Dissolving Unocal
excerpted from the book
Corporate Predators
by Russel Mokhiber and Robert Weissman
Common Courage Press, 1999
The mainstream view among citizen activists is that the most
effective means of dealing with corporate crime and violence is
through regulation, litigation, legislation and law enforcement.
But a breakaway group of activists want to move directly to
a sanction that will get the attention of every big corporation
in America-revocation of the charters of the most egregious of
corporate wrongdoers.
(~ Throughout the nation's history, the states have had the
authority to give birth to a corporation by granting a corporate
charter and to impose the death penalty on a corporate wrongdoer
by revoking its charter.
Earlier today, a coalition of more than thirty public interest
organizations called on the attorney general of California to
revoke the charter of Union Oil of California (Unocal).
Why Unocal?
The 127-page petition argued that Unocal was a recidivist
corporation, engaged in corporate law-breaking, was responsible
for the 1969 oil blowout in the Santa Barbara Channel and numerous
other acts of pollution, committed hundreds of OSHA violations,
treated workers unfairly, is complicit in human rights violations
in Afghanistan and Burma, and has "usurped political power."
Arguing that the state of California routinely puts out of
business hundreds of unruly accountants, lawyers and doctors every
year, the coalition called upon California AG Dan Lungren, who
is running for governor, to revoke Unocal's charter.
"We're letting the people of California in on a well-kept
secret," said 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 AG 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 answers.
"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.
But Unocal's Barry Lane argues 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 AG 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."
And the company has a friend in the attorney general. Lungren
is on the cover of the current issue of William Buckley's National
Review, under the headline "Great Right Hope."
In other words, the chances are slim to none that Lungren
will move against his pals in the oil industry. So, why file the
petition?
"We are not politically naive," Benson answers.
"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 has the guts to
strip the company of its charter, he has the authority to make
"such orders and decrees and issue such injunctions in the
case as justice and equity require."
If Benson were the judge, he'd transform the company into
a renewable energy company, which would create more jobs and inflict
less damage to the environment.
But Benson is not the judge and he admits that Unocal will
not lose its charter anytime soon. The petition was filed to spur
change in our stagnant legal and political culture, so that, as
Benson says, "some day in the future we will dissolve Unocal
and other giant corporate repeat offenders."
[The Attorney General of California rejected the petition
to revoke Unocal's charter a scant five days after it was filed-
hardly enough time to review a 127-page document. Professor Benson
is planning an appeal. "We got a three sentence rejection
that a court can clearly reverse as arbitrary and capricious,"
he said.]
Excerpted Books page