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Unocal in Myanamr, Judge Rules

                               Los Angeles Times

                     April  17, 1997, Thursday, Home Edition



   In a landmark but little-noticed ruling with enormous implications for U.S.
companies operating abroad, a federal judge presiding over an ongoing human
rights case has held that Unocal Corp. can be held liable for abuses allegedly
committed by the government of  Myanmar. 

   The ruling is the first in which a federal court has ruled that under
international and U.S. laws, American firms could be liable for human rights
abuses committed by their partners in another country, according to legal and
human rights experts.

   "The implications are huge because it would vastly expand the jurisdiction of
the U.S. court system," said Gary Hufbauer, a senior fellow with the
Washington-based Institute for International Economics.

   Human rights activists said a win in this unusual civil case would put
corporations on notice that they are answerable not only for their own overseas 
behavior but for that of foreign companies they align themselves with.

   "If Unocal would not engage in business with the Mafia in California, why
should it engage in business with  Myanmar's  military junta ?" asked John
Bonifaz, a leading human rights attorney involved in a second lawsuit against
Unocal on similar charges.

   Though it faces a vigorous appeal, last month's ruling by U.S. District Judge
Richard Paez of Los Angeles is considered a crucial victory for the opponents of
the notorious regime that has ruled the nation formerly known as  Burma  since
   Unocal is a partner with the state-owned Myanma Oil & Gas Enterprise in a
controversial $ 1.2-billion pipeline project in that country. Unocal also pays
the government to provide labor and security on the project. Another
private-sector partner, the French oil firm Total, can also be held liable for
 Myanmar's  actions, the judge ruled.

   In denying Unocal's motion to dismiss a lawsuit by opponents of  Myanmar's 
repressive regime, Paez said Unocal's payments to military leaders for providing
labor and security--in spite of widespread allegations of forced labor and
abuse--would be akin to "participation in slave trading" if such abuses were
proved in court.

   Unocal President John Imle expressed disappointment in Paez's ruling and said
the company will vigorously fight the "false allegations" in court.

   The company has repeatedly defended its role in  Myanmar  as being in the
long-term best interests of the nation's people.

   "I feel there are a lot of people out there trying to smear our image," Imle 
   While dozens of U.S. firms have pulled out of  Myanmar  in recent years,
Unocal has stood firm, making it a lightning rod in the debate over U.S. policy 
toward the country.

   In addition to the lawsuit, the El Segundo-based energy giant faces new
scrutiny on two other fronts where its business ties with  Myanmar's  rulers are
portrayed in an increasingly unfavorable light.

   As pressure mounts on President Clinton to impose tougher sanctions on
 Myanmar,  a bipartisan coalition in Congress is poised to introduce legislation
that would immediately block any new U.S. investment in the country, a step that
opponents say could halt Unocal's pipeline project midstream.

   "They're on the wrong side of history here," said Sen. Mitch McConnell
(R-Ky.), one of the sponsors of the bill.

   The U.S. has already cut off assistance to  Myanmar  and denied visas to its 

   But tougher sanctions are getting more supporters, including prominent
congressional leaders from both parties and the editorial board of the strongly 
pro-business Wall Street Journal. 
   Imle said the proposed ban on new investment in  Myanmar  would hurt his
company's plans to further expand its operations in a critical part of the

   When completed, the  Myanmar  pipeline will primarily supply gas to Thailand,
making it a key piece in the company's Asia strategy.

   "We hope to have new investments in  Myanmar, " he said.

   Meanwhile, the energy giant was rebuffed by the Securities and Exchange
Commission in an effort to prevent shareholders from voting on a proposal to
investigate recent charges that  Myanmar's  state-owned energy company is a
drug-laundering arm of the government.

   While there is little likelihood that shareholders will approve the
resolution at Unocal's annual meeting in El Segundo on June 2, the debate calls 
attention to still more allegations of unseemly activity by the company's

   The charges were made by Geopolitical Drug Watch, a Paris-based research
group that says it has evidence that bank accounts linked to Myanma Oil & Gas
Enterprise were used to launder hundreds of millions of dollars in drug

U.S. drug officials say  Myanmar  supplies 60% of the heroin entering the United

   Officials of Unocal, Total and their  Myanmar  partner have denied those
drug-laundering claims.

   Imle reiterated in an interview that the company will continue to fight
efforts to further isolate  Myanmar's  ruling State Law and Order Restoration
Council, calling such measures bad foreign policy and ineffective because
foreign companies will step into any void left by U.S. firms.

   "The fastest way to democracy is to encourage economic development, not to
stifle it by keeping people jobless, uneducated, without economic hope," he

   But the latest initiatives against Unocal reflect the increasing seriousness 
of the company's predicament as the leading U.S. investor in a country censured 
Wednesday by the United Nations for widespread political repression and human
rights abuses, including torture, imprisonment without trial and summary
   Tensions in the capital of Yangon, formerly Rangoon, have escalated since a
recent bomb blast at the home of a top military leader that the government
blamed on dissident groups in Japan.

   That has raised fears about the safety of Nobel laureate and opposition
leader Aung San Suu Kyi, who was physically attacked by government supporters in
November and is now confined to her home. In the past year, a dozen opposition
politicians have been kidnapped, with one presumed dead.

   Paez's March 25 ruling came in a lawsuit filed by activist lawyers on behalf 
of indigenous farmers in the Tenasserim region of  Myanmar.  The suit contends
that the farmers and their families were forced to relocate and work on the
pipeline project, beaten and otherwise abused by troops assigned to protect the 

   The plaintiffs want Unocal to withdraw from  Myanmar  and pay damages to the 
people living in the pipeline region.

   Paez removed  Myanmar's  military rulers and the state-owned energy company
as defendants in the case on grounds that they are protected by sovereign
immunity. But he refused to dismiss the case against Unocal and Total, rejecting
the companies' claims that the accusations lack merit and that they should

be held liable for any alleged abuses committed by their business partners.

   He said Unocal and its chief executives could be held liable if it is proved 
that the company and the  Myanmar  government had "conspired or acted as joint
participants to deprive plaintiffs of international human rights in order to
further their financial interests in the Yadana gas pipeline project."

   Columbia University law professor Jack Greenberg, a specialist in human
rights law, said the ruling appears to broaden the reach of the U.S. Alien Tort 
Claims Act, the same law by which a New York court has held that Serbian leader 
Radovan Karadzic and the estate of Philippine strongman Ferdinand Marcos are
liable for human rights abuses of subordinates.

   But Greenberg said the Unocal ruling's implications for countless other
companies in today's global economy are so sweeping that appeals courts might
feel compelled to narrow its scope.

   Total remains a defendant on grounds that it also has U.S. operations and
thus falls under jurisdiction of U.S. courts.

   Drug charges against  Myanmar's  leaders are given considerable credence by
U.S. drug officials. 
   In February, the U.S. put  Myanmar,  the world's largest producer of opium
poppy, on a list of countries deemed uncooperative in fighting drugs.

   "Drug money is so pervasive in the Burmese economy that it taints legitimate 
investment," Robert Gelbard, assistant secretary of State for international
narcotics and law enforcement affairs, said at the time.

   A high-ranking State Department official, speaking anonymously, said last
week that foreign investors are increasingly "at risk" of getting caught up in
dirty dealings because  Myanmar's  rulers are allowing drug traffickers to set
up money laundering operations and invest in legitimate businesses.

   But the official said the U.S. government has no proof that Unocal's partner,
 Myanmar's  state-owned energy company, is involved in illicit drug activities.