Rachel's Environment & Health Weekly

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 Date: Thu, 31 Aug 1995 18:24:48 +0100
 To: ann@cni.org
 From: au007@rs1.rrz.uni-koeln.de (Michael Uwe Moebius)
 Subject: RACHEL'S ENVIRONMENT & HEALTH WEEKLY
 Cc: au007@rs1.rrz.uni-koeln.de
 
 ------ Forwarded message ------
 Date: Thu, 31 Aug 1995 05:43:28 -0300
 From: SAMSAM@VM1.YorkU.CA
 To: Multiple recipients of list <inet-news@nstn.ca>
 Subject: NEWS - WEEKLY - ENVIRONMENTAL ACTIVISM
 
 Item:     Weekly news and opinion on environmental related issues
 Site:     See below for email subscription info.
 Content:  This weekly has begun a series on reforming corporate
           America that will fascinate anyone doing business reporting.
           Attached is a particularly interesting recent issue.
           It may be the first incident in an entirely new approach
           to the regulation of corporate behaviour. Although it isn't
           mentioned anywhere in this article - all major corporations
           are in litigation continuously. Now a new type of
           suit is arising.
 
 
 .           RACHEL'S ENVIRONMENT & HEALTH WEEKLY #455           .
 .                     ---August 17, 1995---                     .
 .                          HEADLINES:                           .
 .                   The Big Problems, Part 4:                   .
 .                   CONTROLLING CORPORATIONS                    .
 .                          ==========                           .
 .               Environmental Research Foundation               .
 .              P.O. Box 5036, Annapolis, MD  21403              .
 .      Fax (410) 263-8944; Internet: erf@rachel.clark.net       .
 .                          ==========                           .
 . Subscribe: send E-mail to rachel-weekly-request@world.std.com .
 .  with the single word SUBSCRIBE in the message.  It's free.   .
          Back issues available via anonymous ftp from          .
 .    ftp.std.com/periodicals/rachel and from gopher.std.com     .
 ===========================================
 ======================
 
 THE BIG PROBLEMS--PART 4: CONTROLLING CORPORATIONS
 
 A Pennsylvania environmental group has taken action to revoke the
 corporate charters of two major American corporations --WMX
 Technologies (formerly Waste Management, Inc.), the giant waste
 hauler, and CSX, a large railroad and ocean shipping company.[1]
 
 The Community Environmental Defense League (CELDF) of Harrisburg,
 Pennsylvania [Thomas Linzey, president; phone: 717-545-0124], in
 June petitioned the attorneys general of Delaware and West
 Virginia, asking them to revoke the corporate charters of WMX and
 CSX.
 
 A corporate charter is a piece of paper issued by the authority
 of state legislatures to groups of people, giving them the
 privilege of doing business as a "corporation."  The benefits of
 the corporate form are many:
 
 ** If a corporation causes harm, the liability of individual
 investors is limited by law;
 
 ** Because investors are numerous and scattered, whereas managers
 are few and focused, managers and boards of directors control a
 great deal of money, and therefore a great deal of power, often
 answerable to no one;
 
 ** Corporations can own other corporations, which can, in turn,
 own other corporations, thus making it very difficult, or
 impossible, to trace ownership and responsibility for particular
 corporate actions;
 
 ** Because corporations can grow large (often much larger than
 any state government), in a dispute with government, they can
 field an army of attorneys and other specialists who can
 overwhelm the opposition, leading to an accommodation (often
 called a "consent decree," in which a fine is levied with no
 admission of guilt) rather than an aggressive prosecution by
 government;
 
 ** Corporations, particularly those with overseas subsidiaries,
 can often evade taxes by fancy footwork in the bookkeeping
 department (which may be perfectly legal);
 
 ** In court proceedings, corporations enjoy a dozen or more
 advantages that individuals cannot (for example, fines to
 corporations are deductible as business expenses, whereas fines
 to individuals are not);
 
 ** Under most modern corporate charters, corporations have
 unlimited lifetimes, giving them a staying power and an ability
 to accumulate wealth and strength far beyond anything an
 individual could ever achieve.  Beyond a certain size,
 corporations become so large that no fine --or even the
 occasional jail sentence for an errant manager --can deter them
 from their course.  They are simply beyond social control.
 
 ** As time has passed, court decisions have given corporations
 the legal status of "persons," giving them the same protections
 that the first 10 amendments to the Constitution give to natural
 persons (individual humans).  The first 10 amendments were
 originally written to protect individual citizens against a
 tyrannical government--giving individuals rights such as "due
 process" and "free speech."  Corporations have appropriated those
 rights, which they now use to influence elections, influence
 law-making by legislatures, influence public education, influence
 the media, influence and "educate" judges, and influence public
 policy debates.
 
 Despite these and other advantages of incorporation, the power to
 give, or revoke, corporate charters still resides with state
 legislatures, so ultimately the American people hold power over
 American corporations--though during this century the people have
 made remarkably little use of such power.  Now CELDF has taken a
 first step to change this picture.  Here are a few details about
 the two cases:
 
 WMX Technologies
 
 WMX Technologies (still better known by its former name, Waste
 Management, Inc.) is the nation's largest waste hauling firm,
 headquartered in Oak Brook, Illinois, but chartered in Delaware.
 In recent years, WMX has been charged with numerous violations of
 law and regulations and has paid tens of millions of dollars in
 fines.  (See REHW #299, #288, #282, and #281.)  Based on this
 record, CELDF on June 14, 1995, petitioned the Attorney General
 of Delaware to revoke WMX's charter of incorporation.  Delaware
 law gives the Attorney General QUO WARRANTO power to revoke the
 charter of any corporation for "abuse, misuse or nonuse of its
 corporate powers, privileges or franchises." QUO WARRANTO (a
 Latin phrase meaning "by what authority?") describes a proceeding
 in which the state demands to know by what authority an
 individual or corporation is exercising a franchise or liberty.
 Such a proceeding can end in revocation of a corporate charter.
 Thomas Linzey, the president of CELDF, says Delaware courts have
 defined "abuse" of corporate privilege as "continued criminal
 violations." Linzey says he does not expect the Delaware Attorney
 General to take action against WMX, but eventually he may sue the
 Attorney General. Delaware law says the attorney general "shall"
 take action, Linzey says; it is not discretionary.
 
 CSX
 In recent years, CSX spills and leaks have caused pollution in
 several U.S. locations (for example, see REHW #230 and NEW YORK
 TIMES 11/21/91, pg. A20), including West Virginia.  Based on this
 record, CELDF on June 9, 1995, wrote West Virginia Attorney
 General Darrell McGraw, Jr., seeking the revocation of CSX's
 corporate charter.
 
 SOMETHING NEW
 It is clear that there is a new movement afoot in this country to
 reassert control over corporations.  The action in June by CELDF
 against WMX and CSX could be viewed as the opening gambit in a
 high-stakes chess game between corporations and the American
 people. It is a particularly dangerous game for corporations
 because, if they use their raw power to secure their present
 privileges against democratic control, they may light the fire
 under a major public debate, which would alert the public to the
 extraordinary nature and extent of corporate power.  In the
 ensuing conflagration, corporate privileges could go up in smoke.
 
 At present, public attention in the U.S. is focused almost
 exclusively on "government" as the source of the nation's
 problems; corporations are nearly invisible, and certainly are
 nowhere near the center of public debate.  Even the mainstream
 environmental movement for the past 25 years has sought to
 influence corporate behavior only indirectly, by establishing
 government regulations--a strategy the mainstream groups continue
 to pursue even though it has proven to be enormously costly and
 largely ineffective.
 
 For the past 4 years, the leading proponent of democratic
 control of corporations has been Richard Grossman.  Now, with
 Ward Morehouse, Grossman has started a new project called the
 Program on Corporations, Law and Democracy (P.O. Box 806,
 Cambridge, Mass., 02140; phone: (508) 487-3151; E-mail:
 poclad@aol.com).  The new project goes beyond mere charter
 revocation as a strategy for making corporations more
 accountable.  Recently Grossman and Morehouse issued a list of
 "Suggestions for an Agenda for Action in Arenas WE Define"
 --tactics for changing the behavior of corporations, going
 beyond corporate charter revocation.  Here they are:
 
 ** Rechartering corporations to limit their powers and make them
 entities subordinate to the sovereign people, by, for example,
 granting charters for limited time periods, requiring approval by
 communities and workers to continue in existence, making
 corporate managers and directors liable for corporate harms, etc.
 
 ** Reducing the size of corporations by breaking them up into
 smaller units with less power to undermine elections, lawmaking,
 judicial proceedings and education; restricting size and
 capitalization of corporations; prohibiting one corporation from
 owning another corporation (some of which was accomplished by the
 Public Utility Holding Company Act of 1935).
 
 ** Establishing worker and/or community control over production
 units of corporations to protect the "reliance interest" and
 other rights of workers and communities.  This can be done by
 writing rules directly into corporate charters, such as
 prohibiting the hiring of replacement workers during strikes,
 requiring independent health and safety audits by experts chosen
 by workers and affected communities, and banning use of deadly
 chemicals, such as chlorine.
 
 ** Initiating referendum campaigns, or taking action through
 state legislatures --and in the courts --to end constitutional
 protections for corporate "persons" and to require state
 attorneys general to undertake charter revocation or rechartering
 actions when petitioned by citizen groups.
 
 ** Prohibiting corporations from making campaign contributions to
 candidates in ANY elections, and from lobbying ANY local, state
 and federal government bodies.
 
 ** Stopping extortion and "subsidy abuse" by which large
 corporations rake off billions of dollars from human taxpayers
 through direct pay-offs and tax breaks.
 
 ** Launching campaigns to cap salaries of corporate officials and
 tie them to a ratio of average compensation levels of production
 workers (say, 5:1 or 10:1), to gain greater transparency in
 corporate decision-making, and to end corporate tax deductions
 for legal fees, advertising and fines.
 
 ** Encouraging worker and community-owned and -controlled
 cooperatives and other alternatives to conventional limited
 liability profit-making corporations by using law and the public
 treasury.
 
 ** Preparing a model state corporation code based on the
 principle of citizen sovereignty and campaigning for its
 adoption, state-by-state.
 
 ** Invigorating from the grassroots up a national debate on the
 relationship between public property, private property (including
 future value), and the rights of natural persons, communities and
 other [non-human] species when they are in conflict, and on the
 role of the law in resolving such conflicts in a democracy.
 
 Richard Grossman said recently, "In about 10 states, people are
 looking into corporate law and histories --including how their
 state constitutions and state corporation codes once defined
 corporate rights and activity with great precision.  People are
 learning to demystify the law, looking for organizing handles
 they can use to take rights and powers away from corporations.
 "The large corporation is truly the dominant institution of our
 era. It creates dependence and feelings of helplessness, while
 provoking great anger.  Where people have been resisting
 corporate harms, where corporations are overtly tyrannical,
 people ARE reflecting on the nature of corporations.  They ARE
 discussing citizen sovereignty and corporate abolition.  Surely
 we can turn people's anger away from the symbols of government
 and towards our real governing bodies--giant corporations.
 Surely we can build a powerful political movement to disempower
 corporations and to govern ourselves," Grossman said.
                                                 --Peter Montague

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