Monday, November 30, 2009

Dubai Government seeks to avoid its responsibilities

Interesting passage in the Observer's piece on Dubai.

The Dubai government," it said, "is under no obligation to extend support to any government-related entity". In other words, these companies, led by the largest, Dubai World, which benefited from implicit government guarantees when they were raising huge amounts of debt from western banks, were already being cut adrift.

This is an common trick used by mega-capitalists. They seek to benefit from profits made by their subsidiaries, and cut themselves off from losses. They seek rights, but avoid responsibilities.

Multinational corporations use this mechanism as a stock in trade. Trafigura set up Compagnie Tommee to dispose of the toxic waste on the Probo Koala. The directors of Tommee are in jail, while Trafigura directives are free (although they did spend time in Cote d'Ivoire jails, where they were beaten up. They were released when Trafigura paid the government of cote d'Ivoire $198million for a clean up operation).

The law needs to be changed so that companies bear full responsibility for the operations of sub-contractors and subsidiaries.

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