By Glenn Ashton · 22 Jun 2010
In order to prevent criminal behaviour we are quite correctly forbidden to purchase goods which are suspected to be stolen or to be associated with criminal conduct. While an individual failure to heed this basic tenet of the law can result in personal conviction, a collective failure to observe it leads inevitably to a breakdown in both the rule of law and social order.
Modern commercial law has given similar legal status and rights to both individuals and corporations. People and companies are granted equal legal legitimacy and may buy, sell, make a profit and trade as they see fit; they may be sue or be sued, just as are people.
There is however one important difference, centred on the matter of limited liability. While a company may be held liable, this liability is limited, as is the responsibility of those guiding the company, unless they can be proven to have been negligent, or have acted recklessly. Providing such proof is difficult and often impossible.
Bestowing similar rights to people, companies and corporations overlooks some important differences. People are mortal. Corporations are immortal, often outliving people. Humans have emotion, are altruistic and are guided by social and moral norms. Companies and corporations have one central aim; to maximise profit, to make as much money as possible and push laws to their limits in doing so.
An entirely separate division of law known as company or corporate law has evolved over the past few hundred years to deal with the implications of these differences.
Yet even with this significant body of law, the single-minded, profit driven focus of companies and corporations, as well as their global reach, has often proven insufficient to control and restrain the exploitative nature of their power. Corporations exploit people, natural resources and any sign of competitive weakness in order to fulfil their primary aim of generating profit for their shareholders.
The result is a dynamic conflict between corporate wellbeing and social and environmental sustainability and survival. There is a profound logical disconnect in the dubious granting of citizenhood to corporations juxtaposed against how they interact with the real world in which we, the people, live.
Perhaps the most obvious of these disconnects is how it remains not only illegal but also socially unacceptable to do business with outlaws and miscreants, unless of course they are insulated behind a contrived veil of legal instruments. We need not look too hard to find repeat offenders in the corporate world that, were they individuals, would be forbidden from trading.
BP, or British Petroleum to give it its present name, should perhaps have kept its original moniker – the First Exploitation Company. It has, during its more than century long history acquired a rap sheet that would have forbidden it from even being allowed to sit on its own board, were it a human.
It has polluted the Arctic, failing to notify authorities of spills and toxic dumping. It was instrumental in the overthrow of the Iranian regime in the 1950s. It remained active in apartheid South Africa and has allegedly co-operated in Columbia with oppressive army and police actions. Similar allegations of human rights abuses come from Turkey and Azerbaijan, where BP is a major shareholder in a controversial pipeline. BP has a carbon footprint similar to that of Portugal. It is one of the US’ leading polluters. It has definitely not moved “beyond petroleum” as it has misleadingly claimed, instead exploiting Canada’s dirty energy tar sands.
Most recently BP’s association with the unfolding disaster in the Gulf of Mexico, through another string of questionable and possibly illegal actions has led to massive environmental impacts and is coupled to many thousands of job losses. Yet despite all of this, people unthinkingly support BP, on a daily basis. Is there not a serious disconnect here? Surely there should be a law against doing business with such a recidivist?
Closer to home we have Sasol, a company spawned by the apartheid government to minimise the impact of fuel sanctions. Sasol was later privatised at bargain basement prices which completely ignored the contributions of both tax-payers and exploited workers.
Besides its dirty history and its responsibility for the worlds biggest single source of CO2 pollution in Secunda, Sasol has been repeatedly found guilty of price fixing and of operating and supporting cartels to drive up prices of products like industrial waxes, bitumen (along with BP and other companies) and fertilisers.
Yet people still buy fuel from its outlets. Were Sasol a person, it would be probably be forbidden from trading, bankrupt or incarcerated. The fact that it has virtually unlimited resources to throw at legal and public relations has enabled it to maintain a modicum of legitimacy.
Then we have collusion in fixing food prices, which is effectively stealing from hard pressed consumers. First, collusion was proven in the bread industry. Then it was the millers. Then the dairy industry was implicated. Is there a clean industry out there? Steel, gas, seeds have all been implicated in cartel activity or seeking to cement monopoly control of their sectors.
Again each of these cases involves illegal action, not just in colluding, but in effectively stealing from the public. And what real censure results? Seldom does anyone go to jail, as would an individual. Companies pay fines which are offset against increased profits and then continue to trade.
A poor, hungry shoplifter may go to jail for stealing bread but a greedy, rich bread company can steal from breadwinners. When fines are levied they are little more than a virtual slap on the wrist, paid not by those responsible for the actual wrongdoing but by proxies in the form of shareholders, with individuals escaping Scott-free in these multi-million rand scams.
There are endless such cases across the world. Union Carbide killed thousands and impacted untold hundreds of thousands more in Bhopal, yet this event remains largely unresolved twenty five years on, through drawn out legal sparring. Monsanto Corporation polluted an entire town, Anniston, Alabama, yet got off with a fine that failed to reflect the true costs of its actions after 30 years of legal wrangling. Many victims have died without resolution.
Monsanto has consistently lied in its advertising, bribed officials and dumped toxic waste, amongst a long list of malfeasance. Here is a company that a judgement found to be guilty of behaviour “so outrageous in character and extreme in degree as to go beyond all possible bounds of decency so as to be regarded as atrocious and utterly intolerable in civilised society.”
Monsanto is now the worlds biggest seed company and responsible for more than 90% of the worlds genetically modified seed sales. “Trust us, they’re safe, folks!” Yet Union Carbide still functions, now morphed into a division of Dow Chemicals. Were either of these corporate ‘individuals’ were people they would have been removed from society and rendered bankrupt.
Corporations routinely get away with a lot more than “little people” as the BP CEO recently called the fishermen, owners of tourist facilities and millions of others affected by its latest disaster.
The legal differentiation between trading with individual criminals and criminal corporations is patently unfair. Even when corporate criminals are prosecuted, as in the case of Exxon, BP, Monsanto or Union Carbide, the corporation lives on. Banks are “too big to fail” so we bail them out, indebting us for untold future generations.
The culture from which these corporate crimes arose remains unchanged, with levels of built in deniability insulating individuals from culpability. If one corporate foot-soldier falls, a new recruit steps up to the plate. One can have all of the King Reports, all of the regulations on social and environmental responsibility without making one iota of difference to this culture of deniability.
Commercial law must be changed so that there is consistency in how individuals and companies are treated. Laws that serve the interests of business without adequately protecting the rights of citizens, of the environment and of society at large must be re-drafted. It is time for the concept of limited liability to be expunged if the necessary changes are to happen. Equal rights may be okay on paper but we cannot permit corporate super-citizens to overwhelm social order.
A major constraint to making these changes is the reality that we effectively dwell in a global oligopoly, ruled by a corporate-political nexus. Neutral legislation is drafted and interpreted to suit corporate interests. Judgements are inordinately influenced by narrow perspectives of libertarian free marketeering and neo-liberal, profit-driven self-interest, facilitated by the best lawyers that money can buy.
The most obvious way to force the badly needed changes is by changing the ground rules and hitting offenders where they hurt. If a corporation is out of line, remove its charter, strip its assets and stop it doing business. Hold directors, management and shareholders responsible for their actions.
In a truly free market – not the extant charade - the gap should rapidly be filled by others waiting on the sidelines. Just as football hooligans are banned from spoiling things for everyone, so too should corporate hooligans be curbed, for once and all.
Liquidating companies is more acceptable, legally and morally, than killing flies. The only problem comes with social acceptability. Perhaps we need a corporate death penalty. It would at least make social and environmental responsibility obligatory for investors, rather than the optional fashion accessory that it is now.