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Rix, Stephen --- "Globalisation and corporate responsibility" [2002] AltLawJl 6; (2002) 27(1) Alternative Law Journal 16

Globalisation and corporate responsibility

Stephen Rix[*]

Globalisation is nothing new and corporate responsibility is an oxymoron.

The lack of substantive meaning in the term ‘globalisation’, and acceptance of the notion of ‘corporate responsibility’, risks leaving liberals and progressives feeling overwhelmed and powerless. A more historical, and realistic, approach is required if we are to understand how to respond to current international challenges. This article, which uses Enron as a case study, was completed in mid-November 2001. Since then, Enron has collapsed and its Directors and officers are appearing before a US Senate Committee.

The issues of globalisation and corporate responsibility have been much in the news of late. The former is cited by people as an explanation for, among other things, the continued impoverishment of the developing world, the massive increase in wealth of the developed world during a sustained period of economic growth over the last decade, the advent of deregulation being fostered by the OECD and other international organisations, and the emergence of international agencies such as the WTO with some form of regulatory power.

The latter term (or one of its variants) is called up by those wishing to minimise the social impact of profit-maximising corporate decision- making. For Australians the best-known example is the call for the banks to exercise some degree of social responsibility in rural and regional Australia (what we used to call ‘the bush’). The Labor Party has gone so far as to advocate a statutory requirement on banks to be socially responsible.

Not often considered is what all this might mean for socially owned companies.[1]

This article begins to consider this issue. It claims neither to be extensive, nor to offer the last word on the subject. The article is also, and in all respects, unashamedly belligerent. It proceeds by:

• challenging the reality of globalisation,

• placing the notion of corporate responsibility in some historical and political perspective, and

• showing that responsible corporations will act in irresponsible ways.


Modern industry has established the world-market, for which the discovery of America paved the way.[2]

Over the last few years, globalisation has come into common usage. It is an unusual word in that both advocates and opponents have no reluctance in using the term and they usually mean the same thing.

Where they differ is in their assessment of its effects. But does globalisation have any real meaning?

The term itself has no single definition, but the following identified developments, either singly or in combination, tend to characterise the ways in which the term is used:

• increasing integration of world financial markets, increasingly dominated by flows of capital between branches of transnational corporations;

• increasing integration of world financial markets, with huge capital flows between nations depending on marginal differences in national interest rates;

• increasing integration of world commodity and products markets, either in the form of flows between branches of transnational corporations or between separate nationally based suppliers and consumers;

• increasing conformity of world products and services markets as transnational corporations come to dominate the production and distribution networks;

• the development of a world culture, usually understood to mean a north American culture;

• a reduction in the influence of the nation-state, as corporations and multi-lateral agencies dominated by these corporations’ interests, accrete and use power over trade and trade-related matters (free trade is the usual example cited); and

• increasing recourse to international treaties and conventions by governments, advocates and the judiciary.

Regardless of which characteristic of globalisation is being referred to, it is usually accompanied by some reference to an accelerating rate of change in all things economic, social, political, technological and natural. ‘It is widely agreed’, says Sheehan ‘that the world economy is in the early stages of an era of fundamental change, as the emerging information industries permeate all aspects of economic and social life, and facilitate to an unprecedented degree global competition and worldwide flows of goods, services, capital and technology’.[3]

Unfortunately, the lack of rigour in the use of the term and the conclusions flowing from it, is accompanied by a studious ignorance of previous developments in the international economy, and current developments, in the interest of a good story. A good story, of course, contains terms like ‘unparalleled’, ‘a sea-change’, and ‘fundamental’.

A more rational approach requires, first, clarity about how real globalisation might be; and second, taking the hyperbole out of the word.

A number of criticisms of the term have been made, two of which are worth noting. First, there is the criticism made most forcefully by Hirst and Thompson in a 1996 book and again, in a completely revised version, in 1999. In that second edition, Hirst and Thompson present the following conclusions:

1. The present highly internationalised economy is not unprecedented … in some respects, the current international economy is less open and integrated than the regime that prevailed from 1870 to 1914.
2. Genuinely transnational companies appear to be relatively rare. Most companies are based nationally and trade multinationally … and there seems to be no major tendency towards the growth of truly international companies.
3. Capital mobility is not producing a massive shift of investment and employment from the advanced to the developing countries.
4. As some of the extreme advocates of globalisation recognise, the world economy is far from being genuinely ‘global’. Rather, trade investment and financial flows are concentrated in the Triad of Europe, Japan and North America and this dominance seems set to continue.
5. These major economic powers, the G3, thus have the capacity, especially if they coordinate policy, to exert powerful governance pressures over financial markets and other economic tendencies.[4]

The second stream of criticism is anticipated in point 4 of this list. That is, ‘what is often referred to as ‘globalisation’ is perhaps better described as ‘Triadisation’.[5] In other words, most of what both advocates and opponents to globalisation refer to has been largely confined to the already developed world.

Leaving aside the possibility of the reality of ‘triadisation’, there has been a word to describe what has been occurring in use for about a century. That word is ‘internationalisation’. The quote which heads this discussion shows that what is now being paraded as ‘new’ was identified as, at least, a trend 150 years ago.

Regardless of all this, cold water can be poured on globalisation rhetoric by simply acknowledging that more than 50% of the world’s people have never used a phone. For these people even the advances in information technology, which have provoked an orgasmic response from so many commentators, are totally irrelevant.[6]

What about the cultural aspects of globalisation?

More recently attention has focused on the cultural dimension of globalisation, as Western cultural hegemony advances through transnational corporate empires that control the technology, markets and ideological content of services. Sectors as diverse as entertainment and advertising, tourism, fast-food and brand-name franchises promote competitive individualism, exploitation of nature, and unbridled consumption — an influence which will expand under the auspices of the intellectual property (TRIPS) and services (GATS) agreements in the GATT/WTO. The information super-highway brings the world closer together, deluging those with the time, know-how and equipment to ‘surf the net’ with material which may be (but often is not) of considerable use. Private satellites service competing media empires, whose networks reduce news and critique to commercially-saleable sound-bites, repackage human tragedy as infotainment and implicitly blame victims of an increasingly polarised and fractured world for their own poverty and social dis-ease.[7]

Enthusiastic users of the term globalisation seem to owe much to postmodernists (who claim to have moved beyond any one philosophy/school/trend/ideology to embrace the best of all). ‘It is not a mark of provincialism but of cosmopolitanism to recognise that there has emerged in the last few centuries something like a true global culture, centering around technologically driven economic growth and capitalist social relations necessary to produce and sustain it’, wrote Fukuyama in The End of History and the Last Man in 1992.

Hirst and Thompson are briefly, entertainingly and sufficiently sceptical of the enthusiastic hyperbole, which has replaced analysis. ‘Globalisation is above all a literature of anecdote, inference and reliance on the accumulation of isolated facts removed from context’, they say.[8] Fukuyama certainly fits the bill.

And more recently, Professor George Monbiot has remarked, ‘this great advance of globalisation, of communication technologies, of interconnectedness (we’re always being told we live in a global village) has been accompanied by this extraordinary parochialism whereby it becomes almost impossible to discuss even serious ideas unless there’s a supermodel fronting them’.[9]

While some want to see the restrictions imposed on the exhibition of USA films by the French as an example of a fight-back against cultural globalisation, the French have always been culturally precious. It is extremely doubtful that French cinematic restrictions are examples of a national fight-back against globalised cultural dominance. Rather, they reflect the same values, which underlie the long-term French attempt (failed) to protect their language from ‘pollution’ from other sources.

The readers of this journal are undoubtedly more aware of how the concept has impacted on the judiciary. However, I can report that a search for ‘globalisation’ on the AustLII database threw up 27 documents that contain the term. The bulk of these are not references to cases, but to law journal articles — including this journal. Much of the discussion has been in the context of human rights. Not all the authors have subjected the term itself to critical appraisal.

In one case (Trades and Labor Council of Western Australia and Australian Mines and Metals Association [1999] WAIRComm 150, 6 July 1999), their honours joined an argument from the unions (which quoted an article which made reference to globalisation) with one from the employers, and concluded that globalisation would have positive outcomes for Western Australia’s extractive industries.

Interestingly, it appears that globalisation advocates are having considerable difficulties with the legal profession internationally. The 1996 Australian Law Reform Commission’s Report Legal Risk in International Transactions (ALRC 80, chapter 9) notes work underway by the International Law Association (ILA):

Its Committee on International Civil and Commercial Litigation[10] works closely with the Hague Conference on Private International Law.

The Committee was investigating the possibility of international co-operation in relation to the taking of protective and preventative measures.

A further Committee project involved an examination of the possibility of transnational co-operation regarding the transfer of proceedings to the most appropriate forum.

The 69th Conference of the ILA was held in London in July 2000. The ILA posts some of the workshop reports on its website.[11] Looking at those reports it is clear that there is considerably less than wholehearted support for using the term in a legal context. For instance, one workshop report notes that the workshop ‘explored the topics of regionalism or globalism (or multilateralism or universalism, used interchangeably as preferred by some of the speakers) …’[12]

Corporate responsibility

However worthwhile the attempt to encourage some notion of corporate responsibility appears to be, it needs to be recognised that it has only emerged as a key issue coincident with the reassertion of liberalism following the demise of the Soviet Union; and has only become a major demand coincident with attacks on the role of the state in liberal — and social — democracies. Combining these two perspectives results in a coherent historical perspective which can be summarised thus: appeals to corporate responsibility are necessary as a result of the victory of neo-liberalism and the demise of oppositional political movements (including, with all its faults, communism).

The Organisation for Economic Cooperation and Development (OECD), the club of rich nations, has a number of initiatives underway focusing on corporate responsibility. These initiatives include the development of private initiatives for corporate responsibility.[13] In a February 2001 report on an international study on these private initiatives, the OECD said:

What should governments be doing to enhance the effectiveness of these initiatives? The fact-finding report suggests that OECD governments have already done a lot — many of these initiatives are closely linked to national policy environments from which they have emerged. The relevant policies adopted to date have tended to avoid direct control, working instead through indirect influence (tax expenditures on the NGO sector, incentives under regulatory and law enforcement arrangements, etc.). So far the indirect approach appears to have been successful in encouraging the business community and governments to co-operate in making both more effective. These policies have also encouraged the acquisition of compliance expertise in the business community. Governments have also added their voices to the debate about behavioural norms through such instruments as the OECD Guidelines for Multinational Enterprises.
 In many issue areas, the indirect approach is likely to be a more effective policy stance for governments than more direct types of intervention. This contrasts with the view of some that governments need to add ‘teeth’ to voluntary initiatives in order to make them effective. The indirect approach encourages businesses and societies to continue feeling their way forward. It allows open dialogue to take place and experience and knowledge to be accumulated while avoiding dangers of direct intervention (capture by vested interests, inability to respond to changing circumstances, etc.). The follow-up process of the OECD Guidelines for Multinational Enterprises has the potential to play an important role in reinforcing the indirect strategy already adopted by governments by contributing to dialogue and to the dissemination of knowledge and experience.[14]

In May 2001, the OECD Directorate for Financial, Fiscal and Enterprise Affairs released The OECD Guidelines for Multinational Enterprises and Global Instruments for Corporate Responsibility: Background and Issues Paper (16 May 2001). It followed a review of the guidelines, which concluded in June 2000.

The Paper notes ‘The OECD Guidelines are unusual in that they are rooted in long-standing inter-governmental co-operation and are closely linked to a broader framework for international investment, the OECD Declaration on International Investment. The Guidelines are an expression of the shared expectations of the adhering governments. These governments agree to promote them among ‘their’ multinational enterprises and sign a binding Council Decision that requires them to set up National Contact Points … and to participate in other facets of Guidelines implementation’ (p.3).

About these Guidelines, George Monbiot said:

[the] guidelines for multinational enterprises … are worth less than the paper they’re written on because the paper they’re written on is probably worth about 1 penny a sheet and these are worth nothing at all, for the very simple reason that they are completely voluntary. Within these guidelines are all the principles that you’d want to see corporations adhering to. You know, protecting the environment, protecting their workers from outrageous practices, fair treatment of local people, all of these things are incorporated in there, but no-one pays the blindest bit of attention to them because they don’t have to.[15]

 I want to highlight two features, which characterise the OECD initiatives:

1. Voluntary initiatives clearly emerge from an environment characterised by a voluntary absence of government.

2. More formal developments are continuations of national approaches, which have a history.

 Unless, and until, these two features are acknowledged and incorporated into our perspectives on corporate responsibility we run the real risk of allowing corporate interests to drive the regulatory agenda.

The International Organisation for Standardization (ISO), another multinational organisation, at least provides a coherent definition of corporate responsibility. ‘Corporate social responsibility refers to the overall relationship of the corporation with all of its stakeholders’, it says.[16] Stakeholders ‘include’ customers, employees, communities, owners/ investors, government, suppliers and contractors. The ISO has begun work on the development of standards for corporate social responsibility, and its first forum is scheduled for June 2002. It has already conducted a forum on ‘Consumer Protection in the Global Market’ which was primarily concerned with e-commerce (May 2000).

The ISO’s 10 September 2001 press release cited earlier also illustrates the inherent contradictions, which progressives recognise (if only tacitly) in placing reliance on notions of corporate social responsibility. On the one hand, social responsibility is supposed to extend the activities of corporations into activities such as ‘community outreach, employee relations, creation and maintenance of employment, environmental stewardship and financial performance’.

On the other hand, ‘a growing number of companies have recognised the business benefits of corporate social responsibility policies and practices. Companies which take these issues seriously not only achieve benefits to society; they can also enhance their reputation, improve their competitiveness and strengthen risk management’ said the ISO. In other words, corporate social responsibility is good for a corporation’s bottom line.

This leaves hanging the question of what happens to corporate social responsibility when the bottom line is threatened. Also left hanging is the fact that the OECD and the ISO are multinational organisations: their status, legitimacy and effectiveness depend on the commitment of national governments.

The political dangers inherent in calls for corporate social responsibility become apparent when we consider our re-elected Prime Minister’s 2001 call for enhanced levels of corporate philanthropy.[17] The same Prime Minister has overseen massive corporate tax relief (or corporate welfare). Corporate charity allows corporations to determine who gets their largesse — they define the ‘deserving’. On the other hand, the distribution of tax revenues allows at least some form of social control over the direction of these expenditures, by ensuring these decisions remain in the political realm. In other words, corporations are now being allowed to set their own tax rates, and to determine social expenditure policy.[18]

In respect of Australian corporate international investments, the former Howard government and the former Beazley opposition both rejected the Democrat’s Corporate Code of Conduct Bill 2000. The Bill called for the regulation of Australian companies overseas, establishing minimum Australian and UN environmental protection, human rights and labour standards in their overseas operations.[19] Behaving in a responsible manner, the Minerals Council of Australia, the WA Chamber of Mines, the Victorian Chamber of Mines, BHP, the Australian Chamber of Commerce and Industry and the Australian Institute of Company Directors all lobbied against the Bill.[20]

Issue 55, September 1999, of the Australian Chamber of Commerce and Industry Review stated:

Good corporate governance and corporate responsibility are principles and practices held in high regard by reputable firms worldwide, and a legitimate asset in business and commercial affairs which underpin competitive advantage and shareholder value.

What does it mean, therefore, when socially owned enterprises are required to act more like their private sector counterparts?

The NSW State Owned Corporations Act 1989 (SOC Act) dates from the period of the Greiner government (Greiner used to describe himself as CEO of NSW Inc). It establishes the objectives, and sets out the requirements on statutory authorities, which are scheduled as state-owned corporations (SOCs). The NSW legislation owes much to the New Zealand State Owned Enterprises (SOEs) legislation.

The SOC Act has been much amended in the 12 years since its initial passage, but retains certain elements from the date of that passage. The Act now identifies two types of SOCs: company SOCs and statutory SOCs. Their statutory objectives are identical, and are set out below.

8 Principal objectives of company SOCs

The principal objectives of every company SOC are:


to be a successful business and, to this end:

(i) to operate at least as efficiently as any comparable businesses, and

(ii) to maximise the net worth of the State’s investment in the SOC, and


to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates, and


where its activities affect the environment, to conduct its operations in compliance with the principles of ecologically sustainable development contained in section 6 (2) of the Protection of the Environment Administration Act 1991, and


to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates.


Each of the principal objectives of a company SOC is of equal importance.

20E Principal objectives of statutory SOCs

The principal objectives of every statutory SOC are:


to be a successful business and, to this end:

(i) to operate at least as efficiently as any comparable businesses, and

(ii) to maximise the net worth of the State’s investment in the SOC, and


to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates, and


where its activities affect the environment, to conduct its operations in compliance with the principles of ecologically sustainable development contained in section 6 (2) of the Protection of the Environment Administration Act 1991, and


to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates.


Each of the principal objectives of a statutory SOC is of equal importance.

There are even provisions to ensure that we know that the SOC has, indeed, acted with a sense of social responsibility. That information is to be included with the SOC’s annual report tabled in Parliament, and is to include an estimate of the costs associated with meeting its environmental objectives (s.26(5)(b)).

Reflecting this general requirement, and while electricity generators are exempt from s.20E of the SOC Act, the Energy Services Corporations Act 1995 establishes a similar set of objectives for electricity generators formed under that Act. The relevant section is set out below.

5 Principal objectives of electricity generators


The principal objectives of an electricity generator are as follows:


to be a successful business and, to this end:

(i) to operate at least as efficiently as any comparable businesses,

(ii) to maximise the net worth of the State’s investment in it,

(iii) to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates,


to protect the environment by conducting its operations in compliance with the principles of ecologically sustainable development contained in section 6(2) of the Protection of the Environment Administration Act 1991,


to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates,


to operate efficient, safe and reliable facilities for the generation of electricity,


to be an efficient and responsible supplier of electricity,


to be a successful participant in the wholesale market for electricity.


Each of the principal objectives of an electricity generator is of equal importance.[21]


The provisions of section 20E of the State Owned Corporations Act 1989 do not apply to an electricity generator.

What can we make of all this?

Well, if NSW publicly owned electricity companies are to operate like any other energy corporation, perhaps we could obtain some guidance from the experience of one of the better-known international energy corporations.

Enron: a case study of responsible corporate behaviour

It is Enron’s policy to conduct its business worldwide in compliance with all applicable environmental, health, and safety laws and regulations and to apply responsible standards where such laws or regulations do not exist. These laws, regulations, and standards are designed to safeguard the environment, human health, wildlife, and natural resources. Our commitment to observe them faithfully is an integral part of our business and of our values.
Enron’s Statement of Environmental, Health, and Safety Principles (emphasis added)
Enron’s approach to social responsibility can be summarized as our commitment to ensuring that our behavior and activities, products and services result in positive returns for our stakeholders. This means that our businesses and projects will strive to engage those affected by our business to better understand how our decisions affect issues such as economic development, indigenous populations, human rights, and workforce development and diversity. This also means that we will manage and minimize the impacts of our operations; work to invest in our communities; promote diversity within the workplace; strive to attract the best and brightest talent; and identify ways to translate social trends and issues into business opportunities.
Enron Corporate Responsibility 2000 Annual Report

Enron is a major energy multinational based in Houston, Texas, USA. Enron is supposed to be an example of an environmentally responsible corporation in its international activities.[22] It has invested in green energy production, and is itself based in the natural gas industry.[23]

Despite Enron’s large contributions to the Democrats — often overlooked[24] — there was a very close relationship between Enron’s former CEO (Kenneth Lay) and the 2nd Bush, with one commentator describing it in the following way:

Referring to Bush’s involvement in the energy sector: ‘To separate him from that industry is hard to do. There are so many connections,’ said Craig McDonald, head of the nonprofit Texans for Public Justice, a longtime Bush watchdog group. ‘There’s always been a question of whether the policies he’s pursuing are his or Ken Lay’s. Actually, there is no difference.’[25]

How important this connection can be is clear from a Los Angeles Times article:

The Los Angeles Times has accessed correspondence between Lay and Bush: On Oct. 17, 1997, Lay thanked then-Gov. Bush for calling Pennsylvania Gov. Tom Ridge, a fellow Republican, to vouch for Enron, which was competing to sell electricity in that state.
‘I am certain that will have a positive impact on the way he and others in Pennsylvania view our proposal,’ Lay wrote.
He was not disappointed. A short time later, Enron gained a foothold in the Pennsylvania electricity market.[26]

The 2nd Bush went on to appoint at least one Enron Executive to his Cabinet (Thomas E. White, the vice chairman of Enron Energy Services, appointed Secretary of the Army)[27] — and this is a corporation that did not support Bush’s position on Kyoto!!

It is also important to acknowledge that energy corporations are divided into fractions. Some fractions of multinational energy capital, like Enron, are supportive of the trend to greater international environmental regulation. Even then, their self-interest is palpable. On 19 March 2001, US News reported that while Kenneth Lay had been in the vanguard of businesses active on global warming, Enron stood to gain substantially from carbon control, not only as the largest North American trader of natural gas (less polluting than oil and coal) but because of the company’s burgeoning energy-efficiency business.[28]

The same issue of US News reported that the coal and oil fractions of energy capital were active opponents of the Kyoto protocol, and were themselves significant lobbyists into the 2nd Bush regime — Bush’s own history is in this energy sub-sector. It appears virtually impossible to exaggerate how a corporation’s seeming progressive positions on social or environmental issues are linked to the corporation’s self-interest.

To emphasise this connection between ‘responsibility’ and profits, the New York Times reiterated on 1 August 2001 that a primary motivation for corporations such as Enron which supported the adoption of some form of greenhouse gas emissions is that concessions could be obtained on other pollution controls.[29]

Internationally, Enron until recently was a major player in the Indian Energy market. It was, with the Indian government and the Japanese company Mitsui OSK Lines Ltd, a partner in a liquefied natural gas (LNG) vessel, which is dedicated to the supply of LNG to the Darbhol Power Company Ltd near Mumbai. Enron described its involvement in the Indian energy sector in the following terms:

As one of the largest foreign investors in India’s energy sector, Enron will help meet the country’s growing electricity needs through the 2,184-megawatt Dabhol Power project. In addition, Enron will help India reach its goal of diversifying its fuel mix by importing liquefied natural gas (LNG) to fuel the plant and provide natural gas for other purposes within the country. The approximately US $2.9 billion combined-cycle facility, located south of Mumbai, is being constructed in two phases. The 740-megawatt Phase I began commercial operation in May 1999. Phase II is scheduled to come on-line fourth quarter 2001. Enron, as majority owner of the Dabhol project, will operate the plant and serve as fuel manager.[30]

Enron’s involvement in the project appeared quite environmentally positive: diversification of the fuel mix away from coal and into natural gas would have positive environmental outcomes by reducing the quantity of greenhouse gases emitted during the generation of electricity.

Looking at other aspects of corporate responsibility, Enron’s 2000 Corporate Responsibility Annual Report referred specifically to its Indian project, and claimed:

Since establishing a presence in India, Enron has played an important role in investing in the community and promoting sustainable development in the region. Enron has focused its community relations efforts on skills training and income generation, educational training, and healthcare. [p.30]

Put politely, this is an exaggerated claim.

In 1999 the USA State Department reported that Human Rights Watch had found the project’s human rights record in the project was not good:

During [1999] Human Rights Watch published a report that asserted that the Maharashtra government was complicit with the Dabhol Power Corporation (a joint venture of the Enron Corporation, General Electric, and Bechtel) in numerous human rights abuses. According to HRW, the Maharashtra government also engaged in a systematic pattern of suppression of freedom of expression and peaceful assembly coupled with arbitrary detentions, excessive use of force, and threats.[31]

From the point of view of corporate transparency — another aspect of corporate responsibility — when it was reported in May 2001 that Enron wanted to exit the arrangement, Enron denied the claims.[32] Its ‘partners’, including the Industrial Development Bank of India, did not want the termination to proceed. According to the Times of India, Enron and the project’s foreign lenders wanted the Indian government ‘[to assume] payment mechanisms’ before providing the remaining one-third funding for the project.

The Maharashtra State Electricity Board, a party to the arrangements, said that Enron’s proposed tariff structure was unacceptably high. The Maharashtra government established the Godbole Committee to examine the issue. The Panel found:

The committee said since the LNG facility of 5 mmpta was far in excess of what was required by the plant (only 2.1 mmpta of which 1.8 mmpta is on take or pay), it should be separated into a distinct facility whose capital costs should not be reflected in the fuel charge, not as take or pay.

It should instead be only in proportion to the fuel regassified for the power generation. Using the entire allocated gas requires an unusually high plant load factor. Instead, the surplus gas can be sold to other players like Petronet or Enron’s own Metgas.[33]

The Committee’s recommendations included:

• cancellation of the present tariff structure,

• renegotiation of the LNG and shipping contract,

• removal of dollar denomination as far as fixed charges of the tariff is concerned,

• debt restructuring, and

• the formation of a committee to renegotiate the power purchase agreement.

Enron said that these recommendations did not represent an acceptable basis for further discussions.[34] In November 2001 Enron withdrew from the project.[35]

The major lenders to the project were the ANZ Investment Bank, Credit Suisse First Boston, ABN-AMRO and Citibank.

The USA Securities and Exchange Commission is now formally examining transactions among Enron Corporation and partnerships headed by Andrew S. Fastow, the company’s chief financial officer.[36] Enron has been purchased by a former, smaller rival (Dynergy), but the acquisition is ‘expected to be reviewed by numerous state and federal agencies, led by the Justice Department, the Federal Trade Commission and the Federal Energy Regulatory Commission’.[37]

And like the collapse of HIH in Australia, which has had effects far beyond the corporation itself, Enron’s collapse is being felt not only in India, but is also being felt in the UK, where Enron’s business mix covers water and electricity operations. Enron’s new owner (Dynergy) has announced that it intends to divest itself of Wessex Water, which Enron purchased in 1998.[38]

Concluding remarks

Each of us is a self-conscious political actor. As such, we have a responsibility not to allow ourselves to be seduced by appeals to novelty as an alternative to rigorous analysis based on an appreciation of history.

We have a responsibility to examine terms which, however widely used and for whatever purposes, result in a distortion of reality and a loss of the capacity to act. The term globalisation, and its appeals to technological determinism and historical inevitability, has the capacity to reduce all of us to victims of corporate decision making, to making us feel that national governments no longer have a role to play in regulating economic activity. Only when we look at reality are we again empowered to act. Look closely at an anti-globalisation protest, and what you will see is a loose coalition of campaigners on a number of issues. This is their strength.

It is doubtful whether appeals to corporate responsibility, whether included in the legislation establishing socially owned companies or as a justification for de-regulation, will be heeded by corporations when the bottom line is challenged. A corporation’s own claims to corporate responsibility should be viewed with the utmost scepticism — it is likely to be little more than a slogan.

[*] Stephen Rix has worked on public sector reform issues for a variety of trade union and community sector organisations in both Australia and (post-1994) South Africa for the last 15© 2002 Stephen Rix.

[1] Usually, historically and dangerously called ‘government owned’. My personal preference is for the term ‘socially owned’.

[2] Engels, F. and Marx, K., Manifesto of the Communist Party, 1848.

[3] Sheehan, P., ‘Governance and the Global Knowledge Economy’, in Clark, C. and Corbett, D. (eds), Reforming the Public Sector: Problems and Solutions, Allen & Unwin, 1999, p.231.

[4] Hirst, P. and Thompson, G., Globalization in Question, Policy Press, 2nd edn, 1999, p.2.

[5] Ruigrok, W. and van Tulder, R., The Logic of International Restructuring, Routledge, 1995, p.151.

[6] Those interested in the concept of globalisation and who are searching for some historical context could do worse than read Trilateralism: The Trilateral Commission and Elite Planning for World Management, Holly Sklar (ed.), South End Press, Boston, 1980.

[7] Kelsey, J., Globalisation, State and Law: Towards a ‘Multi- perspectival Polity’, 50th Anniversary Conference Australasian Law Teachers’ Association Cross Currents: Internationalism, National Identity and Law, 1995.

[8] Including the delightful put-down: ‘we have no commitment to the sensibilities of postmodernism’, p.xiii.

[9] Australian Broadcasting Corporation Background Briefing, 11 November 2001.

[10] Comprising a number of European Union countries, the United States, Australia, Japan, Indonesia, Argentina and Canada.

[11] <>.

[12] Noor, Elina, rapporteur, 69th Conference of the International Law Association, Report of Workshop 4, Regionalism and International Law, 27 July 2000.

[13] It is important to recall that the OECD was advocating the Multi-lateral Agreement on Investment (MAI), which would have resulted in the diminution of state power, and its replacement with corporate power. The OECD was defeated by an international coalition of community, consumer and political organisations in the developed world; and developing nations. The MAI has resurfaced through the World Trade Organisation (WTO): see Goodman, J. and Ranald, P., Stopping the Juggernaut: Public Interest versus the Multilateral Agreement on Investment, Pluto Press, 2000.

[14] OECD Directorate for Financial, Fiscal and Enterprise Affairs, Private Initiatives for Corporate Responsibility: An Analysis, February, 2001, p.23 (emphasis added).

[15] Australian Broadcasting Corporation Background Briefing, 11 November 2001.

[16] International Organisation for Standardization, ISO looks into standards for corporate social responsibility, Press Release, 10 September 2001.

[17] That is, charity.

[18] Ron Brunton, wrote on 9 June 2001, ‘in many respects, HIH would have appeared as a model of social responsibility. The company was an extremely generous benefactor to a wide range of worthy causes. Most significantly — and ironically — HIH was a very substantial donor to the St James Ethics Centre, which specialises in providing advice on ethical behaviour to major corporations, encouraging them to take a maximalist view of their responsibilities to the broader society. Indeed, HIH was reported to have set the centre ‘on its financial feet’ in 1999’ (Courier Mail).

[19] Evans, Geoff, ‘Where giants tread, rumblings will follow’, Sydney Morning Herald, 2 November 2001.

[20] Evans, Geoff, above.

[21] This is an interesting feature of the Acts, and dates from the period of the corporatisation of Sydney Water in the early 1990s when it was injected as a result of lobbying from community, consumer and environmental groups.

[22] See Lavelle, Marianne, ‘A shift in the wind on global warming: Confounding some allies, Bush talks tough’, Business & Technology, 19 March 2001.

[23] A number of other corporations also invested heavily in environmentally benign technologies. It was these corporations, which opposed the 2nd Bush’s decision to repudiate the Kyoto treaty on greenhouse gas emissions.

[24] A 31 October 2001 New York Times article by economist Paul Krugman (‘The One-Eyed Man’) said that Enron (among others) would receive ‘surprisingly big’ benefits from the USA government’s financial support provided following the 11 September 2001 terrorist attack in New York. Enron is not a large employer. Another company on the gift list is Texas Utilities (TXU), which is now part of the Australian energy industry.

[25] <>.

[26] <>.

[27] New York Times, 25 April 2001.

[28] <>, 19 March 2001 (date posted).

[29] Revkin, Andrew C. and Banerjee, Neela, ‘Energy Executives Urge Some Gas-Emission Limits on Bush’.

[30] <>, 27 April 2001 (date accessed). Enron is also involved in the Gas Authority of India (GAIL) which was privatised in November 1999.

[31] 1999 Country Reports on Human Rights Practices: India’, released by the Bureau of Democracy, Human Rights, and Labor, US Department of State, 25 February 2000.

[32] Enron toughens stand on Enron, Economictimes.Com Bureau, 4 May 2001.

[33] above, ref 32.

[34] above, ref 32.

[35] Ayres, Chris, ‘Enron to pull out of Indian project’, The Times, 6 November 2001.

[36] Berenson, Alex, ‘SEC Opens Investigation into Enron’, New York Times, 1 November 2001.

[37] Gerth, Jeff, ‘Regulators Struggle with a Marketplace Created by Enron’, New York Times, 10 November 2001.

[38] Tomlinson, Heather, ‘Wessex Water “to be sold”’, Independent, 18 November 2001.

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