Center for the Defense of Free Enterprise Releases First List of Major 'Scandals in the Making,' Includes 'Greenmail', 'Reinsurance'

6/17/2003

From: Ron Arnold of The Center for the Defense of Free Enterprise, 425-455-5038 (work) or 425-503-0328 (mobile)

BELLEVUE, Wash., June 17 -- The Center for the Defense of Free Enterprise (CDFE) this week released its first list of major "Scandals in the Making" and is taking action before they can become "corporate disasters."

The non-profit, non-partisan foundation examined various areas of the business community and identified potential threats that are largely unknown to investors and consumers.

"Each of these trouble spots could develop into major corporate scandals," said Ron Arnold, CDFE executive vice president. "We're working to expose these ills before they become corporate disasters."

The watchdog organization is writing letters to the appropriate authorities and elected leaders urging them to take action. Issues include:

-- "Greenmail." Are corporations being coerced into paying off activist organizations in exchange for their no longer accusing them of "social irresponsibility" or environmental damage? Are such non-profit activist groups subject to Federal Trade Commission rules on anti-competitive acts and collusions with for-profit firms to unfairly manipulate markets and damage competing businesses? (http://www.cdfe.org/greenmail.htm)

-- "Reinsurance." Are some reinsurance brokers coercing insurance company clients to kick back future business and pay higher premium rates than could be obtained from competitors? Concerned that this problem could cost businesses millions of dollars in higher insurance premiums, the Center for the Defense of Free Enterprise is writing the Federal Trade Commission and the Securities and Exchange Commission this week to alert them to the problem. (http://www.cdfe.org/reinsurance.htm)

-- "The Nature Conservancy." The question: Do executives of for-profit firms take positions on the board of directors of the non-profit Nature Conservancy to enrich themselves with access to land deals and other exclusive perquisites? Is The Nature Conservancy subject to oversight by Congress? (http://www.cdfe.org/tnc_scandal1.htm)

Arnold said the foundation has kicked off Scandal-Scan because of recent corporate scandals.

"We've seen how flawed practices such as 'creative bookkeeping,' kickbacks, insider trading, and collusion can creep into business unchecked until small problems become gigantic disasters," Arnold said. "We're releasing this list to help keep businesses honest and restore public confidence in corporate integrity."

A complete list of the "Scandals in the Making" is available at http://www.cdfe.org/scandal-scan.htm.

The Center for the Defense of Free Enterprise (http://www.cdfe.org) is a non-partisan education and research organization which works on free enterprise studies, public policy research, book publishing, conferences, white papers, and media outreach. It is a tax-exempt educational organization under Section 501(c)(3) of the United States Tax Code. An independent analysis of the Center is available at http://www.guidestar.org by entering Center for Defense of Free Enterprise in their search engine (note that the word "the" in the correct name is missing between "for" and "Defense").