Essay – Unocal in Business

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Abstract In the world of business, maintaining a profit on the edge of ethics is always a difficult issue. Union Oil Company of California (Unocal) has invested in an international project outside of America. This project requires the construction of a pipeline to transport natural gas to Thailand. Though the corporation mentioned the benefits the local people would get, this project would violate numerous human rights abuses indirectly affecting Unocal’s reputation. Let’s further analyze the situation and evaluate whether Unocal was right, or what suggested a course of suitable actions for all parties in this case.

Introduction Unocal Oil Company of California or Unocal was established in 1890. Its main business was to develop oil fields around Los Angeles and other parts of California. After 100 years of operations and development, Unocal had expanded into different aspects of the oil industry (Velasquez, 2006, p. 119). This was not only a challenge but also an opportunity for Unocal as most of the oil fields in the United States nearing depletion. Hence, the corporation had looked outside America for opportunities. “Yamada Field” was their answer.

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It was an attractive natural gas field that belonged to Burma. To perform this project, it required Unocal to cooperate with one of the world’s most repressive military regimes, Burma’s State Law and Order Restoration Council (SLORC). Strongest condemnations by the US Congress, US State Department and other international organizations had been issued for SLORC (Velasquez, 2006, p. 120). Hence, the question was whether Unocal made the right decision in signing the contract with the Myanmar Oil and Gas Enterprise or not. Analysis

Unocal had violated not only human rights but also property rights of local people living across the route of building pipeline to Thailand. Especially, the Karen people were the most affected most. They are a hostile minority group inhabited in the South of Burma where the last 40 miles of the 256 mile pipeline to Thailand would cross through. However, to clear land with a cheap labor force the Burmese army continually forced them to relocate to different places, work in harsh conditions and cruelly repressed them if they had any intention against this project (Velasquez, 2006, p. 20). The Karen had to work like slaves. They were brutalized and forced to build roads, housing camps, and other infrastructures. For Unocal, trying to neglect and ignore what happened in Burma was not a very responsible action. In 1995 in a meeting with activists Unocal president John Imle said, “If you threaten the pipeline, there’s going to be more military. If forced labor goes hand in glove with military, yes, there will be more forced labor. For every threat to the pipeline there will be a reaction. ” Therefore, there was a huge conflict between the local people and Unocal.

This brought to an inevitable lawsuit that the corporation had to face. According to the article, Burmese villagers face Unocal in US court, Bangkok Post, published on 28/09/2002, we could see that: The defendant, Unocal, is based in the US, while the events in question took place in Burma. Because of US legal doctrine, it has been very difficult to bring cases from other countries to US courts, even when US defendants are central to the case. The Doe vs Unocal decision has overcome this obstacle (Kenny & John, 2002, p. xx).

In summary, if the plaintiffs – eleven anonymous Burmese villagers won this case, this would create a legal action brought under a law allowing foreigners to sue US companies for abuses overseas. On the contrary, if Unocal won this case, it would create a prototype for different American corporations in directing the operation and development process. Solutions Whether Unocal knew the brutal actions of their partner or not, they still had to be responsible for the ill-treated behaviors towards the Karen in Burma. What should Unocal do to force the human and property rights in Burma without sacrificing its benefits?

The Burmese Government had its own way of governing; hence, interfering in the political institution was not a good strategy. The responsibility of Unocal was making a profit associated with social benefits. Hence, at first, Unocal should negotiate with the Myanmar Oil and Gas Enterprise (MOGE) to find the peaceful ways of protecting the pipelines. Instead of using the army they should be able to hire the minority groups themselves to secure the pipeline. Unocal and their partners should pay fair wages directly to the villagers. They should offer them an amount of compensation to help them relocate as well.

All of those activities would save the reputation and image of the company. In addition, Unocal itself could offer free medical services, education or agriculture assistance. This will help the local villagers stand behind Unocal, supporting them in future, and especially avoiding the lawsuits of human abuse. What ethical theories or principles can you cite to help support what you say? Nevertheless they had known what the military did with the minority people; they kept neglecting how Burmese Government treated the local people.

Sadly, they had no action on this issue. In a landmark decision that reversed the trial court’s decision that plaintiffs had to show that Unocal also wanted the military to commit those abuses, a federal appeals court ruled in 2002 that plaintiffs needed only to demonstrate that Unocal knowingly assisted the military in perpetrating the abuses, and that plaintiffs had presented enough evidence to that effect so the case should go to trial. (Lobe, 2004) As a result, in December, the Supreme Court had used this ATCA to against Unocal Company. Unocal agreed to pay the villagers a sum in the tens of millions” (Kurlantzick, 2005). What we could learn from this lesson? According to utilitarian, this compensation was not so worthy compared to the benefit they had earned from this project. The benefit they earned could contribute a lot for American society in general and the government in particular. However, they violated the rights and justice of the Burmese. Instead of preventing the abuses in Burma, they passed over, putting all the responsibility onto the Burmese Government. This cannot be considered an ethical action.

If Unocal took care of the local villagers, built schools for them, provided free medical services, and treated the local people fairly, the cost that Unocal had to compensate would be lesser than 10 million dollars. Unocal also would not need to spend more time to take care of those victims, nor more money to pay for the lawyers. Their reputation and their brand name would not need to be rebuilt. Automatically, everyone would recognize Unocal as a trustworthy brand name on market. It would be a good way of PR in this competitive environment. Conclusion Despite the risk and ethical problems relating to the project in Burma,

Unocal kept investing in Burma and neglecting the human rights abuses of Burmese Government (Manuel, 2006, p. 120). Though Unocal has compensated 10 million dollars for the plaintiffs, they still need to spend more efforts to get back their reputation in the oil industry. Hence, after this case, Unocal should focus more on different social activities, fixing what they have missed in Burma and raise a fund to assist other abused people such as children or women laborers in the third world. This would help them gradually achieve the trust of customers in America and in the world.

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