COMMENT: The Endbridge corporate character

Ray Grigg
By Ray Grigg
October 24th, 2012

A corporation is not a person.

Words, of course, convey the impression that it is because language uses the same terms to refer to a corporation as an individual. “John” can be transposed to “Enbridge” without a change in sentence structure.

Even though a corporation is neutered by the pronoun “it”, this substitute for a noun doesn’t eliminate the impression that a corporation is something tangible and real. But it isn’t. It is, in fact, nothing more than a scratch of ink on a page, an abstract creation that can appear or disappear by a legal manoeuvre.

Because a corporation isn’t a person, it can misrepresent and deceive without a qualm of guilt. So, too, can it change shape and character without a blush of embarrassment or shame.

Hypocrisy is not in its vocabulary. As an impersonal and amoral object, its essential purpose is to follow the course of maximum profits for its shareholders. And the people who speak on behalf of the corporation commonly adopt its persona.

This explains how Enbridge could describe its Northern Gateway pipeline project, a $5.5 billion project intended to move Alberta bitumen to Kitimat on BC’s coast, as a state-of-the-art design with safety features that would practically eliminate the possibility of oil spills.

The implicit message to the public was, “Trust us, we know what we’re doing.” Then, when the drift of public opinion began to oppose the pipeline, Enbridge could announce that it would improve its safety features by using extra-thick steel in potentially vulnerable parts of the project, and by adding more remotely controlled valves to shut off oil in case of possible emergencies.

A person with an iota of conscience would shrink with humiliation at being caught in such a compromising position somewhere between exaggeration and deception.

This is the poverty of ethics that undermines the credibility of any promises made by Enbridge. The $500 million in additional improvements came only when the possibility of a failed project threatened to cost the corporation more than the added investment.

If Enbridge had really intended to build a state-of-the-art pipeline, these additional safety features would have been included in the first design. Enbridge’s motivating objective is to make as much profit as possible with as little investment as possible.

The safety of the pipeline was always a calculated consideration, never an inviolable principle.

This explains why Enbridge did not voluntarily submit to Canada’s Joint Review Panel the damning findings of America’s National Transportation Safety Board on the corporation’s spill of 3 million litres of diluted bitumen (dilbit) into Michigan’s Kalamazoo River in 2010.

The environmental impacts of dilbit are much more severe than the usual spills of crude. Dilbit is a tar-like substance mixed with volatile solvents (diluents) so that it will flow. At a spill in water, the solvents evaporate as toxic gases, then the remnant bitumen sinks.

The challenge of cleaning up the mess increases about twentyfold over crude. Because of the sensitive river systems exposed to this elevated risk by the Northern Gateway pipeline, Enbridge simply overlooked this vital information so as not to undermine confidence in its project. Call this selective honesty.

The same poverty of ethics applies to the “broadly representational” (Enbridge’s term) depiction of Douglas Channel being devoid of the multiple navigational hazards that would plague the safe passage of dilbit-laden supertankers.

This is a model example of a corporate psychology of “sell” — simplify information to eliminate any obstacle that might reduce the likelihood of closing a deal.

The objective is to present the most promising of all images to investors, regulators and the public: the safest pipeline, the clearest tanker routes, the best technology and, of course, the most jobs and the largest economic benefit to society.

So, if Enbridge really wanted to provide maximum benefit to Canada, Alberta and British Columbia, why wouldn’t it build a refinery at the site of the tar sands?

This would multiply employment, enhance the tax base, increase Canada’s energy self-sufficiency and contribute to an intelligent national energy policy. The answer is simple. Shipping bitumen to Asia has a higher profit margin than refining it here. Enbridge is an economic opportunist, not a political loyalist. It does what’s best for itself on behalf of its shareholders.

So, how far would it go to protect its own interests? Economist Robyn Allan has raised two interesting question about the relationship between Enbridge and the Northern Gateway pipeline (Island Tides, July 26/12).

The first concerns insurance — the project does not guarantee adequate liability coverage for a “leak and burst” event. The second concerns a separate corporate structure, the Northern Gateway Pipelines Limited Partnership, that appears to be a legal manoeuvre designed by Enbridge to insulate its assets from costs in case of a spill.

A similar separation already exists between Enbridge and the supertankers that would load Alberta’s dilbit at Kitimat — once the dilbit is at sea, Enbridge is no longer responsible for the damage from a spill.

A close examination of the Northern Gateway project raises other contentious issues.

Patrick Brown, writing for Island Tides (Aug. 23/12), notes that no pipelines cross the Rockies except the 60-year-old Kinder-Morgan pipeline that travels a relatively safe route from Edmonton to Burnaby, and “a couple of small pipelines close to the Mexican border where the mountains aren’t so high”.

The reasons are obvious. “Pumping crude oil all the way up-and-over (plus the congealing cold in winter) takes a lot of pressure and a lot of energy. That’s why more lines along that route do not exist.”

Cost and risk in mountainous areas have been historical discouragements that Enbridge intends to defy with its Northern Gateway project. Enbridge may be willing to gamble on the cost but the risk ultimately belongs to the environment.

Risk, of course, is the close companion of profit. So the corporate agenda contrives to separate the two by avoiding the risk and keeping the profit. If all else fails, it can do this by changing character and shape — remember, a corporation is not a person.

Any combination of fresh directors, new ownership or adverse economic conditions can alter the form and structure of a corporation so it can avoid the costly responsibility of its risk.

It can also initiate complex legal strategies that may take decades to resolve.

Or it can simply take its profits and dissolve into legal oblivion, leaving real people and the real world to bear the tragic consequences of its mistakes.

Ray Grigg is a weekly environmental columnist for the Campbell River Courier-Islander. He is the author of seven internationally published books on Oriental philosophy, specifically Zen and Taoism. This article originally appeared in the Common Sense Canadian.

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