15 July 2024
By Robert C. Hinkley*
I began my studies to become a lawyer 50 years ago because I loved the central idea of democracy that people could govern themselves and provide for each other’s security through a system of laws enacted by their elected representatives. As a result of my long career as a corporate lawyer (see: www.linkedin.com/in/robert-hinkley/.), I’ve come to realize that this idea can be undermined.
Recently, there’s been much consternation over the U.S. Supreme Court decision which declared a president has immunity from criminal liability arising out of his “official acts.” It’s easy to see where the concern comes from.
Democracy doesn’t work when the powerful are given free rein to ignore the law. Immunity gives the president a license to violate the security of everyone and anyone without fear of legal punishment. That’s a problem.
Democracy also doesn’t work when big companies lobby and are allowed to continue severely damaging the public interest simply because no law can be enacted to make them stop. Big corporations have figured out how to use the rights of citizenship to shield themselves from its obligations. The constant emission of significant quantities of greenhouse gases and the millions of deaths caused by tobacco annually are good examples.
In both cases, democracy fails to protect the security of the people. The first because the president is granted immunity from the application of existing law. The second, because the government is unable to pass a new law. The first gives license to lawlessness. The second allows the infliction of severe harm to continue due to the absence of law.
In both cases, the security of the citizenry is imperilled, and democracy fails to fulfill its promise. Who would agree today to setting up a government where the elected leader was given broad immunity for harms he or she might cause in office? Who would agree to be governed by a government which can’t stop corporations from severely harming the environment or other elements of the public interest?
Presidential immunity is a uniquely American problem. There’s not much that can be done but pray that the next time it comes before the Supreme Court the court recognizes its earlier mistake and reverses itself.
Corporate abuse of the environment and other elements of the public interest which causes severe harm is different. It has been a worldwide problem for years. There, the people have the ability to make it stop. In other words, democracy gives them the ability to change the law to protect themselves.
All corporations are creatures of the law. If the corporate law all over the world did not provide for their existence and license them to operate, they simply couldn’t.
That law also directs the people who manage them how they are to conduct themselves. It says they must always “act in the best interests of their company.” The problem with this is that it includes continuing to cause severe harm to the public interest when stopping would be contrary to the company’s best interests.
There is a simple solution. Direct our elected representatives to change that law. Add to the duty to act in the company’s best interests a higher directive, a Code for Corporate Citizenship (see, www.codeforcorporatecitizenship.com.) which would read:
“but not at the expense of severe damage to the environment, human rights, the public health and safety, the dignity of employees or the wellbeing of the communities in which the company operates.”
Directors can do both, make money and protect the public interest from severe harm. The duty to act in the company’s best interests will still be the directors’ prime directive. Adding the Code for Corporate Citizenship will refine how they are to go about it—by not continuing to cause severe harm.
This higher priority obligation will impose on companies the minimum obligations of citizenship to go with the rights they already enjoy. The result will make directors more cautious. That can only be a good thing. It will enhance the security of everyone and help restore the promise of democracy.
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* Robert C. Hinkley is a retired US corporate securities lawyer and dual US/Australian citizen. He resides in Berry, New South Wales.
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