Through the Project on Organizing, Development, Education, and Research (PODER), Ben Cokelet is training Latin American civil society organizations to become community guarantors of corporate transparency and accountability. The key to PODER is local capacity building, which can subsequently promote corporate accountability in a region where the concept is largely underdeveloped.
The New Idea
While working in corporate transparency, labor unions, and large civil society organizations (CSOs) for approximately 10 years in the United States and Mexico, Ben realized that very few actors possessed the strategies necessary to hold corporations accountable for their actions in Latin America. As a result, the concepts of corporate transparency and corporate accountability are much less developed in most Latin American countries, like Mexico, than they are in the U.S. Through his organization PODER, Ben’s goal is to detonate a regional corporate accountability movement centered on local CSOs throughout Latin America, beginning with Mexico, where Ben has worked for years and currently lives.
The crux of PODER’s model balances business intelligence gathering with multi-stakeholder approaches to guarantee corporate accountability. By conducting strategic corporate research through a combination of open sources (i.e. information that is publicly available but sometimes difficult to find) and human sources (i.e. a confidential network of contacts in companies, regulatory agencies, and the media), PODER uncovers information on undisclosed corporate practices and reputational risk factors that can be used as leverage with companies whose actions harm local communities or the environment. By involving various stakeholders like investors, creditors, shareholders, and community members, PODER works to change corporate behavior through strategic pressure from the inside rather than simply through whistle blowing from the outside. Rather than altering the individual attitudes of business executives, Ben’s ultimate goals are to make corporate practices more transparent and empower CSOs in the process.
Ben is convinced that local CSOs are best placed to hold the companies in their communities accountable, particularly because the civil sector rarely has a voice in any business decisions across Latin America today. Using revenue from strategic corporate research for international clients, PODER builds the capacity of local CSOs to gather business intelligence and deploy it strategically in conjunction with other stakeholders to address corporate malfeasance. By embedding PODER staff in these local CSOs for several months, Ben ensures that the CSOs receive the long-term accompaniment necessary to become local corporate accountability partners. Local CSOs will thus gradually become a counterweight to entrenched business and political interests in making business decisions that affect all levels of Latin American society.
Mexico is no exception to consolidated decision-making power, which only a small number of business and political elites hold throughout much of Latin America. For example, the 38 members of the Consejo Mexicano de Hombres de Negocios (Mexican Council of Businessmen) control major conglomerates that together account for an astonishing percentage of Mexican GDP. Through the collaboration and consent of politicians and regulators, crony capitalism undermines equitable economic growth and democracy in a country where democratic institutions are still being strengthened. Decisions of great economic importance, such as contracts for infrastructure projects or television broadcast rights, are routinely made by a small circle of the most powerful corporate executives in Mexico, most of whom are members of the above-mentioned Consejo Mexicano, which currently includes the chief executives of companies such as Bimbo, FEMSA, Televisa, and Banamex.
Corporate transparency and accountability are scarce in Mexico, particularly because company reporting standards required by the Mexican government are lax compared to those in more closely regulated markets like the U.S. For example, most publicly-traded holding companies only report consolidated financial statements for their entire groups rather than breaking them down by subsidiary. Corporate impunity is also a pervasive problem, ranging from white-collar crime to association with organized criminal groups.
The actors that traditionally hold corporations accountable in developed economies either have conflicts of interest or are ineffective in Mexico: government regulators are often impotent against corporate malfeasance or are in collusion with it; the major media outlets are controlled by the same powerful business families; and the judicial system is riddled with inefficiency and corruption. The few CSOs that do work on corporate accountability in Mexico tend to pursue what labor activists call “air campaigns,” which refer to high-level public assaults on a company’s image and reputation that are designed to produce consumer pressure and draw the company into changing its behavior. This strategy, however, rarely produces the desired effects. Many companies, particularly manufacturers, can simply pack up and move their operations elsewhere, leaving behind thousands of unemployed workers. Often these companies have undisclosed financial and legal liabilities that could be used as powerful negotiating tools for investors, creditors, and shareholders. But most human rights, labor, and environmental CSOs lack the expertise to systematically uncover such information, so the public never discovers that these liabilities even exist.
Local CSOs in Mexico do their best to represent community interests, but they have little influence over important business decisions. Even if they were allowed to participate in such negotiations, most local CSOs lack the specialized knowledge required to gain leverage. As a result, Mexican economic growth in the past few decades has not brought attendant income equality; according to the latest available Gini coefficient data, Mexico ranks as the 28th least equal country out of 134 countries worldwide. The benefits of capitalism in Mexico have been significantly distorted by asymmetric power structures.
The cornerstone of PODER’s work is strategic corporate research, or business intelligence gathering, in any of five areas—labor rights, human rights, environmental impact, corporate governance, and illicit activity. PODER’s clients are all large international CSOs or labor organizations that commission specific studies on corporate practices. PODER will often uncover unforeseen information and advise clients on how to use it strategically while guarding the security of everyone involved. Unlike the private sector where firms like Kroll and McKinsey serve clients’ business intelligence needs, few organizations until now have offered strategic corporate research services to the citizen sector. PODER’s target market comprises trade unions, human rights, as well as environmental CSOs that have a presence in Latin America and generally possess annual budgets greater than $1 million, of which Ben estimates there are over one thousand in the U.S alone. Even in the first few years of PODER’s operations, Ben has had to turn down paying clients in areas outside his core target. Ben and his team rely on a confidential network of contacts, whom Ben calls “human sources,” within companies, regulatory agencies, and the media to complement information gleaned from open source information about corporate actions and their consequences. Since 2008, PODER has already conducted $200,000 worth of strategic corporate research and compliance services for ten different paying clients, uncovering previously unknown pieces of information that stakeholders have leveraged with the companies in question.
Besides conducting strategic corporate research, PODER also partners with communities and other stakeholders to alter company behaviors that carry negative social and environmental consequences. Instead of immediately exposing any undisclosed liabilities to the media and antagonizing the companies involved, PODER determines the most effective course of action to take in each individual case. They select from a prioritized menu of tactics, which includes engaging the offending corporation in private; taking collective action against the company with employees and community members; pressuring the company financially by involving investors, creditors, and shareholders; sharing information with the media; and taking legal action, which is always the last resort. By focusing on industries that are not easily outsourced (i.e. such as mining, energy, and ports) or that are located in the most economically important cities, Ben concentrates PODER’s resources on strategic cases where success will have a ripple effect across the national economy. For example, in PODER’s first project in 2008, a large labor organization asked PODER to investigate a Mexican mining accident for which a publicly traded mining and infrastructure conglomerate was ultimately responsible. Ben’s team uncovered numerous strategic leverage points that were shared with shareholders, the media, and even U.S. regulators.
The revenue generated from these paying clients finances the pro bono heart of PODER’s work: the long-term accompaniment and training of local CSOs to become corporate transparency and accountability guarantors. Using a train-the-trainer model, PODER embeds members of its own team in selected local CSOs—often worker or human rights groups—for several months to build these CSOs’ capacities to conduct strategic corporate research on their own and implement multi-stakeholder approaches to pressure companies for change. In the long-term, Ben’s goal is to create a region-wide corporate accountability movement led by the citizen sector in conjunction with investors, shareholders, local community members, and the government. Rather than spending time and money fighting isolated, short-lived campaigns against corporations in Latin America, PODER invests its resources to help local civil society organizations assume long-term responsibility for holding corporations accountable for their actions. In the 2008 mining and infrastructure conglomerate case, for example, Ben used the project revenue to train two Mexican CSOs dedicated to labor rights and transparency in the mining sector, so that they could continue to drive corporate accountability in this field. Three years later, both organizations are still working with PODER in a pro bono capacity.
While much of the information that PODER unearths must be carefully controlled, Ben sees an important opportunity to address the problem of asymmetrical information in markets suffering from lax financial disclosure standards. Part of the reason why corporate accountability is so challenging in Latin America is the limited access that investors and shareholders have to information that could affect their investment decisions. Ben has already begun working on a Web platform that will make some of PODER’s information selectively available for more widespread use. He and his team are developing the “Who’s Who Wiki” that will not only compile information about regional elites and their business interests, but will also allow users to add further information through a wiki feature. Ben’s goal is to create a LexisNexis-like online resource for organizations and individuals working on corporate transparency throughout Latin America.
Ben projects that PODER will grow from serving ten paying clients today to 25 by 2014, with annual revenue of approximately $1.5M, 80% of which will come from project sales and 20% from philanthropic donations. He envisions two field offices in Mexico in addition to the current office in Mexico City and an additional office in South America, where there is also high CSO demand for strategic corporate research. Between 2010 and 2014, PODER plans to work with 30 different local CSOs on corporate accountability capacity building, thus creating a network of local PODER-like organizations with extensive geographic coverage. Through paid contracts and pro bono CSO accompaniment, Ben estimates that PODER will impact the lives of 2 million people in the next five years by improving corporate transparency and accountability in Latin America.
Ben’s passion for corporate transparency and building civil society capacity comes from over a decade of experience as a trade unionist and civil society advocate in the U.S. and Mexico. Even though PODER only came into being with a proof-of-concept project in 2008, Ben’s expertise in corporate accountability springs from a much longer personal and professional history working in this field.
For many years Ben worked on traditional campaigns against multinational corporations, but in 2004 a particular experience in Mexico prompted him to reexamine the actions that most human and labor rights organizations take against the corporate sector. Over the course of a year, Ben managed a campaign against a textile factory in the state of Puebla that was notorious for employee abuse. One day, the factory owners suddenly decided to shut down the operation rather than continue dealing with the workers and their advocates, thus instantly eliminating thousands of jobs. It was a catastrophic result for the workers whose interests the campaign was promoting. Instead of gaining better pay and better working conditions, the workers lost both their jobs and voices necessary to negotiate with factory owners. Ben says that he learned two important lessons from that experience: “Never risk the livelihoods of the economically disadvantaged without knowing what you’re up against, and never wage empty international campaigns without first developing local organizing capacity.”
Two years later, the incarceration of a fellow activist from a partner advocacy organization once again forced Ben to question the effectiveness of traditional anti-corporate tactics. He felt that there was a lack of innovation and creativity in the strategies that were conventionally deployed in the human and labor rights sector and that oftentimes those strategies did not even achieve their stated purpose of protecting workers’ and communities’ rights, particularly when international organizations tried to wage local campaigns without first understanding local culture. Ben decided that the solution lay in empowering local civil sector groups to assume responsibility for corporate accountability in their communities.
In April of 2008, Ben began working as an independent researcher and consultant for large international CSOs, focusing on strategic corporate research paired with multi-stakeholder accountability approaches. That fall, he enrolled in an International Business and International Politics master’s program at New York University to further develop the PODER concept; in the meantime, he hired a small team to continue implementing the idea in Mexico and the U.S. At NYU, Ben was a Catherine B. Reynolds Fellow in Social Entrepreneurship and, in 2009, PODER won NYU Stern School of Business’s prestigious Social Venture Competition and $100,000 in seed funding. In 2010 Ben was named an Echoing Green fellow. Both the recognition and the money have been instrumental in helping Ben to rapidly scale PODER during this initial stage of growth.