Challenging Corporate Rule
The petition to revoke UNOCAL'S charter
as a guide to citizen action
by Robert Benson
Apex Press, 1999
Forward by Ronnie Dugger, Founder of the Alliance for Democracy
pviii
A hundred and twelve years ago in 1886, the Supreme Court began
the long process, which climaxed in the Bellotti case in the 1970s,
of declaring in effect, in defiance of common sense and democracy,
that corporations are people, and giving them the constitutional
rights of people, including free speech. Since 1886 waves of corporate
lawyers who put property over democracy have developed new theories
of the corporation we are their subcitizens. The corporations
are Superpersons, and we are their subpersons. And the corporations
we created as servants of our public interest have broken free
of our democratic control and metamorphosed into the international
creatures of greed and rapacity that now dominate the world.
pviii
... the corporations we created as servants of our public interest
have broken free of our democratic control and metamorphosed into
the international creatures of greed and rapacity that now dominate
the world.
pviii
... if the people don't control economic life, the inevitably
gathering economic oligarchy, the plutocracy, will strangle democracy.
That is what has been happening, again, in the United States since
the defeat of the American populists at the end of the last century.
For the past 15 or 20 years now, the divine right of kings
has been replaced by the divine right of CEOs and the controlling
owners behind them. We are ruled now by a form of government in
which hierarchical and authoritarian corporations control the
government for their own profit and power against the people's
interests.
pix
Regulation of the large corporations has been abandoned by the
government. Antitrust laws are mounted in the trophy cases of
the politicians. In 1997 we had 156 corporate mergers each worth
more than a billion dollars. Big business fires workers for trying
to form unions and gets away with it year after year. The corporate
share of taxes has dropped in the last 50 years from 33% to 15%
while the people's share of taxes has gone from 44% to 73%. One
percent of the people among us own 40% of the national wealth.
The savings and loan rake-off costs the taxpayers half a trillion
dollars. The rate of child poverty among us is four times the
rate in Western Europe. Forty million of us have no health insurance.
The cigarette corporations go on killing for profit-who gives
a damn? Sweatshops return to the garment industry. Who gives a
damn! Huge conglomerate corporations control our newspapers and
the broadcasts on our own public airways. Who gives a damn! Our
jobs are exported to the low-wage areas of the world with no protections
for the workers or environment abroad. Corporations not governments
are 51 of the 100 largest economies in the world.
pix
Outgoing Senate Majority Leader George Mitchell of Maine
The system stinks. The system is money.
***
THE PETITION TO REVOKE UNOCAL'S CHARTER
Introduction
By Robert Benson, Professor of Law Loyola Law School, Los
Angeles. Lead attorney, National Lawyers Guild charter revocation
project.
... The citizens of every state, acting through their attorney
general, have, and have always had, the legal authority to go
to court to revoke the charters of corporations that violate the
law. This means that lawbreaking corporations can be dissolved,
put out of business, their assets sold to others under a judge's
order that will protect jobs, the environment and the public interest.
In our democracy, corporations have no inherent right to exist.
They exist by the permission of we the people acting through the
legislature, the attorney general and the courts. Since we the
people attach strings to the privilege of doing business in the
corporate form (such as the condition that corporations actually
obey the law!), when those conditions are violated we the people
are perfectly free to yank those strings and pull the charters
from offending companies.
Attorneys general used the legal tool of corporate charter
revocation fairly frequently in the l9th century. In our own time,
it has been less common but it remains on the books in every state
and is occasionally invoked. In California, in 1976 the attorney
general used it to force a private water company out of business
for delivering contaminated water to its customers. The attorney
general of New York state used this tool in 1998 in conjunction
with other tobacco litigation to put the Council for Tobacco Research,
a New York corporation, out of business and order its assets donated
to state education and health institutions.
Most attorneys general, however, are letting this law enforcement
de vice gather dust in their desk drawers. They don't even want
you to know about it because the truth is they are soft on corporate
crime and the corporate takeover of our democracy.
Attorneys general and big business want you to think that
the cozy system of "government regulation" is working
and nothing stronger is necessary. But the regulatory agencies
that are supposed to keep corporations safe for the rest of us
have been captured by the businesses they are assigned to oversee.
The agencies are sucked into the quicksand of year-long efforts
to protect the public one toxic spill at a time, one layoff at
a time, one civil rights violation at a time. In the end, too
often the corporations walk away with a light fine that they deduct
from their taxes as a cost of doing business. And attorneys general
get re-elected by deceptively boasting about the fines they imposed
on polluters and other corporate criminals, never admitting that
they could and should have put some of these incorrigible repeat
offenders out of existence forever.
***
p35
U.S. Supreme Court Justice White said in 1978 about corporations:
"The state need not permit its own creation to consume
it."
***
THE PETITION TO REVOKE UNOCAL'S CHARTER
p40
RECALLING THAT THE PEOPLE ARE SOVEREIGN OVER CORPORATIONS
From the founding of the Massachusetts Bay Colony Company,
to the forced break-up of Standard Oil in 1911, to the anti-trust
prosecution of Microsoft Corporation today, the people's ability
to create, dissolve and discipline the economic entities chartered
within their borders has critically influenced life in America.
The interaction between government and corporations has shaped
the distribution of society's wealth, the quality of life, and
the meaning of democracy itself.
The legal instrument which empowers companies to play a role
in our democracy is the corporate charter. The charter, by which
states incorporate economic enterprises and grant them special
privileges, is one of the most powerful legal devices ever created.
As the Temporary National Economic Committee of the Congress found
in 1941, "[t]he principal instrument of the concentration
of economic power and wealth has been the corporate charter with
unlimited power."
Carrying on common law principles which have existed "from
the time whereof the memory of man runneth not to the contrary,"
state and federal courts have consistently recognized the authority
of states, in the exercise of their sovereign police power, to
revoke corporate charters. Yet few corporations today fear this
sort of ultimate accountability for crimes and anti-social behavior,
for now it is seldom even mentioned that corporate charters are
legally revocable. Non-lawyers have had to remind the legal profession
that this authority is still on the books...
THE HISTORY OF CONTROL OF CORPORATIONS
Originally, the states kept corporations subordinate through
charters.
From the very beginning of our nation the power to grant existence
to corporations has been vested in the individual states, each
controlling activity within its own domain. Initially most corporations
were chartered to build public works and conveniences. Some private
corporations, however, were chartered for profit-making enterprises
and were given special privileges in order to enhance their economic
viability. At law, a corporation was classically defined as an
artificial being, invisible, intangible, and existing only in
contemplation of law. Being the mere creature of law, it possesses
only those properties which the charter of its creation confers
upon it, either expressly, or as incidental to its very existence....'
Typically the companies were kept on a short leash, given
life for a determined period of years and for narrow, public purposes.
Their charters were revocable, and were frequently revoked.
Corporations later won some important constitutional privileges.
In 1819 the Supreme Court ruled in Trustees of Dartmouth College
v. Woodward that the legislature of the state of New Hampshire
could not reorganize Dartmouth College in violation of the original
charter granted to the school's founder. Dartmouth held that a
grant of incorporation is a "contract" and under the
United States Constitution contracts cannot be impaired. In Santa
Clara County v. Southern Pacific Railroad, decided in 1886, the
Fourteenth Amendment of the Constitution was held to protect the
interests of corporations as "persons" benefiting from
certain constitutional protections and rights enjoyed by natural
persons under the Fourteenth Amendment while simultaneously possessing
the privileges granted by incorporation. Without any discussion,
debate or explanation, the Court applied to corporations the Fourteenth
Amendment, which had been designed to protect blacks freed from
slavery. The decision has long been subject to grave criticism
for its lack of basis in law, history or logic."
Then, in a "race to the bottom," states began competing
with one another to loosen charter requirements, further eroding
effective state control.
Pressured relentlessly by business to permit more charters,
in the late Nineteenth Century legislatures began enacting "general
incorporation laws" allowing any company to form for any
lawful purpose and to enjoy perpetual life. Soon, states were
competing with one another to attract corporations and their tax
revenues by removing all but the most elemental restrictions.
Thus began the infamous "race to the bottom" that within
a single generation ended the centuries long tradition of holding
corporations to strict charters. The noted journalist Lincoln
Steffens described in McClure's Magazine at the time how openly
corrupt the process was, particularly in New Jersey. "She
[New Jersey] not only licensed companies to do in other states
what those states would not license; she licensed them to do in
those other states what she would not let them do in Jersey. No
our sister state was not prompted by any abstract consideration
of right and wisdom. New Jersey sold us out for money."'
Justice Brandeis described the phenomenon in his opinion in Liggett
v. Lee:
The removal by the leading industrial states of the limitations
upon the size and powers of business corporations appears to have
been due, not to their conviction that maintenance of the restrictions
was undesirable in itself, but to the conviction that it was futile
to insist upon them; because local restriction would be circumvented
by foreign [out of state] incorporation. Indeed, local restriction
seemed worse than futile. Lesser states, eager for the revenue
derived from the traffic in charters, had removed safeguards from
their own incorporation laws. Companies were early formed to provide
charters for corporations in states where the cost was lowest
and the laws least restrictive. The states joined in advertising
their wares. The race was one not of diligence but of laxity.
Some conservative economists today dispute that this was a
"race to the bottom," arguing that corporate profits
increased as controls loosened. But the profit data do not show
a causal link between the removal of controls and higher profits.
More importantly, the data ignore the increase in usurpation of
ungranted powers, corporate lawlessness, anti-social and undemocratic
behavior as states let go of the reins.
***
p45
Corporations today operate out of control as private governments,
more powerful than nation-states.
Today, transnational corporations, operating alone as well
as through supranational trade organizations and agreements, have
a greater ability to circumvent state power than ever before.
Indeed, 50 of the 100 largest economies in the world are not nations
but transnational corporations, and merely 500 corporations control
70 percent of global trade. They have the power to run or ruin
foreign economies, topple foreign governments, uproot cultural
traditions overnight, threaten whole races of indigenous peoples,
and destroy the global biosphere upon which the survival of future
generations depends.
The de facto reality, as Professor Arthur Miller concluded
in 1968, is that modern day corporations have become entities
unto themselves; a privately owned company "can be validly
termed a 'private' government' whose power is not responsible
or accountable to anyone." The ability of private, for-profit
corporations to control the international economy, influence domestic
political and economic decisions and violate their charters without
fear of significant punishment creates an urgent legal need for
the resuscitation of meaningful state control of corporate activities.
Charter revocation, though ignored, remains intact as a legal
remedy against corporate power.
Despite the Dartmouth and Santa Clara decisions, despite the
legislative "race to the bottom" resulting in a new
era of lax charters, despite "substantive due process"
and First, Fourth and Fifth Amendment legal shields for corporations,
the legal door never closed on charter revocation. After Dartmouth
the Supreme Court distinguished the states' obligation not to
interfere with corporate contracts from their affirmative right
to govern corporate charters. In Bank of Augusta v. Earle the
Court explained that the contract-making power of a corporation
is circumscribed by the limitations contained in its charter:
[I]t may be safely assumed that a corporation can make no
contracts, and do no acts either within or without the state which
creates it, except such as are authorized by its charter; and
those acts must also be done, by such officers or agents, and
in such manner as the charter authorizes.
The corporation's obligation to its charter is also an obligation
to the state of incorporation. No matter a corporation's size
or the scope of its activities, the special privileges it enjoys
are granted by the sovereign authority of the state that incorporated
it:
[F]ranchises are special privileges conferred by government
upon individuals, and which do not belong to the citizens of the
country, generally, or by common right. It is essential to the
character of a franchise that it should be a grant from the sovereign
authority, and in this country no franchise can be held which
is not derived from the law of the state.
By the time of Standard Oil of New Jersey v. United States,
a 1911 decision in which the Supreme Court upheld the revocation
of a petroleum trust's charter, corporations chartered for business
in the United States had already accumulated more capital than
existed in any other nation. In the opinion the danger posed by
unchecked corporate activity was juxtaposed to slavery as one
of the defining issues in our nation's development, aspirations
and prosperity:
All who recall the condition of the country in 1890 will remember
that there was everywhere, among the people generally, a deep
feeling of unrest. The nation had been rid of human slavery-fortunately,
as all now feel-but the conviction was universal that the country
was in real danger from another kind of slavery sought to be fastened
on the American people: namely, the slavery that would result
from aggregations of capital in the hands of a few individuals
and corporations controlling, for their own profit and advantage
exclusively, the entire business of the country, including the
production and sale of the necessities of life.
The Supreme Court reasoned that the individual freedoms which
our government is designed to preserve depend for their existence
upon a democracy free of political and economic domination by
an uncontrolled elite. State and federal high court decisions
have consistently related charter revocation to the most fundamental
precepts of our national identity because unchecked corporate
power has been deemed to be inherently undemocratic.
In 1933, Justice Louis Brandeis, who was of the view that
"the citizens of each state are still masters of their destiny"
when it came to setting the terms on which corporations would
be allowed to do business wholly within the state, told of the
evils that justified the citizens' assertion of sovereignty over
business:
The prevalence of the corporation in America has led men
of this generation to act, at times, as if the privilege of doing
business in corporate form were inherent in the citizen; and has
led them to accept the evils attendant upon the free and unrestricted
use of the corporate mechanism as if these evils were the inescapable
price of civilized life and, hence, to be borne with resignation.
Throughout the greater part of our history a different view prevailed.
Although the value of this instrumentality in commerce and industry
was fully recognized, incorporation for business was commonly
denied long after it had been freely granted for religious, educational
and charitable purposes. It was denied because of fear. Fear of
encroachment upon the liberties and opportunities of the individual.
Fear of the subjection of labor to capital. Fear of monopoly.
Fear that the absorption of capital by corporations, and their
perpetual life, might bring evils....There was a sense of some
insidious menace inherent in large aggregations of capital, particularly
when held by corporations.
And Justice Brandeis warned ominously of the threat to democracy
that justifies sovereign control of corporations:
Able and discerning scholars have pictured for us the economic
and social results of thus removing all limitations upon the size
and activities of business corporations and of vesting in their
managers vast powers once exercised by stockholders-results not
designed by the states and long unsuspected.... Through size,
corporations, once merely an efficient tool employed by individuals
in the conduct of private business, have become an institution-an
institution which has brought such concentration of economic power
that so-called private corporations are sometimes able to dominate
the state. The typical business corporation of the last century,
owned by a small group of individuals, managed by their owners,
and limited in size by their personal wealth, is being supplanted
by huge concerns in which the lives of tens or hundreds of thousands
of employees and the property of tens or hundreds of thousands
of investors are subjected, through the corporate mechanism, to
the control of a few men. Ownership has been separated from control;
and this separation has removed many of the checks which formerly
operated to curb the misuse of wealth and power. And as ownership
of the shares is becoming continually more dispersed, the power
which formerly accompanied ownership is becoming increasingly
concentrated in the hands of a few. The changes thereby wrought
in the lives of the workers, of the owners and of the general
public, are so fundamental and far-reaching as to lead these scholars
to compare the evolving "corporate system" with the
feudal system; and to lead other men of insight and experience
to assert that this "master institution of civilized life"
is committing it to the rule of a plutocracy.
Although this opinion was written in dissent in 1933, subsequent
Supreme Court decisions have never disputed Brandeis's premise
that states need not tolerate corporate behavior that threatens
democracy. This is true even at the hard center of the new constitutional
shield of corporate rights represented by First National Bank
of Boston v. Belotti.' In a 5 to 4 decision, the Court in Belotti
forbade states from prohibiting corporate speech about ballot
propositions submitted to the voters. It rejected as "extreme"
the argument "that corporations, as creatures of the State,
have only those rights granted them by the State," finding
that the corporations have other rights under the constitution
as well, such as the First Amendment rights in question. Yet the
Court never questioned that corporations are "creatures of
the state" and could be controlled by them. It declared only
that the particular state regulation went too far. Had the state
shown enough evidence of a corporate threat to "the confidence
of the people in the democratic process and the integrity of government,"
it appears that the regulation would have been upheld:
According to appellee, corporations are wealthy and powerful
and their views may drown out other points of view. If appellee's
arguments were supported by record or legislative findings that
corporate advocacy threatened imminently to undermine democratic
processes, thereby denigrating rather than serving First Amendment
interests, these arguments would merit our consideration.
The dissents in Belotti by Justices White and Rehnquist opined
that enough evidence of the threat had already been demonstrated,
or need not be demonstrated, to uphold the state's regulation.
Justice White commented:
Corporations are artificial entities created by law for the
purpose of furthering certain economic goals. In order to facilitate
the achievement of such ends, special rules relating to such matters
as limited liability, perpetual life, and the accumulation, distribution,
and taxation of assets are normally applied to them. States have
provided corporations with such attributes in order to increase
their economic viability and thus strengthen the economy generally.
It has long been recognized, however, that the special status
of corporations has placed them in a position to control vast
amounts of economic power which may, if not regulated, dominate
not only the economy but also the very heart of our democracy,
the electoral process.... The State need not permit its own creation
to consume it.
For his part, Chief Justice Rehnquist threw doubt on Santa
Clara County's 1886 grant of personhood to corporations under
the Fourteenth Amendment, then quoted Dartmouth College's definition
of a corporation as a "mere creature of law" possessing
only those powers conferred by charter or necessarily incidental
to its existence, and stated:
I can see no basis for concluding that the liberty of a corporation
to engage in political activity with regard to matters having
no material effect on its business is necessarily incidental to
the purposes for which the Commonwealth permitted these corporations
to be organized or admitted within its boundaries.
In sum, the legal situation at the end of the Twentieth Century
is the same as it was at the beginning of the Nineteenth: Corporations
are "mere creatures of law." Within the bounds of the
constitution, the state gives them life, can regulate it, and
can take it away.
The political branches have a duty to exercise the authority
recognized by the courts. Woodrow Wilson, in his inaugural address
as Governor of New Jersey, aptly summed up the power and responsibility
of the states:
A corporation exists, not of natural right, but only by license
of law, and the law, if we look at the matter in good conscience,
is responsible for what it creates .... If law is at liberty to
adjust the general conditions of society itself, it is at liberty
to control these great instrumentalities which nowadays, in so
large part, determine the character of society.
***
p96
Complicity in Crimes Against Humanity: Enslavement and Forced
Labor
On the basis of the information stated and footnoted below,
petitioners believe there is strong reason for the Attorney General
to find the following to be true:
Unocal has formed a business enterprise with the illegal military
dictatorship of Burma to build a natural gas pipeline across a
civil war zone in the country. To understand how this relationship
has led Unocal to violate the law, it is necessary to recount
the background of the pipeline deal.
SLORC takes power.
Burma has spent most of the post World War II era under military
rule. However, there was renewed pro-democracy activity in Burma
in the late eighties. Burmese citizens organized politically,
demanding democracy, an end to human rights violations and, most
importantly, an end to decades of military dictatorship. The ruling
military elite brutally put down the movement, reorganized themselves
and declared a new regime on September 18, 1988, called the State
Law and Order Restoration Council (SLORC). The "new"
SLORC regime imposed martial law on Burma and renamed the country
"Myanmar," a name the democratic groups do not acknowledge.
In a bid for legitimacy in the wake of their suppression of
the prodemocracy movement, SLORC held multi-party elections on
May 27, 1990. The people of Burma soundly rejected the SLORC dictatorship
in the election; the National League for Democracy (NLD), led
by Daw Aung San Suu Kyi (who was later awarded the Nobel Peace
Prize), won 82 percent of the parliamentary seats. In an act of
repression which has been universally condemned," SLORC refused
to relinquish its SLORC began preparing the land for the pipeline
in 1991, while negotiating with Unocal and Total. SLORC began
building permanent military outposts in the area of the proposed
pipeline. In fact, the confiscation of land, relocation of villages
and destruction of rainforest and other habitat in the pipeline
region began when business negotiations began, although the 30-year
gas sales contract and pipeline agreement calling for deliveries
of natural gas to Thailand beginning in mid-1998 was not signed
until February 1995.
Violations of law.
As part of the pipeline enterprise, Unocal has profited from
the use of forced and slave labor, in violation of customary international
law, the Universal Declaration of Human Rights, the International
Covenant on Civil and Political Rights, the International Covenant
on Economic, Social and Cultural Rights, the International Labor
Organization Convention No. 29 Concerning Forced or Compulsory
Labor, the International Labor Organization Convention No. 105
Concerning the Abolition of Forced Labor, the Slavery Convention,
the Protocol Amending the Slavery Convention, and the Convention
on the Rights of the Child.
Unocal is liable for these violations by its military business
partner under traditional doctrines of, conspiracy, agency, joint
participation and crimes against humanity. Unocal is also directly
liable for these acts under the common-law torts of negligence,
negligent hiring and negligent supervision. As the previous seven
footnotes confirm, there is nothing radical or legally unusual
about holding Unocal liable for its business partner's violations.
The legal doctrines are ancient and commonplace, applied in U.S.
courts every day. Now that corporations are more often acting
globally, it is to be expected that the site of their harms will
be distant places. But the foreign locale does not change the
traditional law applicable to determine their liability.
Unocal knew or should have known and could have reasonably
foreseen that its military partner would use forced labor to clear
the land for the pipeline route, build related infrastructure
in the area, and provide security for the pipeline.
* The latest U.S. State Department report observes:
Forced or compulsory labor remains a serious problem. In March
following an investigation of the country's forced labor practices,
the European Union Commission revoked benefits under the Generalized
System of Preferences. In recent years, the SLORC has increasingly
supplemented declining gross investment with uncompensated people's
"contributions," chiefly of forced labor, to build or
maintain irrigation, transportation and tourism infrastructure
projects. During 1996 the Government introduced an initiative
to use military personnel for infrastructure projects. This initiative
and the increasing use of heavy construction equipment resulted
in a decline during 1996-97 in the use of unpaid labor on physical
infrastructure projects, especially for irrigation projects and
railroad building. Nonetheless, there were credible reports that
the use of forced labor remained widespread throughout the country.
The army continued to force citizens-including women and children-to
work as porters.... The Government does not specifically prohibit
forced and bonded labor by children.... In March the governing
board of the ILO established a Commission of Inquiry to investigate
Burma for its violation of ILO Convention 29 on forced labor.
The complaint accuses the Government of systematic use of forced
labor.
* The mistreatment of porters has been well documented by
observers, and constitutes torture and cruel, inhuman and degrading
treatment in addition to the extraction of forced labor. SLORC
military rulers have sought to justify the use of slave labor
by reference to Burmese custom and cultural practice and have
attempted to convince the international community that its use
of forced labor is in compliance with international law. Since
MGTC began the Yadana pipeline project the use of forced labor
in Burma has increased:
As the SLORC has opened up the economy to international investors,
it has forced civilians and prisoners to rebuild the country's
infrastructure, which was badly neglected by the previous government.
The SLORC claims that these "development projects" are
designed for the long-term benefit of all, because they will create
the infrastructure for improvements in the standards of living
of their people. Human Rights Watch/Asia estimates that since
1992 at least two million people have been forced to work without
pay on the construction of roads, railways and bridges across
the country. Hundreds have died from beatings, exhaustion, accidents
and lack of medical care. The use of unpaid civilians on these
development projects is a violation of the 1930 International
Labor Organization (ILO) Convention, to which Burma is a signatory.
In violation of Common Article 3 of the Geneva Conventions, forced
labor has also been used for overtly military practices. This
includes the use of civilians as porters for the army, to construct
army barracks, and to stand watch on roads and railways in areas
where ethnic rebels are active.
* In November 1994 the International Labor Organization investigated
the use of forced labor in Burma and found: `'[T]he extraction
of labor and services, in particular porterage service, under
the village Act and the Towns Act is contrary to the Forced Labor
Convention, 1930 (No.29), ratified by the government of Myanmar
in 1955." In June 1995, the ILO's committee of Experts on
the Application of Conventions and Recommendations rejected the
SLORC's attempt to justify its use of forced labor under the
criteria of the convention. International condemnation continued
in December 1996 when the European Commission recommended that
the European Union suspend the preferential trade tariffs which
Burma then received as a developing country "until such time
as forced labour practices are abolished."
* According to figures published in SLORC's own paper, the
New Light of Myanmar, as of December 15, 1993, approximately 921,753
people had worked on the Pakokku-Monywa railway without pay. In
another instance SLORC stated that 799,447 people worked without
pay on the Aungban-Loikaw railway.
In its defense Unocal has touted the economic benefit the
Yadana pipeline is bringing to the people of Burma. Yet by the
company's own admission the number of direct paid employees Unocal
has hired on the project numbers only between 300 and 600 Burmese,
the number varying depending on the season. According to human
rights observers these paid workers were not recruited until March
1995, long after pipeline related activities began. Even then,
among those living in the pipeline region, only members of the
Union Solidarity and Development Association ("USDA"),
SLORC's political association, were eligible for paid employment.
The balance of labor on the pipeline was extracted by SLORC
with force from the people of Burma. Prior to March 1995, before
any pipes were laid, forced labor was used to clear a path for
the pipeline and to construct infrastructure to support SLORC's
natural gas development program. To facilitate building the pipeline
from the Andaman Sea across the ethnic states of southern Burma,
the Ye-Tavoy railway line was begun to transport troops and supplies
to the pipeline area. In October 1993, it was reported that up
to 2,000 people a day were being forced to labor on the railway.
The Ye-Tavoy railway is a nexus of cruel, inhuman and degrading
treatment, all precipitated by the Yadana pipeline project.
* Human Rights Watch/Asia published the following report on
abuses suffered by those working on the Ye-Tavoy railway that
are being carried out for Unocal's economic profit:
A twenty-eight-year-old man interviewed by Human Rights Watch/Asia
in a refugee camp in Thailand in May 1994 described conditions
for forced laborers at the Ye-Tavoy railway, one of the most notorious
construction site[s] in Burma, and one on which work continued
in January 1996:
"It was very difficult for families like mine which have
only one man. When I was at the work site, the rest of my family
found it difficult to work the farm and grow food. When a man
returns, women are expected to replace him at the work site ...
I saw some elderly people working there and some children aged
about twelve years. I also saw some pregnant women working there.
. . One girl from Moe Gyi village who was four and half months
pregnant died from malnutrition and diarrhea in mid-March 1994.
She did not get any medical help. People were beaten by soldiers
for trying to escape or for not working hard enough. Some people
attempted to flee from the work site but were caught. They were
beaten and tortured in front of everyone."
In September 1995, a report in a British newspaper confirmed
that twelve-year-old children were still working on this same
railway project. The article included an interview with a Karen
man who had worked on the railway who said "labourers encouraged
children at the site to rest, but the soldiers beat them and ordered
them to work. Some children were as young as twelve." In
January 1995 a woman from Karen state interviewed by Human Rights
Watch/Asia said, "Sometimes we didn't go because we were
tired, and they [the soldiers] came and dragged us from the our
house. My children were screaming and crying, but I just had to
leave them there." This is a common problem, it seems, as
increasing numbers of people are taken to work for the military.
In many cases, women with babies who are still suckling have to
take their babies with them, tied to their backs as they do heavy
work such as breaking rocks or digging trenches.
* EarthRights International and Southeast Asian Information
Network have also documented with testimony of Burmese victims
that forced labor has been used on projects directly for the pipeline
and on related infrastructure projects. This is in addition to
the forced portering for the military providing security in the
pipeline area.
* Two lawsuits against Unocal filed in federal court in Los
Angeles contain similar allegations.
Unocal's response and damning admission.
Unocal likes to quote the U.S. State Department report on
Burma for 1996 which addressed the pipeline with this remark:
"The preponderance of the evidence indicates that the pipeline
project has paid its workers at least a market wage." The
comment leaves open the possibility that, though paid, the labor
was nevertheless forced, and it says nothing about related infrastructure
projects or military security.
The company has made a number of contradictory and finely
shaved statements on the issue. It has said: "From initial
clearing, grading and infrastructure development, through constructing,
laying and burying the onshore pipeline, all work has been done
by voluntary labor under formal contracts. Workers receive their
pay directly, with receipt stringently documented. Unocal has
sent representatives to the project; their observations confirm
Total's reports: there has never been forced labor on the pipeline;
we would never countenance it." The same statement, however,
makes clear that Unocal does not consider work on the Ye-Tavoy
railroad or other local infrastructure projects to
be related to the pipeline and does not consider military
security for the pipeline relevant. But Unocal President John
Imle also told a group of human rights activists in 1995: "Let's
be reasonable about this, what I'm saying is that if you threaten
the pipeline, there's going to be more military. If forced labor
goes hand-in-glove with the military, yes, there will be more
forced labor." Imle later backtracked in an interview with
Infrastructure Finance magazine: "The troops assigned to
provide security on our pipeline are not using forced labor."
254 Then, in a sworn deposition in the John Doe l lawsuit, Imle
confirmed that Total told him Total paid for military porters.
That necessarily means they were paid for pipeline purposes. And
even when workers are paid, they are not necessarily voluntary
workers. Imle then made this damning admission:
Surrounding the question of porters for the military and their
payment was the issue of whether they were conscripted or volunteer
workers. The consensus--although very had to verify this--but
the consensus was that it was mixed. Some porters were conscripted.
On this evidence, the Attorney General has abundant "reason
to believe" that Unocal is benefiting from and liable for
the use of forced labor to construct, support, or protect the
pipeline, or all of these. These violations work a forfeiture
of Unocal's corporate charter because the charter has been "unlawfully
exercised," and "perverted," in "serious offen[se]"
against "the statutes regulating corporations," including
the Unfair Competition Act prohibiting "any unlawful, unfair
or fraudulent business act or practice."
Count 6. Complicity in Crimes Against Humanity: Forced Relocation
of Burmese Villages and Villagers
On the basis of the information stated and footnoted below,
petitioners believe there is strong reason for the Attorney General
to find the following to be true:
The relevant paragraphs from Count Five, supra, describing
Unocal's business enterprise to build a pipeline in Burma are
incorporated here by reference as if fully set forth.
As part of the pipeline enterprise, Unocal has knowingly profited
from the large-scale forcible relocation of Burmese villages and
villagers without compensation, in violation of the law of Burma,
customary international law, the Universal Declaration of Human
Rights, the International Covenant on Civil and Political Rights,
and the International Covenant on Economic, Social and Cultural
Rights.
Unocal is liable for these violations by its military business
partner under traditional doctrines of conspiracy, agency, joint
participation and crimes against humanity. Unocal is also directly
liable for these acts under the common-law torts of negligence,
negligent hiring and negligent supervision.
Unocal knew or should have known and could have reasonably
foreseen that its military partner would steal property and food
from villagers and would forcibly relocate whole villages without
compensation, creating a flood of refugees to Thailand.
The U.S. State Department report:
The military authorities also continued the widespread and
frequent practice of forcible relocation of rural villages in
ethnic minority areas in response to security concerns. This practice
was particularly widespread and egregious in the Shan, Kayah,
and Karen states, where tens of thousands of villagers were displaced
or herded into smaller settlements in strategic areas.... In rural
areas, military personnel at times confiscated livestock and food
supplies.
* The U.N. Commission on Human Rights has also condemned the
"arbitrary seizures of land and property" and the "systematic
programs of forced relocation."
* EarthRights International and Southeast Asian Information
Network have gathered evidence of forced village relocations.
* The John Doe lawsuit filed in Los Angeles alleges similar
facts.
Around 1991 the forced relocation of Burmese villages and
villagers to secure the region for the pipeline project began.
Unocal acknowledges that relocations took place but argues the
villages "were nowhere near the pipeline" and took place
"well before Unocal, through its affiliated subsidiary, acquired
any interest in the Yadana project." The three villages Unocal
acknowledges, Mi Chaung Long, Lauk Thein and Yaboo, were apparently
relocated in 1992 while Unocal was doing business in Burma just
a year before it formally entered the Yadana project; all three
villages are near the route of the Ye-Tavoy Railway which crosses
the pipeline. A "Humanitarian Report" prepared at Unocal's
request by two outside observers acknowledges that the village
of Migyaunglaung was relocated in 1991, when the SLORC took the
mostly Karen people from the East Bank of the village for "security
reasons" and moved them to the West Bank. After this relocation
had been accomplished, Total came to the village.
By late 1994 SLORC had embarked on a code-named military operation
to relocate villages in the pipeline region:
Operation Natmin [Spirit King] had two main objectives: securing
the pipeline route and removing resistance forces. By the time
Operation Natmin ended in July 1995, thousands of civilians had
been forcibly relocated and military offensives had been conducted
against several ethnic armed groups. Not surprisingly, thousands
of people had also fled from the Tenasserim area to the Thai/Burmese
border seeking sanctuary.
If any doubt remained about the relocation of villages to
accommodate the pipeline, it was removed by a half-page advertisement
in the Bangkok Post on April 17, 1995, paid for by the Electricity
Generating Authority of Thailand, the major purchaser of Yadana
pipeline gas. The ad trumpeted:
The Myanmar government aims to complete its part of the gas
pipeline system by 1996.... Myanmar has recently cleared the way
by relocating a total of 11 Karen villages that would otherwise
obstruct the passage of the gas resource development project.
These violations work a forfeiture of Unocal's corporate charter
because the charter has been "unlawfully exercised,"
and "perverted," in "serious offen[se]" against
"the statutes regulating corporations," including the
Unfair Competition Act prohibiting "any unlawful, unfair
or fraudulent business act or practice."
Complicity in Crimes Against Humanity: Killings, Torture and
Rape
On the basis of the information stated and footnoted below,
petitioners believe there is strong reason for the Attorney General
to find the following to be true:
The relevant paragraphs from Count Five, supra, describing
Unocal's business enterprise to build a pipeline in Burma are
incorporated here by reference as if fully set forth. In furthering
the project and protecting the pipeline, Unocal's military business
partner has committed widespread killings, torture and rapes in
violation of the law of Burma, customary international law, the
Geneva Convention Relative to the Protection of Civilian Persons
in Time of War, the United Nations Charter, the Universal Declaration
of Human Rights, the International Covenant on Civil and Political
Rights, the Declaration on the Protection of All Persons From
Being Subjected to Torture and Other Cruel, Inhuman or Degrading
Treatment or Punishment, and the Convention on the Elimination
of All Forms of Discrimination Against Women.
Unocal is liable for these violations by its military and
business partner under traditional common-law doctrines of conspiracy
and agency, and under international law doctrines of joint participation
and individual responsibility for crimes against humanity. Unocal
is also directly liable for these acts under the common-law torts
of negligence, negligent hiring, and negligent supervision.
These violations work a forfeiture of Unocal's corporate charter
because the charter has been "unlawfully exercised,"
and "perverted," in "serious offen[se]" against
"the statutes regulating corporations,"' including the
Unfair Competition Act which prohibits "any unlawful, unfair
or fraudulent business act or practice."
Legal liability for such violations turns on what Unocal "knew
or should have known" and could have "reasonably foreseen"
about its business partner's behavior. At the time Unocal was
negotiating for the pipeline deal, after it was signed, and continuing
today, Unocal has to have known that it was dealing with a notorious
outlaw regime condemned worldwide for heinous human rights violations.
* The U. S. State Department reports during the period were
unequivocal. The latest report is typical:
Burma continued to be ruled by a highly authoritarian military
regime.... The Government's longstanding severe repression of
human rights continued during the year. . . There continue to
be credible reports, particularly in ethnic minority-dominated
areas, that soldiers committed serious human rights abuses, including
extrajudicial killings and rape.
* The U.N. Commission on Human Rights issued similar reports,
of which the latest is likewise typical:
The Commission on Human Rights . . . expresses its deep concern
(a) At the continuing violations of human rights in Myanmar as
reported by the Special Rapporteur, including extrajudicial, summary
or arbitrary executions and enforced disappearances, torture,
abuse of women and children by government agents. . . (c) At the
violations of the rights of women. . . in particular forced labor,
sexual violence and exploitation, including rape, as reported
by the Special Rapporteur.
* Amnesty International has reported on the killing, torture
and rapes of civilians forced to become military porters and laborers.
* EarthRights International and Southeast Asian Information
Network collaborated to gather first-person accounts of the human
rights abuses connected to the pipeline's construction and protection,
including killings, torture and rape, by interviewing victims
inside Burma and in Thailand refugee areas.
* The two lawsuits in federal court in Los Angeles allege
that Unocal knew or should have known about the violations of
its partner including killings, torture and rape, and is legally
responsible for
Protecting the pipeline.
Unocal's unfair business practices are the threshold to their
participation in the Yadana project. All parties in MGTC entered
their business collaboration aware of the critical need to secure
the pipeline and the land in which it lay in order to secure their
present and future profits. To provide security, Unocal, SLORC,
Total and PITEP devised a plan to suppress anti-SLORC ethnic residents
in the pipeline region. SLORC also extended a World War II-era
railway, building a line from Ye in the Mon State to Tavoy in
the Tenasserim region to facilitate SLORC troop movement and transport
machinery and equipment needed for security.
Civil war zone.
Unocal is complicit in SLORC's business strategy because it
is part of MGTC's business plan for the pipeline. The area through
which the Yadana pipeline passes has been in a state of violent
civil unrest throughout Unocal's involvement in Burma. MGTC planned
to do business in a war zone. New military camps were added to
existing military outposts along the railway route after the deal
was secured. The Ye-Tavoy railway, which runs perpendicular to
the pipeline, is a crucial North-South transport and business
expenditure for MGTC because it allows SLORC troops access to
control the ethnic homelands along the East-West Iying pipeline.
The military component of Unocal's business deal is undeniable.
SLORC has provided an exceptionally strong and visible military
presence along the route since clearing the forest before construction
began:
A full-strength battalion has approximately 800 troops. While
SLORC battalions typically number only 400 soldiers, the battalions
in the pipeline region are reportedly closer to full strength.
Thus, with LIBs [Light Infantry Battalions] #273,#408,#409 and
#410 permanently based on the pipeline route itself, there are
at least 3,000 SLORC troops designated exclusively to protect
the pipeline route. As they are reinforced by at least ten other
battalions patrolling the area it is likely that the total number
of troops charged with pipeline security is over 10,000. Such
figures do not include SLORC intelligence units, police units
or special forces which are also scattered throughout the region.
The purpose of these troops has never been in question; their
presence has allowed SLORC troops to take control of previously
ethnic-controlled territory. According to the human rights reports
cited above, residents of the pipeline region are indiscriminately
attacked by SLORC, whether they are combatants or civilians. After
a February 1996 attack on Total's headquarters in Oh Bin Gain,
the SLORC army summarily executed at least ten Karen villagers
from En Da Y Z village, which is on the pipeline route.
Unocal's consent to violence.
Most damning to Unocal, however, is that it and its corporate
partners expect SLORC to use military force to protect MGTC's
investment. Unocal knew or should have known that SLORC security
for the pipeline would lead to human rights violations and death.
According to John Imle, President of Unocal:
There are military units there to provide security for the
pipeline, surveying and eventually construction crews. There was
an attack in March 1995 and one earlier this year. Of course,
those attacks require security forces to be in that area. We do
not pay the army for that security. It just goes with being there.
Unocal's consent to the use of violence to protect the pipeline
demonstrates its willingness to sacrifice human rights for profits.
Unocal, pursuing lucre, came to the civil unrest in Burma; its
economic investment has only exacerbated it. Total executives
have also admitted to a security arrangement for MGTC with SLORC,
conceding: "we know there might be a problem . . . [o]bviously
the government has told us that they will make the area safe,"
and "unless the area is pacified, the pipeline won't last
for its thirty year duration." John Imle has even said, "If
you threaten the pipeline there's gonna be more military . . .
for every threat to the pipeline there will be reaction."
***
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