRINGING HOME THE BACON
Let us recount, for a moment, some of Seaboard's corporate welfare in the
1990s: Minnesota provided more than $3 million in economic incentives;
Kentucky, $23 million; Kansas, $10 million; and Oklahoma, $100 million. The
Federal Government's OPIC provided $25 million in insurance for business
ventures abroad. As for the financial burdens imposed on other taxpayers by
virtue of Seaboard's presence, no one knows the cost. It is in the tens of
millions of dollars. And all this for jobs that pay little more than
poverty-level wages.
All this welfare has helped propel Seaboard into the front ranks of American
pork producers. As recently as 1989, the company did not own a single hog.
This year it's the No. 5 producer in the country--and about to vault higher.
Seaboard plans to build yet another processing plant, capable of slaughtering
4 million hogs a year, thereby doubling its output.
So who really profits from all of this? A secretive Boston family of
millionaires.
Seaboard's stock is traded on the American Stock Exchange, and last week it
closed at $387 a share. Some 75% of that stock is owned by another company,
called Seaboard Flour Corp., and 95% of Seaboard Flour is owned by brothers H.
Harry and Otto Bresky Jr., their sister Marjorie B. Shifman and family trusts.
All told, the family's stock in Seaboard is worth $425 million.
And who are the Breskys? A Boston Business Journal article published in
February 1993 described them this way: "The Bresky family could teach J.D.
Salinger a thing or two about maintaining a low profile... Try [to] find
anyone in Boston who has even heard of the family, and you draw nothing but
blanks... The Breskys have never held memberships with local Chambers of
Commerce or positions on the boards of local companies and nonprofit
organizations." Two months later, in April 1993, the Kansas City Star
published a similar report: "Seaboard declined to be interviewed for this
article, following a standard practice for at least a decade. That practice
has helped Seaboard avoid press coverage almost totally.
"'We kind of like it that way,' said Marshall Tutun, a Boston lawyer who is
Seaboard's corporate secretary. 'We're modest, humble, unassuming folk, and
our stock is rather thinly traded.'"
Indeed, Seaboard's offices in Chestnut Hill, Mass., are a testimonial to
anonymity and modesty. The executive offices of the company with annual sales
of $1.8 billion are confined to several small rooms on the third floor of a
frayed four-story building in a strip mall on the western edge of Boston. With
stained orange carpets, faded paint and a warren of empty offices, the
building is home to a number of small businesses, including a hair and nail
salon, a furrier, a jeweler, a facial salon, an electrologist and a marketing
firm. Notes are affixed to unmarked office doors advising delivery people to
"put envelope under door."
It is from this location, as well as a suite in the San Carlos Hotel in
midtown Manhattan, that 72-year-old Harry Bresky masterminds the day-to-day
business operations of the family's global empire.
Harry Bresky, president of both Seaboard Corp. and Seaboard Flour, presides
over a work force of 12,000 employees, 10,200 of them in the U.S. Holdings
include flour mills in Ecuador, Guyana, Haiti, Mozambique, Nigeria, Sierra
Leone and Democratic Republic of Congo; feed mills in Ecuador, Nigeria and
Congo; 3,100 acres of shrimp ponds in Ecuador and Honduras; 37,000 acres of
sugarcane, 4,200 acres of citrus and a sugar mill, all in Argentina; a winery
in Bulgaria; other agricultural and business interests in Chile, Colombia,
Costa Rica, Guatemala and Venezuela; electric-power-generating facilities in
the Dominican Republic; shipping companies in Liberia; containerized cargo
vessels running between Miami and Central and South America; and, of course,
the processing plant and hog farms in Oklahoma, Kansas, Texas and Colorado,
along with poultry-processing plants, feed mills, hatcheries and a network of
700 contract chicken growers in Alabama, Georgia, Kentucky and Tennessee.
Harry Bresky, who earned just under $1 million in salary and bonus last year
as Seaboard's top officer, didn't respond to TIME's requests for an interview.
But details of the business dealings of Seaboard and Bresky have emerged in a
series of lawsuits filed over the years.
It all began in 1987, when Bresky fired Seaboard's vice president and chief
financial officer, Donald Robohm, who had been with the company for more than
a decade. Robohm sued, charging "illegal and improper activity by Seaboard and
other components of the Flour conglomerate, as directed by Bresky."
Robohm claimed the activities included "improper diversion of corporate
opportunities from Seaboard," a public company, to Seaboard Flour, Bresky's
private company. When Robohm refused to "cover up the conduct," he claimed,
Bresky fired him for "not being 'a team player.'"
The lawsuit was settled and, according to court documents, both parties are
prohibited from disclosing "information concerning the substance of
the...litigation and the substantive terms of its settlement."
Three years later, in 1990, Alan R. Kahn, a Wall Street investment broker
and Seaboard stockholder, filed a lawsuit in Delaware seeking an accounting of
the profits earned by the Breskys through their intercompany dealings. Kahn
alleged that the Breskys required Seaboard Corp. to enter into business deals
with Seaboard Flour that generated "unlawful profits" for Seaboard Flour. In
short, according to Kahn's allegations, the Breskys used their controlling
positions in the two companies to move money from the public company to their
private business.
Robohm was subpoenaed in the Kahn lawsuit, and he recited a litany of
business dealings in which, he said, Bresky had interests in companies that
profited from inflated contracts with Seaboard Corp. According to his
deposition, kickbacks were paid to officials in foreign governments; contracts
were padded, with the excess money diverted to Swiss bank accounts; management
fees were inflated; brokerage commissions ran 2 1/2 to five times the usual
rate. And in the case of one Seaboard subsidiary, "there was a great deal of
cash that was...unaccounted for."
In his deposition, Robohm recounted the time a top Seaboard executive
dropped by his office to ask whether he had set aside money for Bresky in a
contract that was being negotiated for a manufacturing plant in Nigeria.
Robohm recalled the meeting:
"He said, 'Have you thought about including something in this for Harry?'
"I said, 'No...that thought didn't occur to me.'
"He said, 'You know that these are important considerations when you look at
an investment of this size; that you need to have something in this for
Harry.'"
Robohm said he told the executive that "that's not the kind of thing that I
do." He added that "it wasn't 60 days later that I was taken off that
project."
The litigation dragged on for four years. Finally, in 1994, the lawsuit was
settled when Seaboard Flour and the Breskys, without admitting "any liability
or wrongdoing," agreed to pay $10.8 million to Seaboard Corp. For practical
purposes, that meant the Breskys transferred money from the family-owned
Seaboard Flour to the publicly traded but still family-controlled Seaboard
Corp.
As for Harry Bresky, financial statements filed in the Kahn legal case show
that in 1991 he reported a net worth of $84 million. That was back when
Seaboard stock was less than half its present value. Like many millionaires,
Bresky also enjoyed a comparatively low federal tax rate. On his 1990 U.S.
income tax return, he reported adjusted gross income of $2.243 million and
paid $503,000 in federal income and Social Security taxes. His effective
overall tax rate worked out to 22.4%--just a few percentage points above the
16.8% rate paid by families earning $35,000 a year. Of course, Bresky had 64
times as much income.
From 1990 to 1997, Seaboard Corp. was the beneficiary of at least $150
million in economic incentives from federal, state and local governments to
build and staff poultry- and hog-processing plants in the U.S.; insure its
operations in foreign countries, and sell its products.
Local (and federal) taxpayers supplied the dollars not just for the outright
corporate welfare, but also by picking up the costs of new classrooms and
teachers, homelessness, increased crime, dwindling property values and an
overall decline in the quality of life.
During those same years, the value of a share of Seaboard stock spiraled
from $116 to $387, increasing the worth of the Bresky family holdings in the
company from $125 million to $425 million.
Not bad work if you can get it. But you can't.
And that is the inequity of the entire, elaborate jerry-built system of
corporate welfare that infects and distorts the American economy. We are all
left holding the bill.
Last in a series on corporate welfare. This week: the saga of one firm.
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