Management Focus: Unocal in Myanmar

Management Focus: Unocal in Myanmar

Reread the Management Focus on Unocal in Myanmar  Chapter 4  and research on Myanmar. 

Write a 3-4 page analytical paper.  Please answer the following questions within the paper and submit through The course management system 

Answer the following questions and attach in one file 

a  Was it ethical for Unocal to enter into a partnership with a brutal military dictatorship for financial gain 

b  What actions could Unocal have taken  short of not investing at all  to safeguard the human rights of people affected by the gas pipeline project  

Support your answers with research.  Cite using APA format. The Case Analysis Rubric will be used to assess this assignment.

 In 1995  Unocal  an oil and gas enterprise based in California  took a 29 percent stake in a partnership with the French oil company Total and state-owned companies from both Myanmar and Thailand to build a gas pipeline from Myanmar to Thailand. At the time  the  1 billion project was expected to bring Myanmar about  200 million in annual export earnings  a quarter of the country   s total. The gas used domestically would increase Myanmar   s generating capacity by 30 percent.

This investment was made when a number of other American companies were exiting Myanmar. Myanmar   s government  a military dictatorship  had a reputation for brutally suppressing internal dissent.

Citing the political climate  the apparel companies Levi Strauss and Eddie Bauer had both withdrawn from the country. But as far as Unocal   s management was concerned  the giant infrastructure project would generate healthy returns for the company and  by boosting economic growth  a better life for Myanmar   s 43 million people. Moreover  while Levi Strauss and Eddie Bauer could easily shift production of clothes to another low-cost location  Unocal argued it had to go where the oil and gas were located. However  Unocal   s investment quickly became highly controversial.

Under the terms of the contract  the government of Myanmar was contractually obliged to clear a corridor for the pipeline through Myanmar   s tropical forests and to protect the pipeline from attacks by the government   s enemies. According to human rights groups  the Myanmar army forcibly moved villages and ordered hundreds of local peasants to work on the pipeline in conditions that were no better than slave labor.

Those who refused to comply suffered retaliation. News reports cite the case of one woman who was thrown into a fire  along with her baby  after her husband tried to escape from troops forcing him to work on the project. The baby died and she suffered burns. Other villagers reported being beaten  tortured  raped  and otherwise mistreated when the alleged slave labor conditions were occurring. In 1996  human rights activists brought a lawsuit against Unocal in the United States on behalf of 13 Myanmar villagers who had fled to refugee camps in Thailand.

The suit claimed that Unocal was aware of what was going on  even if it did not participate or condone it  and that awareness was enough to make Unocal in part responsible for the alleged crimes. The presiding judge dismissed the case on the grounds that Unocal could not be held liable for the actions of a foreign government against its own people   although the judge did note that Unocal was aware of what was going on in Myanmar.

The plaintiffs appealed  and in late 2003 the case wound up at a superior court. This time  the plaintiffs    legal strategy hinged upon the use of a law that had been on the books since 1792 but was largely ignored for 200 years. Known as the Alien Tort Claims Act  ATCT  of 1792  this law allows foreigners to sue each other in U.S. courts. The ATCT law is being used to allow the foreign plaintiffs to sue the Myanmar subsidiary of Unocal for damages. At the time of this writing  the case is ongoing.

Irrespective of the final outcome  however  and most legal scholars believe that Unocal may ultimately be able to dodge any legal liability  there is little doubt that one can question the ethical validity of Unocal's decision to enter into partnership with a brutal military dictatorship for financial gain. 

Sources  Jim Carlton. Unocal Trial for Slave Labor Claims Is Set to Start Today     The Wall Street Journal  December 9  2003  p. A19  Seth Stern     Big Business Targeted for Rights Abuse     Christian Science Monitor September 4  2003  p.2     Trouble in the Pipeline     The Economist  January 18  1997  p. 39  and Irtani Evelyn     Feeling the Heat  Unocal Defends Myanmar Gas Pipeline Deal     Los Angeles Times  February 20  1995  p. D1.

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