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

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.

... 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.

... 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For the past 15 or 20 years now, the divine right of kings has been replaced by the divine right of CEOs and the controlling owners behind them.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.

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.

Outgoing Senate Majority Leader George Mitchell of Maine

The system stinks. The system is money.




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.


U.S. Supreme Court Justice White said in 1978 about corporations:

"The state need not permit its own creation to consume it."





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...



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.



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.



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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