New York state Comptroller Alan Hevesi and California state Treasurer Phil Angelides met with Unocal Corp. Chief Financial Officer Terry Dallas to assure company shareholders that the company is in compliance with human rights protections in its investments in the Southeast Asian nation. Myanmar, the country formerly known as Burma, has been widely criticized by human rights groups for alleged violations of the rights of its citizens, according to an Albany Business Review report.
El Segundo, California-based Unocal – an energy resource and project development company – is the only US based company with significant direct investments in the nation. This is after more than 50 other US-based corporations pulled out of Myanmar in the 1990’s in the face of alleged human rights violations.
During the meeting, Hevesi and Angelides demanded proof from the company that it has implemented the International Labor Organization’s Fundamental Principles and Rights At Work. In the face of rising shareholder concerns, Unocal, earlier this year, agreed to include those principles and rights of work in its company code of conduct.
Additionally, the two stated their concern that Unocal’s investment in Myanmar – estimated to have provided Unocal with less than 3% of its revenue in 2002 – exposed the company and its shareholders to significant potential liabilities from lawsuits filed by Burmese villagers in federal and state courts in California. Already, four lawsuits have been filed by Burmese plaintiffs that allege Unocal is liable for a plethora of human rights abuses conducted by the Myanmar military undertaken in conjunction with Unocal’s operations. The alleged abuses include forced labor, torture, rape, extortion, and the loss of homes and property. Potential damages from the lawsuits might be in excess of $1 billion.
“As shareholder representatives, we are concerned because Unocal’s stock has performed much worse than other similar companies,” Hevesi said in a written statement. “Unocal’s Burma operations create unnecessary risk for the company from lawsuits, loss of investment if the unstable regime loses power and damage to the company’s reputation.”
The move is the latest in a series of corporate governance crackdowns that Angelides has taken in recent months. In December 2002, Angelides introduced his “Power of the Purse” plan to use California’s $270 billion in pension investments and large market presence to influence corporate governance and accountability. Through his plan, Angelides laid out a list of principles investors can follow when deciding in which companies to invest (See Angelides Posits Purse Power ).
Prior to that, the California Public Employees’ Retirement System (CalPERS) – a pension fund that Angelides sits on the board of – voted to pull investments it had in countries that did not stand up to a permissible country review process in February 2002. The process takes into account broad financial factors as well as transparency, political stability and labor practices/standards (See New Emerging Market Standard Emerges at CalPERS ).
Then again in February of this year, the nation’s largest public pension fund renewed its commitment to its emerging market investment policy, even though Myanmar remained on the list of permissible foreign investments (See Philippines Could Be Off CalPERS List Again ).