[Chapter] 3 - Small Towns, Small Minds

I live 100 miles outside the city, in the sticks. When I published a version of these stories in the New York Times, my village's newsletter printed an editorial suggesting that I pack up and get the hell out of town. It was the second time they'd requested my departure. I can't imagine why.

My Mother Was a Hypnotist for McDonald's

In 1970, one of the corporation's biggest franchisees, moving millions of burgers in Hollywood, California, feared for their crew leaders. Working 15-hour shifts scattered over nights and days for $3 an hour, some of these so-called managers took on that look of insomniac spookiness that could end with one of them "going postal" the colloquialism which describes what happens when the California penchant for self-expression meets the American fascination with automatic weapons. That wouldn't do. So my mother taught them self-hypnosis. 'Twenty minutes trance is worth four hours' sleep!' Maybe that's why I don't eat Clown meat anymore. When I look at those grinning, unblinking faces, asking, "Do you want fries with that?'...

To residents of Montparnasse and Hampstead, the opening of each new McDonald's heralds the Bozo-headed declasse Americanization of Europe. But to me, McDonald's represents something far more sinister: the frightening Americanization of America.

To understand what I mean, let's begin with this: the US is ugly. A conspiracy of travel writers have sold the image of America the Beautiful: Georgia O'Keefe sunsets over New Mexico's plateau, the wide-open vistas of the Grand Canyon. But to get there, you must drive through a numbing repetitive vortex of sprawled Pizza Huts, Wal-Marts, K-Marts, The Gap, Jiffy-Lubes, Kentucky Fried Chickens, Starbucks and McDonald's up to and leaning over the Canyon wall. All America's special tastes - New Orleans jambalaya, Harlem ham hocks, New England crab boil - whatever is unique to a region or town has been hunted down and herded into a few tourist preserves. The oppressive ubiquity of contrived American monoculture has ingested and eliminated any threat of character. The words of McDonald's late CEO Ray Kroc, "we cannot trust some people who are nonconformists," have become our national anthem.

Almost. One hundred miles dead east of New York City, a hamlet of farmers called Southold held out. Southold was the last place in New York State where you could look from a rolling road across an open cornfield uninterrupted by Golden Arches. The town board refused McDonald's request to build as "just not part of our rural character". A group of visiting English land use experts had planted in our village the un-American idea of "stewardship" trumping property rights. In Britain, these battles are common stuff - in 1999, 40 mums and kids in Shaftesbury, Harrow, marched against conversion of the Hungry Horse pub into an Avaricious Clown - but in the US in 1990, Tiny Town Resists was national news. The rebellion lasted six years. Then McDonald's huffed and puffed and threatened law suits, and Southold - my town - bowed down. Today, Southold schools bus students to "instructional" outings at McDonald's.

The story of Mom and McDonald's is my contribution to the Great Bubble debate. A whole gaggle of Chicken Littles in the financial press have been cackling about The Bubble, the allegedly insupportable speculative rise in share prices which had to burst and spew out financial fire, brimstone and bankruptcies.

Yes, we've seen dot-coms vanish like backseat vows of eternal love. But stay calm. The sky is not, I repeat not, falling. The Bubble Theorem is the creation of good-hearted souls of the Left made ill by the orgy of monstrous increases in wealth for a few and begging bowls for the many. The world's 300 richest people are worth more than the world's poorest three billion. The stock market could not rise indefinitely on the promises of dot-coms that sell nothing yet lay claim to a large share of the planet's wealth. Brilliant economic analysts like the Guardian's Larry Elliot and complete cranks like Robert Schiller sermonized about the coming "Day of Reckoning". Yet the 2001 "collapse" of the stock market barely dimpled the overall rise in equity values seen over the decade.

The belief that a Price Must Be Paid is religion not economics, Calvinism dressed up in Marxist clothing. What the Bubble-heads fail to accept is that the class war, as Messrs Blair and Bush tell us, is indeed over - but not because we have reached a happy social entente. Let's face it, the working class has been defeated soundly, convincingly, absolutely.

Dr Edward Wolff, director of the Income Studies Project at the Jerome Levy Institute, New York, tells me that between 1983 and 1997, 85.5 per cent of the vaunted increase in America's wealth was captured by the richest 1 per cent. In that time, overall US income rocketed - of which 80 per cent of America's families received 0 per cent. The market's up, but who is the market? According to Wolff, the Gilded One Per Cent own $2.9 trillion of the nation's stocks and bonds out of a total $3.5 trillion.

Not coincidentally, the rise in the riches of the rich matches quite well with the wealth lost by production workers through the shrinking of their share of the production pie. US workers are producing more per hour (up 17 per cent since 1983) while keeping less of it (real wages are down 3.1 per cent). So there you have it: the market did not rise on a bubble of fictions but on the rock-hard foundation of the spoils of the class war.

What's going on here? Let's start with computers. Forget Robert Reich's sweet notion that computers can make work more meaningful and worthwhile. The purpose of every industrial revolution, from the steam-powered loom to the assembly line, is to make craft and skills obsolete, and thereby make people interchangeable and cheap. And now, computerization is speeding the industrialization of service work.

That brings us back to "Micky Us". While Ray Kroc gets all the kudos for building the company, it was the genius of the brothers McDonald, Richard and Maurice, in 1948, to divide the production of restaurant food into discrete, skill-less tasks. McDonald's ruthlessly and methodically applied to the corner greasy spoon, the working man's cafe, the techniques of Taylorism, the timeand-motion paradigm which rules factory assembly lines. No more cooks. Any clown can make a hamburger for McDonald's. Their machines are designed so that unskilled employees hired off the street can reach full speed within minutes. Britain's prime minister, mesmerized by the modern, says he is creating a Knowledge Economy. Oh, yeah. At McD's, you can spend all day punching machine-portioned glops of ketchup onto burger buns.

In one of the Observer's undercover investigations, we learned that McDonald's retained the notorious union-busting firm Jackson Lewis of New York. But why should McDonald's bother? Fast food operators report employee turnover averaging 300 per cent per year - and, despite what the industry says, they love it. Workers out the door in four months don't demand pensions, promotions, training or unions. In 1996, a British civil court found the company systematically exploited young workers, but that is a temporary situation. It won't be long before the majority of workers of all ages will need no more experience than any 17-year-old slacker - and will be paid like one.

The stock market went up because the human market went down. Here in the twenty-first century, Blake's Dark Satanic Mills have been replaced by Bright Demonic Happy Meals as the factory for deconstructing work into a cheap commodity.

It is estimated that one in eight American adults have worked at a McDonald's. This acts as a kind of moral instruction for the working class, as jail time does for ghetto residents. It is one reason behind America's low unemployment rate. As my old professor Milton Friedman taught me, unemployment falls when workers give up hope of higher pay.

Things Like That Don't Happen Here

Last autumn, one of my neighbours, Kenneth Payne, fortified by the courage available at one of our local bars, loaded his shotgun, walked across the road to the trailer home of his best buddy, Curtis Cook, and emptied both barrels into Cook's stomach. While his friend bled to death, Kenneth sat down on his porch and telephoned a local family to say, 'No one's going to bother your little girl anymore.' Kenneth claimed Curtis had earlier in the evening confessed to molesting the neighbour's eight-year-old child.

The next day, our town's burghers ran out to tell curious metropolitan reporters, 'Things like that don't happen here. ' Really? None of my neighbours mentioned the story of our school principal's daughter, who hid her pregnancy from her parents then drowned her child right after its birth. I thought it worth reporting, so I did, in the Observer and the New York Times.

What kind of monstrous hamlet do I live in? While few Americans have heard of it, Britons know it as the congenial, rural town lionized on BBC radio's "Letter from America", broadcast by Alistair Cooke, one of our few unarmed residents.

Like Alistair, I've made shameless use of the cartoon imagery of this convenient exemplar of unspoiled, small town America. In the prior article, I told you about our town's heroic struggle to block McDonald's opening a restaurant, a threat to our quaint rural character. The way I told it, we were gloriously defeated by the corporation's McLawyers who bullied us into bending our preservation laws.

I left out of the story about our defense against the fast food giant being sabotaged from within by that fifth column of small businessmen found in every American town - the local real estate agents, shopkeepers and farmers hoping to turn a quick buck on their properties once the planning rules are breached and broken.

I've written scores of bad-tempered columns about the brutish ways of America's biggest businesses. That viewpoint is admittedly a bit unbalanced. To be fair, we must recognize that for sheer narrow-minded, corrosive greed nothing can beat the US's grasping, whining, small businessmen. And within that avaricious little pack, none is so poisonously selfcentered and incorrigible as the small town businessman of rural America.

During the presidential debates, Al Gore opened the bidding to win this pampered demographic by promising to slash inheritance taxes, "to save our family farms and businesses". Until President Bush took office, if you inherited a farm or business worth up to $2.6 million you paid no tax at all. But that's just not enough for what the fawning candidates call "local entrepreneurs". Gore promised to raise the exemption to $4 million - only to be trumped by George W. Bush who promised to wipe away inheritance taxes altogether (one of the few promises he kept).

This group of small businessmen and farmers, so deserving of protection of their tax-free millions, is the same that defeated Bill and Hillary Clinton's 1993 proposal to require all businesses to provide bare-bones health insurance for their employees, an expenditure of only 35 cents per hour. Fortune 500 corporations expressed few qualms about the mandatory insurance plan as most big firms already provide some health care Coverage for their employees. It was the swarm of Lilliputian entrepreneurs, under the aegis of their National Federation of Independent Businesses, who blocked the Clintons' modest attempt to end medical care apartheid in America.

You name it - maternity leave, minimum wage, even health and safety inspections and rules barring racism in hiring any meagre proposal to protect the lives and families of working people, and the NFIB's small businesses legions have their swords out to kill it.

But we must never say so. Al Gore can shoot at big tobacco and big oil, Bush can vilify teachers and union workers, but any politician who breathes a word against rural businesses, farmers or the NFIB's Scrooge battalions ends up as electoral road-kill.

Ten years ago, our town convinced a charitable foundation with more money than wisdom to pay for experts from Britain to tell us how to preserve our area's rural character. We held meetings, referenda, elections. It was that active small town American democracy that makes foreign writers like Tocqueville and Jonathan Freedland ga-ga with admiration. At the end, the town voted overwhelmingly to adopt what became known as the "UK Stewardship Plan" to protect our green fields and prevent ugly urban sprawl.

Come by my town today and count the pustules of strip malls and fluorescent signs directing you to Bagels Hot! Cars Like New No Down-Payment! Dog Burger! where cornfields once grew. Sensible British designs and a preservation-minded electorate could not overcome the me-first obstructionism of a hard core of small businessmen and farmers lusting to sell off their land to McDonald's, Wal-Mart and housing speculators.

I didn't equate rural shotgun murders or child molesting to the small town businessman's penchant for despoiling the rural landscape. But they are covered over by the same cowardly silence. No politician, local or national, has the guts to break through the mythology, the legend of the struggling local businessman who cares and sacrifices for his community. This folkloric invention approaches saintliness when the discussion turns to rural, small town America with its treacly images of barbershop quartets, Farmer Brown on his tractor and the Main Street parade after the strawberry harvest.

What makes this myth of happy small town America off-limits to challenge is that it provides pleasant code words for the ugliest corner of the American psyche. When politicians talk about "small town American values", "family values" and the "hard-working small businessman" everyone knows the color of that town, that family and that businessman - white. Pleasantville USA is implicitly placed against the urban jungle populated at the bottom by darkskinned muggers and pregnant teenagers on the dole, and at the top by Jewish financiers of Hollywood pornography.

It would dangerously undermine this politically useful imagery if the public were reminded that small towns are filled with pale-faced citizens despairing and dangerous as any in the inner cities. Nor could the NFIB win those special exemptions from taxes and planning regulations for small businesses and farms if they were seen, not as struggling defenders of local communities, but as dollar-crazed and duplicitous operators who wouldn't care if McDonald's put a drivethough in the Lincoln Memorial.

Every landscape we build, wrote psychologist Norman O. Brown, is our recreation of the interior of our mothers' bodies. What does it say about Americans when we look out over a natural vista we are seized with psychic anguish if we cannot locate a throbbing neon sign flashing PIZZA HOT!

In our little town, it was George, the owner of the local lumberyard, who proudly organized successful business opposition to the UK Stewardship plan. With dollar signs in his eyes, he welcomed McDonald's and the boxy shopping mall that replaced several hundred acres of raspberry fields.

But small-town Georges forget that, when they break down government regulations, it is big business that gleefully rushes through the breach. Last time I saw him, George the lumberman was stunned by the announcement that Home Depot, the Wal-Mart of do-it-yourself stores, would replace a nearby cornfield. And that means George is out of business.

In a small town, neighbourly manner, I expressed my sympathy to George. If I were a better person, I would have meant it.

Insane about Asylum

At midnight on May 12, 2000, twelve Mexicans crossed the Rio Grande on the flrst leg of their journey to Farmingville, Long Island, where my town's tradesmen pick up their laborers. Lost in the fearfully vast Arizona desert, the twelve died of dehydration. I surprised myself by wanting to write something almost kind about my town.

So here's me, using one of the lowest tricks in journalism - asking a London cab driver to give his salt-of-the-earth opinion on one of the great issues of the day: asylum seekers. He couldn't wait.

"Well, it's like you're ashamed to be English today! You're not supposed to be English!"

I had good reason to ask. As an American, I can't get my head around British election time "asylum" hoo-hah. At the last election Prime Minister Blair and his Tory opponent William Hague seemed to be competing for the post of Great White Hunter, stalking "bogus" asylum seekers among the herd of "legitimate" ones.

In America, we don't have asylum seekers; we have immigrants. Lots of them - 29 million by the low-ball official census, with 1.2 million more coming in each year. US cities compete for prime-pick foreign workers as they would for a foreign auto plant.

America certainly has had anti-immigrant politicians. In the nineteenth century we had the appropriately named KnowNothing Party and in 1988 we had Mike Huffington. Huffington's wife Arianna famously convinced her overly-rich husband to run for the US Senate on a rabid anti-immigration platform.

It was a perplexing campaign for California, where Whites are the minority race and the only true non-immigrants are, if you think about it, a handful of Shosone Indians. Mrs Huffington herself delivered the most virulent antiforeigner speeches ... in her thick Greek accent.

After his demolition at the polls, the demoralized Huffington announced he could remain neither a Republican nor a heterosexual.

Huffington's defeat also allowed George W. Bush to convince his party to adopt hug-an-immigrant slogans. Bush would hold open the Golden Door for immigrants, but not out of a weepy compassion for the "huddled masses yearning to breathe free". Immigration is simply good business.

In fact, it's the deal of the millennium, says Dr Stephen Moore of the Cato Institute, a think-tank founded by big-name Republicans. "It's a form of reverse foreign aid. We give less than $20 billion in direct aid to Third World nations and we get back $30 billion a year in capital assets."

By "assets" he means workers raised, fed, inoculated and educated by poorer countries, then shipped at the beginning of their productive lives to the US. (The average age of immigrants is 28.)

The Cato Institute reckons that the US "imports" about $25 billion a year in human "goods". "It is the lubricant to our capitalistic economy," said Moore (as I eschewed thoughts of the film Modem Times, where Charlie Chaplin gets squeezed through giant gears), "giving US companies a big edge over European competitors."

Given the US experience, American economists would find the entire British fixation on "bogus" and "legitimate" asylum seekers just wacky. Instead of asking newcomers for a commitment to building Britain, they are asked solely whether they are running for their lives. What an odd standard for choosing new citizens.

American industry saves a bundle due to its access to an army of low-skill, low-wage foreign workers who can be hired, then dumped, in a snap. US industry also siphons off other nations' best and brightest, trained at poor nations' expense.

The habit of siphoning off other countries' high-skilled workers, let me note, permits America's monied classes to shirk the costly burden of educating America's own underclass. (So far, this system hums along smoothly: Bangalore-born programmers in Silicon Valley design numberless cash registers for fast-food restaurants so they can be operated by illiterate Texans.)

To get a closer understanding of the Cato Institute studies, I talked with a piece of imported human capital. His name is Mino (I can't disclose his last name). Mino first tried to get into the US from Guatemala eleven years ago. He paid thousands of dollars to a gusano (a "worm" ) to sneak him across the border. The cash bought Mino a spot in a sealed lorry stuffed with 100 other men. Mino felt lucky: he didn't die. But he did spend three days in jail when La Migra (the Immigration and Naturalization Service) grabbed him.

Back in Guatemala, Mino next bought a plane ticket to JFK airport - and a false visa. This time, no problems. Within days, Mino had a job washing dishes in the local cafe in my town on Long Island, east of New York. I asked the chief planner for our region, Dr Lee Koppelman, about the role of "illegal" workers like Mino in our local economy. Koppelman laughed: "There wouldn't be an economy without the illegals." He estimates there are more than 100,000 "undocumented" workers in our county alone. Nationwide, undocumented workers total between seven million and eleven million.

Our local businesses, says Koppelman, "turn a blind eye" to the suspect status of the workers stooping in our strawberry fields and clearing our construction sites. One local farmer tells me he gets his field hands from El Salvador - though I know this guest worker program ended more than 20 years ago.

Our business community's "blindness" goes beyond ignoring someone's counterfeit "green card". The local shop paid Mino the legal minimum wage, but worked him twice the legal number of hours.

And that's another advantage to US-style immigration. "The workforce is flexible," says the expert from Cato. "Flexible" means millions of workers too scared of La Migra to blow the whistle on illegal working hours, or to join unions or make a fuss when, at the end of the harvest season (or tourist season or production run) they are told to get lost.

By keeping the Golden Door only slightly ajar, with a third of all immigrants fearful of deportation, America's employers profit from something that works quite a bit like the old South African system of migrant workers. "Workers just materialize," says Koppelman, then are expected to vanish, leaving neither businesses nor communities with any responsibility for their survival nor their families' when work ends.

So why does Britain fear this gloriously profitable scheme of importing valuable worker-assets? The English notion that immigrants drain government resources is a laugh. The US Senate Immigration sub-committee tells me the government turns a nice profit on immigration, efficiently collecting in taxes from migrants roughly double what they get back in services. America approves 2.5 million applications to stay a year; Britain lets in a paltry 129,000.

But what about my cabby's fear of losing his English identity? Face it, Shakespeare's dead. England's cultural exports are now limited to Morris dancing, football hooliganism and Hugh Grant.

I humbly suggest you consider floating Home Secretary David Blunkett into the English Channel dressed like the Statue of Liberty with robe, tiara, torch and a sign reading: "Desperately seeking new material for stagnant gene pool!"

Now for the happy American ending: today, Mino owns a landscaping business, drives a flash pick-up truck, plans to buy a home, get rid of his accent and finish a degree in accounting.

No one here resents Mino's success. His story is every American's story. It's my story. Anna Palast stole across the border in 1920. Luckily, La Migra didn't catch her until a few days before her 100th birthday.

And that's what neither Blair nor the Tories understand. It's not where you come from that counts. It's where you're going.

[Chapter] 4 - Pat Robertson, General Pinochet, Pepsi-Cola and the Anti-Christ: Special Investigative Reports

Papers fly out of filing cabinets and land on my desk. Voices whisper phone numbers of corporate, government, even church, insiders. People talk and my tape recorder happens to be rolling. I guess I'm a lucky guy.

I've tried to carry over to journalism the techniques of in-depth investigation I used in gathering intelligence for government racketeering cases. While there's the cloak-and-dagger fun stuff (setting up false front organizations as I did for the Observer in the Lobbygate sting), most of it involves hours, days and weeks lost in piles of technical and financial papers. Glamorous it ain't. It is expensive and time-consuming - not exactly attractive to editors for whom Quick and Cheap are matters of principle, both professional and personal. Bless those editors who've tolerated my deviant journalistic behaviour.

Almost all the stuff in this book is "investigative", that is, revealing information the subjects of the stories assumed and hoped had been well hidden. These reports were a bit more difficult to tease out, especially when the subject of one, through divine communication, learned that I was a correspondent for a newspaper, the Observer, founded by an agent of Lucifer. But I knew that already.

Sympathy for the Banker: Anti-Christ Inc. and the Last Temptation of Pat Robertson

In May 1999, the oldest financial enterprise in the English-speaking world, the Bank of Scotland, decided to launch into the cyber-future with the largest-ever telephone and Internet bank operation, to be based in the US. Their choice of partner and chairman for the enterprise, US televangelist 'Reverend' Pat Robertson, scandalized a few Britons.

The United Kingdom's business elite could dismiss objections with a knowing condescension. To them, Robertson was just another Southern-ftled Elmer Gantry bigot with a slick line of LordyJesus hoodoo who could hypnotize a couple of million American goobers into turning over their bank accounts to the savvy Scots.

I had a different view of the Reverend Pat. For years, I'd kept tabs on the demi-billionaire media mogul who had chosen one president of the United States and would choose another ... and who left a scent of sulphur on each of his little-known investments from China to the Congo. The Feds were already on his case, but I could speak to insiders in the born-again Christian community once high in Reverend Pat's billiondollar religious-commercialpolitical empire, who would never talk to officialdom.

Most difficult was convincing the Reverend's protectors to let me speak directly to The 'Doctor" (as they call him) at his compound in Virginia; and once there, getting my wire through the metal detector. ('Officer, could you please hold my cigarette lighter?")

While some Britons could not fathom why the Bank of Scotland chose Robertson, I was more surprised that Robertson chose the Scots. He had, in fact, written a great deal about that Presbyterian-run finance house. In Robertson's darkly woven universe, the Bank of Scotland was the manifestation on earth of the Spirit of the Anti-Christ.

It's time someone told you the truth. There is an Invisible Cord easily traced from the European bankers who ordered the assassination of President Lincoln to German Illuminati and the "communist rabbi" who is the precise connecting link to Karl Marx, the Trilateral Commission, the House of Morgan and the British bankers who, in turn, funded the Soviet KGB. This is the "tightly knit cabal whose goal is nothing less than a new order for the human race under the domination of Lucifer".

If you don't know about the Invisible Cord, then you have not read New World Order by Dr Marion "Pat" Robertson, chairman of the Bank of Scotland's new American consumer bank holding company.

Interestingly, the Scottish bank's biography of Robertson failed to mention New World Order, the 1991 bestseller which a Wall Street Journal review uncharitably described as written by "a paranoid pinhead with a deep distrust of democracy".

There is so much the Bank of Scotland forgot to include in their profile of Dr Robertson that it is left to the Observer to properly introduce this man of wealth and taste. The bank, for example, failed to note that Dr Robertson is best known to Americans as the leader of the 1.2 million-strong ultra-right political front, Christian Coalition. It may seem a bit odd for the Bank of Scotland to choose as their spokesman a man widely feared by many in the target market as America's own Ian Paisley. But the Bank of Scotland says it is not concerned with Dr Robertson's religious beliefs. Nor, apparently, is Dr Robertson concerned with theirs. He has called Presbyterians, members of Scotland's established Church, "the spirit of the Anti-Christ".

What would entice the Bank of Scotland to join up with a figure described by one unkind civil liberties organization as "the most dangerous man in America"? Someone more cynical than me might suspect that the Bank of Scotland covets Dr Robertson's fiercely loyal following of two million conspiracy wonks and Charismatic Evangelicals. A former business partner of Robertson's explained The Reverend's hypnotic pull on their wallets: "These people believe he has a hot-line to God. They will hand him their life savings." Robertson drew believers to his other commercial ventures. "People remortgaged their homes to invest in his businesses," the insider told me. If he did use his ministry to promote his business, this would cross several legal boundaries.

In an exclusive interview with the Observer, Dr Robertson swore to me he will keep bank commerce, Christianity and the Coalition completely separate. But our look into the Robertson empire, including interviews with his former and current business associates, reveals a hidden history of mixing God, gain and Republican campaign. Not all has been well concealed. Tax and regulatory authorities have tangled for decades with his supposedly non-partisan operations.

The combination of Christianity and cash has made Dr Robertson a man whose net worth is estimated at somewhere between $200 million and $1 billion. He himself would not confirm his wealth except to tell me that his share in the reported $50 million start-up investment in the bank deal is too small for him to have taken note of the sum.

Neil Volder, president of Robertson's financial business and future CEO of the bank venture, emphasizes Robertson's selflessly donating to his church 65-75 per cent of his salary as head of International Family Entertainment. I was surprised: that amounted to only a few hundred thousand dollars yearly, pocket change for a man of Dr Robertson's means. There was also, says Volder, the $7 million he gave to "Operation Blessing" to help alleviate the woes of refugees fleeing genocide in Rwanda. Or did he? Robertson's press operation puts the sum at only $1.2 million - and even that amount could not be corroborated.

More interesting is how the "Operation Blessing" funds were used in Africa. Through an emotional fundraising drive on his TV station, Robertson raised several million dollars for the tax-free charitable trust. "Operation Blessing" purchased planes to shuttle medical supplies in and out of the refugee camp in Goma, Congo (then Zaire). However, investigative reporter Bill Sizemore of the Virginian-Pilot discovered that, except for one medical flight, the planes were used to haul heavy equipment for something called the African Development Corporation, a diamond mining operation distant from Goma. African Development is owned by Pat Robertson.

Did Robertson know about the diversion of the relief planes? According to the pilots' records, he himself flew on one plane ferrying equipment to his mines.

One of Robertson's former business partners speaking on condition of confidentiality told me that, although he often flew with Dr Robertson in the minister's jet, he never saw Robertson crack open a Bible or seek private time for prayer. "He always had the Wall Street Journal open and Investors' Daily." But on the Congo flight, Robertson did pray. The pilot's diary notes, "Prayer for diamonds".

Volder told me that Robertson's diverting the planes for diamond mining was actually carrying out God's work. The planes, he asserts, proved unfit for hauling medicine, so Robertson salvaged them for the diamond hunt which, if successful, would have "freed the people of the Congo from lives of starvation and poverty". None the less, the Virginia State Attorney General opened an investigation of "Operation Blessing".

Volder asserts that Robertson was "not trying to earn a profit, but to help people". As it turned out, he did neither. The diamond safari went bust, as did Robertson's ventures in vitamin sales and multi-level marketing. These disastrous investments added to his losses in oil refining, the money pit of the Founders Inn Hotel, his jet leasing fiasco and one of England's classier ways of burning money, his buying into Laura Ashley Holdings (he was named a director). One cannot term a demi-billionaire a poor businessman but, excepting the media operations handed him by his non-profit organization, Robertson the "entrepreneur" seems to have trouble keeping enterprises off the rocks. Outside the media, Robertson could not cite for me any commercial success.

Undeniably, Dr Robertson is a master salesman. To this I can attest after joining the live audience in Virginia Beach for 700 Club, his daily television broadcast.

That week, he was selling miracles. Following a mildly bizarre "news" segment, Dr Robertson shut his eyes and went into a deep trance. After praying for divine assistance for his visions, he announced, "There is somebody who has cancer of the intestines ... God is healing that right now and you will live! ... Somebody called Michael has a deep chest cough ... God is healing you right now! "

It is not clear why the Lord needs the intervention of an expensive cable TV operation to communicate to Michael. But more intriguing theological issues are raised by the program hosts' linking miracles to donations made to Robertson's organization, In a taped segment, a woman's facial scars healed after her sister joined the 700 Club (for the required donation of $20 per month). "She didn't realize how close to her contribution a miracle would arrive." It ended, "Carol was so grateful God healed her sister, she increased her pledge from the 700 Club to the 1000 Club."

The miracles add up. In 1997, Christian Broadcast Network, Robertson's "ministry", took in $164 million in donations plus an additional $34 million in other income.

Earlier tidal waves of tax-deductible cash generated by this daily dose of holiness and hostility paid for the cable television network which was sold in 1990 to Rupert Murdoch, along with the old sit-coms that filled the nonreligious broadcast hours, for $1.82 billion. Seven years prior to the sale of this media bonanza, the tax-exempt group "spun it off" to a for-profit corporation whose controlling interest was held by Dr Robertson. Lucky Pat.

Robertson donated hundreds of millions of dollars from the Murdoch deal to both Christian Broadcast Network (CBN) and CBN (now Regent) University. That still left Robertson burdened with heavy load of cash to carry through the eye of the needle.

In his younger days, Robertson gave up worldly wealth to work in the Black ghettos of New York, But, says a former Coalition executive, "Pat's changed." She noted that he gave up his ordination as a Baptist minister in 1988. (He is still called, incorrectly, "Reverend" by the media.) His change in 1988 was accelerated when, says another associate, his former TV co-host Danuta Soderman Pfeiffer, "he was ensnared by the idea that God called him to run for president of the United States".

The 1988 run for the Oval Office began with Robertson's announcing his endorsement by Highest Authority. It was not some quixotic adventure. The losing race generated a mailing list of three million sullen Americans of the heartland whose rage was given voice by Robertson forming, out of defeat, the Christian Coalition. Some say he ran just to generate the list, and Volder offers that this may have been, in fact, the Lord's stratagem. These mailing lists, like the CBN lists, are worth their weight in gold. Robertson swore they would not be used in for the banking business. To dip into the Christian lists uncompensated to promote the new bank would breach the law.

But abuse of these lists lies at the heart of charges by ex-partners with whom I spoke. The IRS opened an investigation of the doctor's use of lists, but had not been able to obtain statements from some witnesses willing to speak with the Observer.

Two former top executives in the for-profit operations who have never previously spoken to the media state that Robertson personally directed use of both the tax-exempt religious group's lists and the "educational" Christian Coalition lists to build what became Kalo-Vita, the pyramid sales enterprise which sold vitamins and other products. (Kalo-Vita collapsed in 1992 due to poor management amid lawsuits charging deception.)

A former officer of the company alleges some operations were funded, without compensation, including offices, phones and secretarial help, by the ministry. When insiders questioned Robertson's using viewers' donations for a personal enterprise, Robertson produced minutes of Board meetings that characterized as "loans" the start-up capital obtained from CBN. According to insiders not all Board members were made aware of these meetings until months after they were supposedly held. Dr Robertson's spokesman responds that they are unfamiliar with the facts of the allegation.

The executives were also alarmed about Dr Robertson's preparing to use the 20,000-strong and growing Kalo-Vita sales force as "an organizational structure to back his political agenda" - and partisan ambitions. (US federal investigators never got wind of this alleged maneuver.)

The US Federal Election Commission had already charged Dr Robertson's groups with misusing the Christian Coalition lists. Federal courts are reviewing internal documents including a September 15, 1992, memo from the Coalition's then president, Ralph Reed. The Observer obtained a copy of the memo from Reed to the coordinator of President George W. Bush's re-election campaign which says Pat Robertson "is prepared to assist ... [by] the distribution of 40 million voter guides ... This is a virtually unprecedented level of cooperation and assistance ... from Christian leaders." Unprecedented and illegal, says the FEC, which sued the Christian Coalition, technically a tax exempt educational corporation, for channelling campaign support worth tens of millions of dollars to Republican candidates. The action is extraordinary because it was brought by unanimous vote of the bipartisan commission which cited, among other things, the Coalition's favoring Colonel Ollie North with copies of its lists for North's failed run for the US Senate.

Records subpoenaed from the Christian Coalition contain a set of questions and answers concocted by the Coalition and the Republican Party for a staged 1992 "interview" with Bush broadcast on the 700 Club. This caught my eye first, because it appears to constitute a prohibited campaign commercial and second, because Robertson months earlier claimed Bush was "unwittingly carrying out the mission of Lucifer". With Bush running behind Bill Clinton, Robertson must have decided to stick with the devil he knew.

But the government will never see the most incriminating documents. Judy Liebert, formerly Chief Financial Officer for the Christian Coalition, told me she was present when Coalition President Reed personally destroyed documents subpoenaed by the government. Also, when Liebert learned that the Coalition had printed Republican campaign literature (illegal if true), she discovered that the evidence, contained in the hard drive of her computer, had been removed. Indeed, the entire hard drive had been mysteriously pulled from her machine - but not before she had made copies of the files.

When Liebert complained to Robertson about financial shenanigans at the Coalition, "Pat told me I was 'unsophisticated'. Well, that is a strange thing for a Christian person to say to me."

The Coalition has attacked Liebert as a disgruntled ex-employee whom they fired. She responded that she was sacked only after she went to government authorities - and after she refused an $80,000 severance fee that would have required her to remain silent about the Coalition and Robertson. The Feds, notes the Coalition, have never acted on Liebert's charge of evidence tampering.

Little of this information has been reported in the press. Why? The three hour dog and pony show I was put through at the CBN-Robertson financial headquarters in Virginia Beach culminated in an hour-long diatribe by his CEO Voider about how Robertson was certain to sue any paper that did not provide what he called a "balanced" view. He boasted that by threatening use of Britain's draconian libel laws and Robertson's bottomless financial treasure chest, one of his lawyers "virtually wrote" a laudatory profile of Robertson in a UK newspaper. As in the days when the Inquisition required recalcitrants to view instruments of torture, I was made to understand in detail the devastation that would befall me if my paper did not report what was "expected" of me. This was said, like all the Robertson team's damning anthems, in a sweet, soft Virginia accent.

Would Dr Robertson use his ministry's following to promote the Bank of Scotland venture? Despite Robertson's protests to the contrary, his banking chief Voider laid out a plan to reach the faithful, including appearances of bank members of the 700 Club, mailings to lists coincident with their own, and "infomercials" just after the religious broadcasts. This is just the type of mixing that has so upset the election commission and the Internal Revenue Service, which in 1998 retroactively stripped Christian Broadcasting of its tax-exempt status for 1986 and 1987.

I met Dr Robertson in his dressing room following his televised verbal intercourse with God. Robertson, though three hours under the spotlight, didn't break a sweat. He peeled off his make-up while we talked international finance. Here was no hayseed huckster, but a worldly man of wealth and taste.

And, despite grimacing and grunts from Voider, Dr Robertson told me he could imagine tying his Chinese Internet firm ("The Yahoo of China," he calls it) into the banking operation. Picking up Voider's body shakes, Dr Robertson added, "Though I'm not supposed to talk about Internet banking."

And he wasn't supposed to mention China. His fellow evangelists are none too happy about his palling around with Zhu Rongi, the communist dictator who gleefully jails Christian ministers. Voider defends Dr Robertson's friendship with Zhu (and association with deposed Congo strongman Mobutu) on the grounds that "Pat would meet with the Devil if that is only way to help suffering people." The fact that the political connections assisted in obtaining diamond (Congo) and Internet concessions (China) is secondary.

The Bank of Scotland will be launched in the US through Dr Robertson's accustomed routes: phone and mail solicitations. But once he hits the Net, with or without the Chinese, this bank deal will make Pat Robertson the biggest financial spider on the world wide web. Yet, his choosing the Bank of Scotland as his partner is surprising because, until this year, Dr Robertson boasted of his English, not Scottish, heritage. Moreover, in New World Order, he singled out one institution in particular as the apotheosis of Satan's plan for world domination, the British chartered central banks conceived by Scottish banker William Paterson: the Bank of England and Bank of Scotland.

Dr Robertson explains that Rothschild interests carried on the Paterson plan, financing diamond mines in Africa which, in turn, funded the satanic secret English Round Table directed by Lord Milner, editor of the Observer (Ah-Ha!) a century ago. Furthermore, the Scottish banker's charter became the pattern for the US Federal Reserve Board, a diabolic agency created and nurtured by the US Senate Finance Committee whose chairman was the evil Money Trust's dependable friend, Senator A. Willis Robertson - Pat Robertson's father.

That's right. Pat is the scion of the New World Order, who gave up its boundless privileges to denounce it.

Or did he?

I had done some research on the Anti-Christ. How would we recognize him? How would the Great Deceiver win over Godfearing Christians? What name would he use? As I drove away from the chapel-TV studio-university-ministry banking complex, I realized I'd forgotten to ask a key question. Why does the ex-Reverend go by the name "Pat" - not his Christian name, Marion? It struck me that "Pat Robertson" is an obvious anagram for the Devil's agent, Paterson of the Scottish bank. My silly thoughts piled higher, fuelled by staying up all night to finish New World Order. Suddenly, like Robertson, I too had a vision of an Invisible Cord that went from Lucifer to Illuminati to Scottish bankers to African diamonds to the Senate Finance Committee to Communist Dictators to the world wide web ... Ridiculous, I know, but strangely, though I thought I'd turned off the radio, it continued to play that damned Rolling Stones song,

Pleased to meet you!

Hope you've guessed my name ...

Afterword

The Almighty moves mysteriously, and swiftly. Within a week after the Observer printed the article, Robertson abandoned the 'dark land' of Scotland, as he called it, and the big banking dream went poof! Robertson fled Darkest Scotland. He even resigned from the Board of Laura Ashley, the UK fashion house.

But our exposure of evidence indicating that Robertson had used the "educational" foundation mailing lists of the Christian Coalition not only for political purposes (as the US government charged) but to promote the failed Kalo-Vita cosmetics pyramid marketing operation opened up whole new possibilities of investigation into whether the pastor sheered his flock. Public interest lawyers with People for the American Way announced they would take our discoveries to the US Federal Elections Commissions and the Internal Revenue Service.

More problems surfaced. The Observer, not the Bank of Scotland, announced Robertson's appointment as chairman of the proposed bank venture. Why? Usually such things are announced with fanfare. The answer may be that the US banking authority, the Controller of the Currency, did not know of Robertson's involvement. The "Reverend", though chairman of the holding company, could not be found listed as a member of the board of the subsidiary that applied for the banking charter. It seems the Feds have lots of problems granting charters to persons under investigation for misuse of assets. Failure to mention Robertson's chairmanship would not help their chartering cause.

Then there were the allegations of destruction of evidence. The Christian Coalition's CFO told me that Ralph Reed, a big Republican operative even today, "would got through (the subpoenaed documents] and throw everything on the floor - I mean just pitch it - just take it and throw it on the floor". When challenged on the legality (and Christianity) of such actions, Reed reportedly said, "Why don't you just take a gun and blow my brains out."

But Robertson had a better plan. Weirdly, the Christian Coalition's taxexempt status had been in limbo for an unprecedented ten years, with no US government prepared to take it away nor legally able to grant it. After our story ran, Robertson simply withdrew the application, costing him virtually nothing in cash but thereby pulling the plug on all the investigations of the use or misuse of the Coalition's assets.

Not wanting to leave himself exposed, Robertson within days also announced the shut-down of the Christian Coalition (June 10, 1999). The New York Times, National Public Radio and 60 Minutes, the infotainment flagship of the CBS network, all announced that Robertson and his Coalition were finis, his political machine sunk. This was a sure signal that Robertson would rise again, and stronger.

The wily shape-shifter closed Christian Coalition (a Virginia organization) only to establish "Christian Coalition of America". Within a year, his childhood chum, George H.W. Bush, would need his help again. This time, son George W. was in hot water. In January 2000, Senator John McCain beat the Dim Son in the New Hampshire Republican presidential primary. McCain was being hailed as a real American hero, calling for an end to corporate softmoney campaign donations. He looked unstoppable in the race for the Republican nomination ... until the Virginia and South Carolina primaries. This was Christian Coalition turf. A whisper campaign among The Believers tagged McCain, a red-white-and-blue war veteran, as Satan's stand-in. McCain lost those primaries, and that's how Dr Pat chose our president (with a little help from friends in Florida).

The Cola-Nut Coup: Pinochet, Nixon and Pepsi

In 1998, Augusto Pinochet, on one of his many shopping trips to London, was arrested for murder, that is, held for extradition to Spain to face charges. I thought I might track down some of his alleged accomplices. This led to that embarrassing historical factotum, Henry Kissinger - no surprise there - and behind him to the real Mr Bigs of the operation: ITT Corporation, Anaconda Copper and Pepsi-Cola.

When the story hit, my main source screamed bloody murder - not about Pinochet, but about me. Edward Korry, the US ambassador to Chile under Richard Nixon, complained to my editor he'd been had, bamboozled, set-up, conned into talking six hours of taped revelations. The old ambassador is a fervent anti-communist who thought most highly of the "Chicago Boys", the University of Chicago economic free market shock troops that pillaged and impoverished Chile (my view) or (his yiew) saved the South American country.

He believed I was one of the "Boys", a student of Milton Friedman and crew, and so the curmudgeon - whose hatred of, and threats against, journalists are notorious - let down his guard. However, I had not lied to him, I really had been one part of the closed little Chicago Boys study group. Just because he convinced himself I was a fellow free market fruitcake, well, there's nothing I could do about that. And although he attacked me for reporting his words, and his politics gives me the shivers, I look on Ambassador Korry as kind of heroic. Though he hated the Allende government, he would not countenance bribery or bloodshed, not even for Pepsi.

"It is the firm and continuing policy that Allende be overthrown by a coup ... pleasereview all your present and possibly new activities to include propaganda, black operations, surfacing of intelligence or disinformation, personal contacts, or anything else your imagination can conjure...'

"EYES ONLY" "RESTRICTED HANDLING" "SECRET"

message from CIA headquarters to US station chief in Santiago, October 16, 1970

"SUB-MACHINE GUNS AND AMMO BEING SENT BY REGULAR COURIER

LEAVING WASHINGTON 0700 HOURS 19 OCTOBER DUE ARRIVE SANTIAGO...' message from CIA, October 18, 1970

You would be wrong to assume this plan for mayhem had anything to do with a cold war between the Free World and communism. Much more was at stake: Pepsi-Cola's market share and other matters closer to the heart of corporate America.

In exclusive interviews with the Observer, the US Ambassador to Chile at the time, Edward Malcolm Korry, interpreted these and other chilling CIA, State Department and White House top secret cables obtained by the National Security Archives. Korry literally filled in the gaps, describing cables still classified and providing information censored by black lines in the documents made available under the US Freedom of Information Act.

Korry, an ambassador who served Presidents Kennedy, Johnson and Nixon, gives a picture of US companies, from cola to copper, using the CIA as a kind of international collection agency and investment security force.

Indeed, the October 1970 plot against Chile's president-elect Salvador Allende, using CIA "sub-machine guns and ammo", was the direct result of a plea for action one month earlier by Donald M. Kendall, chairman of the Board of PepsiCo, in two phone calls to Pepsi's former lawyer, President Richard Nixon. Kendall arranged for the owner of the company's Chilean bottling operation to meet National Security Adviser Henry Kissinger on September 15. Some hours later, Nixon called in his CIA chief, Richard Helms, and, according to Helms's handwritten notes ' ordered the CIA to prevent Allende's inauguration.

But this is only half the picture, according to Korry. He revealed the US conspiracy to block Allende's election did not begin with Nixon, but originated - and read no further if you cherish the myth of Camelot - with John Kennedy. In 1963, Allende was heading toward victory in Chile's presidential election. Kennedy decided his own political creation, Eduardo Frei (the late father of Chile's current president) could win the election by buying it. The president left it to his brother Bobby Kennedy to put the plan into motion.

The Kennedys cajoled US multinationals to pour $2 billion into Chile - a nation of only eight million people. This was not benign investment, but what Korry calls "a mutually corrupting" web of business deals, many questionable, for which the US government would arrange guarantees and insurance. In return, the American-based firms kicked back millions of dollars toward Frei's election. This foreign cash paid for well over half of Frei's successful campaign.

By the end of this process, Americans had gobbled up more than 85 per cent of Chile's hard-currency earning industries. The US government, on the hook as guarantor of these investments, committed extraordinary monetary, intelligence and political resources for their protection. Several business-friendly US government fronts and operatives were sent into Chile - including the American Institute for Free Labor Development, infamous for sabotaging militant trade unions.

Then, in 1970, US investments both financial and political faced unexpected jeopardy. A split between Chile's center and right-wing political parties permitted a Communist-Socialist-Radical alliance, led by Salvador Allende, to win a plurality of the presidential vote.

That October, Korry, a hardened anti-communist, hatched an admittedly off-the-wall scheme to block Allende's inauguration and return Frei to power. To promote his own bloodless intrigues, the Ambassador says he "backchannelled" a message to Washington warning against military actions which might lead to "another Bay of Pigs" fiasco. (Korry retains a copy of this stillclassified cable.)

But Korry's prescient message only angered Kissinger, who had already authorized the Pepsi-instigated coup, scheduled for the following week. Kissinger ordered Korry to fly in secret to Washington that weekend for a dressing down.

Still clueless about the CIA plan, Korry, now in a White House corridor, told Kissinger that "only a madman" would plot with Chile's ultra-right generals. As if on cue, Kissinger opened the door to the Oval Office to introduce Nixon.

Nixon once described Korry, his ambassador, as "soft in the head", yet agreed with Korry's conclusion that, tactically, a coup could not succeed. A last-minute cable to the CIA in Santiago to delay action was too late: the conspirators kidnapped and killed Chile's pro-democracy Armed Forces Chief, Rene Schneider. The Chilean public did not know of Nixon's CIA having armed the general's killers. Nevertheless, public revulsion at this crime assured Allende's confirmation as president by the Chilean Congress.

Even if Nixon's sense of Realpolitik may have disposed him to a modus vivendi with Allende (Korry's alternative if his Frei gambit failed), Nixon faced intense pressure from his political donors in the business community who had panicked over Allende's plans to nationalize their operations.

In particular, the president was aware that the owner of Chile's phone company, ITT Corporation, was channelling funds illegally - into Republican Party coffers. Nixon was in no position to ignore ITT's wants - and ITT wanted blood. An ITT board member, John McCone, pledged Kissinger $1 million in support of CIA action to prevent Allende from taking office. McCone was the perfect messenger: he had served as director of the CIA under Kennedy and Johnson.

Separately, Anaconda Copper and other multinationals, under the aegis of David Rockefeller's Business Group for Latin America, offered $500,000 to buy influence with Chilean congressmen to reject confirmation of Allende's electoral victory. But Ambassador Korry wouldn't play. While he knew nothing of the ITT demands on the CIA, he got wind of, and vetoed, the cash for payoffs from the Anaconda gang.

Over several days of phone interviews from his home in Charlotte, North Carolina, Korry revealed, among other things, that he even turned in to Chilean authorities an army major who planned to assassinate Allende - unaware of the officer's connection to the CIA's plotters.

Once Allende took office, Korry sought accommodation with the new government, conceding that expropriations of the telephone and copper concessions (actually begun under Frei) were necessary to disentangle Chile from seven decades of "incestuous and corrupting" dependency. US corporations didn't see it that way. While pretending to bargain in good faith with Allende on the buy-out of their businesses, they pushed the White House to impose a clandestine embargo of Chile's economy.

But in case all schemes failed, ITT - charges Korry - paid $500,000 to someone their intercepted cables called "The Fat Man". Korry identified The Fat Man as Jacobo Schaulsohn, Allende's ally on the compensation committee.

It was not money well spent. In 1971, when Allende learned of the corporate machinations against his government, he refused compensation for expropriated property. It was this - Allende's failure to pay, not his allegiance to the hammer and sickle - which sealed his fate.

In October 1971, the State Department pulled Korry out of Santiago. But he had one remaining chore regarding Chile. On his return to the US, Korry advised the government's Overseas Private Investment Corporation to deny Anaconda Copper and ITT compensation for their properties seized by Allende.

Korry argued that, like someone who burns down their own home, ITT could not claim against insurance for an expropriation the company itself provoked by violating Chilean law. Confidentially, he recommended that the US Attorney General bring criminal charges against ITT's top brass, including, implicitly, the company's buccaneer CEO Harold Geneen, for falsifying the insurance claims and lying to Congress.

Given powerful evidence against the companies, OPIC at first refused them compensation - and the Justice Department indicted two mid-level ITT operatives for perjury. But ultimately, the companies received their money and the executives went free on the not unreasonable defense that they were working with the full knowledge and cooperation of the CIA - and higher. In September 1970, in a secret cable to the US Secretary of State, Ambassador Korry quotes Jean Genet, "Even if my hands were full of truths, I wouldn't open it for others." Why open his hand now? At the age of 77, one supposes there is the tempting, though impossible, desire to correct history. The old diplomat himself says only that it is important to take out of the shadows what he calls - a bit optimistically - the last case of US "dollar diplomacy".

And the Ignoble Prize in Chemistry Goes to ...

In May 1999 a cache of documents fell out of a low-flying aeroplane and oil to my desk. However they ended up in my possession, they certainly came by an interesting route: from the flies of WTO food safety regulators where they had been filched by US functionaries and passed under the table to Monsanto Corporation. This was fresh evidence of a dangerous new epidemic: the infection of science by corporate cash.

Thirty-seven per cent of Americans over the age of 15 find sexual intercourse painful, difficult to perform or plain just don't feel like doing it. Who says so? Doctors Edward Laumann and Raymond Rosen, that's who. And because they said it in JAMA, the prestigious Journal of the American Medical Association, the story had enough white-lab-coat credibility to pop up in every US newspaper suffering from Monica Lewinsky withdrawal pains.

Oh, did I forget to mention that the study's authors previously worked for Pfizer, maker of Viagra? JAMA forgot to mention it as well.

Maybe you don't care whether Americans are hot or not. But contamination by cash affects research on several other organs. Calcium channel blocking drugs reduce the risk of heart disease. But they may have an unfortunate side effect: they could give you a heart attack. But don't worry: an avalanche of learned articles in medical journals vouch for the drugs' safety and efficacy. Now worry: according to an investigation by the New England Journal of Medicine, 100 per cent of the scientists supporting the drugs received financial benefits from pharmaceutical companies, 96 per cent from the manufacturers of these channel blockers. Only two out of 70 articles disclosed drug company ties to authors' bank accounts.

Surreptitiously putting a hunk of the scientific community on its payroll can help a manufacturer win government approval for human and animal drugs. But when suborning conflicts of interest fails to do the trick, one US manufacturer, Monsanto Company, turns to more proactive means of influencing regulators.

The Observer had received copies of letters, memoranda and meeting notes indicating that Monsanto obtained crucial restricted documents from a key international regulatory committee investigating the company's controversial bovine growth hormone, called BST. A shot of BST boosts a cow's milk output. But European and American experts say BST has such yummy side-effects as increasing the amount of pus in milk, promoting infection in cow udders and potentially increasing the risk of breast and prostate cancer in humans who drink BST-laced milk.

According to an internal Canadian health ministry memo dated November 1997, Monsanto got its hands on advance copies of three volumes of position papers intended for review in closed meetings of the UN World Health Organization's Joint Experts Committee on Food Additives. This is one valuable set of documents. The European Community's ban on the genetically altered hormone was set to expire in 1999. The Experts Committee advises the international commission which votes whether to add Monsanto BST to something called the Codex Alimentarius, the international list of approved food additives. Codex listing would make it difficult for nations to block imports of BST-boosted foods.

Monsanto's cache included confidential submissions by the EC's Directors General for food and agriculture as well as analysis by British pharmacologist John Verrall.

I spoke with Verrall just after he learned his commentary was passed to Monsanto. Verrall was stunned not just by selective release of reports he believed confidential - participants sign non-disclosure statements about the proceedings but by the source of the leak. The memo identifies Monsanto's conduit from the UN experts' committee as Dr Nick Weber of the US Food and Drug Administration (FDA). Dr Weber, it turns out, works at the FDA under the supervision of Margaret Miller. Dr Miller, before joining government, headed a Monsanto laboratory studying and promoting BST.

After scouring the purloined Committee documents, Monsanto faxed a warning to company allies in government that one participant on the Experts Committee, Dr Michael Hansen, "is not completely on board". Indeed he was not. Hansen was furious. A BST expert with the Consumers' Policy Institute, Washington, Hansen interprets the memos to mean that some US and Canadian authorities, supposedly acting as objective, unaffiliated scientists, were in fact working in cahoots with Monsanto as advocates for the producer.

Other memos discuss plans by US and Canadian officials sympathetic to Monsanto, to "share their communication strategy" with industry. The plan was to lobby members of the Experts Committee. Monsanto would secretly provide help in preparing a response to critics of BST ahead of the vote of the experts panel scheduled for February 1998. Whether the scheme using inside information affected the outcome, we don't know. We do know Monsanto won that vote.

Because proceedings were confidential, we cannot know how a majority overcame objections of known dissenters. But we can presume Monsanto was not harmed by the late addition of BST defender Dr Len Ritter to the deliberations. An intraoffice memo obtained from Canada's Bureau of Veterinary Drugs states that Dr Ritter's name was subtly suggested to the bureau's director in an August 1997 phone call from Dr David Kowalczyk, Monsanto's regulatory affairs honcho. Of course, there is not much value to Monsanto in obtaining government approvals to sell BST-laden milk if no one will buy the stuff. Luckily for Monsanto, the US FDA not only refuses to require labelling hormone-laced products, but in 1994 published a rule which effectively barred dairies from printing "BST-free" on milk products. This strange milk carton exception to America's Bill of Rights was signed by Michael Taylor, deputy to the FDA Commissioner. Prior to joining the US agency, Taylor practiced law with the firm of King & Spalding, where he represented Monsanto. Taylor, no longer in government, did not return our calls to his office at his current employer - Monsanto Washington.

Monsanto does not just place friends in government, it likes to make friends. Canadian Health Ministry researcher Dr Margaret Haydon told me Monsanto offered her bureau $1-2 million in a 1994 meeting in return for their authorizing the sale of BST. Monsanto counters the funds were proffered solely to support the cash-strapped agency's research. When asked if he considered the Monsanto offer "a bribe", Haydon's supervisor replied, "Certainly!" though he said he laughed off the proposal.

No one's laughing now. Haydon and five other government scientists filed an extraordinary plea with Canada's industrial tribunal seeking protection for their jobs and careers. They fear retaliation for ripping the cover off longhidden, highly damaging facts about BST. America's rush to approve the hormone in 1993 rested on a study published in the journal Science by FDA researchers, which concluded there were no "significant changes" in BST-fed rats. The rats tell a different tale. Their autopsies revealed thyroid cysts, prostate problems and signs of BST invading their blood. The Monsantosponsored US researchers failed to publish these facts and the FDA sealed the full study, saying its public release would "irreparably harm" Monsanto. Indeed it would.

The Canadian scientists, finally winning access to the full study, blew the whistle on the rat cover-up. The facts became public via their labor board action, a decade after the original, misleading report. By then BST had received US FDA approval as safe.

I regret singling out Monsanto if only because I'm left with so little room to honour other corporate nominees for the Ignoble Prize in Chemistry. BST expert John Verrall, a member of the UK Food Ethics Council, says the Monsanto episode only illustrates a trend in which "Multinational corporations have let morals slide down the scale of priorities." He concludes - in what must be a sly reference to Monica Lewinsky - "The white coat of science has been stained."

A Well-Designed Disaster: The Untold Story of the Exxon Valdez

On March 24, 1989, The Exxon Valdez broke open and covered 1,200 miles of Alaska's shoreline with oily sludge.

The land smeared and destroyed belongs to the Chugach Natives of the Prince William Sound, the last people in America who lived substantially off what they hunt and catch. Within days of the spill, the Chugach tribal corporation asked me to investigate allegations of fraud by Exxon and the little known "Alyeska' consortium. In three years' digging, my team followed a 20-year train of doctored safety records, illicit deals between oil company chiefs and programmatic harassment of witnesses. And we documented the oil majors' brilliant success in that old American sport, cheating the Natives. Our summary of evidence ran to four volumes.

Virtually none of it was reported. The official story remains "Drunken Skipper Hits Reef". Don't believe it.

In fact, when the ship hit, Joe Hazelwood was not near the wheel, but below decks, sleeping off his bender. The man left at the helm, the Third Mate, would never have hit Bligh Reef had he simply looked at his Raycas radar. But he could not, because the radar was not turned on. The complex Raycas system costs a lot to operate, so frugal Exxon management left it broken and useless for the entire year before the grounding.

There's more to the Exxon Valdez story you've never been told.

¥ "Alyeska" is the six-company oil group that owns the pipeline and runs the tankers. We discovered an internal memo describing a secret, toplevel meeting of the group in Arizona held just ten months before the spill. There, the chief of their Valdez Operations, Theo Polasek, warned executives that it was "not possible" to contain an oil spill in the center of the Prince William Sound - exactly where the Exxon Valdez grounded. Polasek needed millions of dollars for spill containment equipment. The law required it, the companies promised it to regulators, then at the meeting, the proposed spending was voted down.

¥ Smaller spills before the Exxon disaster could have alerted government watchdogs that the port's oil spill-containment system was not up to scratch. But the oil group's lab technician, Erlene Blake, told me that management routinely ordered her to change test results to eliminate "oil-in-water" readings. The procedure was simple, says Blake. She was told to dump out oily water and re-fill test tubes from a bucket of cleansed sea water, which they called "The Miracle Barrel".

¥ A confidential letter dated April 1984, fully four years before the big spill, written by Captain James Woodle, then the oil group's Valdez Port commander, warns management that, "Due to a reduction in manning, age of equipment, limited training and lack of personnel, serious doubt exists that [we] would be able to contain and clean up effectively a medium or large size oil spill." Woodle told me there was a spill at Valdez before the Exxon collision, though not nearly as large. When he prepared to report it to the government, his supervisor forced him to take back the notice, with the Orwellian command, "You made a mistake. This was not an oil spill."

The canard of the alcoholic captain has provided effective camouflage for British Petroleum's involvement in the environmental catastrophe that Exxon Valdez caused. Alaska's oil is BP oil. The company owns and controls a majority of the Alaska pipeline system. Exxon is a junior partner, and four others are just along for the ride. Captain Woodle, Technician Blake, Vice-President Polasek, all worked for BP's Alyeska.

When it comes to oil spills, the name of the game is "containment" because, radar or not, some tanker somewhere will hit the rocks. Failure to contain the Exxon Valdez spreading oil is what destroyed the coastline.

Quite naturally, British Petroleum has never rushed to have its name associated with Alyeska's destructive recklessness. But BP's London headquarters, I discovered, learned of the alleged falsification of reports to the US government nine years before the spill. In September 1984, independent oil shipper Charles Hamel of Washington DC, shaken by evidence he received from Alyeska employees, told me he took the first available Concorde, at his own expense, to warn BP executives in London about scandalous goings-on in Valdez. Furthermore, Captain Woodle swears he personally delivered his list of missing equipment and "phantom" personnel directly into the hands of BP's Alaska chief, George Nelson.

BP has never been eager for Woodle's letter, Hamel's London trip and many other warnings of the deteriorating containment system to see the light of day. When Alyeska got wind of Woodle's complaints, they responded by showing Woodle a file of his marital infidelities (all bogus), then offered him pay-outs on condition that he leave the state within days, promising never to return.

As to Hamel, the oil shipping broker, BP in London thanked him. Then a secret campaign was launched to hound him out of the industry. A CIA expert was hired who wiretapped Hamel's phone lines. They smuggled microphones into his home, intercepted his mail and tried to entrap him with young women. The industrial espionage caper was personally ordered and controlled by BP executive James Hermiller, president of Alyeska. On this caper, they were caught. A US federal judge told Alyeska this conduct was "reminiscent of Nazi Germany".

BP's inglorious role in the Alaskan oil game began in 1969 when the oil group bought the most valuable real estate in all Alaska, the Valdez oil terminal land, from the Chugach Natives. BP and the Alyeska group paid the natives one dollar.

Arthur Goldberg, once a US Supreme Court justice, tried to help the Natives on their land claim. But the Natives' own lawyer, the state's most powerful legislator, advised them against pressing for payment. Later, he became Alyeska's lawyer.

The Natives, who lived off what they hunted and caught, did extract written promises from the oil consortium to keep the Prince William Sound safe from oil spills. These wilderness seal hunters and fishermen knew the arctic sea. They demanded that tankers carry state-of-the-art radar and that emergency vessels escort the tankers. The oil companies put all this in their government approved 1973 Oil Spill Response Plan.

Yet, when the tanker struck Bligh Reef, the spill equipment - which could have prevented the catastrophe - wasn't there. (An Alyeska honcho said he was afraid the natives would steal it.) The promised escort ships were not assigned to ride with the tankers until after the spill. And the night the Exxon Valdez grounded, the emergency spill-response barge which carries oil-containment barriers and pumps was sitting in a dry dock in Valdez locked in ice. We found letters to the government from the oil companies swearing, just before the spill, they would not ship oil unless the emergency barge was in the water, ready to go.

When the pipeline opened in 1974, the law required Alyeska to maintain round-the-clock oil spill response teams. As part of the come-on to get hold of the Chugach's Valdez property, Alyeska hired the natives for this emergency work. The Natives practiced leaping out of helicopters into icy water, learning to surround leaking boats with rubber barriers. But the Natives soon found they were assigned to cover up spills, not clean them up. Their foreman, David Decker, told me he was expected to report one oil spill as two gallons when 2,000 gallons had spilled.

Alyeska kept the Natives at the terminal for two years - long enough to help break the strike of the dock workers union then quietly sacked the entire team. To deflect inquisitive inspectors looking for the spill teams, Alyeska created sham emergency teams, listing names of oil terminal workers who had not the foggiest idea how to use spill equipment, which, in any event, was missing, broken or existed only on paper. When the Exxon Valdez grounded, there was no Native spill crew, only chaos.

Nearly a decade ago, a jury ordered Exxon to pay $S billion, though the petroleum giant stalls payment through legal maneuvers. The BP-led Alyeska. consortium was able to settle all claims for 2 per cent of the acknowledged damage, roughly a $50 million pay-out, fully covered by an insurance fund.

The Fable of the Drunken Skipper has served the oil industry well. It transforms the most destructive oil spill in history into a tale of human frailty, a terrible, but one-time, accident. But broken radar, missing equipment, phantom spill personnel, faked tests - all of it to cut costs and lift bottom lines - made the spill disaster not an accident but an inevitability.

I went back to the Sound just before the tenth anniversary of the spill. On Chenega, they were preparing to spend another summer scrubbing rocks. A decade after the spill, in one season, they pulled 20 tons of sludge off their beaches. At Nanwalek village ten years on, the state again declared the clams inedible, poisoned by "persistent hydrocarbons". Salmon still carry abscesses and tumours, the herring never returned and the sea lion rookery at Montague Island remains silent and empty.

But despite what my eyes see, I must have it wrong, because right here in an Exxon brochure it says, "The water is clean and plant, animal and sea life are healthy and abundant."

Today

Go to the Sound today, on Chugach land, kick over a rock and it smells like a gas station. As to my four-volume summary of evidence of frauds committed against the Natives: in 1991, when herring failed to appear and fishing in the Sound collapsed, the tribal corporation went bankrupt and my files became, effectively, useless.

Coda: Nanwalek Rocks

A longer version of the following story was nearly censored out of Index on Censorship. The magazine had hired a guest editor for the "Tribes" issue, an amateur anthropologist. He'd been to the same group of Alaskan villages where I worked. The Natives performed their special ceremony for him. Among themselves they call it "Putting on the feathers". in which they provide those quaint and expected lines which so please the earnest white men with 16 mm Airflex cameras and digital tape recorders.

He wrote down "healing poems' about 'our friend the bear'. I imagined him with helmet and pukka shorts preserving in his leather notebook the words of the ancient, wizened Injuns. Stanley Livingstone meets Pocahontas.

It was my terrible, self-inflicted misfortune to spoil this delicate idyll of the Noble Savage by my reporting that Alaskan Natives are, in fact, very much like us, if not more so.

At the far side of Alaska's Kenai Fjord glacier, a heavily armed and musically original rock-and-roll band held lock-down control of the politics and treasury of Nanwalek, a Chugach Native village, when I first went to work there in 1989.

According to not-so-old legend, rock came to the remote enclave at the bottom of Prince William Sound in the 1950s when Chief Vincent Kvasnikoff found an electric guitar washed up on the beach. By the next morning, he had mastered the instrument sufficiently to perform passable covers of Elvis tunes. Of all the lies the Natives told me over the years, this one, from the Chief himself, seemed the most benign.

We sat in the Chief's kitchen facing an elaborate Orthodox altar. Russian icons spread the length of the wall. It was a golden day, late summer at the end of the salmon run, but the Chief's 18-year-old nephew hung out in the bungalow watching a repeating loop of Fred Astaire movies on the satellite TV.

Fishing was just excellent, the Chief assured me. He'd taken twelve seals that year. I didn't challenge the old man, legless in his wheelchair. Everyone knew he'd lost his boat when the bank repossessed his commercial fishing licence. The village once had eight commercial boats, now it had three. Besides, all the seal had been poisoned eight years earlier, in 1989, by Exxon's oil.

It took,an entire 'Month for the oil slick from the Exxon Valdez to reach Nanwalek. Despite the known, unrelenting advance of the oil sheet, Exxon had not provided even simple rubber barriers to protect the inlets to the five lakes that spawned the salmon and fed the razor clams, sea lions, bidarki snails, seals and people of the isolated village on the ice. But when the oil did arrive, followed by television crews, Exxon put virtually the entire populace of 270 on its payroll.

"The place went wild," Lisa Moonan told me. "They gave us rags and buckets, $16-something an hour to wipe off rocks, to baby-sit our own children." In this roadless village that had survived with little cash or storebought food, the Chief's sister told me, "They flew in frozen pizza, satellite dishes. Guys who were on sobriety started drinking all night, beating up their wives. I mean, all that money. Man, people just went berserk."

With the catch dead, the banks took the few boats they had, and Chief Vincent's sister, Sally Kvasnikoff Ash, watched the village slide into an alcoholand drug-soaked lethargy. Sally said, "I felt like my skin was peeling off." Nanwalek's natives call themselves Sugestoon, Real People. "After the oil I thought, this is it. We're over. Sugestoon, we're gone unless something happens. "

Sally made something happen. In August 1995, the village women swept the all-male tribal council from office in an electoral coup plotted partly in the native tongue, which the men had forgotten. Sally, who's Sugestoon name Aqniaqnaq means "First Sister", would have become Chief if Vincent, she says, hadn't stolen two votes. The rockers, Chief Vincent's sons ' were out - so was booze (banned), fast food and the band's party nights in accordance with the new women's council cultural revolutionary diktats. The women returned Native language to the school and replaced at least some of Kvasnikoff's allnight jam sessions, which had a tendency to end in drunken brawls, with performances of the traditional Seal and Killer Whale dances.

They put the village on a health food regime. "We're fat," says First Sister, who blames the store-bought diet which, since the spill, must be flown in twice-weekly from city supermarkets. To show they meant business on the alcohol ban, the women arrested and jailed Sally's disabled Uncle Mack for bringing a six-pack of beer into the village on his return from the hospital.

On Good Friday 1964, the snow-peaked mountains of Montague Island rose 26 feet in the air, then dropped back twelve feet, sending a tidal wave through the Prince William Sound. At the village of Chenega, Chugach seal hunter Nikolas Kompkoff ran his four daughters out of their stilt house, already twisted to sticks by the earthquake, and raced up an icecovered slope. Just before the wall of water overcame them, he grabbed the two girls closest, one child under each arm, ran ahead, then watched his other two daughters wash out into the Sound.

Chenega disappeared. Not one of their homes, not even the sturdier church, remained. A third of the Natives drowned. Survivors waited for two days until a postal pilot remembered the remote village.

Over the following 20 years, Chenegans scattered across the Sound, some to temporary huts in other Chugach villages, others to city life in Anchorage. But every Holy Week, these families sailed to the old village, laid crosses on the decaying debris, and Kompkoff would announce another plan to rebuild. Over the years, as the prospect of a New Chenega. receded into improbability, Nikolas became, in turn, an Orthodox priest, a notorious alcoholic and failed suicide. He survived a self-inflicted gun shot to the head. He was defrocked for the attempt.

In 1982, Nikolas convinced his nephew, Larry Evanoff, to spend his life savings building a boat that could traverse the Sound.

Evanoff has four long scars across his torso. These wounds from Vietnam helped him get a government job as an air traffic controller in Anchorage, but he was fired when his union went on strike. Larry had lost both his parents in the earthquake.

Larry's boat was not finished until the sub-arctic winter had set in. Nevertheless, he sailed to remote Evans Island with his wife and two children, aged 9 and 14. They built a cabin and, for two years, without phone or shortwave radio, 100 miles from any road, lived off nearby seal, bear and salmon while they cleared the land for New Chenega. Over the next seven years, 26 of Chenega's refugee families joined the Evanoffs, built their own homes and, with scrap wood from an abandoned herring saltery, built a tiny church with a blue roof for Nikolas, whom they still called "Father".

On March 24, 1989, the village commemorated the twenty-fifth anniversary of the tidal wave. That night, the Exxon Valdez oil tanker ran aground and killed the fish, smothered the clam beds and poisoned all the seal on which Chenegans subsisted.

In mid-century, the average life expectancy for Chugach Natives was 38 years. They had next to nothing by way of cash and the state moved to take even that away. In the 1970s, new "limited entry" laws barred them from selling the catch from their traditional fishing grounds unless they purchased permits few could afford. The Natives did have tenuous ownership of wilderness, villages and campsites. In 1969, America's largest oil deposit was discovered on Alaska's north slope. The Chugach campsite on Valdez harbour happened to be the only place on the entire Alaska coast that could geologically support an oil tanker terminal. Their strip of land grew in value to tens or even hundreds of millions of dollars. In June of that year, Chief Vincent's father Sarjius representing Nanwalek and Father Nikolas representing the nonexistent Chenega agreed to sell Valdez to British Petroleum and Humble Oil (later called "Exxon") - for one dollar.

The Alaskan Natives could not afford to hire legal counsel, so they were truly grateful when Clifford Groh, head of Alaska's Republican Party and the most powerful attorney in Alaska, volunteered to represent them without charge against the oil companies. Some months after signing the one dollar sale of Valdez, Groh took on work representing his biggest client yet, "Alyeska", the Exxon-BP oil pipeline consortium.

But before he was done with the Chugach, Groh transformed them utterly and forever. No longer would Chugach be a tribe. Groh incorporated them. The tribe became Chugach Corporation. The villages became Chenega Corporation and English Bay (Nanwalek) Corporation. The chiefs'powers were taken over by corporate presidents and CEOs, tribal councils by Boards of Directors. The Sound's natives, once tribe members, became shareholders - at least for a few years until the stock was sold, bequeathed, dispersed. Today, only eleven of Chenega's 69 shareholders live in the island. Most residents are tenants of a corporation whose last annual meeting was held in Seattle, 2,000 miles from the island.

I first met the president of Chenega Corporation, Charles "Chuck" Totemoff, soon after the spill when he missed our meeting to negotiate with Exxon. I found the twenty-something wandering the village's dirt pathway in soiled jeans, stoned and hung over, avoiding the corporate "office", an old cabin near the fishing dock.

Years later, I met up with Chuck at Chenega Corporation's glass and steel office tower in downtown Anchorage. The stern, long-sober and determined executive sat behind a mahogany desk and unused laptop computer. Instead of photos of the village, a huge map of Chenega's property covered the wall, color-coded for timber logging, real estate subdivision and resort development. He had penned a multi-million dollar terminal services agreement with the Exxon-BP pipeline consortium. For Chenega island, a 46-room hotel was in the works.

In 1997, 1 returned to Chenega. It was the worst possible day for a visit. Larry was out on "pad patrol", leading a Native crew cleaning up tons of toxic crude oil still oozing out of Sleepy Bay eight years after the Exxon Valdez grounding. They'd already lost a day of work that week for Frankie Gursky's funeral, an 18-year-old who had shot himself after a drink-fuelled fight with his grandmother.

Larry and his team continued to scour the oil off the beach, his family's old fishing ground, but it wasn't theirs any more. The day before, the Corporation had sold it, along with 90 per cent of Chenega's lands, to an Exxon-BP trust for $23 million.

"Corporation can't sell it," Larry said, when I told him about the check transfer. "People really can't own land." He rammed a hydraulic injector under the beach shingle and pumped in biological dispersants. "The land was always here. We're just passing through. We make use of it, then we just pass it on."

Nanwalek also sold. Chief Vincent's son leader of the rock band and director of the corporate board, arranged, just before his death from AIDS, to sell 50 per cent of the village land to an Exxon trust.

I was in Corporate President Totemoff's office the day Exxon wired in the $23 million. When Totemoff moved out of the village, he announced, "I hope I never have to see this place again." Now he doesn't have to. I asked Chuck if, like some city-dwelling natives, he had his relatives ship him traditional foods. "Seal meat?" He grinned, "Ever smell that shit? Give me a Big Mac any time."

California Reamin': Hunting the Power Pirates from Pakistan to the Golden Gate, the Untold Story of Electricity Deregulation

On April 10, 1989, Jacob "Jake" Horton, senior vice-president of Southern Company's Gulf Power Unit, boarded the company jet to confront his Board of Directors over accusations of illegal payments to local politicians. Minutes after take-off, the plane exploded. Later that day, police received an anonymous call, "You can stop investigating GuIf Power now."

I had just begun my own investigation of Southern Company for a Georgia consumer organization which would lay the foundation for a series of screeds in the Guardian, New York Times, Washington Post, La Republica (Peru) and Financial Times on the deregulation of the power markets worldwide. Here's the latest.

Just before George W. Bush took office in 2001, the lights in San Francisco blinkered out. Wholesale electricity prices in California rose on some days by 7,000 per cent. San Francisco's power company declared bankruptcy. Within days of his inauguration, the new president declared an "energy crisis" and proposed laws to wipe away all regulation, economic and environmental, on electricity markets. At first, it was billed as the magic potion to end black-outs; then after the horrors of September 11, 2001, Bush's energy plan was remarketed as a weapon against Middle East terrorists. Alternatively, nastyminded readers may believe the president's energy program is just some pea-brained scheme to pay off his oil company buddies, fry the planet and smother Mother Earth in coal ash, petroleum pollutants and nuclear waste. In truth, it's more devious than that.

Under the polluters' wet-dream of an energy plan lies the mystical economics of "electricity deregulation". And behind the smoke of this odd backwater of market theory is a multi-continental war over the ownership and control of $4 trillion in public utility infrastructure, a story that began a decade earlier, with Jake's exploding jet.

In 1989, I was focused on transcripts of Treasury Department tape recordings made a year earlier by accountant Gary Gilman. Wearing a hidden microphone, Gilman recorded his fellow Southern company executives detailing the method by which the company charged customers for $61 million of spare parts which, in fact, had not been used. Like all good accountants, they kept a careful record of the phantom parts in electronic ledgers found in one executive's car. I spent months decoding the accounts, gaining an insight into what would, a decade later, lead to black-outs in 'Frisco and riots in Pakistan.

What you will read now are pieces from several stories on the theory and practice of electricity deregulation. After having seen deregulation eat Britain's electricity consumers alive, it was a no-brainer to predict what it would do to California and elsewhere. Since the turn of the century, US state governments have kept tight lids on utility monopolies' profits. This regulatory system - uniquely open and democratic - was the legacy of the Populists, an armed and angry farmers' movement whose struggle bequeathed to Americans just about the lowest power prices, and highest service quality electricity service in the world - which is, of course, anathema to power company shareholders. In the 1980s, Southern Company was an unremarkable regional electricity company dying of a thousand financial cuts. Consumer groups demanded rightly that electricity companies, including Southern, eat their investments on foolish nuclear plants. Southern showed nothing but cash losses for years.

What about poor Jake? "He saw no other way out," laments former Southern chairman A.W. "Bill" Dahlberg. Dahlberg, who took over after Horton's death, conceived an unorthodox way out for Southern from its regulatory and financial troubles. The plan: the near-bankrupt local company would take over the entire planet's electricity system and, at the same time, completely eliminate from the face of the earth those pesky utility regulations which had crushed his company's fortunes.

California black-outs are just a hiccup on the road to the astonishing success of this astonishing program.

While America's papers were filled with tales of the woes of the two California electric companies bleeding from $12 billion in payments for electricity supplies, virtually nothing was said of the companies collecting their serum. The biggest sellers and traders in the new California and Western market were Enron of Houston, Reliant of Houston and Southern.

The success on Southern's and the Texans' plan for world power conquest (or, if you prefer, "vision for globalization of energy supplies") hinged on Britain. As Keynes noted, the mad rants of men in authority have their origins in the jottings of some forgotten professor of economics. The professor in question here is Dr Stephen Littlechild. In the 1970s, young Stephen cooked up a scheme to replace British government ownership of utilities with something almost every economist before him said simply violated all accepted theorems: a free market in electricity.

The fact that a truly free market didn't exist and can't possibly work did not stop the woman in authority, Mrs Thatcher, from adopting it. In 1990, Professor Littlechild's market, the England-Wales Power Pool, went into business. On paper, it was an academic beauty to behold. In this auction house for kilowatt hours, private power plant owners would ruthlessly bid against each other to cut electricity prices for British consumers.

I can't say for certain whether the market scheme failed in minutes or days, but the pool quickly became a playground for what the industry calls "gaming" - collusion, price gouging and all sorts of sophisticated means of fleecing captive electricity consumers. Ten years of hapless fixes by Littlechild and his successor have failed to stem the tide of rip-offs at the heart of this unfixable system. At the same time, "deregulated" regional electric companies expertly vacuumed the pockets of captive customers.

From their besieged Atlanta headquarters, Southern's executives learned they could charge in "deregulated" England double the price permitted in Georgia. In 1995, Southern bought up England's South Western Electricity Board. This was the first purchase ever by a US power company outside the US, or even outside its own local service area. The cash rolled in and American operators - seeing the UK industry earn five times the profit allowed in the US - soon grabbed the majority of the British electricity sector.

Although Mrs Thatcher's private power market scheme was a poor idea proved worse in practice, the International Monetary Fund and World Bank adopted it as a requirement of every single structural assistance program worldwide. The World Bank's former chief economist, Joe Stiglitz, who once promoted the privatizations for the Bank, told me how their teams would fly into Russia and Asia, preach the wonders of selling electricity markets, "and you could see the wheels turning in the local officials' minds". Here was a means for their corruption "rents" to multiply a thousand-fold. The baksheesh flowed and power systems were privatized from Brazil to Pakistan.

US power buccaneers, led by Southern and Texas companies Enron, Reliant and TXU, grabbed plants and wires on every continent save Antarctica.

But not in the US, not at first. America stubbornly exempted itself from neoliberal "reform", and this rankled the new international players. So the industry's lobbyists, like Columbus bringing back Indians for display from the New World, brought Mrs Thatcher's professors and their wheezing free market contraptions to California. In 1996, the state's legislature, inebriated by long draughts of utility political donations, tossed out a regulatory system which, until then, had provided reasonably cheap, clean, reliable energy to the state. Despite the British disaster, the sun-addled legislators wrote into the law itself the lobbyists' slick line that a "deregulated" market would cut consumer prices by 20 per cent.

My parents sent me their light bill from San Diego. Instead of 20 per cent savings, in the first year of deregulation, their energy charges rose 379 per cent. But before the big bills hit, the new planetary power merchants, using a combination of money muscle and America's penchant to follow first-and-best California, suckered 23 other states into adopting deregulation plans.

SCE and PG&E, California's two big regional electricity distribution companies, wrote a price freeze into the law which permitted them to stuff their accounts with $20 billion in extra revenues as oil prices fell. They sold off their plants to traders and generations who used the games learned in England - "stacking", "cramming" and "false scheduling" - to vacuum SCE's and PG&E's pockets clean. The $12 billion in debt owed to Southern Company and the other deregulated sellers bankrupted PG&E - which immediately came running to the governor for a bail-out. They got it. California consumers will now pony up about $35 billion to pay off the speculators and generating companies. Before their assault on the California beachheads, the power pirates landed in Rio de Janeiro, South America's City of Light. In 1999, 1 received a postcard from Rio, which was completely black. "Cariocis" (Rio residents) mailed them in protest against Light, Rio's electricity company, now nicknamed "Dark". The federal government privatized Rio Light, selling it to Electricite de France and Reliant of Houston, Texas. The new owners, who had promised improved service, swiftly axed 40 per cent of the company's workforce. Unfortunately, Rio's electricity system is not fully mapped. Rio Light's electricity workers had kept track of the location of wires and transformers in their heads, When they were booted out by the new Franco-Texas owners, the workers took their mental maps with them. Nearly every day, a new neighborhood went dark. The foreign owners blamed El Ni–o, the weather in the Pacific Ocean. Rio is on the Atlantic,

But for the new foreign owners' consortium, not all was darkness. The windfall from reduced wages and price increases helped the foreign owners hike dividends 1,000 per cent. Rio Light's share price jumped from $300 to $400.

The terms of this asset sell-off are dictated by a hefty document drafted by the US-UK consulting firm of Coopers & Lybrand (now PriceWaterhouse Coopers). While the term "market" is sprinkled throughout, the blueprint is feudal, not capitalist. PriceWaterhouse Coopers divided the nation's saleable infrastructure into legally enforceable monopolies designed to guarantee new, principally foreign, owners super-profits unimpeded by real government control nor by competition. It is patterned on the medieval system of "tax farming" by which, for a one-time payment, kings permitted private tax collectors to pick the peasants clean.

And to whom had the World Bank turned over our energy future? It came down to no more than half a dozen big players. I've introduced you to Southern. The largest power seller identified by the governor of California as a price gouger, the coowner of Rio Light, was Reliant, known as Houston Power & Light before it globalized.(1 should be careful what I say about Reliant. The company maintained a file on me, including a fantasmic profile of my sex life far spicier than the mundane reality. In 1999 Reliant handed this filth file "confidentially" to reporters who dared quote me. Nice guys.) I knew them from reading records of their South Texas nuclear plant. The plant's construction management drilled tiny holes in the ceiling of the workers' locker room and placed three-inch espionagestyle cameras to ferret out the disloyal. If they suspected a worker had filed negative safety reports, they were fired: John Rex for blowing the whistle on forged safety inspection documents; Thomas Saporito for exposing security violations; Ron Goldstein for flagging faked welding records. Other key internationalized power companies besides Reliant include Enron, the largest lifetime donor to George W. Bush's political career and Entergy International of Little Rock, Arkansas, tied to Bill and Hillary Clinton. Interestingly, all three come up in Britain's "Lobbygate" scandal (Chapter 8). Another one of the big players was Entergy International of Little Rock, Arkansas, once a division of a struggling regional electricity company, which started landing huge projects, including ownership of London Electricity following the election of their home-town boy, Bill Clinton, to the White House. Entergy used their connections to sign deals in China; and Entergy's chairman Dahlberg found Peru attractive after that nation's president shut down the elected congress. "They've got a good stable situation there," said the pleased executive. "Sort of a benevolent dictator, which means good, responsible leadership."

Pakistan looked like another Entergy jackpot when, in 1992, the government of Benezir Bhutto, in a manner most strange, agreed to increase the amount Pakistan's power agency would have to pay for electricity from plants partowned by Entergy (10 per cent) and Britain's National Power (40 per cent). Then, in 1998, Bhutto lost the election and the new Pakistan government discovered her secret ownership of posh properties in London. Putting her unexplained riches together with the crazy generous deal with the UK-US power companies, the government in October 1988 charged her and the Western consortium with bribery. Pakistan's new government then ended the high payments to the British-American consortium on the internationally accepted rule of law that contracts allegedly obtained by bribery are unenforceable.

Officially, the IMF and World Bank condemn bribery. Nevertheless, within days of Pakistan's filing corruption charges and cutting payments to the accused British-American power combine, the IMF Bank, at Clinton's and Blair's request, threatened to cut off Pakistan's access to international finance.

Panicked by the threat of economic blockade, Pakistan prepared to collect the cash to pay off the UK-US consortium. On December 22, 1998, Pakistan's military sent 30,000 troops into the nation's power stations. Peter Windsor, National Power's Director of International Operations, told me, "A lot changed since the army moved in. Now we have a situation where we can be paid, they've found a way to collect from the man in the street." Yes, at gunpoint, trade union lawyer Abdul Latif Nizamani told me after his arrest and release following mass demonstrations. (Windsor vehemently denied the bribery charges.)

With Pakistan's army in control of the nation's infrastructure, and acting as guarantor of payment to the multinationals, General Musharraf's final takeover nine months later - a "surprise coup" to Western press - was, in fact, a foregone conclusion to the power plant dispute.

In the months before he left office, President Clinton flew to Pakistan. Shocked congressmen could not understand why Clinton would meet a military dictator not recognized by the US State Department. The answer was the real item on the agenda: higher electricity prices to pay the questionable contracts with the British-American power group. That takes us back to California. I looked into the December 2000 black outs. That month in Southern California the wholesale price of electricity jumped 1,000 per cent over the previous year and the price of natural gas, fuel for the power plants, jumped 1,000 per cent in one week. Power shortage? Nope. The California power grid operator reported that, just over the California border at the "Henry Hub" gas pipeline switching center, you could buy plentiful gas for $1 a therm. A couple miles down the pipeline in California, the price was $ 10.

It turns out two power merchants, which controlled the biggest pipe into California, simply blocked part of the tube. Result: panic, price spikes, blackouts. Market speculators made a half a billion dollars on that cute little maneuver. In all, says a technical report by Dr Anjali Shiffren of the state's grid system, "monopoly rents", "economic withholding" and "physical withholding" were responsible for artificial shortages and excess charges of $6.2 billion in 2000, more in 2001. In other words, California didn't run out of energy, it ran out of supplies of government.

California's governor then borrowed the billions to pay the power pirates and save local electric companies from liquidation. Consumers will pay off this debt for decades. And that is the true wisdom of the deregulated marketplace in electricity: the brilliant method by which profits are privatized and losses socialized.

[Chapter] 5 - Inside Corporate America

For two decades, we've known the name of the enemy. No matter whether Democrat or Republican, Tory or New Labour, politicians compete for their chance to lash him at the whipping post. the bureaucrat, that paunchy apparatchik with the thick rule book, his fat bottom spreading behind a paper-choked desk, scheming of ways to pick the pockets of the productive class and get in the way of business doing business. Even government tells us: the enemy is government. Our only chance of rescue is a cavalry of inventive, creative entrepreneurial private sector samurai, especially the new, cando American corporate eagles,

Wackenhut Corporation, Monsanto, Enron, Reliant, Novartis. These are a few of the knights errant of the New Order. But as Butch said to Sundance, "Who are these guys?" Before we put humanity entirely into their hands and their corporate brothers', it might be wise to better acquaint ourselves with how these organizations, who would govern us better than government, conduct themselves when left to their own devices.

In 1998, I was hired by the Observer to do just that in an ongoing series of investigative and analytical reports titled "Inside Corporate America". My mission was to enter the bodies and souls of US-based multinationals, many you've never heard of, who may soon have extraordinary control of your health, your culture and your freedom.

Gilded Cage: Wackenhut's Free Market in Human Misery

New Mexico's privately operated prisons are filled with America's impoverished, violent outcasts - and those are the guards. That's the warning I took away from confidential documents and from guards who spoke nervously and only on condition their names never appear in print.

In 1999, New Mexico rancher Ralph Garcia, his business ruined by drought, sought to make ends meet by signing on as a guard at the state prison at Santa Rosa run by Wackenhut Corporation of Florida. For $7.95 an hour, Garcia watched over medium security inmates at the Wackenhut's complex. Among the "medium security" were multiple murderers, members of a homicidal neo-Nazi cult and the Mexican Mafia gang. Although he had yet to complete his short training course, Garcia was left alone in a cell block with 60 unlocked prisoners. On August 31, 1999, they took the opportunity to run amuck, stab an inmate, then Garcia, several times.

Why was Garcia left alone among the convicts? Let's begin with Wackenhut's cut-rate Jails'R'Us method of keeping costs down by packing two prisoners into each cell and posting one guard to cover an entire "pod" or block of cells. This reverses the ratio in government prisons - two guards per block, one prisoner per cell. Of course, the state's own prisons are not as "efficient" (read "cheap") as the private firm's. But then, the state hasn't lost a guard in 17 years - where Wackenhut hadn't yet operated 17 months.

Sources told me that just two weeks prior to Garcia's stabbing, a senior employee warned corporate honchos the oneguard system is a death-sentence lottery. The executive's response to the complaint, "We'd rather lose one officer than two."

How does Wackenhut get away with it? It cannot hurt that it put Manny Aragon, the state legislature's Democratic leader, on its payroll as a lobbyist and used an Aragon company to supply concrete for the prison's construction. Isn't that illegal? I asked State Senator Cisco McSorley. The Democratic Senator, a lawyer and vice chairman of the legislature's Judiciary Committee, said, "Of course it is," adding a verbal shrug, "Welcome to New Mexico."

Wackenhut agreed to house, feed, guard and educate inmates for $43 a day. But it can't. Even a government as politically corroded as the Enchanted State's realized Wackenhut had taken them for a ride. New Mexico found it had to maintain a costly force of experienced cops at the ready to enter and lock-down prisons every time Wackenhut's inexperienced "green boots" lost control. A riot in April required 100 state police to smother 200 prisoners with tear gas - and arrest one Wackenhut guard who turned violent. The putative savings of privatization went up in smoke, literally.

The state then threatened to bill Wackenhut for costs if the state had to save the company prison again. In market terms, that proved a deadly disincentive for the private company to seek help. On August 31, during a phone check to the prison, state police heard the sounds of chaos in the background. Wackenhut assured the state all was well. By time the company sent out the May Day call two hours later, officer Garcia had bled to death.

Why so many deaths, so many riots at the Wackenhut prisons? The company spokesman told me, "New Mexico has a rough prison population." No kidding.

We have obtained copies of internal corporate memos, heartbreaking under the circumstances, from line officers pleading for life-saving equipment such as radios with panic buttons. They begged for more personnel. Their memos were written just weeks before Garcia's death.

Before the riots politicians and inspectors had been paraded through what looked like a fully staffed prison. But the inspections were a con because, claim guards, they are ordered to pull 16- and 20-hour shifts for the official displays.

One court official told me with low pay for dangerous work, Wackenhut filled the hiring gap, in some cases, with teenage guards, some too young to qualify for a driver's licence. And because of lax background checks, some excons got on the payroll.

A few kiddie guards and insecure newcomers made up for inexperience by getting macho with the prisoners, slamming them into walls. "Just sickening," a witness told me in confidence. Right after the prison opened, a pack of guards repeatedly kicked a shackled inmate in the head. You might conclude these guards needed closer supervision, but that they had. The deputy warden stood nearby, arms folded. One witness to a beating said the warden told the guards, "When you hit them, I want to hear a thunk." The company fired those guards and removed the warden - to another Wackenhut prison.

Conscientious guards were fed up. Four staged a protest in front of the prison, demanding radios - and union representation. Good luck. The AFL-CIO tagged Wackenhut one of the nation's top union-busting firms. The guards faced dismissal.

Senator McSorley soured on prison privatization. New Mexico, he says, has not yet measured the hole in its Treasury left by the first few months of Wackenhut operations. After the riots, the company dumped 109 of their problem prisoners back on the government which then spent millions to ship them to other states' penitentiaries.

Still, let's-get-tough pols praise Wackenhut's "hard time" philosophy: no electricity outlets for radios, tiny metal cells, lots of lock-down time (which saves on staffing). And, unlike government prisons, there's little or no schooling, job training, library books, although the state paid Wackenhut for these rehab services. The company boasted it could arrange for in-prison computer work, but the few prisoners working sewed jail uniforms for $0.30 an hour. Most are simply left to their metal cages. Brutality is cheap, humanity expensive - in the short run. The chief of the state prison guards' union warns Wackenhut's treating prisoners like dogs ensures they lash out like wolves.

Wackenhut Corporation does not want to be judged by their corrections affiliate only. Fair enough. Following the Exxon Valdez disaster in Alaska, an Exxon-British Petroleum joint venture wiretapped and bugged the home of a whistleblower working with the US Congress. This black bag job was contracted to, designed by and carried out by a Wackenhut team.