Union Pacific Sued for Drug Smuggling

(MoneyWatch)  The U.S. Department of Justice filed lawsuits against Union Pacific Railroad Co. this week, seeking $37 million in damages from the rail company for not stopping drug smuggling on its trains. Between 2001 and 2006, customs officials on at least 38 occasions found marijuana or cocaine in rail cars at the U.S.-Mexico border, the suit said. About two tons of marijuana was seized, along with about 117 kilograms of cocaine.

In July, Union Pacific filed a lawsuit of its own against the federal government over the fines and seizure of six rail cars. Donna Kush, a spokeswoman for Union Pacific told the San Diego Union-Tribune the company has no control over its railroad cars in Mexico, and can't take them over until U.S. customs release them at the border. Union Pacific has a 26 percent ownership stake in Ferromex, a Mexican railroad, which was what the rail cars operated under when they were seized with drugs. Kush said Union Pacific can't force inspections on its Mexican partner.

The Department of Homeland Security wants the company to hire a security contractor to work with Ferromex, but Kush told the Los Angeles Times that such a team would be dangerous because it wouldn't be allowed to carry arms and would be powerless against "vicious drug gangs."

It's strange that Union Pacific, with a net income of $2.3 billion, can't find a way to stop drug smuggling before its train cars reach the United States -- or create a better partnership with Ferromex so that the Mexican rail company will. I don't buy the company line about how its hands are tied -- their cars are being used to smuggle cocaine and marijuana! How much worse publicity can a company get?

Union Pacific is a well-known company with too much at stake to be a passive drug mule for Mexican cartels. Let's hope the company wakes up to the fact that this is a public relations nightmare and works with its partners south of the border to create solutions rather than more roadblocks.