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IRS Audited Greenpeace At Request of ExxonMobil-Funded Group

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The Wall Street Journal revealed this week that a little-known watchdog group, largely subsidized by ExxonMobil, was responsible for getting the IRS to audit the environmental organization Greenpeace. We speak with the reporter who broke the story and the head of Greenpeace USA. [includes rush transcript]

The Wall Street Journal revealed this week a little-known watchdog group was responsible for getting the IRS to audit the environmental organization Greenpeace. Two years ago, Public Interest Watch challenged Greenpeace’s tax-exempt status and accused the group of money laundering and other crimes. According to the Journal, tax records show more than 95 percent of the funding of Public Interest Watch was provided by the oil giant ExxonMobil.

On its website, Public Interest Watch says it was founded “in response to the growing misuse of charitable funds by nonprofit organizations and the lack of effort by government agencies to deal with the problem.” The group describes its mission as: “Keeping an Eye on the Self-Appointed Guardians of the Public Interest.”

Greenpeace, meanwhile, has been one of ExxonMobil’s fiercest critics. The group has protested ExxonMobil’s meetings and company gatherings as well as its oil tankers and filling stations. Greenpeace has labeled ExxonMobil the “No. 1 Climate Criminal” over its environmental practices.

  • Steve Stecklow, senior special writer at the Wall Street Journal, he wrote the article about Exxon’s funding of Public Interest Watch. He speaks to us from Boston.
    - Read article by Steve Stecklow
  • John Passacantando, Executive Director of Greenpeace USA.
  • Representatives from ExxonMobil declined to appear on Democracy Now. A spokesperson said the company had nothing further to say on the topic. Public Interest Watch did not respond to our interview request.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Joining us to discuss this story is Steve Stecklow, senior special writer at the Wall Street Journal. He wrote the piece about Exxon’s funding of Public Interest Watch, speaking to us from Boston. Also, in Washington, D.C. studio, John Passacantando, Executive Director of Greenpeace USA. Representatives from ExxonMobil declined to appear on Democracy Now! A spokesperson said the company had nothing further to say on the topic, besides what they said in the Wall Street Journal. Public Interest Watch did not respond to our interview request. Let’s begin with Steve Stecklow. Why don’t you lay out the story?

STEVE STECKLOW: Well, basically, a couple of years ago this fairly little known organization called Public Interest Watch started attacking a number of nonprofits and challenging their tax-exempt status. And their main target was Greenpeace, and they wrote a letter to the Internal Revenue Service, accusing Greenpeace of literally money laundering and crimes and quite serious allegations. And then I got a tip a few months ago that Greenpeace had, in fact, been audited, and I started looking into it, and I discovered this connection with Public Interest Watch and their calls for the audit.

And I did some checking on their tax records, their tax records. They have never disclosed where they receive their funding from, but it turns out that a year ago they filed tax records with the Internal Revenue Service, which showed that in 2003-2004, they received virtually all their money from ExxonMobil. So, anyway, I started doing some checking and did a story on that. This comes against a backdrop where a number of conservative groups have been attacking nonprofits and NGOs over their tax-exempt status. There have been hearings on Capitol Hill. There have been a number of conservative groups in Washington who have been quite critical. So, that’s the backdrop of this.

JUAN GONZALEZ: And, John Passacantando, when did the I.R.S. first approach Greenpeace about the audit? And how did you know about the connection between them and this watchdog group?

JOHN PASSACANTANDO: Well, we didn’t know fully the connection until we — until Steve from the Wall Street Journal called us, interviewing us about the story, but we got notified by the I.R.S. this past December that we were to be audited. Several years prior is when we saw that Public Interest Watch report, making all these erroneous claims about money laundering, very, you know, extreme charges with no factual basis for it. It was clearly propaganda.

Nevertheless, this report was moved around, mostly, I have to say, the Murdoch media chain. We were getting calls from reporters, but always linked to some kind of Murdoch operation, and we would explain. We would say, “Come in. Look at the books. We can show you that this is completely erroneous.” And you would have journalists who actually weren’t interested in looking at the books. They weren’t interested in refuting the claims in this report, so the report went out and it went into what some would call sort of the “rightwing echo chamber.” And it bounced around the world, never honestly in a reputable publication.

We stayed on it. We always had — you know, we’re willing to counter the charges. Then we got some calls from a subcommittee to the House Ways and Means Committee, saying they wanted to look into this more carefully. And we gave them — and now that committee was willing to look at further information. We gave them full disclosure. They came no further. And then, this past December, we got the letter from the I.R.S., saying we were indeed being audited, and the I.R.S. was in our offices for three months.

It’s important to know that we came out of this with flying colors. Greenpeace, in the auditor’s words — and I have to say I think it’s inappropriate the way the I.R.S. came in, but then the audit was done professionally, and the auditor told me, 'This is as clean an operation as I've been in. You guys were transparent and forthcoming, and you should be proud of the way you keep your books.’

AMY GOODMAN: How did the I.R.S. come in, when you say it was inappropriate? Just in terms of what sparked this whole audit?

JOHN PASSACANTANDO: Yes. You know, my initial — my opening question to the auditor was, “Were we a random selection?” If we’re a random selection, that’s appropriate then; that’s the way the I.R.S. should work. There should be that level of scrutiny, but the I.R.S. should not be a tool of the government to silence its critics. The government, meaning the Bush administration and ExxonMobil, who have been tied at the hip in denying, refuting the reality of global warming. Greenpeace has been countering that, been pushing hard on that. ExxonMobil and the Bush administration have been the real gridlock on action to stop global warming.

So, when the auditor came in, one of the very first things he said was — he looked at a picture that we had of a peaceful protest at an Exxon station, where our people were occupying an Exxon station, and he said, “This illegal activity has got to stop.” And I said, “In fact, there is a long precedent of nonprofits using a small amount of their resources to do peaceful activities such as this, from Martin Luther King in the Civil Rights Movement, right up through Randall Robinson’s TransAfrica work.” And I said, “I don’t think you have your facts right, but we’ll give you all the information you need.”

And, of course, we came out of this with flying colors, but the auditor did tell us at the end that the I.R.S. was ultimately responding to this report from Public Interest Watch. In other words, a political — it was a political audit. He said this was indeed a political audit. The lawyers that we worked with to get through this audit told us this has not been happening until the Bush years. The political referrals were not being listened to at the I.R.S., that, indeed, they are now. So, this is a resurgence of this kind of activity, not seen since Richard Nixon was using the I.R.S. to audit his enemy’s list.

JUAN GONZALEZ: Well, Steve Stecklow, I’d like to ask you, the writer at the Wall Street Journal who broke this story, clearly there has been more public concern or attention around these types of audits. Obviously, the NAACP had a much publicized interaction with the I.R.S., as well. Who runs Public Interest Watch, and what are the other kinds of organizations that they have attempted to raise concerns about?

STEVE STECKLOW: Well, Public Interest Watch was founded by a guy named Michael Hardiman who I interviewed, and he’s a Washington-based lobbyist. He’s a Republican. He’s worked for a number of — he’s lobbied on behalf of a number of organizations, including the American Conservative Union and the American Trucking Association. He started the organization in 2002, but it didn’t seem to really gain steam until 2003, when the records show he started to get a lot of money, you know, almost all of it from ExxonMobil.

In fairness, they didn’t simply go after Greenpeace. They went after a number of groups, and some of them wouldn’t — you know, they included, for example, the American Heart Association. Another — but he did go after a number of environmental groups, and one of them was the group down in North Carolina called Dogwood Alliance. They also called for an audit — an I.R.S. audit of Dogwood Alliance, questioning its tax-exempt status, and the head of that organization told me that, in fact, they, too, were audited back in 2004. And, once again, the I.R.S. found that there weren’t problems enough to merit taking away their tax-exempt status. They also went after a few others, but, again, there were at least two that were audited.

Now, whether the I.R.S., in fact, audited Dogwood Alliance, the person there believes that it was because of Public Interest Watch; however, she said that the — unlike in the Greenpeace case, the auditor who was there, who was local, said he didn’t know what had prompted the audit. But they’re convinced, and after I talked to Hardiman, he claimed credit for it, although I have to say, when I first interviewed him, he was not aware that the I.R.S., in fact, had audited either Greenpeace or Dogwood Alliance, and seemed a little surprised. But then, when I spoke with him a second time, he seemed quite proud of the fact and said it showed what great work he did.

AMY GOODMAN: I wanted to turn to John Passacantando, head of Greenpeace USA, and read an excerpt of a piece that came out last year in Mother Jones magazine by Chris Mooney, called ” Some Like It Hot.” It’s about some 40 public policy groups that have this in common: “They seek to undermine the scientific consensus that humans are causing the earth to overheat, and they all get money from ExxonMobil.” And Chris Mooney writes, ”Mother Jones has tallied some 40 ExxonMobil-funded organizations that either have sought to undermine mainstream scientific findings on global climate change or have maintained affiliations with a small group of 'skeptic' scientists who continue to do so. Beyond think tanks, the count also includes quasi-journalistic outlets like (a website providing 'news, analysis, research, and commentary' that received $95,000 from ExxonMobil in 2003), a columnist, and even religious and civil rights groups. In total, [the groups] received more than $8 million between 2000 and 2003…ExxonMobil [chair] and CEO Lee Raymond serves as vice [chair] of the board of trustees for the AEI,” — that’s American Enterprise Institute — “which received $960,000 in funding from ExxonMobil. The AEI-Brookings Institution Joint Center for Regulatory Studies, which officially hosted [writer Michael] Crichton, received another $55,000. When asked about the event, the center’s executive director, Robert Hahn — who’s a fellow with the AEI — defended it, saying, 'Climate science is a field in which reasonable experts can disagree.' (By contrast, on the day of the event, the Brookings Institution posted a scathing critique of Crichton’s book, State of Fear).”

Can you talk about the power of ExxonMobil? And I have to say, I wish they were joining us to talk themselves.

JOHN PASSACANTANDO: Yes, well, and the reason they’re not joining us is their power has been behind the scenes. Their power has been to keep their names off of things, but fund a whole range of groups that literally go out there and deceive the public, in the name — and use names like, you know, Public Interest Watch or some kind of independent think tank. They are Exxon tools. They are funded by Exxon to do Exxon’s bidding, which is to continue to confuse the public in their knowledge of the enormity of what’s coming on us on global warming. I believe that when we’re past this era, and we are indeed reorienting our economy to stop global warming, when we ask, “Why did we wait so long? What was the reason for the delay?” we will know that it was ExxonMobil that held the world back.

Greenpeace’s main role in this, in addition to our protests of ExxonMobil around the world, we built a database to delineate all the money that we could find from ExxonMobil to these groups that are essentially out there lying about global warming, and we put it all online. It’s called, and it’s essentially a website for researchers, and all our documentation is on it, so people can look at it and then go actually find the hard copies of this data and prove it to themselves. Exxon has intentionally spent millions of dollars to deceive the public, to lure us into this complacency, so we wouldn’t worry about global warming, all in order to protect their short-term oil profits. Meanwhile, this storm of damages from global warming is building in strength, and we have an administration and a congress that have looked the other way and have been able to sort of count on a confused American public. And that has been the tragedy of this.

JUAN GONZALEZ: Exxon, of course, can afford to spend that money, having just recently reported $36 billion in profit last year, the greatest profit of any corporation in the history of the world, and a sum larger than the budgets of 123 countries in the world. Your organization has continued to have major confrontations or criticism of ExxonMobil, obviously, over the years. What was the latest, in terms of your organizations having to deal with that?

JOHN PASSACANTANDO: Well, what we’ve continued to do is expose them. When people have leaked us papers, there have been a number of times we have continued to show this link between ExxonMobil and the misinformation in the news. There was an employee at the Council on Environmental Quality, who was editing one of the E.P.A. officials, career official Rick Piltz, who was writing about global warming in a required report coming out of the Bush administration, coming out of our government, and this fellow, Phil Cooney, was editing out all the references to global warming and softening everything. This was revealed. This was broken on 60 Minutes this past Sunday evening.

This particular fellow worked for the American Petroleum Institute before he went into the Bush administration. And then, when it was revealed that he was — when he got caught red-handed editing out this global warming reality from this government report, he was then hired by ExxonMobil. So, we spend a lot of time tracking these people, who they are, where they’ve come from, where they’ve gone, and all roads do lead to ExxonMobil.

AMY GOODMAN: Interesting also, Mother Jones, in that piece, reported that less than a month after President Bush took office, an ExxonMobil lobbyist named Randy Randol sent a memo suggesting certain climate experts from the Clinton administration should be “removed from their positions of influence.” A year later, the Bush administration blocked one of the scientists, Robert Watson, from his post to the Intergovernmental Panel on Climate Change.

JOHN PASSACANTANDO: That’s absolutely right.

AMY GOODMAN: What’s that, John?

JOHN PASSACANTANDO: Our point is that ExxonMobil has played an unbelievably aggressive role. Many of the other big oil companies have backed off of this, don’t want their integrity impugned by getting involved in this kind of nefarious work of essentially lying to the public. ExxonMobil has had a very strong hand in this and has worked very closely with this White House to continue to confuse the American public, so it can continue to stall actions to stop global warming.

AMY GOODMAN: Well, we want to thank you both very much for being with us. John Passacantando, head of Greenpeace USA in Washington, and Steve Stecklow, senior special writer with the Wall Street Journal. We will link to the piece on our website.

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