> Exxon a 'profit-driven' tiger
>
>
> By ROGER FRANKLIN
> Sunday 1 July 2001
>
> When Business Week devoted a recent cover story
>to Exxon Mobil, Esso's United States parent, it wasn't the staggering size
>of the world's largest energy outfit that inspired the greatest awe.
>
> True, a $US17.7 billion ($A34.7 billion) profit
>last year was pretty darn impressive. But, what really captured the
>magazine's imagination were the same things that have inspired juries to
>sock the oil company with some of the largest fines ever imposed in the
>United States: Exxon's immense power and its arrogant willingness to abuse
>it.
>
> It is an attitude that begins at the top, in the
>office of chairman Lee Raymond, whose desk is watched over by a wall-sized
>oil painting of an attacking tiger, the company's snarling symbol. "If he
>gives his word, which he is reluctant to do, he will keep it," an executive
>who has negotiated with Mr Raymond told Business Week. "But he is very
>difficult to
>deal with."
>
> How difficult?
>
> The lawyers in the Alabama Attorney-General's
>department found out several years ago, when they informed Exxon that it
>owed the state $US88 million in unpaid royalties on oil and gas extracted
>from beneath the Gulf of Mexico.
>
> A pittance in comparison with the oil giant's
>cash flow, the company nevertheless decided to contest the demand in court.
>That turned out to be a bad move because the lawyers for the state gained
>access to mountains of confidential - and embarrassing - corporate
>documents.
>
> What they found - in the words of Southern
>Methodist University Business School's John Slocum, who recently compiled a
>detailed study of Exxon's corporate culture - was a management philosophy
>that respects nothing but the bottom line.
>
> "It is the ultimate cold, calculating, analytical
>and bureaucratic organisation," Professor Slocum told The Sunday Age last
>week.
>
> "In Alabama, they did what they always do:
>conducted a cost-benefit analysis of what it would cost to honor the
>contract ... Obviously, ignoring it made greater financial sense at the
>time, so it appears they decided to withhold payments."
>
> As documents submitted during the trial made
>clear, Exxon did indeed weigh right and wrong - and concluded that breaking
>the law was more profitable.
>
> Even its chief in-house lawyer recommended
>withholding the royalties because, "our exposure is 12 per cent interest on
>underpayments. Plus the cost of litigation". In other words, the money to
>be made by breaking its word outweighed the potential fines.
>
> What Exxon did not figure on was the sense of
>outrage that inflamed 12 Alabama jurors, who decided that such a flagrant
>disdain for honesty deserved special punishment.
>
> In January, the panel brought down a $US3.5
>billion judgment against the company, with jury foreman Shae Fillingim
>later explaining that Exxon needed to be taught that the law applied to
>everyone, not just to the "little people".
>
> A similar case unfolded last year in Miami, where
>a group of service station owners sued Exxon for price gouging. Once again,
>at least according to lawyer Eugene Stearns, who won a $US1 billion
>judgment in the case, the company chose to do wrong in pursuit of profit.
>
> They "don't have much respect for the civil
>justice system. They fight over everything. They don't concede the
>obvious," said Stearns.
>
> If that observation chills Melbourne lawyers
>preparing to sue Esso for the financial losses that followed the Longford
>explosion, the legal aftermath of the infamous Exxon Valdez oil spill in
>Alaska may well give them even more reason to expect a drawn-out legal
>battle.
>
> Let this excerpt from an August, 1998, editorial
>in the Anchorage Daily News explain what happened in the wake of a 1994
>jury decision that hit Exxon with $US5 billion in punitive damages:
>
> "Apparently delay pays," the paper wrote. "Exxon
>is earning $US90,000 an hour, about $US2 million a day ... As it stands
>now, if the appeal lingers a couple more years, Exxon will have earned
>enough interest alone to pay the $US5 billion, plus the accrued interest."
Visit <http://www.pressurepoint.org/> to check out info on the international day of action against ExxonMobil.
Yoshie