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Corporations: Enemies Of The People

By Chaitanya Davé

12 June, 2013

The true progenitors of modern corporations emerged as the “chartered company “during the time of the colonial expansion in the 17th century. The Dutch East India Company and the British East India Company symbolized the dazzlingly rich potential of this new entity and its new ways of doing business that was brutal and exploitative. Its nature has changed little ever since.

Of the 100 largest economies in the world today, 41 are corporations, not countries. Their enormous wealth carries immense impact on our lives. These incredibly wealthy and powerful multinationals through their activities can harm our health, determine our working conditions, decide to neglect the hazards we face as workers or consumers and devastate our natural environments.

It is interesting to see what some of these giant multinationals are doing around the world. Few days ago, The Democracy Center released their scathing report by Thomas Mc Donagh on corporate activities globally. The report describes many of the incidents of corporations’ nefarious activities and their ridiculous claims.

El Salvador vs. Pacific Rim: According to this report, in 2009, when the government of El Salvador refused to issue an environmental permit to a Canadian mining corporation, people of Las Cabanas rejoiced. The community activists there for years were fighting a pitched battle against the company, Pacific Rim, to mine for gold in their region. Their plans included dumping of toxic arsenic in their rivers. The campaign was fraught with risks. In the course of their courageous campaign, four Salvadoran anti-mining activists had been murdered. For the poor people of El Salvador, this victory will be costly. In a legal assault filed in a World Bank trade court, Pacific Rim is now demanding $315 million in compensation payments from the Salvadoran government, an amount equal to one third of the country’s annual education budget.

In 2010, public health campaigners in Uruguay won a huge victory when the national government passed new health laws to discourage tobacco consumption. Even though these new laws—including aggressive new warnings on cigarette packages—had directly followed the guidelines of the World Health Organization, the U.S. corporate tobacco giant Philip Morris retaliated with a $2 billion legal action against the government.

Bolivia vs. Bechtel: The corporate driven investment rules and “dispute resolution” were exposed into public view when a decade ago, Bechtel, a San Francisco based engineering conglomerate, sued the people of Bolivia for $50 million in lost profits following the now-famous Cochabamba Water Revolt after investing just $1 million in the country. The people of Cochabamba had revolted against Bechtel because when Bechtel took over their water system, the price of water had more than doubled.

Peru vs. Doe Run Peru: There is another case that features exposure to lead in Peru. The local population of the town La Oroyo suffered from lead poisoning from a smelter plant operated by Doe Run Peru. Located high in the Peruvian Andes, the village has been declared one of the most polluted sites on earth. In 2007, 99% of children in the neighborhood closest to the town’s smelter had dangerously high levels of lead in their blood. The Peruvian government concluded that Doe Run Peru had failed to meet the environmental cleanup commitments at the site and this constituted a breach of their environmental legal standards. But the parent company of Doe Run thought otherwise. Doe Run, owned by US billionaire Ira Rennert, hit back the Peruvian government with an $800 million damage-claim. For a poor country like Peru, this is enough money to pay salaries of almost 15,000 Peruvian school teachers or nearly 6,000 Peruvian health workers.

Mexico vs. Metalclad: When the U.S. based corporation Metalclad was denied the permit to operate a toxic waste site and instead declaring the area a natural reserve to protect the environment by Mexico, Metalclad retaliated by launching a lawsuit for $90 million. Using chapter-11 investor protections in the North American Free Trade Agreement (NAFTA), Metalclad has demanded compensation for damages and loss of future earnings. Metalclad was awarded $16.7 million in August 2000 by an ICSID arbitration panel which was later reduced to $15.6 million in the courts of British Columbia.

The trade under globalization today is controlled by an expanding web of over 3,000 bilateral and multilateral trade and investment agreements. The cases are argued behind closed doors by a handful of lawyers, most of them from North America and Europe. Most respondents are governments from the global South. Under these unfair agreements, the corporations are granted rights to sue governments for policy initiatives that they claim interfere with their profits. The resulting legal cases, though they pose far reaching local consequences, are settled far away and behind closed doors by a small group of unaccountable private lawyers in international dispute arbitration tribunals. With no democratic principles or judicial independence, these tribunals operate under little or no public scrutiny. The community directly affected is denied any voice.

The most commonly used tribunal system is ICSID (the World Bank’s International Center for the Settlement of Investment Disputes), an institution of the World Bank where there were 26 cases in 1990. Today there are 518 cases pending. Besides ICSID, other courts commonly used include ad hoc tribunals established under the rules of United Nations Commission on International Trade Law (UNCITRAL) and the International Court of Arbitration at the International Chamber of commerce (ICC). The multinational corporations are using these international courts, their clever lawyers and a web of complicated rules and regulations inserted in the complex agreements to sue and force the governments especially those of the poor countries to either allow their nefarious activities or to make them pay huge compensations for lost profits.

As the globalization is increasingly facing staunch opposition by the third world countries, the U.S. and European powers have created ICSID and have proposed Transpacific Partnership (TPP), bilateral trade agreements between two countries that include provisions that allow corporations to sue governments if they feel their rights are breached by the government’s action even though the individual government’s action is based on the local community’s welfare and for the protection of the local environment.

Concerned solely for their shareholder profits and growth, these multinationals in many instances are hurting the local communities around the world, devastating the earth’s environment while the planet is hurtling towards a series of ominous environmental tipping points that will surely culminate into the greatest disaster humanity has ever faced.

The author, Chaitanya Davé is the director of a non-profit organization, "Pragati" that is involved in rural development work in the villages of India since 1993. He is the author of COLLAPSE: Civilization on the Brink. He lives in California, USA with his family.





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