You are on page 1of 6

Unocal in Burma Since 1990, Union Oil Company of California (Unocal), which was founded in 1890, had operations

in all aspects of the oil business. Considering that it had expertise in all aspects, Unocal markets itself to governments outside the United States for they like about Unocals one stop shopping that was from development to the marketing end. In December 1992, Unocal paid US$ 8.6 million to Total S.A to became 28,26% of the Yadana Field project, while the other investors are Total S.A (31,24%), Thailands PTT Exploration & Production Public. Co(25,5%) and the Burmese government (15%). The Yadana field project was a gas mining project on the Yadana field that is located in the Andaman Sea beneath 150 feet of water off Burmas shore and belongs to Burma. It was agreed that Total would be responsible for overall coordination of the project, such as developed the wells and extract gas, and Unocal would construct the 256 mile pipeline to carry the gas from Yadana to Thailand. While the Burmese government provided security to ensure that land was cleared and rights of way secured for the passage of the pipeline through Burma, including built roads and other facilities such as base camps, buildings, barracks, river docs, helipads, etc. Most of the pipe would lie under the ocean, but the final 40 miles would cross over southern Burma through the region inhabited by the Karen, the minority ethnic group most hostile to the Burmese government. At the time of preparation and installation of the pipeline from The Yadana field to Thailand, there are numerous reports from human rights groups who claimed that there had been human rights violations against the Karen people. To clear the way and build facilities for the pipeline construction, the Burmese government that was notorious for violating human rights in Burma, forced hundreds of Karen doing so and provided slave labor for the project. Even, 15 members of the Burmese Karen minority group stated that during the period of pipeline construction many members of their family were forced relocated, forced labor, tortured, murdered or raped by the Burmese army. Since the members believed that Unocal was aware of the brutal methods used by the Burmese army, and they should be held responsible for the injuries of hundreds of Karen people by the Burmese army because of the pipeline project, they filed class action suits in U.S courts against Unocal. On June 29, 2004, U.S. Supreme Court inaugurated the provision that foreigners can use American law in order to seek compensation in U.S. courts for abuses overseas. On December20, 2004, Unocal announced it would settle a federal lawsuit, provided compensation and funding for social programs for people who are in the pipeline region.

QUESTIONS 1. Answer whether from utilitarian, rights, justice and, caring perspective, Unocal did the right thing in deciding to invest in the pipeline and then in conducting the project as it did. In your view, and using your utilitarian, rights, justice, and caring assessments, did Unocal do the right thing? Assume there was no way to change the outcome of this case and that the outcome was foreseen, was Unocal then justified in deciding to invest in the pipeline ? Ethics is a kind of investigation and includes both the activity of investigating and the results of that investigation - whereas morality is the subject matter that ethics investigates (Velasquez 2006, p.8).Simply put - ethics deals with understanding and differentiating right from wrong. The validity of Unocal activities in engaging in the Yadana field project can be discussed from 4 (four) moral principles point of view, which are : the utilitarian, rights, justice, and caring perspective. a. Utilitarian Perspective : Utilitarian is a moral principle that claims that something is right to the extent that it diminishes social costs and increases social benefits. In any situation, the right action or policy is the one that will produce the greatest net benefit or the lowest net costs(Velasquez 2006, p.59 & 61). The core concept of utilitarianism is the focus of good consequences for all stakeholders and not just the individual. To understand if Unocal decision to invest in the Yadana project from a purely Utilitarian perspective, we can see the costs and benefits of the project, such as : Unocal and other companies built schools and roads along the pipeline, small businesses werealso growing, the project provided Burma citizens with employment, infant mortality along the pipeline dropped, Thailand was able to enjoy cleaner natural gas from the 500-600 million cubic feet of gas that was piped in daily through the pipeline instead of using dirtier fuel oil and Unocal was expected to earn $2.2 billion dollars throughout the life of the contract. However, the projects also causing the costs, as follows : hundreds of Karen were used as forced labour and also forced to relocate to accommodate the pipeline project, allegations of abuse and even murder by the Burmese government for those who opposed the project.

Considering the above mentioned benefits and costs, a pure Utilitarian perspective would say that it was right for Unocal to investing in the Yadana pipeline. By conducting the project, there were a far greater number of people got benefits from the project, as opposed to the costs.

b. Rights Perspective : In general, a right is an individuals entitlement to something(Velasquez 2006, p.72). When an entitlement is a result of a legal system, then it is known as a legal right. However, there is a far greater right that encompasses all human beings or better known as moral rights. The most famous foundation for moral rights requires that everyone be treated as a free and equal person(Velasquez 2006, p.78), as it is stated at Imanuel Kants theory of Principle of Ends, which is : never treat a person as a means to advance ones own interest but rather as an end in themselves. Moreover, Manuel Velasquez in his Business Ethics Concept and Cases book also mentioned that : - Humans have a clear interest in being provided with work, food, clothing, housing and medical care when they cannot provide for these themselves (Velasquez 2006, p.81); - Humans have a clear interest in being free from injury or fraud and in being free to think, associate, speak and live privately as they choose (Velasquez 2006, p.81); - Humans have a clear interest in preserving the institution of contracts (Velasquez 2006, p.81);From the case study, we find that references are made to the rights perspective of ethics violation, including : the report that throughout 1993 to 1996, the Human Rights Watch and Amnesty International issued reports claiming that the Burmese army was using forced labour and brutalising the Karen population to provide security for Unocal workers and equipment. Subsequently, a 1995 report commissioned by Unocal also stated that human rights violations have occurred and continue to occur. All of reports were proves of indirect conflict with the rights perspective of ethics. It appeared that based on the rights perspective, Unocal was not correct in investing in the Yadana project and conducting in the ensuing project as there was information at hand prior to Unocal entering the contract and again during the time of the contract which showed that unethical violations against human rights existed in Burma both directly and indirectly related to the project. c. Justice Perspective : Justice is giving to each that which is his due. In essence, the justice approach to ethics is ensuring that all are treated fairly, with equal distribution of benefits and risks. Taking into consideration the information gathered under the Utilitarian and Rights perspective, it can be examined Unocals position from the three different categories of justice, as follows : - Distributive justice : distributive justice is concerned with the fair distribution of societys benefits and burden (Velasquez,2006, p.88). From a distributive justice viewpoint, it did appear that Unocal made the wrong decision to invest in the Yadana project due to the fact the various reports from the US State Department, non-profit organisations and even Unocals own commissioned study shows that although the benefit of the project could have in theory been distributed to all of Burma via government development, it appears that the burden of the project has been focused on those living within the pipeline corridor;

- Retributive justice : proportionate punishment is morally acceptable for breaking a rule or a law. From a retributive justice viewpoint, it appears that Unocal was not correct in its decision to invest in the Yadana project as it was sued in both the Federaland State courts in the US and the ensuing bad publicity and boycotts by consumers in the US eventually forced Unocal out of business by way of a merger with Chevron. - Compensatory justice : the just way to compensate people for what they have lost when they were wronged by other.(Velasquez, 2006, p.88). From a Compensatory Justice viewpoint, Unocal was right in investing in the Yadana pipeline as the Karen population who had suffered as a result of the project were adequately compensated through the out of court settlement. d. Caring Perspective : Ethics from a caring perspective emphasises the importance of relationships. Since caring about other persons is the heart of the moral life and, thus ethics. It is suggested that by demanding that we show care towards those who depend on us, be it our family, community or even country, we as individuals run the risk of burn out and self sacrifice. Again drawing on the various reports from the US State Department, non-profit organisations and even Unocals own studies, it appeared that Unocal was not correct in investing in the Yadana project from an ethics of care perspective. This is due to the nature of the ethics of care which emphasises compassion, kindness and the development of relationship. Since the Karen people was treated badly or without compassion by the Burmese army, and with the awareness of Unocal, it violated the ethics of caring perspective .

2. In your view, is Unocal morally responsible for the injuries inflicted on some of the Karen people ? Explain. To analyze whether Unocal is morally responsible for the injuries inflicted on some of the Karen people, it is necessary to review the principles of ethical or moral that had been violated and how the four main principles of ethical translated into standard moral of the Yadana field project. In his Business Ethics Concepts and Cases book, Velasquez showed that ethical principles (utilitarianism, rights, justice and care), provide a systematic basis of moral standards that can be used to determine and evaluate the moral value of a decision or assessment. In the case of Unocal, before the investment was made, Unocal had conducted socio-political analysis of the State of Burma. In fact, Unocal contracted a consulting firm to review the 1991 Amnesty International report, which documented abuses against the Burmese by the army. Although it had received an explanation of human rights violations in Burma, as well as the risks that might occur, Unocal continued investing into the project. Subsequently, in 1995, Unocal hired consultants to investigate conditions in the Yadana region and again obtained a report on the existence of various human rights abuses during the pipeline installation. The violation of ethics or morals that obviously occurred related to the case of Unocal in Burma, including: - Violation of rights principle, given the reports that show the existence of human rights had been widespread; - Violation of justice principle, because the benefits and the costs were not evenly and equally distributed; - Violation of caring principle, because the loss of basic compassion for the people of Karen by the Burmese army; Since Unocal proceeded with the project based on the Utilitarian principle of Ethics in which the consequence of continuing the project outweighed the social costs involved, it was justifiable to continue. As such, Unocal should be held morally responsible and accountable for the injuries inflicted on the Karen people.

3. Do you agree or disagree with Unocals view that engagement rather than isolation is the proper course to achieve social and political change in developing countries with repressive governments? Explain The options between engagement and isolation became the questions that the global community has put forth with regards to Burma. However, Unocal had consistently chosen engagement since they believed that they could affect better social and political change than via isolation policies. I agree with the Unocals preference of engagement rather than via isolation, to affect changes in a country. Historically, isolation (isolation occurs when a country is isolated by another country or group of countries in the form of sanctions usually in the form of trade embargoes and/or travel & immigration bans) or unilateral sanctions have proven to be ineffective. For example, commercial and financial embargo imposed on Cuba by the US Government for more than 40 years was the reason why Cuba became one of the poorest countries in the world. Nevertheless, despite continued pressure from the US, Cuban president Fidel Castro remains in charge of the country. Likewise, sanctions against Iraq after the Persian Gulf War suggests that as many as 567,000 Iraqi children may have died since the end of the first Persian Gulf War because of economic sanctions imposed by the UN Security Council (Thawnghmung & Sarno 2006, p.42). The Myanmar Times & Business Weekly at its website suggests that the US ban on textile imports from Myanmar in 2003 resulted in tens of thousands of the estimated 350,000 workers employed in the garment industry in losing their job. Whereas, the Clinton administration switched from a policy of isolation to one of engagement (engagement is where a country or a group of countries actively engage with a specific country with hopes that dialogue and bi-lateral communication would serve as a more effective platform to affect change for local, regional or global interests) allowed Vietnam to grow towards liberalisation and has become an active trading partner with the US. The Unocal Yadana project can also be considered as an engagement policy. Among the benefits derived were : - reduced infant mortality rates from 87 per 1000 to just 13 per 1000; - provided improving medical care, new and refurbished schools, electrical power, and agricultural development in the pipeline region; - created of employment along the pipeline region which was and remains an extremely poor and underdeveloped region of Burma; In summary, although occasionally isolation policies have produced point specific result, it is however usually accompanied by greater social, political and economic fallout typically suffered by the general population. In contrast, a policy of engagement does provide better overall outcomes socially, politically, and economically, although sometimes it takes longer to provide visible results.