Dozens of large corporations were assailed by name yesterday for "crosstown hypocrisy" -- telling stockholders that everything is going well while telling federal agencies and courts that environmental and safety and health regulations are about to plow them under.
This habit was said by Ralph Nader and his Public Citizen Inc. to have two purposes: delaying or blocking adoption of the regulations, which may increase costs of decrease profits, while keeping stock prices high and shareholders happy by playing down or not disclosing those regulations' possible financial effects.
The charges were made amid angry shouting and gavel-banging at a hearing of the House Commerce subcommittee on oversight and investigations and in a petition to the Securities and Exchange Commission for new rules to compel disclosures to stockholders consistent with representatives to the Environmental Protection Agency and other bodies.
The petition cites 45 corporations that made purportedly inconsistent disclosures and puts Mead Corp. at the top of a list of "the more egregious examples."
In a March 15, 1979, letter to EPA , Mead said that its costs in meeting proposed regulations for the disposal of hazardous wastes "could greatly exceed $115 million" -- at least $21.2 million more than its 1978 earnings. "Mead and the paper industry simply cannot withstand these intolerably burdens," the letter warned.
Thirteen days later, Mead filed a so-called 10-k report with the SEC. Over the next five years, the report said, Mead would spend far less -- "$40 million to $66 million" -- to comply not merely with the EPA rules, but with all federal, state and local air, water and environmental laws and regulations. a
In Dayton, Ohio, Dudley P. Kircher, director of corporate communications, for Mead, said in a telephone interview that the figures were not inconsistent and that the company had leveled with its stockholders.
The letter to EPA was written in response to an invitation for comment on proposed regulations. From the outset, however, Mead expected that the agency ultimately would adopt less stringent rules, and the form filed with the SEC was consistent with that expectation, Kircher said.
At the subcommittee hearing, Nader said, "Crosstown hypocrisy is when Vepco tells its shareholders that it cannot estimate the cost of . . . proposed hazardous waste regulations and then two weeks later files specific cost estimates with Epa.'
He contrasted the Virginia Electric & Power Co.'s statement in a 10-k form that it could not determine the cost of the regulations, although it said it "may be substantial," with an estimate made to the EPA a week later -- on March 16, 1979 -- that the rules would cost Vepco at least $26.6 million.
In Richmond, a Vepco spokesman called the comments "wrong and uncalled for" and said the statements to stockholders and the EPA were "consistent.
The recriminations at the hearing, gaveled down at one point by subcommittee Chairman Bob Eckhardt (D-Tex.), were between Nader and Rep. Norman F. Lent (R-N.Y.).
Lent accused Nader of conducting "a vendetta against American Industry and indeed the free enterprise system." Nader accused some corporations of waging "a vendetta against the truth." Each accused the other of being a bully and of being misleading.
But Lent accepted a Nader challenge to a debate in the legislator's home district on Long Island, and Eckhardt accepted Lent's proposal to invite officers of the 45 accused companies to testify in "eyeball-to eyeball" confrontations with Nader.
At the same time, Eckhardt rejected as "ridiculous" a request by Lent and Rep. William E. Dannemeyer (R-Calif.) to withhold the Nader petition from the public until the companies have had a chance to reply. The request was made after the petition became a public record at the SEC.
Lent, later joined by Dannemeyer, criticized Nader and two Public Citizen lawyers, Alan B. Morrison and Fredric Townsend, for alleging inconsistencies in statements made by tire manufactures and their trade association in regard to an Occupational Safety and Health Administration standard for benzene, a cancer-causing industrial chemical. Both sides stood fast.