Unocal Case Study

Unocal invested with other companies to build a gas pipeline from Myanmar to Thailand. At the same time, many American companies were leaving due to the nation’s military dictatorship. However, because the project was expected to generate significant export earnings while also economically benefitting Myanmar, Unocal continued to move forward with an agreement with the government of Myanmar in which they were obligated to clear a path for a new pipeline and protect it from any government enemies. The investment became controversial when the Myanmar army forcibly moved villagers and made them work on the pipeline under slave-like conditions, including torture and rape. A lawsuit was brought against Unocal claiming that Unocal was aware of what was happening and did nothing about it, therefore, they should be held responsible for the crimes that were occurring against these people. Although the presiding judge dismissed the case, he ruled that Unocal was aware but could not be responsible for what a foreign government has done. It was eventually settled out of court for an undisclosed amount.

This case encompasses a failure of the most basic ethical issues including human rights, employment conditions, and environmental regulations. The people of Burma were forced out of their homes, made to work under abusive and torturous conditions without compensation, and subjected to imprisonment and even execution if they refused. In addition, the pipeline was responsible for environmental destruction by cutting through tropical forests and wetlands while disrupting the habitat of much of the animal life. (Laid Waste: Human Rights along the Kanbauk to Myaing Kalay gas pipeline, 2009)

Unocal knew that by moving forward with this project in Myanmar, there would violations of human rights, and yet it continued to invest. Unocal grossly lacked moral courage, corporate social responsibility and lacked any sustainable strategies that would not disrupt the rainforests, mangrove ecosystems, and the poaching of endangered species. When considering this project, Unocal knew it was going to be profitable, but they also knew the atrocities that that would occur and could have chosen to walk away. Because they lacked the courage to walk away from a decision that would be profitable, but unethical, irreparable environmental and social consequences ensued. For Unocal to enter into a partnership under Myanmar’s military dictatorship was unethical, regardless of financial gain.

I feel that Unocal took on a straw men approach to ethics in this case. I see shades of all four categories, but specifically the Friedman Doctrine, the belief that the only social responsibility of business is to increase profits, as long as the company stays within the rules of law. (Hill, 2014) Rather than protest this brutal regime and take their business elsewhere as other companies did, Unocal focused on the hefty returns the company would make and keeping the shareholders happy. They went on to justify their actions by reporting that the pipeline project provided jobs, reduced infant mortality through new medical programs, built roads, improved schools, and provided small business opportunities. Given all of these examples, Unocal felt that the benefits to the company and the citizens of Burma far outweighed any losses or risks. They took a Utilitarian perspective, justifying their actions by saying more people benefited from the project as opposed to the cost, citing that “engagement”