[corp-focus] A Corporate Lawyer Speaks Out

[Robert Weissman]

A Corporate Lawyer Speaks Out
By Russell Mokhiber and Robert Weissman

Look at the law in each of the fifty U.S. states.

All have a provision similar to that of Maine's section 716: "The
directors and officers of a corporation shall exercise their powers and
discharge their duties with a view to the interest of the corporation
and of the shareholders."

These laws make it the legal duty of corporate directors and executives
to maximize profits for shareholders.

Robert Hinkley would add a simply amendment: "... but not at the expense
of the environment, human rights, the public safety, the communities in
which the corporation operates, or the dignity of employees."

The provision would be enforced by those who suffer at the hands of
corporation wrongdoing. And in the case of intentional wrongdoing, by
criminal sanction.

For 20 years, Hinkley worked as a corporate securities law expert, many
of them as a partner at Skadden Arps Slate Meagher & Flom, one of the
world's largest corporate law firms.

He wants to spend the next few years campaigning for his amendment.

Now Robert, wouldn't your little amendment, if it were enforced
aggressively, for starters drive the internal combustion engine off the
market?

"To the extent that auto companies can't find a way to make the internal
combustion engine work without emitting pollutants into the air, yes, it
would," he says. "I prefer to think that it would spur the auto industry
to find a way to make money for its shareholders that doesn't poison
their air at the same time. It can be done."

Hinkley wants zero pollution.

He would phase in his amendment over 10 or 15 years.

"We say -- we are going to move from where we are today to no pollution
in 10 or 15 years," he says. "And we expect corporations to make
progress all the way through."

Isn't your amendment way too broad, and vague  -- "Not at the expense of
the environment, the dignity of employees, the public safety?" Your
former colleagues at Skadden Arps are going to have a field day with
this.

Not at all, he says.

The securities laws operate largely on the basis of companies being
prohibited from making "false and misleading statements."

"By not spelling this out in greater detail, companies are generally
more cautious," he says. "When it comes to the public interest, whether
its the integrity of the securities markets or the environment, this is
a good thing. I would expect the same results for my amendment."

"The language of the amendment is quite clear," he says. "It says we no
longer want corporations to pollute, engage in unsustainable
development, violate human rights, put dangerous products into the
marketplace -- or leave them there once their danger is understood --
leave our communities in economic ruin by closing down plants and simply
moving away, pay employees less than a living wage."

"Like the Bill of Rights, the language of the code is such that it can
change with the culture over time."

Wait a second, Robert.

A corporation is not allowed to profit at the expense of "the dignity of
employees"?

The Wall Street Journal editorial writers are going to have a field day.
Some employee is going to say -- you are making profits and that's
undignified.

"I think a court would tell that employee that maybe he should do
something else with his life," Hinkley responds. "There is an old maxim
that the law does not deal with trivialities. I think that maxim would
be applied in this case. Dignity is one of those words like pornography.
In the words of the Supreme Court 'I know it when I see it.' An
employee's dignity is violated when she isn't paid a living wage, when
her right to bargain collectively is not recognized, when she is forced
to work overtime against her will, and when she is forced to work in
unsafe conditions. I am sure there are others. The amendment will give
employees a different status in the corporation from the one they now
have. In addition to being the 'company's most important assets,' they
will have to start being treated that way."

But Robert, if you pass this law in Maine, then every major corporation
will move to Delaware.

"I once sat next to a republican Delaware legislator at a dinner in New
York and he said to me -- 'Bob, that's a great idea. You get it passed
in the other 49 states and I'll get it done in Delaware.'"

Hinkley says that in Maine, there are about 40,000 corporations on the
books -- "39,950 of them are small local corporations which don't
pollute the environment, which don't violate human rights, which don't
endanger the public safety, which treat all five to 10 of their
employees with dignity."

"They are good corporate citizens," he says. "It is the big corporations
that create the problem. That is where the system takes over. The local
guy in downtown Ellsworth, Maine has to walk through the town everyday.
If he messes with the public interest, the local people will not do
business with his company and he will be out of business. It is the
large public corporations that are creating the problem. If this law is
passed, will these other 50 companies pack up and leave Maine? I don't
think so. They will see it is the trend."

Hinkley says that his former colleagues would for the most part be
opposed to his amendment.

"Corporate lawyers are a peculiar lot," he explains. "We make our living
by representing clients that are dedicated solely to the pursuit of
their own interests. You have to be careful when you are talking to a
group of people whose job it is to speak for someone else. Usually they
are responding to only what they see to be in their clients' interests,
not what is in the public's interest."

But he cites a Business Week/Harris poll which finds that 95 percent of
Americans agree with him.

In that poll, 1,100 Americans were asked -- which statement do you agree
with more strongly?

The first is -- corporations should only be concerned with maximizing
profits for shareholders, and if they do, everything will be right with
the American economy.

The second is -- in addition to being concerned about shareholders,
corporations should be concerned about their employees, the communities
in which they operate, and sometimes they should sacrifice the interests
of shareholders for the benefit of employees and the communities in
which they operate.

Ninety-five percent choose the second.



Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor, http://www.essential.org/monitor. They are
co-authors of Corporate Predators: The Hunt for MegaProfits and the
Attack on  Democracy (Monroe, Maine: Common Courage Press, 1999;
http://www.corporatepredators.org).

(c) Russell Mokhiber and Robert Weissman

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