Walpole, MA

Ten months ago, Sprawl-Busters first reported the death of a Brazilian immigrant worker during a botched renovation job by an unlicensed crew inside a Walmart in Massachusetts.

Romulo de Oliveira Santos died at the age of 47 on the floor of a Walmart vision center in Walpole, Massachusetts. His muscles were charred, his skin was coagulated, and one-fifth of his body suffered second and third degree burns. There were bruises and cuts on his face, back, arms and hands. According to an autopsy, Santos had been electrocuted. 

This week, the Boston Globe picked up the Santos story in its Business section, noting a similar job site injury and death at Walmart elsewhere in the country. 

On the night of September 8, 2008, Santos was working as part of an inexperienced, unsupervised subcontract crew on a remodeling project at Walmart store #2103 on Providence Highway in Walpole. There was no properly licensed supervisor watching over crew members from Italo Masonries, for whom Santos worked.

Italo had never done demolition work before. Walmart hired a general contractor to oversee the reconstruction of its Vision Center, and that contractor has subbed out the interior demolition to Italo. Santos was working without licensed supervision. 

In 2000, Santos came to America on a work visa to pursue a dream. He wanted to become an electronic technician. Santos enrolled in ESL classes to learn English, and began working on a cleaning crew. Santos would send some of his earnings back to the city of Volta Redonda, Brazil, where his family lived. He was 39 years old when he first entered the U.S. Eight years later, he was inside the Walpole Walmart working a late hour shift—his last.

The construction scene inside the Vision Center was a tangle of unlabeled wires and cords. Walmart had insisted that the remodeling job would proceed while the store remained open. On Santos' last night, the general contractor, electrical contractor, and Italo Masonry all left no supervisors at the site. But several light circuits were left on, because the renovations could be done quicker and easier by leaving the area "hot."

One junction box at the top of a wall was left "hot." Santos arrived at the site just before 10:30 pm—a time when most Walmart shoppers were home in bed. Santos and his coworkers were not warned that a 227-volt circuit powering the overhead lights in the Vision Center had been left live. Santos had no reason to expect that wires behind the walls were hot. It was normal practice that live wires would be clearly marked and labeled, to avoid lethal danger. 

One of Santos' coworkers began tearing down a wall that had been marked for demolition. The crew member, wielding a reciprocating saw, cut through the live wire at the top of the wall. The lights went out, leaving the whole crew in the darkened Vision Center. The crew began to exit the site, when Santos came in contact with the live wire. 

According to witnesses at the scene, Santos moaned in pain, and fell to the floor in between a scissors lift and the wall. A crew member rushed to his side, but Santos died within minutes—badly burned from the trauma.

The federal Occupational Safety and Health Administration (OSHA) issued Walmart an immediate stop work order, and listed numerous violations of federal safety regulations. "Workers were exposed to hazards of arc-flash and arc blast while working on energized parts of the circuit breaker panels without proper personal protective equipment," OSHA wrote. "Employees were exposed to electric shock hazards while performing . . . tasks without de-energizing the circuits."

Attorney Brian A. Joyce of the Joyce Law Group, the firm that is handling a civil lawsuit against Walmart on behalf of the Santos family, says that Romulo's death could have been avoided if Walmart had held its general contractor to its contractual obligation to permit only properly licensed and qualified subcontractors to demolish the Vision Center. Joyce notes that the general contractor has a rap sheet with OSHA for hiring unlicensed contractors. 

"Walmart's callous indifference to the safety of construction workers at the Walpole store is not an isolated incident," Joyce told Sprawl-Busters. Similar construction-related deaths have occurred in Texas, Nebraska, and Indiana. OSHA has cited Walmart in numerous other cases for its negligence in protecting workers.

WHAT YOU CAN DO
"In its ruthless quest to cut prices and maximize profits," Joyce charges, "Walmart allows cutting corners, especially when it comes to safety, and is willing to risk the lives of construction workers to save on costs. When the sadly predictable accidents occur, Walmart remorselessly opposes attempts by the surviving family members to discover what happened, and to seek justice for their lost loved ones."

The family of Romulo de Oliveira Santos has waited for almost three and a half years to see justice done in this case. The sudden death of their son who traveled to America was tragic enough—but Walmart's response since the accident has made the family's ordeal even harder to accept. On February 14, 2011, the Boston law firm hired by Walmart acknowledged in a letter to the Joyce law firm that "an offer of $25,000 was made" to the Santos family by the retailer and its general contractor as compensation for Santos' death. That was one year ago. There has been no movement by Walmart since then. 

Attorney Joyce says Walmart's financial offer is a slap in the face to the Santos family: "If Mr. Santos—who was in excellent health when this tragedy occurred—had worked until his retirement age, he could have had another $1 million in salary alone. Apparently $25,000 is the value that Walmart puts on this man's life."

An everyday low price for a life—from the company that made its fortune on cheap imported products—like the labor of Romulo de Oliveira Santos. 

Readers are urged to call Walmart customer service at 1-800-WALMART to leave the following message: "I'm calling to urge Walmart to settle the case of the subcontracted worker who was electrocuted in your Walpole, Massachusetts store. Your company should pay the family of Mr. Santos a sum that fairly represents the lost wages and benefits Santos would have earned had he not made the mistake of working at Walmart in unsafe conditions."

Oxford, MA

A change in Walmart’s corporate tax status in Massachusetts has triggered a volley of angry reactions from local officials across the state. The town reaction was brought to light recently in several media stories in Pittsfield, Oxford, and other municipalities. 

Walmart currently has 49 stores in Massachusetts, including 12 superstores, 35 discount stores, and two Sam’s clubs. Some of these stores had been classified as “Limited Partnerships.” The entity of record in a number of cities and towns was “Walmart Stores East, LP.” 

But in 2009, a new state law went into effect which included two provisions to close corporate loopholes. One provision, called “combined reporting,” is an accounting system that treats a company with many subsidiaries across many states as just one company, and taxes that company based on the percentage of its business that is in the state, as measured by where its property, payroll and sales are made. 

As Sprawl-Busters explained in a story on April 24, 2008, Walmart hired three lobbying firms to fight combined reporting. The retailer paid $208,678 in 2007 to protect its lucrative tax loophole---five times what the company had spent the previous year on lobbying. In states which have only “separate reporting,” Walmart pays rent to itself through a maze of corporate subsidiaries created in November of 1996, including Real Estate Investment Trusts (REITs). The rent appears as an expense on state tax forms, and is deducted from its taxable revenues. Walmart pays 2.5% of its gross sales monthly as rent to its own REIT, which then wires the money quarterly to a Walmart Property Company in the form of a dividend, which is then paid to Walmart Stores as a tax-exempt “dividends received.” 

All of these transactions are handled through a “cash management agreement” between the parties. Neither the REIT nor the Property Company ever had any employees. The REITs don’t pay taxes, as long as they pay 90% of their income out in dividends to shareholders. In Walmart’s case, the REITs are owned by Walmart subsidiaries, which are registered in Delaware, a state that has no corporate income tax. Walmart gets the benefit of the rent expense, but also gets the benefit of the non-taxed dividend, on the same monies. The dividends escape taxation, and the original rent that created the dividends is deducted from taxable income in the states where the “expense” is incurred.This complex game makes it almost impossible for tax regulators to follow the money.

The second provision of the 2008 Massachusetts law, called “check the box,” requires that businesses must declare themselves as the same classification at the state level as the claim at the federal level. Because Walmart is classified as a corporation at the federal level, it had to reclassify all its Massachusetts stores as corporations also, not as Partnerships. Sprawl-Buster estimated that in 2006, Walmart used these tax dodges to avoid $5.4 million in state taxes. A Walmart spokesman told the Boston Globe, “Anytime there’s a lawful way to reduce our expenses and save money for our customers, we’re aware of it.”

It is not clear how many of Walmart’s stores in Massachusetts were still listed as Limited Partnerships, but Pittsfield, Oxford, Leicester and Ware all have complained to the media that their local revenues had been raided. A Walmart spokesman told the Worcester Telegram-Gazette that the loss of local revenue was the state’s fault: “Walmart is based in Arkansas, is incorporated in Delaware and files taxes as a corporation in Massachusetts. That’s been the case for years. A recently enacted state law adopted federal income tax rules that classify how Walmart and other companies are taxed. As a result, the law treats Walmart as a Massachusetts company for tax purposes.” 

A spokesman for the Massachusetts Department of Revenue countered that as of January, 2009, Walmart had to declare its stores as either Limited Partnerships or Corporations. By choosing corporations, Walmart lowered its personal property taxes at many stores, because the state excise tax on corporate personal property is much lower than the local personal property tax levied by cities and towns. 

DOR told Sprawl-Busters that the municipal personal property tax rate ranges from $12 to $30 per $1,000 valuation, compared to the state excise tax on personal property at only $2.60 per $1,000 valuation in state excise taxes. In Oxford, Leicester and Ware, Walmart paid a total of $277,548 in personal property taxes last year. Most of that sum is no longer taxable.

When the city council in Pittsfield, Massachusetts learned recently that the city was losing $187,000 in personal property taxes due to Walmart’s corporate status change, one city councilor stated: "I think that big box stores, and the benefit for Pittsfield, is negligible," Krol said.

WHAT YOU CAN DO
Walmart claims on its website that it pays $35.5 million in state and local taxes in Massachusetts. There is no way to independently verify this figure, because the amount that Walmart pays to the state as a corporation is private information. There is no way to compare the impact of the combined reporting law on Walmart's total tax bill—but it is clear that the shift from Partnership stores to Corporations will cost local communities hundreds of thousands of dollars in losr tax revenues. 

This frustration drove local officials in the tiny town of Oxford, Massachusetts to vote unanimously this month to ask their state legislators to consider changing the tax code so that towns could benefit from personal property taxes. Such a change is not likely to happen, given the corporate lobby that would oppose it. 

For the forseeable future, Walmart stores in many Massachusetts communities have become much less attractive financially than some local officials had hoped.

Readers are urged to cut and paste this article and email it to your local and city and town officials.

Boston, MA

A well-known asset management firm in Boston has written to Mayor Thomas Menino advising him not to let Walmart into his city. Menino has been an outspoken opponent of a Walmart store in Boston. 

Zevin Asset Management which manages money for institutions, foundations, and other organizations looking for “socially responsible” investments, focuses on well-managed companies with sustainable business practices. That does not include Walmart. 

In a letter to Mayor Menino, dated December 7, 2011, Sonia Kowal, Director of Socially Responsible Investing for Zevin, says that Walmart has a “poor record of corporate citizenship.” Here is Kowal’s letter: 

"Dear Mayor Menino, 

I write to express my firm’s concern over the potential entrance of Walmart into Roxbury. Zevin Asset Management, LLC is a Boston based investment firm which integrates financial and environmental, social, and governance research in making investment decisions on behalf of our clients. We have never held Walmart stock in client portfolios as we think that better investments can be made among its more sustainable peers in the retail sector. 

While Walmart has made some very impressive moves towards waste reduction, truck fleet efficiency, and a sustainability index for its suppliers, we believe that this is more than offset by the negative impact on local communities and the company’s poor track record on worker’s rights issues. 

While we are sympathetic about the need for job creation and low prices for consumers, we believe that Walmart’s presence in a community does not achieve those goals over the long-term. There have been many studies that have shown that when Walmart enters a market, the net effect is to reduce local employment, reduce area wage rates and total payroll, and eliminate other businesses (especially small locally-owned shops) and raise poverty rates. Is this something that Roxbury wants to pursue? 

As I’m sure you are aware, Walmart has been implicated in a significant number of employee-related lawsuits, many of which have received class action status. The lawsuits have alleged violations of wage and hour laws, failure to pay overtime wages, forcing employees to work off the clock, discrimination, and illegal compensation. We believe that the severity and frequency of the incidents are of great concern. Moreover, Walmart continues to adopt contentious tactics to systematically prevent its employees from unionizing, including intimidation of union supporters and store closures where unionization efforts have succeeded. Such methods contravene US labor law as well as two core International Labor Organization (ILO) Human Rights conventions, namely the right to freedom of association and collective bargaining. 

Our continued exclusion of Walmart from our clients’ portfolios is a result of the Company’s poor record of corporate citizenship described above. Our investment process considers these types of factors when making decisions as we believe that over time, a company’s respect for its workers, suppliers, customers, community, and investors, as well as the natural environment contributes to a strong and enduring firm. Based on the Company’s disappointing behavior in other communities, we are concerned that allowing a Walmart in Roxbury would turn out to be a long-term negative for the residents of Boston."

WHAT YOU CAN DO
The University of California, Irvine study quoted above showed that Walmart store openings reduce retail employment by 2.7%, implying that each Walmart employee replaces about 1.4 employees in the rest of the retail sector. 

The 2007 University of California, Berkeley studies found “strong evidence that Walmart entry reduced average and total retail earnings, retail wages, and health benefits for retail workers primarily in urban areas”. 

The 2009 Loyola University study found that the probability of retailers going out of business in the two years after the Walmart opened was significantly higher for establishments close to the studied Walmart location in Chicago. This resulted in an elimination of estimated 300 jobs, roughly equaling the numbers in the new Walmart. 

Sonia Kowal also sent the same letter to Somerville, Massachusetts Mayor Joseph Curtatone, and Watertown, Massachusetts Town Manager Michael Driscoll. These two communities are also engaged in controversial Walmart battles. 

Readers seeking more background on Zevin Asset Management should visit their website at: http://www.zevin.com/index.php, or email them at invest@zevin.com.