Today's Corporate Crime Blotter
New York Attorney General Eric Schneiderman has been taking on the big oil companies over climate change for years, specifically targeting ExxonMobil. After initially pretending to cooperate with Schneiderman’s investigation, Exxon turned more adversarial last year as it became clear that Schneiderman was looking to show that Exxon was engaging in securities fraud over its deceptions about the cost of global warming and the resulting value of the company’s unexploited oil holdings. Exxon even sued Schneiderman and Massachusetts AG Maura Healey, claiming “The improper political bias that inspired the New York and Massachusetts investigations disqualifies Attorneys General Schneiderman and Healey from serving as the disinterested prosecutors required by the Constitution.” That motion was, quite rightly, thrown out of court.
Schneiderman has now filed a new motion which states that “evidence suggests not only that Exxon’s public statements about its risk management practices were false and misleading, but also that Exxon may still be in the midst of perpetrating an ongoing fraudulent scheme on investors and the public.” The motion specifically revolves around something Exxon describes as the proxy cost of carbon. In essence, Exxon is putting a cost on carbon (essentially greenhouse gases) which it uses to judge its investment decisions. This proxy cost is especially important for estimating the value of Exxon’s holdings that are still in the ground. A higher cost of carbon will actually decrease the value of those unexploited holdings and, if the price gets conceivably high enough, make them not worth extracting at all.
Exxon has publicly stated its proxy cost was $60 dollars per ton of greenhouse gases up until 2030 and $80 dollars per ton until 2040. But Scheiderman says that internal Exxon documents only show one instance where Exxon actually used its stated proxy cost. In fact, documents show that former CEO Rex Tillerson decided to use an internal proxy cost of $40 per ton until 2030, while still publicly pronouncing the $60 figure in public.
Even worse, Schneiderman claims that Exxon rarely if ever used the proxy cost at all. According to one of Schneiderman’s deputies, “It appears that Exxon’s proxy-cost risk-management process may be a sham.” And that is a clear basis for securities fraud as Exxon is constantly, consistently, and knowingly overstating the value of its assets that remain in the ground.
Meanwhile, it appears that the pharmaceutical industry is, in many cases, killing us with drugs meant to cure. I have already written at length about Big Pharma’s complicity in creating the opioid crisis that has now morphed into a heroin crisis in states around the country. But the latest story revolves around Actemra, a drug designed to treat rheumatoid arthritis created by Roche.
We are all used to those television ads for the latest drug that eventually ends with a dizzying array of potentially deadly symptoms. The problem with Actemra was that none of those frightening disclaimers and warnings ever came with the drug or appear on the labeling for it. Since the drug was formally approved in 2010, Actemra patients have suffered from heart attacks, strokes, heart failure, pancreatitis, lung disease, hair loss, memory failure and other conditions at a far higher rate than other competing drugs that do contain significant warnings about the same side effects caused by Actemra.
The drug is Roche’s fifth highest producing product, generating over $1.7 billion dollars in revenue last year. And, despite numerous reports of deadly side effects, Roche has repeatedly refused to include any warnings with Actemra. The FDA has determined that well over 1,000 people have died from taking Actemra. In addition, over 25 people have died from pancreatitis, an incredibly rare phenomenon these days, after taking the drug. And these numbers probably understate the damage as the FDA does not really have a robust tracking system to collect data on the deadly side effects of approved drugs.
The FDA has created an environment to fast-track drugs to the market. But there has been minimal effort to monitor the effects of these quickly approved drugs once they have come to market and so we end up with a situation where a deadly drug can continue to stay on the market with no warnings for years, as with Actemra. What’s even more frightening is that the Trump administration wants to speed up the approval process even more, meaning that more drugs will reach the market without a full understanding of the deadly side-effects they may have. And people will die as a result.