Gulf Case Shows Need For Regulators
Does capitalism need any of the regulatory restraints of government? No, say the conservatives who have given U.S. politics a hard shove to the right.
But tell that to the lead-poisoned children and ripped-off pensioners left behind in the wreckage of Gulf Resources & Chemical Corp., owner of North Idaho’s defunct Bunker Hill mine and smelter.
A succession of buyout artists snapped up the company, which had major obligations to pensioners and to environmental cleanup. They spirited its cash out of the United States and squandered it on high living and risky investments.
Remember the buyout binge of the 1980s? This was capitalism’s hour, with investors swapping stock certificates like baseball cards, looking for companies with assets to cannibalize.
Meanwhile, the U.S. government sat on its hands. And now, the government - that’s us, taxpayers - is getting stuck with the tab. Gulf has been forced into bankruptcy. Its cash is mostly gone. But its obligations aren’t.
The pensioners who created the company’s wealth, by sweating in the Bunker Hill mine and smelter, pray now for a fraction of what they’re owed. Bankruptcy lawyers, who make in an hour what pensioners collect in a month, gobble company assets like vultures and fight over the corporate carcass on behalf of whichever creditor happens to employ them. If the pensioners are shortchanged, their needs will increase the burden on the government’s social safety net - just as Congress prepares to cut holes in the net.
Meanwhile, North Idaho’s Silver Valley remains contaminated with lead and other damaging residues from the smelter. Taxpayers will get stuck for the cleanup cost, and what they don’t pay for may not get done.
Lawsuits may yet squeeze some semblance of justice from the high rollers who looted Gulf’s assets.
But it shouldn’t be this difficult. In bankruptcy laws, pensioners deserve a higher priority; lawyers, a lower priority. Taxpayers deserve aggressive scrutiny of corporate buyouts when pension and environmental obligations are at stake.
Politically, this sad case casts doubt on today’s confident conservatives, who contend government’s highest duty is to protect business and the rich, who then will take care of the poor. There is wisdom in the middle ground of America’s political tradition, which holds that if government makes an effort to protect the little guy, the big boys can take care of themselves.
However, the looting of Bunker Hill occurred at the end of the Reagan-Bush era. Then, government had only begun to turn its back on the little guy.
, DataTimes The following fields overflowed: CREDIT = John Webster/For the editorial board