The Human Rights Pipeline : Charges of Slave Labor in Myanmar Lead to Ballot at Unocal
In a proxy vote this month, Unocal Corp.’s shareholders face a decision that may have a major impact on the debate over U.S. human rights policy in Myanmar, where the military regime allegedly is using forced labor to build infrastructure projects possibly related to a Unocal gas pipeline.
Company officials deny any connection between Unocal’s activities in Myanmar (formerly Burma) and alleged human rights violations. They have urged shareholders to reject a resolution calling for a full report on the situation.
But as proxy votes are being cast by mail in advance of Unocal’s April 25 annual shareholders’ meeting in Los Angeles, evidence is mounting that serious problems have occurred in the vicinity of the planned natural-gas pipeline.
Burmese refugees reportedly have poured into Thailand, complaining that government troops uprooted villages and conscripted men for forced labor gangs working on highway and railroad construction in the area, formerly a war zone where ethnic Karen and Mon rebels were active.
“We think these reports are credible,” said a knowledgeable U.S. official, who requested anonymity because of the sensitivity of the matter. “Forced labor is an important aspect of the human rights problem in Burma.”
No evidence has surfaced directly linking the alleged labor abuses to plans by Unocal and its French partner, Total, to build a 38-mile pipeline through the Ye-Tavoy region, in Myanmar’s southern panhandle, to Thailand.
The U.S. official said there is “certainly a possibility” of a link. But Unocal officials said any construction in the area has nothing to do with the pipeline project.
Pipeline construction would begin only if offshore drilling concessions, located in Myanmar’s territorial waters in the Andaman Sea, prove commercially viable, Unocal officials said.
“We will not hire slave labor,” said Dennis Codon, vice president and general counsel for Unocal. “We will not be a party to that.”
Yet the Unocal proxy resolution, filed by investors affiliated with the Interfaith Center on Corporate Responsibility, brings focus to a festering trouble spot in U.S. foreign policy. And it highlights the kinds of ethical questions corporations must ask themselves as they pursue opportunities in developing countries.
“Unocal and other corporations claim political neutrality in Myanmar,” the proxy resolution states. “However, doing business with a repressive regime is inherently political.”
Myanmar’s ruling military junta, which calls itself the State Law and Order Restoration Council (SLORC), “flaunts its partnerships with foreign corporations as proof of political legitimacy,” the resolution asserts.
John Imle, Unocal executive vice president, insisted that Unocal representatives in Myanmar have seen no evidence to substantiate the claims of human rights abuses in the pipeline area. He added that Unocal believes its presence in Myanmar will contribute to the growth of democracy.
“I cannot take an anti-SLORC stand,” Imle said. “But I don’t think they’re gaining legitimacy on the world stage by having Total and Unocal there. I think the people have gained through employment . . . and Western influence.” Unocal has been active in Myanmar since 1988; it abandoned an unsuccessful onshore drilling site in 1992.
The tension between U.S. commercial interests and human rights concerns in Myanmar mirrors the increasingly belligerent dispute over China’s trade privileges.
Sometime over the next several weeks, the Clinton Administration is expected to announce a tougher plan of action for Myanmar, which may include economic sanctions, knowledgeable sources say.
The new policy will follow a series of White House discussions with a group of Nobel Peace Prize winners who have been protesting the house arrest of fellow laureate Aung San Suu Kyi.
Aung leads the National League for Democracy, the party that won Myanmar’s first free election by a landslide in 1990. The military junta abrogated the election results and cracked down on dissent.
Western countries stopped foreign aid after the military massacred hundreds and possibly thousands of civilian demonstrators in 1988. But in the absence of economic sanctions, international human rights activists have been pressuring corporations to voluntarily withdraw from Myanmar, or adopt a code of conduct that would restrict their activities.
Activists complain that doing business with the SLORC regime not only legitimizes the military government, but brings in the badly needed hard currency that will ensure its survival.
In the Total-Unocal deal, the Myanmar Oil and Gas Enterprise, the state oil company, will acquire a 15% stake in the gas project once it starts producing, a Unocal spokeswoman said.
Unocal, which now owns 47.5% of the project, will retain at least a 28% interest; Total, the lead partner, will control about 31%. The Petroleum Authority of Thailand has an option for a 26% stake.
So far, the activists have had little influence on U.S. corporate policy. The exception has been privately owned Levi Strauss, which withdrew operations from Myanmar as well as China in 1992, citing human rights concerns.
Besides Unocal, shareholder resolutions on the Myanmar human rights question have been filed at three other corporations this year: Amoco Corp., Texaco Inc. and Pepsico Inc. But all three persuaded the Securities and Exchange Commission to strike the measures from their proxy statements. (Chicago-based Amoco announced last month that it was withdrawing from an onshore energy exploration project in Myanmar, citing economic reasons.)
Unocal, however, chose not to appeal to the SEC. Company officials said they allowed the Myanmar resolution to remain on the proxy statement because they wanted to engage in open discussions with its sponsors and let shareholders decide.
Father William G. Devine, a Jesuit priest from Boston who has spearheaded the Unocal stockholder measure, said he has met twice so far with Codon, the company lawyer. A meeting with Imle is scheduled for Wednesday.
“Unocal says it really wants a dialogue, and they’re coming all the way across the country to sit down with us,” he said. “But their answers aren’t very clear. There’s not much follow through yet.” The Interfaith Center on Corporate Responsibility, which Devine represents, holds 3,608 of Unocal’s 240 million outstanding shares.
Devine noted that the resolution does not censure Unocal or require it to suspend operations in Myanmar, but only directs management to study the situation and prepare a report for shareholders.
Still, Imle said the company wants the resolution defeated to avoid setting a precedent. “If we created reports for every Unocal shareholder, we’d be writing a lot of reports,” he said. “We don’t have the time.”
A group of Pepsico shareholders asked for and received a report on the company’s activities in Myanmar last year without resorting to a proxy resolution. This year they filed a resolution demanding the company withdraw, but Pepsico got the SEC’s permission to drop the measure from its proxy, said a spokesman for the Purchase, N.Y.-based company.
Meanwhile, the Investor Responsibility Research Center (IRRC)--a Washington group that evaluates social issues facing shareholders--issued a report last week on the Unocal resolution.
“That SLORC is guilty of serious human rights abuses in general appears beyond any reasonable doubt, despite assertions by the oil companies,” the report said. “The charges of forced labor and relocation are open to more question. . . .
“Some shareholders may feel that a vote in favor of this resolution could help to establish the truth of these allegations,” the IRRC concluded.
But the group added that the resolution also brings Unocal management’s judgment on Myanmar into question, possibly “endangering projects and relationships that are providing--or seem to offer the prospect of providing--substantial profits for the company.”
Unocal’s Codon expressed doubts about the report’s objectivity. “I wouldn’t say they’re not neutral,” he said. “But I would say they’re being lobbied and petitioned by that group (of religious investors).”
The IRRC report cites allegations of forced labor abuses in Myanmar by the State Department and human rights advocacy groups such as Amnesty International and Asia Watch. It quotes a United Nations investigator as saying “atrocities are being committed consistently and on a wide scale by the soldiers of the Myanmar army against innocent villagers.”
However, it is not clear whether evidence of forced labor in the Total-Unocal pipeline area can be clearly documented and whether such abuses can be linked to pipeline infrastructure.
A British documentary maker said he recently visited the pipeline area and photographed a laborer in chains. An American anthropologist said she interviewed an army officer there who described the infrastructure work as partly aimed at “boosting security” for the pipeline.
Neither claim could be independently verified.
“This is all hearsay in my mind,” said Codon. “We’re asking for proof and evidence.”
Focus of Controversy
A proposed natural gas pipeline in which Los Angeles-based Unocal will be a major investor has prompted questions from religious activists about the company’s activities in military-ruled Myanmar. Map details the pipeline’s tentative route from Myanmar to Thailand.
