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Rights + Justice

How Non-Disclosure Agreements Have Become a Cancer on Democracy

The powerful, from churches to energy companies, pay to keep wrongdoing secret.

Andrew Nikiforuk 18 Oct

Andrew Nikiforuk is an award-winning journalist who has been writing about the energy industry for two decades and is a contributing editor to The Tyee. Find his previous stories here.

The Catholic Church, the oil and gas industry, Donald Trump, Silicon Valley, governments and corporations all share one thing in common — the use of non-disclosure agreements to hide the truth about wrongdoing.

In every case, the offenders offer compensation — to victims of sex abuse, environmental disasters, government corruption.

But only if they agree never to talk about what happened.

The church has used the legal technique to cover up the grotesque sexual abuse of thousands of children by priests for more than three decades.

The oil and gas industry has routinely used non-disclosure agreements (NDAs) over four decades to conceal the gassing of livestock, environmental poisoning and the contamination of groundwater.

The tech industry loves non-disclosure agreements because they prevent former employees from sharing algorithms with competing firms. Some tech non-disclosure agreements even prevent employees from disparaging their employer or former employer.

President Donald Trump embraces non-disclosure agreements as common tools for “celebrities and people of wealth.”

Why should “celebrities and people of wealth” need to buy silence about their predatory sexual behaviour and abuse of power? And why should it be an acceptable legal tactic?

Non-disclosure agreements work just the way they sound.

The contracts bind both the abuser and the abused to secrecy. Sometimes money is involved — a payment to gag the harmed individual.

In exchange the abused person promises to keep silent or face losing the settlement. Monetary penalties for breaching just one condition written in an NDA can be as high as $750,000, or more than the settlement itself.

The Catholic Church, for example, has paid parents to keep quiet about the abuse of their children while the oil and gas industry has paid landowners to shut up about water contamination and other misdeeds.

The routine use of non-disclosure agreements without any consideration of the public or community’s best interests has now become a legal epidemic that undermines the very idea of an open and accountable society.

To date their proliferation has achieved only one thing: a massive erosion of trust in the church, as well as public and corporate institutions.

Unfortunately, NDAs have become as fashionable as fake news, arrogant leaders and tweeting billionaires.

The powerful now use non-disclosure agreements on a daily basis to abuse the powerless. NDAs have become the high-tech way to molest and bury the truth.

According to a 2018 Harvard Business Review article, contracts of silence now bind about one-third of the U.S. workforce. The situation in Canada, a much more secretive society than the U.S., is probably worse.

The author of the Harvard piece, Orly Lobel, a well-known San Diego lawyer and law professor, concluded that corporation’s use of NDAs was “out of control.”

He wrote that NDAs for new employees “demand silence, often broadly worded to protect against speaking up against corporate culture or saying anything that would portray the company and its executives in a negative light.”

Non-disclosure agreements, he added, “also attempt to expand the definitions of secrecy to cover more information than the traditional bounds of trade secret law, in effect preventing an employee from leaving their employer and continuing to work in the same field.”

The history of non-disclosure agreements is short because the legal tool is another toxic byproduct of living in a complex technological society that, by definition, aggressively demands less accountability from those in power.

The Columbia Journalism Review recently noted that mention of the legal tool first appeared in maritime law in the 1940s. High-tech companies such as IBM then employed NDAs to hide tech secrets.

In the 1970s, NDAs became a fixture of the U.S. government to protect so-called national security. The CIA, in particular, doggedly pioneered the use of contracts of silence.

After conducting an illegal spying operation on students and black radicals in the 1960s and 1970s, the CIA had its operatives sign a non-disclosure agreement that said, in part, “I recognize that this project is particularly sensitive, and I will not reveal it to anyone who is not also known to me to be cleared for this information.”

Mark Ames, an U.S. investigator who has tracked the history of non-disclosure agreements, recently wrote that “No one thinks about nondisclosure contracts as a National Security State weapon because they aren’t as sci-fi sexy/scary as the cutting-edge technologies used to spy on people.”

The agreements don’t have the “techno-dystopia novelty” offered by drones and surveillance networks, he wrote. But while “depressingly Old World and anti-climactic,” the contracts are a tool of state power, Ames said.

From the CIA, non-disclosure agreements spread to other government agencies and a host of industries. It should be no surprise that Big Tobacco was an early adopter.

Jeffrey Wigan, the famous whistleblower and subject of the Michael Mann film The Insider, signed a confidentiality agreement as part of his severance package from the industry.

When he went public about hidden industry research on the harmful effects of smoking and was scheduled to appear on the TV show 60 Minutes in 1995, the industry threatened to sue the network, CBS, for “tortious interference” with his contract of silence. His taped interview wasn’t released for several months as the show’s management worried about the threat.

Keeping dangerous secrets

According to the Columbia Journalism Review, contracts of silence have been used to cover up a lot of wrongdoing.

They played a role “in concealing, among other things, the dangers of silicone breast implants, the flaws in a kind of side-mounted gas tank used by GM, and toxic-waste leaks into rivers across America.”

But not much compares to their use by the Catholic Church.

It has employed NDAs as a major tool to cover up its scandalous abuse of power and the serial sexual molestation of thousands of children by priests and bishops around the world over several decades.

Thanks to non-disclosure agreements, the church kept the number of incidents and the cost of settlements secret.

Some experts estimate that the Church has paid out between $400 million and $1 billion over the last 20 years to buy the silence of the abused.

In 1997, for example, the Roman Catholic Diocese of Albany paid $1 million to a citizen who accused a priest of plying him with alcohol and drugs while sexually abusing him for six years.

The settlement bound the abused to secrecy, and it didn’t require the authorization of the diocese’s eight-member board.

The damnable contract of silence insulated the diocese from any accountability and left the abusive priest in his position.

The church has repeated the same immoral behaviour everywhere, but most notoriously in predominately Catholic cities such as Boston and Philadelphia.

In August, a Pennsylvania grand jury report described in harrowing detail how six dioceses in Pennsylvania covered up the abuse of a thousand children by nearly 300 “predator priests.”

The grand jury found that the church had an almost Satanic playbook for concealing the abuse. Documents never mentioned rape but talked about “boundary issues” or “inappropriate contact.” Properly trained and independent personnel never did the investigations. Clerics excused the bad behaviour of fellow clerics.

Last but not least, if a predator’s conduct became known to the community, the grand jury report said, the response was not to “remove him from the priesthood to ensure that no more children will be victimized. Instead, transfer him to a new location where no one will know he is a child abuser.”

Then came the confidentiality agreements.

The grand jury found that various dioceses “had discussions with lawyers regarding the sexual conduct of priests with children and made settlements with victims.”

“These settlements contained confidentiality agreements forbidding victims from speaking about the abuse under threat of some penalty, such as legal action to recover previously paid settlement monies.”

Ryan Philp, a U.S. legal scholar, has argued that the church’s abuse of contracts of silence must end.

“Courts must recognize their duty to scrutinize any agreement that would sacrifice safety in favor of secrecy… the non-disclosure agreements used in the Catholic Church settlements pose obvious dangers to public health and safety by depriving society of vital information.”


A favoured tool for the oil and gas industry

But the Catholic Church is not alone. North America’s oil and gas industry has used NDAs just as religiously for decades.

In the daily business of drilling and fracking, the oil and gas industry makes many mistakes and some result in toxic spills, uncontrolled fractures, earthquakes, leaks from abandoned wells and ruptured pipelines.

As a result farmland is destroyed, water is contaminated and poisonous clouds of gases enter homes or harm livestock. The scale of the abuse is large and affects millions.

I know because I have reported on these incidents for nearly three decades in Alberta and British Columbia and I interviewed scores of abused landowners from Wyoming to Manitoba.

Take fracking for example. It is a highly disruptive technology as the industry injects huge quantities of water, chemicals and sand into the ground to crack rock formations and release hydrocarbons.

But industry can’t always control the direction of the fractures, and many connect to groundwater, the surface or other oil and gas wells.

A 1987 report by the U.S. Environmental Protection Agency documented one of the first cases of fracking resulting in groundwater contamination in West Virginia as early 1982.

Legal settlements sealed by non-disclosure agreements prevented regulators from compiling critical scientific evidence, the EPA said.

“This is typical practice, for instance, in Texas,” the 1987 report stated. “In some cases, the records of well-publicized damage incidents are almost entirely unavailable for review.”

Current and former EPA officials told the New York Times in 2011 they couldn’t assess how severe the problem of groundwater contamination by fracking was because of non-disclosure agreements.

“I still don’t understand why industry should be allowed to hide problems when public safety is at stake,” Carla Greathouse, the lead author of the 1987 EPA report told the Times. “If it’s so safe, let the public review all the cases.”

Greathouse and her colleague found “dozens” of cases that likely involved drinking water contamination related to fracking. But NDAs kept the legal settlements sealed and beyond their reach. Since then regulators and landowners have documented nearly 1,000 cases of groundwater contamination from fracking or leaking wells.

In 2013 Glenn Solomon, a Calgary lawyer, explained how the system of legal settlements and non-disclosures agreements worked in Canada during a recorded conversation with Brent O’Neil, a citizen seeking legal advice for his land-owning mother.

Solomon told O’Neil that most litigation cases involving landowners were resolved with non-disclosure agreements and a payout.

“OK, we damaged your water well. We’ll just set you up with potable water through a tank system forever, because, you know, we just spent a million dollars drilling this well that we made a $100 million on. And it’s costing us an extra $300,000. We’re OK.”

Solomon set out the industry’s attitude, which matches that of the Catholic Church: “‘You know, we don’t need to litigate with you, we don’t even need to know that it was our fault. We’re just happy to pay you. And by the way, by doing that you shut up, the regulators stay off your back, we get to do it again down the street.’ And so that’s the oil company approach.”

An Alberta mother responded to Solomon’s reasoning in The Tyee with this pointed comment. “What are we teaching our kids by signing away their right to freedom of speech? Contaminated water is a public health issue. Water moves, even contaminated water. Gag orders should be illegal.”

In Pennsylvania, politicians and landowners are proposing to amend the state’s Oil and Gas Act to force companies to disclose “the number of non-disclosure agreements the well operator has signed with individuals who have claimed that the operations have harmed their health or contaminated their drinking water or otherwise damaged their property.”

No one really knows how many landowners in North America have signed non-disclosure agreement or, as one Pennsylvania investigation put it, “have traded their freedom of speech over contaminated water.”

But that’s the point. Non-disclosure agreements hide the truth and bury the evidence about the numerous impacts of shale gas drilling or tight oil fracking on rural communities.

The legal technique has made a very dirty industry appear clean, the same way it has tried to scrub a guilty church into some illusion of innocence.

In his review on how the U.S. government and its National Security regime has used non-disclosure agreements, Mark Ames asks some pointed questions that should be heard by every North American politician.

“By their very nature, nondisclosures restrict our liberties, our humanity — why accept them as an unfortunate but unavoidable fact of life? Why is your [the government’s] first instinct to justify or rationalize nondisclosures as necessary? Why is it your job to protect business investments and foster entrepreneurship? Why isn’t your first knee-jerk reaction outrage that our system prioritizes the power of contracts over our individual rights spelled out in the Constitution?”

But the ultimate question for lawyers, judges, the church, industry and government is this.

Why is it all right for powerful institutions and corporations to rely on a legal technique to hide evidence, enshrine lies and banish the truth in our already tarnished democracy?  [Tyee]

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