Author Archives: John Richardson - Page 2

Chevron in Ecuador: Will Justice be Served?

Posted by on May 12, 2011 1 comment

Sludge in an abandoned Ecuadorian wellIn the ongoing battle between Chevron Corp. and a number of indigenous people living in the remote northern region of the Ecuadorian Amazon, known as the Oriente, the plaintiffs and their supporters this week received an interesting report commissioned by Amazon Watch and Rainforest Action Network. Entitled “An Analysis of the Financial and Operational Risks to ChevronCorporation from Aguinda v. ChevronTexaco,” the report focuses on the risks posed for the oil company in the coming years from its more than 18 year battle to avoid liability for its complicity in the devastating aftermath from oil drilling operations in that region of the South American continent.

Written by Simon Billenness and Sanford Lewis, the report is an interesting read about the efforts that a multi-national corporation will spend to avoid responsibility for its misdeeds.  Among other findings, the report noted that:

  • Chevron is facing a number of financial and operational risks with regard to litigation in Ecuador in Aguinda v. ChevronTexaco concerning the company’s liability for alleged widespread contamination of soil and water.
  • At present, Chevron is facing an $18 billion judgment that remains under appeal in the Ecuadorian courts. This is a historically high judgment that is comparable in size only to BP’s promised $20 billion fund to compensate victims of the 2010 Gulf of Mexico oil spill.
  • While Chevron has admitted in sworn legal statements that the company is at risk of “irreparable injury to [its] business reputation and business relationships” from potential enforcement of the Ecuadorian court judgment, the company has failed to characterize these risks to the company in its public filings and statements to shareholders.

While the report does not contain any new revelations about the decades long dispute, what makes this worth noting is that it puts in one place a profile of Chevron’s conduct toward communities, stakeholders and shareholders. I hope that Mssrs. Lewis and Billenness keep us all apprised of developments in this ongoing battle and hopefully, can provide us with some good news sometime soon.

For a copy of this report, click here.

Neo-Paramilitaries Ramp Up as Trade Deal Nears

Posted by on March 17, 2011 2 comments

The U.S-Colombia Free Trade Agreement Nears a Vote

There are two interesting articles that have come out in recent days concerning Colombia and its push to complete a trade deal with the U.S.

The first story carried by the U.S. media concerns renewed efforts by Congress to close the deal on the U.S.-Colombia Free Trade Agreement. For those of you paying attention, this has been a long-running battle between  organized labor and free trade advocates with the union advocates arguing that such a deal should be rejected until trade unionist killings stop in Colombia.See “Senators prod Obama to move Panama, Colombia deals” on Reuters.com.

The second story from ColombiaReports notes a recent report by an NGO in that Latin American country that indicates that neo-paramilitary gangs now occupy fully 1/3 of the municipalities in the country. Neo-paramilitary presence in 1/3 Colombia: NGO – ColombiaReports.com.

Given the trend in Congress to put business before humanity, I don’t expect that this agreement will languish much longer.

 

Corporate Governance is Dead

Posted by on December 28, 2010 6 comments

I am sorry to be the bearer of bad news but it’s true. Corporate Governance as we know it is dead. Gone. Pfffft. As 2010 comes to a close, we must all come to terms with the fact that this old clunker has seen its day. Its rusted hood ornament and fins are of a bygone era, an artifact of another time.

Not to be confused with its evil twin, that mutant beast on a short corporate leash also euphemistically referred to as “corporate governance,” this latter day zombie is a corrupt, tired and wholly irrelevant concept that has no value in today’s world of investing.

Perhaps an explanation is in order. The corporate governance I refer to was once an important, vital tool for holding corporations accountable to their shareholders. Executives were threatened by the concept. Uttering the words corporate governance was akin to dissing one’s mother at the country club.

In its heyday, corporate governance was an effective weapon for reigning in corporate excess, challenging management on a range of issues and a platform for debating important issues effecting shareholder value and stakeholders as a whole. In the late 1980s, the Council of Institutional Investors was but a seed of an idea in the head of California’s State Treasurer, Jess Unruh. JP Stevens, a textile manufacturer was facing unruly mobs of shareholders at its annual meeting because of its abhorrent labor practices. Multinational corporations were called to account for their complicity in Apartheid South Africa. Corporate Governance was in its infancy. Things changed.

The 1990s saw Corporate Governance maturing a bit. Some of the youthful exuberance remained but there was a bit of seriousness injected into its core. CalPERS, the largest pension fund in the U.S. got on the bandwagon, waging battles in annual meetings and boardrooms across corporate America. The nascent idea that executive pay should somehow be tied to corporate performance was bravely advocated. Corporate Governance was now in its adolescent years.

The 21st century arrived and Corporate Governance was in full swing. Barrel-chested, dapper and full of itself, Corporate Governance had come into its own. “Adults” were referring to corporate governance in the same sentence as shareholder returns, valuations and other big and important investment terms. Ominously, executives and corporate lawyers were using the language of Corporate Governance in conversations about the public enterprise. Institutes were formed at major Universities, international conferences were held and Corporate Governance became a profession. Middle age had set in but a mid-life crisis was looming.

In the mid-2000s, the Corporate Governance binge was on. A new beast, the hedge fund, and its drunken cousin, the private equity fund, had embraced Corporate Governance not as a good in and of itself but as a means to an end, in this case profit maximization. Even more disturbing was the embrace of Corporate Governance by the governed – corporate executives and their ilk. Yes, NAMBLA had merged with Mothers Against Child Abuse.

Corporate Governance has begun a period of self-evaluation. One indicator of this is the recent spate of mergers in the proxy adviser world. ISS goes through its seemingly endless series of mergers and acquisitions. MSCI, now stuck with a minimally profitable enterprise is no doubt wondering how to offload this doddering venture. Governance Metrics merged with the Corporate Library. Recent reports have announced the acquisition of Proxy Governance by Glass Lewis. Each of these events speaks to the unspoken fact that there is little money to be made in the proxy advisory world. CalPERS is refocusing its governance work in a way that suggests that its adventures over the last two decades is winding down.

More importantly, the arcane discussions about executive pay, director responsibility and risk are proving to be ever more irrelevant in a world concerned about the influence of the corporate enterprise on society and the environment. Corporate Governance as a tool for addressing these problems has lost its edge. While these discussions remain important to the initiated, its backward-looking approach and its failure to influence the ills of global corporate conduct speaks to its ultimate irrelevance.

Like all things once good, Corporate Governance has seen its day. Now I’m off to get my shovel before things start to smell.

Political Fundamentalism and the Tyranny of Stupidity

Posted by on December 23, 2010 2 comments

“The fundamental cause of trouble in the world today is that the stupid are cocksure while the intelligent are full of doubt.” Bertrand Russell

No words more accurately describe the thinkers at the Heritage Foundation as shown in a recent post on their web site, “Why Does Sovereignty Matter to America?” They suggest that American sovereignty is threatened by looming international forces.  According to the author of this screed, “[O]ur sovereignty faces new threats. International organizations and courts seek to reshape the international system. Nations are to give up their sovereignty and be governed by a “global consensus.” Independent, sovereign nations will be replaced by “transnational” organizations that reject national sovereignty.”

I suppose the opening line of the Heritage Foundation post should have given away the punch line to this amazing corruption of legal reasoning: “The United States is a sovereign nation. Sovereignty is a simple idea.” Really?

So why have the Heritage Foundation “thinkers” gotten on their high horses? Well, in the case of the author, Steven Groves, he is perhaps concerned with the risk that American leaders could be prosecuted for war crimes by the International Criminal Court for their misdeeds in various wars which the country has engaged in of late.  Framed in the logic of Constitutional fundamentalism, which has become so popular with the conservative Right, he suggests that the republic is at risk from foreign forces bent on usurping the rights of Americans as spelled out in the Constitution.

For those familiar with domestic and international law, Groves’ logic fails. Despite his arguments, Constitutional fundamentalism has never been the basis for legal reasoning in America. With respect to principles of international law, it has always been the case that national laws of the United States are created that embrace principles set forth in treaties once entered into by the U.S. For example, the international law forbidding genocide has its counterpart set forth under Title 50, Section 1091 of the U.S. Code. Apparently Mr. Groves missed that lecture while attending law school.

Another explanation for this diatribe can be found in the all too common problem with conservative thinkers today. Playing to the lowest common denominator of the electorate and characterizing all things, which they don’t like as “bad” in the simplest of terms, conservative “thinkers” avoid any real debate about the complexities in the world around them. Like the recruitment by the Taliban and al Qaeda of impressionable young men in the belief that they get to hang with virgins once they blow themselves up, the conservative right demonizes solutions to complex problems with flippant solutions, effectively blows up the rule of law in the process and embrace the fools who buy their twisted logic. This has proven effective for idiots like Sarah Palin and Glen Beck and has served as a rallying cry for Tea Party acolytes everywhere.

It is all too apparent that this sort of reckless thinking is intended to garner votes from an uninformed electorate at the cost of preserving the rule of law.  This is the Christmas gift that the Heritage Foundation and the extreme Right offers America. Thanks a bunch!

Let’s Declare Cyberwar!

Posted by on December 14, 2010 No comments

As a child, I remember playing “war” with my friends. Epic battles played out in our backyards with imaginary casualties lying at the feet of victorious warriors in paper hats. Unfortunately, many years later not much has changed in the minds of many otherwise reasoned thinkers.

A recent article by David Frum in “The Week”  exemplifies this phenomena. In his article “Wikileaks is an Act of Cyber War,” Frum argues that Wikileaks is the cyber equivalent of a roadside bomb as compared to the cyber attack on Iran’s nuclear facilities, which he characterizes as an F-35 attack.

But are Wikileaks antics a form of cyber war as Frum and others suggest? The short answer is no.

Best described as a new form of warfare, a cyber-war must be distinguished from cyber-espionage, cyber-crime and other variants of online conflict. While the popular media will continue to use the term to describe anything that will help sell ad space, the term describes a conflict between states as described in the formal laws of war.

The problem today is that legal scholars have not fully figured out how to define a cyber-war since the modern rules of armed conflict were crafted prior to the advent of the Internet.

A short answer to what is a cyber-war is to look at whether the online actions resulted in death or destruction and can it be attributed to another state. There are no easy answers to these seemingly simple questions and other factors need to be addressed as well before declaring a cyber-conflict a “war.” But for purposes of the discussion about pro or anti Wikileaks hackers waging distributed denial of service attacks against credit card companies and the like, it is perhaps better to think in analogous terms. The current demonstrations in the U.K. by student protesters upset over increases in tuition rates seem a more apt comparison. While some students may believe that they are at war with the British government, theirs is a protest, plain and simple.

In the case of Wikileaks, what we are now seeing is a characterization of the cyber event as something defined by the beholder, thereby justifying retaliation. Calling something a war invokes a certain nationalistic fervor and a call to action. Unfortunately, this means spending money (lots of it) to protect us from enemies, real or imagined, forgoing personal freedoms for the common good (remember the Patriot Act?) and branding dissenters from the prevailing ideology as terrorists. It’s not inconceivable that donations to the Wikileaks defense fund could be considered financing a terrorist organization in the not so distant future.

Cyber-wars will befall us all but be patient and be warned. A real cyber-war is not something we will find entertaining on the evening news. Just as important, reckless use of the cyberwar moniker opens the floodgate of state-sponsored repression that makes the whining about Wikileaks look like child’s play.