De-chartering Unocal

by Russell Mokhiber

Multinational Monitor magazine, September 1998

Calling Unocal "a dangerous scofflaw, corporation," a coalition of 30 citizens' groups in September petitioned the Attorney General of California to begin charter revocation proceedings against Union Oil Company of California (Unocal).

The 127-page petition argues that Unocal has engaged in corporate lawbreaking, was responsible for the 1969 oil blowout in the Santa Barbara Channel and numerous other acts of pollution, committed hundreds of occupational safety and health violations, treated workers unfairly, is complicit in human rights violations in Afghanistan and Burma and has "usurped political power."

Claiming that the state of California routinely puts out of business hundreds of unruly accountants, lawyers and doctors every year, the coalition called upon California Attorney General Dan Lungren to begin a legal process that would result in the revocation of Unocal's charter.

"We're letting the people of California in on a well-kept secret," says Loyola Law School Professor Robert Benson, who drafted the petition. "The people mistakenly assume that we have to try to control these giant corporate repeat offenders one toxic spill at a time, one layoff at a time, one human rights violation at a time. But the law has always allowed the attorney general to go to court to simply dissolve a corporation for wrongdoing and sell its assets to others who will operate in the public interest."

If this authority exists, why is it that only once this century-in 1976 when a conservative Republican attorney general asked a court to dissolve a private water company for allegedly delivering impure water to its customers-has the attorney general sought to revoke a corporate charter in California?

"California attorneys general haven't often done it because they've become soft on corporate crime," Benson says. "Baseball players and convicted individuals in California get only three strikes. Why should big corporations get endless strikes?"

Benson argues that a single act of unlawfulness is enough to trigger charter revocation proceedings, although he admits that if an attorney general acts against a major company, it will be for a pattern of wrongdoing, not for an isolated act of wrongdoing.

Unocal's Barry Lane says that if it is true that one bad act can trigger revocation, then "any company that has ever been found guilty of anything," would face charter revocation proceedings and "the attorney general would be running every company in the state."

So, which is Unocal-a sometimes criminal, or a corporate recidivist?

"We have committed misdemeanors in the past," Lane admits, "but then so have many companies. We have operated here for 100 years. Yes we have made some mistakes, but we have always taken responsibility for those mistakes and worked to correct them."

The petition alleges more than a single mistake. It lists 10 counts against the company, including:

* Environmental devastation. "The company's environmental devastation extends from local to global and is serious enough to describe as ecocide," the petition alleges, focusing especially on the company's pollution in California.

* Unfair and unethical treatment of workers. The petition points to the company's conscious strategy of selling off U.S. operations and discarding U.S. jobs, in order to focus on overseas drilling investments.

* Complicity in crimes against humanity: aiding oppression of women. The petition alleges that Unocal has negotiated with and offered vocal support to the Taliban in Afghanistan-though it suspended negotiations following the U.S. bombing of alleged "terrorist camps" in Afghanistan in August. The Taliban have imposed the most extensive regime of gender apartheid known to the world, the petition points out. Unocal says, "we have neither signed nor negotiated any business deals with any faction in Afghanistan."

* Complicity in crimes against humanity: aiding oppression of homosexuals. In addition to discrimination against women, the Taliban have a policy of putting homosexuals to death.

* Complicity in crimes against humanity: enslavement and forced labor. Unocal is building a gas pipeline in Burma, in business partnership with Burma's SLORC dictatorship. The government has allegedly used forced laborers to prepare fields and build infrastructure to facilitate pipeline construction. Unocal denies that any forced labor has been used in connection with the pipeline project, and argues that a policy of "constructive engagement" offers the best hope for democratizing Burma.

* Complicity in crimes against humanity: forced relocation of Burmese villages and villagers. The Burmese government has allegedly carried out mass, forced relocations without compensation as part of the oil and gas project.

* Complicity in crimes against humanity: killings, torture and rape. The petition alleges that Unocal is liable for human rights violations by "its military and business partner [in Burma] under traditional common-law doctrines of conspiracy and agency, and under international law doctrines of joint participation and individual responsibility for crimes against humanity."

* Complicity in gradual cultural genocide of tribal and indigenous peoples. The petition alleges that Unocal operations in the area inhabited by the Lubicon Cree in Alberta, Canada are contributing to cultural genocide. Unocal alleges it is "caught in the middle" in a dispute between the Lubicon Cree and the Canadian government.

At the time of filing the petition, the coalition acknowledged its chances of success-especially with a right-wing attorney general-were slim, at best.

"We are not politically naive," Benson says. "We don't think that this is going to get so far along the road that Unocal will actually be broken up anytime soon, although it should be. Much more likely, we think the attorney general will deny the petition, and then we will use this as a tool to put pressure on the political process."

If an attorney general were independent enough to file such a petition, a judge could appoint a receiver, so that the assets do not flee the jurisdiction. Then if the judge was inclined to strip the company of its charter, he or she would have the authority to make "such orders and decrees and issue such injunctions in the case as justice and equity require."

The petition requests that the attorney general begin proceedings to dissolve Unocal and to appoint a receiver and preserve company assets pending dissolution. The petition also asks the attorney general to ask a court to use its powers in winding up the company "'to make such orders and decrees and issue such injunctions in the case as justice and equity require,' in order to fully protect jobs, workers, stockholders, unions, communities, the environment, suppliers, customers, governmental entities and the public interest."

Benson says that, if he were the judge, he would transform the company into a renewable energy company, which would create more jobs and inflict less damage to the environment.

Ronnie Dugger, founder of the Alliance for Democracy, one of the groups that signed the petition, calls the filing "an historic event."

"It is the first broad-based effort of this century to use the people's sovereign authority over a corporation chartered by one of our states to terminate its privilege to do business," Dugger says. "It is a step toward regaining actual democratic control over these giant corporations we've created."

A spokesperson for Lungren's office said at the time of filing that the office had yet to receive the petition and it would take "weeks" for lawyers to study it and respond.

That turned out not to be true. Lungren took less than a week to reject the petition.

In a terse three-sentence letter to Benson, Lungren says simply that "we decline to institute legal proceedings at this time." There was no explanation for the decision.

In the letter of refusal, Lungren suggests the petitioners might ask for permission to bring the suit themselves as a sort of private attorney general.

"That's proof they didn't even read the petition," Benson says. "We rejected that avenue in advance. It is legally inappropriate because our clients are not seeking a remedy of private harms unique to them but of harms to the public at large. In such a case it is the attorney general's statutory duty to protect that interest in court, not ours. More importantly, only the full resources of the state will be adequate to challenge a corporation of Unocal's wealth and size and Attorney General Lungren knows that. The Attorney General's suggestion that we take on Unocal ourselves is like urging us to enter a lion's den armed only with sticks."

Benson says he would consult with the 30 petitioners on the option of seeking a court order compelling the attorney general to act.

Benson says that Lungren's action was unprecedented. In similar situations under the statute, the attorney general has always presented a detailed legal analysis of his reasons for declining to take action.

"Instead, we got a three sentence rejection that a court can clearly reverse as arbitrary and capricious," Benson says.

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