UNOCAL IN

BURMA
MM UGM INTERNATIONAL CLASS
BUSINESS ETHIC
Presented by:

Ahmad Fahmi M.
Charisma Arista S.

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CASE SUMMARY

Unocal vs Burma, an overview

Union Oil Company of

California
Was founded in 1890 to develop oil

fields around California.

By 1990, Unocal had operations in all

aspect in oil business (extraction,

refining, distribution, marketing).

The company, then, is starting to

invest in energy projects outside USA

(due to oil fields depletion).

Burma / Myanmar in 1990s

Officially The Republic of the Union of

Myanmar, also known as Burma. Capital city

is Naypyidaw and its largest city is Yangon
(Rangoon).

676,578 km in size, with 42 million people

recorded. Majority (69%) is Burmese, others

are Karens, Kachins, Shans, Indians, Chinese,
etc.,

GDP $200-$300, inflation above 20%, high

infant morality rate, low life expectancy (5356yo).

Military dictatorship, human rights violation,

no free speech, no association and no

assembly.

CASE SUMMARY

The Yadana pipeline project

One of the international projects attracted Unocal was natural

gas field in Yadana, Burma.

Located in Andaman Sea beneath 150 feet (46 meters) of

water offshore. Estimated around 5T cubic feet of natural gas.

Myanmar Oil and Gas Enterprise (MOGE) signed a contract

with Total, French Company, to develop the field.

Total responsible for the overall coordination, develop the

wells at the Yadana and extract the gas.

Unocal would construct the pipeline (256 miles). Most of the

pipe lied under the ocean, rest of them (about 40 miles)

crossed over southern Burma, the Karens area.

Investors:

Burmese Government, via State Law and Order Restoration

Council (SLORC), provided security (stated in the contract by

providing security protection and rights of way and easement
as may be requested means might have to use force to
secure the area).
Government of Thailand (PTT Exploration & Production Public

Co.) would buy the gas.

Unocal - 28.26 %

Total S.A

- 31.24%
Thailands Co. - 25.5% MOGE 15%

CASE SUMMARY

Pros vs Cons overview

PROS
Cheap & well educated labor
Burmas other untapped

resources provided other

major opportunities

An entry point to other

international markets

The government of Burma

provided security through

military support

CONS
The military government

itself has negative

issues/conflict against
minority groups (including
the Karens in southern
Burma)

History of human rights

violations committed by the

military government.

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MAIN ISSUES
Unocal in Burma

1. Ethical principles in business:

utilitarianism, rights & duties, justice &

fairness, and the ethics of care.
2. The concept of morality & business ethic.
3. The justice and fairness.

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PROBLEM STATEMTNT
Unocal in Burma

1. Did

Unocal do the right thing based on the

perspective of utilitarianism, rights & duties, justice
& fairness, and the ethics of care?

2. Is Unocal morally responsible for the injuries inflicted

on some of Karen people?

3. What is the proper course to achieve the social and

political change in country like Burma, engagement

or isolation?

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ANALYSIS OF SOLUTION ALTERNATIVES

1. Did Unocal do the right thing?

Justice & Fairness

Aristotle, the most prominent advocate of the classical ethics theory of
justice proposed three forms of justice.
1.
Distributive justice (which deals with the distribution of benefits and
burdens). Justice as equality; egalitarianism, justice based on
contribution; capitalist justice, justice based on needs & abilities;
socialism, justice as freedom; libertarianism.
2.
Compensatory justice (which is a matter of compensating persons for
wrongs done to them).
3.
Retributive justice (which involves the punishment of wrongdoers).
Decisions and behaviors are judged by their consistency with an equitable
and impartial distribution of benefits and costs among individuals and
groups
. Punishment is morally accepted for breaking a law or rule.
. The government forced Unocal out of business and merged with Chevron.
. Punishing Karen people who are against the project.
. From Unocals view, it was correct by compensating the suffered.

ANALYSIS OF SOLUTION ALTERNATIVES

1. Did Unocal do the right thing?

Utilitarianism
An action is right if, and only if, the sum total of utilities produced
by that act is greater than the sum total of utilities produced by
any other act the agent could have performed in its place. The
happiness which forms the utilitarianism standard of what is right
in conduct, it is not the agents own happiness, but that of all
concerned. As between his own happiness and that of others,
utilitarianism requires him to be as strictly impartial as a
disinterested and benevolent spectator.
Unocal (and other companies involved) got profit from the

business.
Greater number of people in Burma got benefits from the projects
(employment, economic activities around the field, etc.)
Unocal and other companies built schools and along the pipelines,
small business were also growing.
Thailand was able to enjoy cleaner natural gas.

Framework of Utilitarian Ethics

ANALYSIS OF SOLUTION ALTERNATIVES

1. Did Unocal do the right thing?

Right & Duties

Everyone should be treated as a free person equal to everyone else, and everyone
has the correlative duty to treat others in this way
Immanuel Kant-

Right is an individuals entitlement to something. Right differs into

legal right (derives from legal system), moral/human right (by
virtue of being human beings), and also contractual rights & duties
(arise when you enter certain agreement with other party).
The human rights groups issued the report claiming that the
Burmese army was using forced labor.
Brutalizing the Karen population to provide security for the Unocal
workers and equipment.
A report of 1995 by Unocal also stated the human rights violation.
Karen people has right to defend their area, and also to claim their
Framework of Right & Duties Ethic
damages on Unocal.
Unocal has right to do business in Burma

ANALYSIS OF SOLUTION ALTERNATIVES

1. Did Unocal do the right thing?

Ethics of Care
Ethics of care advocates the sustainable
interdependence between human beings and the
environment, and promotes the need to conserve
its symbiotic relationship the yin and yang for
present and future generations.
The company had negated its duty to society and

the environment. By closing its eyes to the

sufferings (pain) of the locals to achieve profit
goals (utility/pleasure).
Jeopardized the harmony between the land and its
inhabitants.

Framework of Ethics of Care

ANALYSIS OF SOLUTION ALTERNATIVES

2. Is Unocal morally responsible?

The Karens only 6.2% of the whole Myanmar population. Severely marginalized,

discriminated, ostracized ethnic groups, and received the worst forms of treatments
by the Government.
The SLORC, whom Unocal partnered, adopted the policy of draining the ocean so

that the fish cannot swim in quelling any form of armed resistance. It simply means
undermining the opposition by attacking the civilian population until it can no longer
bear to support the armed people.

Unocal was aware of the activity of the military in support of that

shared goal, and Unocal supplied the military with the material
means to secure the shared objective. Unocal chose to close its eyes.
Unocal decided to settle the federal lawsuit, compensate the Karens

villagers, and provide funds for social programs for people from the
pipeline region. This action was considered as an admission of guilt,
an acceptance of moral responsibility.

ANALYSIS OF SOLUTION ALTERNATIVES

3. Engagement or isolation?

Contrary to Unocals stance, we support isolating developing

countries with repressive and recalcitrant governments for five
reasons:
Substantial

foreign

investments

have

not

achieved

positive

outcomes.
Engagement

does not foster the much touted economic

development that necessarily leads to improvement of human
rights, and a democratic government.

Any hope for engagement to succeed is an illusion.

It is simply impossible to do business in such countries without

directly supporting their rogue governments, and their pervasive

human rights violations.
The foreign investments do not translate into infrastructure or

sustainable employment for the population, it is our contention that

a disengagement strategy, withdrawal, and banning investments
would not negatively affect the innocent population.

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RECOMMENDATION
Unocal should not invest in

Burma. But Unocal had chosen

engagement rather isolation.
Unocal must compensate
suffered.
Settlement payout replaces
monetary issue.

THANK YOU
Ethics is knowing the difference between what you have a right to
do and what is right to do
-Petter Stewart-