Head: Big business escapes the critical media spotlight

By Donald Gutstein

Bill Gates, the world’s richest person, was a key organizer of last November's World Trade Organization (WTO) Summit in Seattle, but you wouldn't know this from reading Canada's major newspapers.

Gates co-chaired the WTO Seattle Host Organization, along with Boeing CEO Philip Condit. This host organization handled logistics and hospitality arrangements for WTO delegates and provided venues where corporate executives could the trade officials.

Gates’ group organized a massive opening reception, an exclusive ministerial dinner and various cultural events. Depending on how much they contributed, corporate donours received up to five tickets to the receptions and the right to send guests to pri vate-sector-only conferences with trade officials.

But newsreaders and viewers saw or heard little about this side to the talks. The story told by the mainstream media contained only two players, government and non-governmental organizations (NGOs). Big business -- the prime beneficiary of the talks -- was rarely seen.

There were exceptions. Globe and Mail reporter Barry McKenna noted the corporate presence in the last four paragraphs of his story the morning the summit began. ("U.S election strategy helps shape WTO agenda," p. A9) McKenna made the important p oint that Microsoft Corp. and other companies were able to push electronic commerce onto the meeting's agenda. "Nine of the 13 companies that contributed more than $150,000 to the Seattle organizing committee are high-technology companies" that are involv ed in electronic commerce, he wrote. The U.S. administration has "spent an inordinate amount of time pushing the WTO to keep electronic commerce free of duties and tariffs."

Like the corporate presence at the WTO talks, the influence of business and the wealthy on politics has been a blind spot in the media's political coverage throughout the 1990s.

For three years in the mid-90s, we at NewsWatch Canada (formerly known as Project Censored Canada) at Simon Fraser University evaluated what we considered to be the top ten under-reported stories each year. Our story that placed number 7 in 1994 ("Corp orate media ties to political power") illustrates the business-government blind spot.

That story noted an intricate political-corporate web dominated by Paul Desmarais, owner of Power Corporation, which has extensive media and financial holdings. In 1991, Desmarais acquired a substantial interest in Southam Inc. which, when added to his ownership of three television stations and 18 radio stations in Ontario, Quebec and New Brunswick, made him a powerful Canadian media baron. At the same time, Desmarais had close ties to former prime minister Brian Mulroney and Jean Chretien. These ties were rarely reported. Mulroney had been a company negotiator during a labour dispute at Desmarais’ La Presse in 1972; then Desmarais became Mulroney’s largest financial backer in his 1976 leadership bid. Later Mulroney appointed both Desmarais’ bro ther-in-law and brother to the Senate.

Chretien was on the board of Power Corp. until he ran for the leadership of the Liberals in 1990. Chretien’s daughter is married to Desmarais’ son and John Rae, Liberal Party election campaign coordinator, is a Power Corp. vice-president. Finance Minis ter Paul Martin worked for Desmarais as president of Canada Steamship Lines until he bought the company in 1981.

Media coverage of the links between Desmarais and Chretien and Mulroney did improve in subsequent years, especially in 1995, when the federal cabinet ordered the CRTC to allow Power’s direct-to-home Direct-TV channel to apply for a broadcasting license , suggesting that special favours were being granted to friends of government.

If the connection between corporate and political power was better reported, as occurred with Direct-TV, then the real beneficiaries of some government policies could be better understood by the public.

For instance, the story that appeared second on NewsWatch Canada’s list in 1994 ("Tories revamp 21-year rule and forgive the wealthy millions in taxes"), was about special tax benefits provided to Canada’s wealthiest families on 1 January 1993, costing the federal treasury hundreds of millions of dollars in foregone taxes. At the very same time, Finance minister Michael Wilson launched a crusade for fiscal restraint, lecturing Canadians about the need to reduce the deficit and cutting social spending.< /P>

There would have been less need to reduce the deficit, and even less deficit to reduce, if the government had required the wealthy to pay taxes which were on the books since 1972. That’s when the Trudeau government eliminated Canada’s inheritance tax a nd replaced it with a tax on capital gains, which had to be paid when assets were sold.

If owners held on to their assets and passed them on to their successors, then tax would not be paid. To prevent this, the government required property to be assessed for tax at the owner’s death, as if it had been sold. However, wealthy families could still avoid the tax by putting their holdings into a private trust. Because trusts never die, taxes would never be collected. The Trudeau government allowed the tax avoidance scheme, but required that holdings stored in trusts would be subject to taxatio n after 21 years. The 21^st anniversary of the law was 1 January 1993.

Mulroney allowed the tax to be deferred until the last child of the owner of the trust died. It was a glorious example of the saying that ‘tax deferred is tax saved.’

And as the story about tax cuts for the wealthy was under-reported, so too was another one. The issue involved federal cuts to the Canada Assistance Plan, one of the nation’s most important pieces of social legislation, that threatened to create a Unit ed States-style "angry underclass." (1995 #11: "Federal welfare cuts will mean crueler Canada") In 1994, former deputy minister of Health and Welfare ( as Health Canada was then called), Richard Spane, predicted that "we are in danger of slipping into a d ifferent category of country." Half a decade later, with homelessness and squeegee people an established feature of the urban landscape, his prediction seems to have come true.

Cuts to welfare programs were followed by extensively-reported campaigns against welfare fraud. But since welfare fraud constitutes a miniscule amount of public spending, it seems that concern with welfare fraud is selectively focused on those below th e poverty line, while ignoring those well above it. In our story that ranked fourth on the list in 1994 ("White-collar and corporate crime overlooked"), then-Justice minister Allan Rock’s crime-prevention strategy focused on violent crime, but the social ramifications of white-collar and corporate crime, may be more serious.

Aaron Freeman and Craig Forcese, founding directors of Ottawa-based Democracy Watch, argued that the ‘war on crime’ largely ignores white-collar crime and violations committed by corporations, such as tax evasion, fraudulent advertising, illegal merger s and monopoly pricing. They called for an end to the "two-tiered system of justice."

In the early 1980s, a Statistics Canada study reported that the number of workplace deaths attributed to unsafe or illegal working conditions equaled the number of street homicides. In fact, workplace deaths were greater since these figures did not inc lude those resulting from exposure to hazardous workplace chemicals and pollutants.

Ernst & Young fraud investigator Don Holmes estimated that white-collar crime was costing Canadians $20-billion a year in increased taxes and prices for goods and services. American statistics estimated that white-collar and corporate crime account ed for $10 for every one dollar lost to robbery, burglary, larceny and auto theft combined.

Since our 1994 story, corporate and white-collar crime seem on the rise. Special investigative units of forensic accountants and ex-police officers have been hired to combat the losses. But most coverage – about ten to one -- focuses on crimes by emplo yees against employers rather than on crimes committed by corporations which exploit workers and citizens to advance their corporate goals. Even so, coverage of both these forms of crime remains a small fraction of the coverage of violent crimes.

Why do the media give us so many stories on welfare fraud and violence, which account for such a small fraction of crime? There are several reasons. First, as is well known, news about street crime is fairly easy to collect, while white-collar crime is hard to cover. As one reporter told NewsWatch, "white-collar crime doesn’t come over the police scanner."

Second, violent crime appeals to television and its need for dramatic and emotionally charge pictures. News stories must be visual, short and compelling. In contrast, white-collar crimes like embezzlement or tax fraud offer television and newspapers fe w opportunities for dramatic pictures. These stories often require charts, statistics, and maps, items which hold little interest for reporters and perhaps even audiences. White-collar crime means following paper trails and is more time and resource-consu ming than the quick hit on violent crime.

There may be a third reason too, one which ties corporate embezzlement back to the WTO. Prolonged attention to corporate influence and malfeasance could begin to undermine the public image of business in Canada and could even undermine the ability of n ews organizations to attract advertising revenue, the lifeblood of most commercial media.

Donald Gutstein is co-director of NewsWatch Canada and teaches at the School of Communication at Simon Fraser University in Vancouver.

(Editor’s note: For a review of his recent book on blindspots please see page ____)

Content

BLINDSPOTS

Big business ignores the critical media spotlight

Pull quote

If the connection between corporate and political power was better reported, the real beneficiaries of some government policies could be better understood by the public.