revoking corporate charters: another initiative


Jan Slakov

Dear RN list,   Sept. 21

This posting, like the "Exciting news from Arcata, CA" posting of Sept. 16,
is about citizens taking back the right (and responsibility) to revoke
corporate charters. There in no mention of Democracy Unlimited or Arcata in
this posting, but this particular initiative also originates in California.

It would be interesting if someone could help those of us living outside of
California understand better if and how these two initiatives are linked.

all the best, Jan
Date: Wed, 16 Sep 1998 21:35:57 -0400 (EDT)
From: Robert Weissman <•••@••.•••>
To: Multiple recipients of list CORP-FOCUS <•••@••.•••>

The mainstream view among citizen activists is that the most effective
means of dealing with corporate crime and violence is through regulation,
litigation, legislation, and law enforcement. 

But a breakaway group of activists want to move directly to a sanction
that will get the attention of every big corporation in America --
revocation of the charters of the most egregious of corporate wrongdoers. 

Throughout the nation's history, the states have had the authority to give
birth to a corporation, by granting a corporate charter, and to impose the
death penalty on a corporate wrongdoer by revoking its charter. 

Earlier today, a coalition of more than 30 public interest organizations
called on the Attorney General of California to revoke the charter of
Union Oil of California (Unocal). 

Why Unocal? 

The 127-page petition argued that Unocal was a recidivist corporation,
engaged in corporate law-breaking, was responsible for the 1969 oil
blowout in the Santa Barbara Channel and numerous other acts of pollution,
committed hundreds of OSHA violations, treated workers unfairly, is
complicit in human rights violations -- in Afghanistan and Burma, and has
"usurped political power." 

Arguing that the state of California routinely puts out of business
hundreds of unruly accountants, lawyers, and doctors every year, the
coalition called upon California AG Dan Lungren, who is running for
Governor, to revoke Unocal's charter. 

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

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

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

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

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

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

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

And the company has a friend in the Attorney General. Lungren who is on
the cover of the current issue of William Buckley's National Review, under
the headline "Great Right Hope." 

In other words, the chances are slim to none that Lungren will move
against his pals in the oil industry. So, why file the petition? 

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

If an Attorney General were independent enough to file such a petition, a
judge could appoint a receiver, so that the assets do not flee the
jurisdiction. Then if the judge has the guts to strip the company of its
charter, he has the authority to make "such orders and decrees and issue
such injunctions in the case as justice and equity and require." 

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

But Benson is not the judge and he admits that Unocal will not lose its
charter anytime soon. The petition was filed to spur change in our
stagnant legal and political culture, so that, as Benson says, "someday in
the future we will dissolve Unocal and other giant corporate repeat

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor.

(c) Russell Mokhiber and Robert Weissman

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