RACHEL #455 (fwd)

Jim Jaszewski jjazz at freenet.hamilton.on.ca
Sun Aug 20 00:34:35 MDT 1995


---------- Forwarded message ----------
Date: Sat, 19 Aug 1995 17:04:23 -0400
From: Peter Montague <montague at world.std.com>
To: erf at rachel.clark.net
Subject: RACHEL #455


=======================Electronic Edition========================
.                                                               .
.           RACHEL'S ENVIRONMENT & HEALTH WEEKLY #455           .
.                     ---August 17, 1995---                     .
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.                   CONTROLLING CORPORATIONS                    .
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.      Fax (410) 263-8944; Internet: erf at rachel.clark.net       .
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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 at 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
===============
[1] "New Pennsylvania Environmental Group Seeks to Revoke
Charters of CSX Corporation and WMX Technologies for
Environmental Transgressions," CORPORATE CRIME REPORTER June 26,
1995, pgs. 1-5.

Descriptor terms:  corporations; democracy; accountability; wmi;
wmx; csx; community environmental defense fund; celdf; thomas
linzey; delaware; west virginia; de; wv; charter revocation;
corporate charters; richard grossman; ward morehouse; program on
corporations, law and democracy; strategy; tactics; cooperatives;



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Jim Jaszewski <jjazz at freenet.hamilton.on.ca>
http://www.freenet.hamilton.on.ca/~ab975/Profile.html
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