Corporate Welfare: The Empire Of The Pigs

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In his deposition, Robohm recounted the time a top Seaboard executive dropped by his office to ask whether he had set aside money for Bresky in a contract that was being negotiated for a manufacturing plant in Nigeria. Robohm recalled the meeting:

"He said, 'Have you thought about including something in this for Harry?'

"I said, 'No...that thought didn't occur to me.'

"He said, 'You know that these are important considerations when you look at an investment of this size; that you need to have something in this for Harry.'"

Robohm said he told the executive that "that's not the kind of thing that I do." He added that "it wasn't 60 days later that I was taken off that project."

The litigation dragged on for four years. Finally, in 1994, the lawsuit was settled when Seaboard Flour and the Breskys, without admitting "any liability or wrongdoing," agreed to pay $10.8 million to Seaboard Corp. For practical purposes, that meant the Breskys transferred money from the family-owned Seaboard Flour to the publicly traded but still family-controlled Seaboard Corp.

As for Harry Bresky, financial statements filed in the Kahn legal case show that in 1991 he reported a net worth of $84 million. That was back when Seaboard stock was less than half its present value. Like many millionaires, Bresky also enjoyed a comparatively low federal tax rate. On his 1990 U.S. income tax return, he reported adjusted gross income of $2.243 million and paid $503,000 in federal income and Social Security taxes. His effective overall tax rate worked out to 22.4%--just a few percentage points above the 16.8% rate paid by families earning $35,000 a year. Of course, Bresky had 64 times as much income.

From 1990 to 1997, Seaboard Corp. was the beneficiary of at least $150 million in economic incentives from federal, state and local governments to build and staff poultry- and hog-processing plants in the U.S.; insure its operations in foreign countries, and sell its products.

Local (and federal) taxpayers supplied the dollars not just for the outright corporate welfare, but also by picking up the costs of new classrooms and teachers, homelessness, increased crime, dwindling property values and an overall decline in the quality of life.

During those same years, the value of a share of Seaboard stock spiraled from $116 to $387, increasing the worth of the Bresky family holdings in the company from $125 million to $425 million.

Not bad work if you can get it. But you can't.

And that is the inequity of the entire, elaborate jerry-built system of corporate welfare that infects and distorts the American economy. We are all left holding the bill.

--With reporting by Laura Karmatz and Aisha Labi, and research by Joan Levinstein

Last in a series on corporate welfare. This week: the saga of one firm. Reprints of the complete series are available at $1.50 each, with shipping and handling charges of $5 for up to four reprints (reduced rates for multiple-copy orders). To order, please call 1-800-982-0041.

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