-Caveat Lector- Part 2 (of 2) http://interactive.philly.com/packages/america90/1023.htm Meet George Skelton. Until April, he was one of 800 production workers at the Whitehall Laboratories plant in Elkhart. That was the month his job was eliminated. Come Nov. 1, Whitehall Laboratories, a division of American Home Products Corp., will close the Elkhart plant permanently; the last of the 800 still on the job will be out of work. Some of the products once manufactured there now are being turned out at a new facility in Guayama, Puerto Rico. As for American Home Products, the Puerto Rican subsidiary already has allowed the company to escape payment of millions of dollars in U. S. income taxes, not to mention saving millions of dollars in salaries. Said the 52-year-old Skelton: "All the companies that have moved down there, so far as I know, are good, healthy, rich companies. It's like giving welfare to the rich, the way I'm looking at it. Robbing from the poor and giving it to the rich." For that, thank members of Congress and the 1976 Tax Reform Act that amended the tax code. While provisions in the Internal Revenue Code encouraging investment in Puerto Rico date to 1921, the 1976 law added a twist that led to a corporate stampede to the island. Under the old law, the subsidiary of a U. S. company operating in Puerto Rico had to pay federal income taxes on its profits earned there when it transferred the profits back to this country. In other words, a company could accumulate its profits, year after year, on the island, and pay no U.S. income tax. But taxes had to be paid when the subsidiary paid dividends to its parent company. The new law exempted the dividends - or profits in Puerto Rico - from the U. S. income tax, and allowed the profits to be shipped back to the United States tax-free. There is no comparable tax provision for individual taxpayers. If there were, it would go something like this: If you had two jobs, one in Philadelphia and the other in Princeton, N. J., you would pay federal income taxes only on the money you earned in Philadelphia. The money you earned in Princeton would be tax-free. Since passage of the 1976 tax act, corporations have terminated the jobs of tens of thousands of factory workers in the United States, replaced them with lower-paid workers in the possessions, mostly Puerto Rico, and escaped payment of billions of dollars in federal income and other taxes. Pharmaceutical companies, in particular, have embraced this provision. So much so that Puerto Rico boasts the world's largest concentration of drug companies. The effect on U. S. mainland workers may be measured in announcements by pharmaceutical companies over the last few years. In October 1988, then-SmithKline Beckman Corp. announced that it would transfer production of prescription drugs from a Philadelphia plant to a plant in Puerto Rico - and terminate the jobs of 800 Philadelphia production workers. In April 1990, Bristol-Myers Squibb Co. announced that it would transfer production of a cardiovascular drug from a plant in New Brunswick, N. J., to Puerto Rico - and terminate the jobs of 500 New Brunswick workers. Let's look at one company, American Home Products, a New York-based health- care conglomerate that had sales of nearly $7 billion in 1990. Its Whitehall Laboratories division manufactures non-prescription products with such familiar names as Advil and Anacin-3, Preparation H and Dristan. In February 1989, American Home Products told stockholders that ''completion of a new facility in Puerto Rico in the fourth quarter of 1988 . . . will enable Whitehall to achieve significant cost efficiencies while maintaining the highest manufacturing standards." In October 1990, American Home Products announced that within one year it intended to close the Whitehall plant in Elkhart and transfer some of the work to its new plant in Puerto Rico. Among the products to be manufactured in Puerto Rico: Anacin, Dristan, Denorex and Advil. The move exacted a heavy toll on the Elkhart workforce, whose average length of service was 15 years. More than half the production workers were women. A recent survey showed that of 100 employees laid off a year ago, only about half have found other work. In many cases, they have been forced to accept part-time employment. Their average pay today is $6 an hour. Before, it was $13.40. When they worked at Whitehall, they had good benefits, including company- paid health insurance. By one estimate, 70 percent of the Elkhart workers will have no medical insurance after the plant closes Nov. 1. George Skelton, who lost his job in April, is among those who can attest to the plummeting wages. It took five months before he found another job, operating an injection-molding machine in a rubber company. At Whitehall Laboratories, he earned $13.40 an hour. Now he earns $7 an hour. How many former co-workers does he know who were able to find new jobs that matched their Whitehall salaries? "Basically," he said, "everybody that's found a job I know of is (making) half or less than what they were making (at Whitehall)." Mary Soellinger, 57, who worked at Whitehall eight years, is not even doing that well. She hasn't been able to find work since she was laid off earlier this year. "I suppose I could probably get in at McDonald's," she said, "but I really don't feel that it is fair to push people into minimum-wage jobs, because you can't live on minimum wages." But Mary Soellinger and George Skelton's loss - and the loss of the other Elkhart workers - is American Home Products' gain. Listen to the words of Smith Barney, Harris Upham & Co., a Wall Street investment firm that reported in April 1990 on the tax good-fortunes of American Home Products: "In 1985, American Home Products initiated tax-sheltered manufacturing in Puerto Rico. . . . As a result, American Home Products' tax rate declined 13.9 percentage points from 1983 to 1988 . . ." For a personal comparison, if a family with income between $30,000 and $40,000 in 1988 had benefited from a comparable reduction, the taxes they paid would have fallen from $3,708 to $2,558 - a savings of $1,150. George Skelton, whose annual income has been sliced almost in half, has difficulty understanding the Washington wisdom underlying the tax break: "Everybody says, 'Well, they're (Puerto Rico) just like a state.' Well, they're not just like a state. Cause they don't pay taxes. And our states sure in hell don't get those kind of tax breaks. "In my opinion, either you're in the game or you're out of the game. To me, they ought to be able to become a state, or else, if they're not a state, they ought to be treated like a foreign country. They ought to have tariffs put on them and they should have to pay taxes on their profits and everything. "We're headed toward a $5 trillion national debt. And $350 billion a year deficits. And yet we're giving tax breaks to corporations like that to take jobs that would be paying toward that debt. It looks like a hell of a situation for our children and our grandchildren." How much is the Puerto Rican tax rule costing you? According to Treasury Department data, companies claiming the possessions tax credit escaped payment of $14 billion in income taxes during the 1980s. For the U.S. government to make up that lost revenue required every penny in tax paid by all taxpayers in Lancaster and Reading and Wilkes-Barre and Scranton and Harrisburg through the 1980s. And then some. But what about all the new jobs created in Puerto Rico with that tax money? Well, in the pharmaceutical industry alone, the lost tax revenue to the U.S. government adds up to $60,000 for every $6-an-hour job created. Thus, it would be cheaper for the U.S. government - and all American taxpayers - to send annual subsistence checks to those island residents who work for American drug companies - and keep the jobs here. In other words, Congress is spending $60,000 of taxpayers' money to eliminate one job in the United States that pays $28,000 a year, and to crea te one job in Puerto Rico that pays $12,000. * At the same time U.S. companies are exporting ever more jobs, the growing foreign influence in this country is showing up in other, more subtle ways. Take patents, for example. For American business, the year 1986 represented a first: The first time a foreign-owned company, Hitachi Ltd., secured more patents from the U.S. Patent Office than an American-owned company. Hitachi retained the number one ranking from 1987 through 1989, the latest year for which statistics were available. As recently as 1977, of the five corporations that received the largest number of patents, four were American-owned, one foreign-owned. General Electric Co., IBM and Westinghouse Electric Corp. placed first, second and third. By 1989, that pattern had been reversed. Of the top five that year, four were foreign-owned, only one was American-owned. Hitachi, Toshiba Corp. and Canon Kabushiki Kaisha placed first, second and third. In 1977, American companies received two of every three patents granted to corporations. By 1989, it was one of every two. At the same time the Japanese and other foreign interests are churning out patents for new technologies and products, the United States, courtesy of the government rule book, is churning out something else: Master's of business administration degrees (MBAs). All through the 1970s and 1980s, American colleges and universities turned out ever larger numbers of MBAs, a process that coincided with the steady erosion of the country's once-dominant manufacturing base. >From 1970 to 1979, MBA graduates outnumbered advanced-engineering graduates 36,600 to 16,100 annually. In the '50s and '60s - periods of middle-class prosperity - the opposite was true; engineering graduates outnumbered MBAs. In the 1980s, the gap widened further as business schools turned out 64,200 graduates yearly while engineering schools produced only 20,000. And many of the 20,000 were foreign nationals who received their diplomas in this country and returned to their native lands. By contrast, in 1989, Japanese universities awarded nearly 12,000 advanced degrees in engineering, compared with 1,000 MBAs. Akio Morita, the chairman of Sony Corp. and one of Japan's most innovative corporate leaders, understands the trend well: "Americans make money by playing 'money games,' namely, mergers and acquisitions, by simply moving money back and forth . . . instead of creating and producing goods with some actual value." * For Marc Rich, there are no national loyalties. He is a member of an army of global moneymen who, with the touch of a computer keyboard, move money, commodities and information around the world at the speed of a blinking eye, erasing traditional boundaries among nations. More important, Rich and other electronic financiers have insulated themselves from regulation by the U. S. government, have exempted themselves from the official government rule book. >From abroad, they have more opportunities than dealmakers on U.S. soil to escape payment of taxes either by legal or illegal means; engage in business practices that otherwise would be considered harmful to the best interests of American consumers and workers; avoid prosecution for financial crimes, and continue to do business with the U.S. government. So it is that although Marc Rich most likely has never set foot in Ravenswood, W. Va., he has had a powerful impact on the town of 4,100, now embroiled in a bitter labor dispute. The trouble dates from 1989, when the town's largest employer, the aluminum plant, was purchased in a leveraged buyout - the third change of ownership in the 1980s. On Feb. 7, 1989, the plant was acquired by Ravenswood Aluminum Corp., a newly formed company whose stock was owned by Stanwich Partners Inc., a Stamford, Conn.-based investment company. Under Charles E. Bradley, Stanwich acquired interests in a wide range of companies in the 1980s, from steel distribution to metal fabrication. But Ravenswood was not a typical leveraged buyout - one financed by junk bonds or bank loans. The money came from a mysterious source in Switzerland - Ridgeway Commercial AG. According to loan documents filed in a West Virginia courthouse, Ridgeway provided $260 million in loans for the buyout. Ridgeway's official address was in Hergiswil, a scenic hamlet of 2,400 people on the shores of Lake Lucerne. Its U.S. address was "Clarendon, Ltd. . . . Stamford, Connecticut." Clarendon is the U.S. office of Marc Rich's international trading company, Clarendon Ltd., based in Zug, Switzerland. The fine print of the loan documents disclosed yet another Rich connection. The preferred stock in Ravenswood Aluminum was held by a Dutch company, Rinoman Investment BV. Netherlands corporate records list Rinoman's president as Willy R. Strothotte. Strothotte is one of Marc Rich's closest lieutenants, an executive who has worked for the fugitive financier for years. Strothotte is president of Clarendon Ltd., and his office is in the same Zug office building at 37 Baarerstrasse where Rich and his companies are housed. Lastly, another Ravenswood tie to Rich shows up in Delaware corporate records. Ravenswood Aluminum's chairman, R. Emmett Boyle, and Stanwich's Bradley are directors of two other U.S.-based companies with Edward Creswick, who also works for Rich in Zug. When an Inquirer reporter placed a telephone call to Creswick in Zug to ask about his association - as well as Rich's - with Ravenswood, Creswick responded: "Where have you got my name from? And my phone number?" Told that his name appears on corporate records as a director with Boyle and Bradley, he replied: "I would prefer not to comment on that." Just months after the Ravenswood plant was sold, Strothotte, the Rich executive, and Boyle acquired a majority of the stock in the company from Stanwich Partners, with Strothotte picking up the larger share. The ownership change set the stage for a labor dispute that would turn family member against family member in Ravenswood. In the spring of 1990, months before negotiations were to begin on a new labor contract with the steelworkers union, the Ravenswood company implemented procedures that made a labor showdown seem inevitable. The plant was encircled with a 10-foot-high fence topped with barbed wire. Security cameras were installed. Office windows were boarded up. An armed security force was employed. Boxcars of food and mobile homes were brought into the plant, and salaried employees were drilled in security procedures. And ads began to appear in out-of-state newspapers for replacement workers. Not surprisingly, little progress was made toward a new contract that fall, and last Nov. 1, when the agreement expired, employees were turned away when they came to work. The company called it a strike; the aluminum workers call it a lockout. The National Labor Relations Board (NLRB) agreed with the union and formally charged Ravenswood Aluminum on July 18, 1991, with refusing to bargain in good faith and for illegally locking out its employees. The case is now before an administrative law judge. In the meantime, the company has hired 1,100 workers to replace the locked-out workers, a move that has led to scores of incidents of violence. The shutdown has been a financial disaster for the 1,700 employees of Ravenswood, many of whom, like Toby Johnson, were employed there all their working lives. The son of a Ravenswood Aluminum retiree, Johnson went to work at the plant 25 years ago straight out of high school. He worked in the finishing department, where aluminum is cut into sheets for cans, automotive components or other products. Like other Ravenswood workers, Johnson exhausted his unemployment benefits in July. Since then, he and his wife and 13-year-old son have existed largely on $35 a week in food vouchers from the United Steelworkers Union and provisions from the union-run food bank. "Basically, we eat what they give you instead of going out to the store and buying what you want . . . which you can't afford," Johnson said. "We have had to cut a lot of corners." When they need cash, they have dipped into savings or been helped by relatives. Ravenswood Aluminum hired many replacement workers from the town, meaning neighbors and family members now find themselves on opposite sides of a bitter issue. "It's put a real strain on the community and individual families," Johnson said. "It's wrecked homes. There is brother out against brother. There is a father who's locked out and the son is working. It has worked on everybody emotionally and physically." Johnson said the issue has touched his own family. A niece is married to a replacement worker. He said his father allows the man to visit the home. "He keeps letting him come to his house, which I disapprove of," said Johnson. "He still comes there so I don't go there to my own parents' house. So it has really messed us up in our relationship." As might be expected, officials of Ravenswood Aluminum and Clarendon are reluctant to talk about Marc Rich and his ties to the aluminum company. When the U. S. office of Rich's Clarendon Ltd. was asked about the source of funds to acquire Ravenswood Aluminum, a spokesman for the company in Stamford declined to answer, referring questions to Ravenswood. "I think it would be more appropriate from them," the spokesman said. When Ravenswood officials failed to respond to requests for information, telephone calls also were placed to Willy Strothotte at Rich's Zug headquarters. He, too, failed to return the calls. While Rich's ties to Ravenswood Aluminum are shrouded in secret Swiss loan agreements and corporate arrangements, his ties to you are quite direct. Take a look in your pocket. Those pennies? They may have been minted from copper that Rich's Clarendon Ltd. sells to the U. S. Mint. Or those nickels in your pocket? Yes, indeed. They, too, may have been minted from nickel that Clarendon Ltd. sells to the Mint. Over the years, the Mint has awarded millions of dollars worth of contracts to Clarendon for metals. When an Inquirer reporter asked about the U.S. government's business relationship with Clarendon and Rich's association with the company, a spokesman for the Mint said: "The information that the United States Mint has on Clarendon comes from Clarendon. So what we would prefer you to do is to go to them and inquire. Is that fair? Because we would just be recounting to you what they have told us." Let's make the Rich-U. S. government associations perfectly clear: Rich sells copper to the U. S. Mint, a branch of the Treasury Department, while the Internal Revenue Service, another branch of the Treasury Department, and the Department of Justice, are, in theory, seeking to bring him to trial on tax-evasion charges. But not seeking too hard. In fact, Rich, now in his eighth year on the run, seems to have faded from the memories of law enforcement officials. When an Inquirer reporter called the FBI in Washington to ask if there was a "wanted" poster for Marc Rich, the reporter had the following exchange with a specialist on fugitives: FBI representative: "I've heard the name before. I don't believe so. Is he wanted in this country?" ================================================================= Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT FROM THE DESK OF: *Michael Spitzer* <[EMAIL PROTECTED]> ~~~~~~~~~~~~~~~ The Best Way To Destroy Enemies Is To Change Them To Friends ================================================================= <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://peach.ease.lsoft.com/archives/ctrl.html <A HREF="http://peach.ease.lsoft.com/archives/ctrl.html">Archives of [EMAIL PROTECTED]</A> http:[EMAIL PROTECTED]/ <A HREF="http:[EMAIL PROTECTED]/">ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
