Thursday :: Feb 24, 2005

Purchasing The Plantation

by pessimist

During WWII, if a soldier died in action, he was said to have 'bought the farm'. This phrase came about through the life insurance policies each soldier carried being used to pay off the mortgage on the family domecile, commonly a small agricultural holding.

In more current times, similar actions have taken place - and not always with the knowledge or cooperation of the insured:

Dead Peasants - Making a killing

Dan and Rebecca were in a festive mood. Dan was a rotund man. He made his millions convincing government purse holders that awarding contracts to his firm would raise their personal profiles. This evening, however, was not about that source of income. They had just cashed in to the tune of one million dollars. The new windfall was earned by, shall we say, "more interesting means."

Dan feigned a frown, "I have some bad news," Dan said. He stood silent for five seconds. The frown changed into a smile and he added, "but I have some good news too! The bad news is that Joe is dead. He jumped from the balcony of his apartment last night." Dan looked around the table, staring into the eyes of his guests one by one. Some remained emotionless. Some smirked. "Now for the good news!" he announced with a wide smile. "Joe is dead!" Dan raised his glass in triumph. The guests broke out in wild applause.

Michael raised his glass and said, "To Joe, may be burn in hell!"

Everyone was giddy. A number of conversations broke out and the restaurant was filled with excited chatter. Dan picked up his knife and tapped his glass of water again. The crowd fell silent. "I know we've all worked very hard for this day. Josh has put in countless evening stalking Joe online. Cyndy worked enormous hours maintaining the defamation website. My lawyer Phil, spent many hours shutting down Joe's websites, paying off contacts at Gurgle to remove all traces of Joe's name from their cache, and working the IndyMedia circuit to ban Joe's writings. These dedicated workers have made us richer. They deserve a reward. Rebecca!" Dan called.

Rebecca was the director of Dan’s human resources department. She was also his wife. Her access to personnel files provided her with a wealth of information. Rebecca had grown up in poverty, a member of a dysfunctional family. Having become rich by choosing Dan’s dick as her lollipop, she enjoyed a sense of power beyond her wildest childhood dreams. Power had become a drug, money was the root of that power, and her insatiable desire for more and more drove her devious mind to unparalleled lengths. From time to time, her devious plans paid off. This was one of those times.

Rebecca rose from her chair, pulled three envelopes out from her pursue and handed one to Phil, one to Cyndy, and one to Josh. Dan continued. "I would like to express my special thanks to my wife, Rebecca. It was her diligent efforts that uncovered Joe's history of depression. She took the initiative of increasing Joe's insurance. Without her keen observations and hard work none of this would have happened. Let's all give a round of applause to Rebecca!" The crowd of guests broke out in applause, "For she's a jolly good fellow, for she's a jolly good fellow, for she's a jolly good fellow, which nobody can deny…"

"I'd also like to thank the Austin Police Department whose contacts with other law enforcement agencies made tracking and gang stalking Joe all the easier. I have this special check for Officer Smith.

"Now, I'd like you all to enjoy your dinner, take a week to rest and then meet me here next Saturday. Rebecca has made a recent discovery about Nancy, which means there is plenty of work available for everyone.

"Cyndy, you can take the website down now. You’ll need the server for the new job anyway."

Dan sat down. He steepled his hands in a sign of superiority. Desert arrived.

The story presented above is apocryphal, but not so out there that it isn't believeable. Something of this sort had to have gone on at some time in the past, or else this next story couldn't have happened:

Senate passes bill banning 'dead peasants' insurance policies
February 23, 2005

OLYMPIA, Wash. -- Employers would be barred from taking out life insurance on their rank-and-file employees and making themselves the beneficiaries under a bill that passed the Senate Wednesday. The bill, sponsored by Sen. Darlene Fairley, D-Lake Forest Park, passed on a 46-0 vote, with three lawmakers excused. Fairley said there are no companies currently using the practice, but "we want to prevent them from doing this again."

Under the bill, employers would not be able to obtain insurance on employees who are not considered key personnel, such as owners or partners - anyone whose death would cause financial loss to the company. No policy could be taken out on rank-and-file workers unless they gave written consent. If they did not consent, employers could not retaliate against them. "They must agree to it, you have to inform them and not come and harass them if they don't want to be insured by you," Fairley said before the vote.

Last year, Wal-Mart Stores Inc. settled a lawsuit over the practice. The six families who were part of the lawsuit argued that Wal-Mart never told workers about the life insurance policies, something the company disputed. Wal-Mart is one of many large U.S. companies in recent years that have taken out policies on the lives of employees, ranging from executives to workers on the bottom rungs of the pay ladder, with the goal of collecting benefits when the employees die.

Companies call the policies corporate-owned life insurance, or COLIs. Critics call them dead-peasant policies. "It was just a rather sneaky backdoor investment scheme," Fairley said. "The people had no way of knowing that was going on." A similar bill is being considered in the House.

[The bill regulating employer-owned life insurance is [Washington State] Senate Bill 5196 in the Senate and House Bill 1033 in the House.]

Here is a sampling of the benefits accrued by corporations on the lives of their employees:


In the Corporate Greed and Arrogance Beyond Belief department:

* Corporations are now taking out life insurance policies on their low-income employees without the employee's knowledge or consent. These policies are called Corporate-Owned Life Insurance (COLI). But the insurance industry calls them "dead janitor's or dead peasant's insurance."

* An attorney for Hartford Life Insurance, which sells such policies, estimated that one fourth of all Fortune 500 companies have COLI policies on the lives of 5-6 million people. Wal-Mart has taken out COLI on 350,000 employees.

* National Convenience Stores got $250,000 when one of their employees was killed in a robbery. Wal-Mart got $64,000 when an employee died of a heart attack. The families of these employees got nothing.

* Some corporations use COLI money to pay for benefits for their executives. Portland General, a subsidiary of Enron, uses COLI money for supplemental retirement pay for its executives. They have $80 million in a trust fund for this purpose.

* Only 5 states require employee consent for COLI. A bill was recently introduced in Congress, which would require employee consent in all states. But many people believe COLI should be outlawed. Corporations which exploit workers shouldn't be able to benefit from their deaths too.

This is an international problem, as this next article demonstrates:

Jim Sheridan MP Launches Dead Peasants Insurance Bill

West Renfrewshire MP, Jim Sheridan has today (11-11-2003) introduced a Bill in the House of Commons to regulate against employers exploiting the death or loss of limb of their employees. Speaking in the Chamber Mr Sheridan introduced his Ten Minute Rule Bill seeking regulation against what is commonly known in the insurance industry as Dead Peasants Insurance. Working alongside the S.T.U.C, Jim Sheridan is hoping to highlight the immoral practice of employers taking out life insurance for their employees without the employee or their family’s knowledge or consent.

"Companies can then cash in this policy when the employee dies and keep the money for the corporate coffers. This in my view is an obscene practice and has the potential to undermine safety at the work place. I am also seeking to ensure that those companies who indulge in this practice are not afforded any tax exemptions from the Treasury. Trying to identify companies who are operating this practice is proving to be extremely difficult as they are reluctant to disclose any detailed information that they may have. Nonetheless, it is estimated by some industry insiders that these types of policy account for 30% of the life insurance market. I am extremely confident that I will receive cross Party support for this Bill and that the appropriate effective legislation will be introduced."

This next article explains the situation in more detail:


One of the hottest recent discoveries by investigative journalists is the sleazy practice known as "dead peasants’ insurance," which is allegedly used by some of our best known big corporations — such as Wal-Mart and Enron. Officially called Corporate-Owned Life Insurance (COLI), this practice has been going on below the radar since the 1980s, and P&J were turned on to it by our favorite lefty in the bullpen, Dick Walton. P&J agree with Dick Walton when he says, "Just when you thought corporate America could sink no lower, you find that your imagination cannot equal that of these fiends."

Here’s how it works. Big companies with a number of low-paid employees (the practice is also known as "dead janitors’ insurance") buy life insurance on those low-ranking employees — sometimes without their knowledge — to get tax breaks, as well as to collect benefits when a covered employee died. The Atlanta Journal-Constitution reported, "Corporations gain not merely from the tax-free life insurance benefits they receive when current or former employees die, but also can borrow money against these policies. Many companies even deducted the interest on these loans from their taxes." It is legal in some states, but not in others (which have emerged from the ghoulish Dark Ages of squalid business dealings). For some of these companies, death benefits go to pay for executive bonuses and perks.

In an amazing (for them) blur of action, the United States Senate is actually looking into this situation:

S. 219 Could Do More Than Shore Up Pensions
Feb. 4, 2005

The new bill, which would create the National Employee Savings and Trust Equity Guarantee Act, is similar to the NESTEG bill that died in the previous Congress. The new NESTEG bill was introduced by Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, and Sen. Max Baucus, D-Mont., the committee's ranking minority member.

The COLI provision uses the same language that the Senate Finance Committee approved in February 2004. COLI often is used to fund deferred compensation plans for highly paid executives, but members of Congress have heard complaints about some employers profiting from efforts to use COLI to insure rank-and-file employees without the employees' consent. The S. 219 COLI sales guidelines would require that employees insured by COLI policies receive written notices about the coverage and about the possibility that the coverage might continue even after the employees leave their jobs. Insured employees also would have to give their written consent.

Last year, a similar COLI provision had support in the Senate but died in the House.

You may not be able to read S. 219 on the Web right now, because, at press time, the Library of Congress bill posting system had not yet received the text from the Government Printing Office, but the core is a section that is supposed to improve the financial stability of the Pension Benefit Guaranty Corp.

The 8-page press release describing S. 219 is on the Web.

The Library of Congress has posted status information for S. 219 and links to other information about S. 219. Eventually, a link on the status page should bring up the text of the bill.

Fear not, Corporate America! The Best Government Multinational Corporate Contributions Can Buy didn't leave you as the fall guy to eat the costs of this legislation! Here are the benefits awaiting you upon passage of this bill to prevent you from exploiting the lives of your employees:

- Let plan sponsors avoid liability for the investment advice that a qualified investment advisor gives to retirement plan participants.

- Allow employers to deduct up to $1,000 in retirement planning advice fees per year from employees' taxable income.

I can just hear all those retirement investment advice engines roaring to life!

I wonder if Dan and Rebecca will host another party soon? Their wage slaves will be paying for it!

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pessimist :: 8:02 AM :: Comments (7) :: Digg It!