Alumina and BP Scenario Collaborative Analysis, Essay Example

Major corporations and manufacturers have a social and ethical responsibility to protect the environment from contamination from possible mishaps related to their business operations. However, there are cases where this type of protection has been compromised and has caused literal and perceived disastrous consequences such as in the cases of the BP oil spill and the Alumina, Inc. environmental discharge compliance violation. With these, there are legal issues involved that must be addressed.

Legal Issues in the BP Case

In the case of the BP oil spill, there was an explosion of a BP oil rig under the Gulf of Mexico on April 20, 2010. Legal issues with this include loss of life, bodily harm, environmental contamination and destruction, and loss of billions of dollars. This disaster caused the deaths of at least 13 people and bodily harm injuries to at least 17 others. Lawsuits filed against BP sought payment for damages in excess of $260 million which was paid out quickly to eliminate even more costs that would have come from settlement cuts to trial lawyers (McDonald, 2010). Additionally, the main principles violated involved risk management and insurance loss issues.

Legal Issues in the Alumina Case

In the case of Alumina, Inc., an environmental discharge violation was found during a routine EPA inspection to evaluate regulatory compliance. Results from the inspection revealed that Alumina’s discharge concentration samples were above the regulated limit. Alumna quickly corrected the violation. The legal issue arose when a local resident accused Alumna of contaminating the local lake and said this caused her 10-year-old daughter’s leukemia (Alumina Inc. Simulation, 2013). The main principle violated was due diligence. The water contamination very well may be what contributed to the girl’s illness.

 

Benefits to Commerce to Have Personal Liability Protection

According to Investopedia, a corporation is a business that is an entity in itself and separate from its owners and shareholders. The benefit of this is a corporation acts on its own behalf and “a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes” (Investopedia, 2013). In addition, this means that the liability of the shareholders is limited. They cannot be sued personally for any legal matters against the corporation, and the shareholders are not responsible for any of the corporation’s debts. The shareholders personal assets are protected but the corporation’s assets can be taken in a liability case.

Should Shareholders Be Liable?

Personally, I think that it is unfair and unethical for shareholders to have no liability in cases where their corporation has caused injury to the public, to its employees, or to the environment. Limited liability should mean that the shareholders are at least partly liable in certain situations. Otherwise, it leaves the door open for people to hide behind their corporations and cause problems or commit illegal acts. Additionally, it may encourage a certain level of lack of concern on the part of shareholders of some corporations, because they know they can walk away from any legal issues caused by their corporations. For example, the BP oil spill and the Alumna environmental issue caused or potentially caused catastrophically life changing events in people’s lives. Billions of dollars were lost. It seems wrong for there to be no recourse against the shareholders, especially if it so happened that the corporation was broke but the shareholders still had billions of dollars between them.

References

Alumina Inc. Simulation. (2013). Retrieved from Business Regulation Simulation.

Investopedia. (2013). Retrieved from Definition of Corporation: http://www.investopedia.com/terms/c/corporation.asp#axzz2IqpCiIku

McDonald, C. (2010). BP oil disaster breaks records, puts spotlight on risk management failure.

National Underwriter / Property & Casualty Risk & Benefits Management, 114(44),

19-32.