State of New York To Use "Martin Act" To Prosecute ExxonMobil
As an observer of the justice system here in the United States, I have always wondered about the need for laws that are created to help prosecutors go after certain specific types of criminals. For example, we’re far more indignant about drunk drivers, child molesters, Ponzi schemers, and terrorists now than we were 50 years ago; I get that. But 50 years ago, wasn’t it illegal to defraud people and blow up buildings? I.e., we already had laws on our books sufficient to prosecute those who committed crimes in these arenas. Did we really need new ones?
As it turns out, there is an extremely specific law in the State of New York called the Martin Act that will enable prosecutors there to go after ExxonMobil for hiding the truth about climate change. The gist of the law is that it facilitates the punishment of those who defraud investors, e.g., those who withhold information that investors should have had in order to place a proper value on the securities in question. Here, we have a company whose stock was deemed valuable in part because its business model knew no bounds; even when they knew this was false, Exxon was telling its investors that there were no material issues with the consumption of fossil fuels (other than the challenges that may be associated with finding more), and that, accordingly, their business model could exist in perpetuity.
We now have come to learn that, by the late 1970s, the executive team at Exxon knew conclusively that they and the entire oil industry would soon hit a barrier associated with climate change; their scientists, who had been studying the subject diligently, reported to management that the continuation of their business practices would cause the temperature of the planet’s atmosphere to rise to a point at which all life forms on Earth would be threatened, and thus that the business would need to cease, or at least greatly modify, its activities. They knew that their business was predicated on activities that were causing enormous amounts of environmental damage, and that, when all this was discovered, a catastrophic fall in the company’s stock price would result.
Of course, this type of criminality isn’t without precedent; the parallels here to the tobacco industry are obvious. Big tobacco knew without a doubt that cigarettes were the only legal product that when used as directed, causes death. They conspired to hide this from the public, and they continue their business practices today, though these entities have been the result of much regulation, not to mention public disdain; they are broadly regarded as the most despicable commercial group on the face of the Earth. It appears that Exxon is right behind them; in fact, it could be argued that the case with Exxon is even broader, because the damage here accrues not only to those who make a choice to smoke, but to every living human being (in fact, all life forms), regardless of the choices we make.
Needless to say, it will be interesting to see where this goes. In the interim, I suppose I’ve become a believer in specialized laws like the Martin Act, insofar as they enhance the ability of prosecutors to curtail the actions of people who were tragically born into this world without a conscience.
What about prosecuting the gun running by our White House, State Dept and CIA, etc to crazies in the Mid East? What about the Clinton Foundation crimes of cash laundering and influence peddling? Curious as to your thoughts re: those issues.
I can see what you’re getting at, that is, that it’s wrong to be acrimonious about ExxonMobil, while giving a free pass to all manner of other atrocities. You make a good point.
This is hardly a good excuse, but I tend to confine my remarks to the energy industry and issues of environmental sustainability more generally.
Craig,
You are assuming that Exxon has done anything to be “guilty” of apart from discounting the hypothetical theorizing of an employee scientist.
Now, you may agree with the the premise of that scientist proposed, but obviously the Exxon management put it in the same category as Hubbert’s much discredited “Peak Oil theory “.
Having a different opinion, is not a crime ! Nor were they wrong ! Despite the massive debate, dissemination of information, energetic activism, strident advocacy, etc, the stock price of Oil companies has not seen a ” catastrophic fall “.
In their defense the oil companies can point out that far from being detrimental to human existence the fossil fuel industry has enabled the great period of human success.
Life expectancy in the past 150 years has more than doubled, to 71 years in 2013 from fewer than 30 years in 1870. Billions of people have risen out of poverty. One and a half centuries ago, more than 75% of the world’s population lived in extreme poverty, consuming less than $2 a day, in 2015 money. This year the World Bank expects extreme poverty to fall below 10% for the first time in history.
In any proceedings, Oil CEO’s could justify confidence in the continued prosperity of oil products by simply asking if the court caught fire, became the target of terrorism, or the Judge had a heart attack, who would want the life saving attendance of an appropriate emergency vehicle ?
This is just another cheap political stunt, which serves no real purpose except to distract from any real environmental progress.
I have a neighbor whose small hobby farm abuts my property. (He and his wife are well paid academics). My neighbour is a keen environmental activist. He is an active supporter of the far-left Green Party, and loudly decries the government for allowing the local Power Utility to stop buying his surplus Solar Power at the uneconomically high tariff he once enjoyed from the previous government.
Now, you might think this guy is one of the ” good guys “. But his ideologically pure beliefs don’t accommodate him buying an electric ride on mower, (he’s seen mine) although such a vehicle and the acquisition of some electric farm tools would use up that surplus Solar power, and alleviate pollution. Instead he would rather buy cheap Chinese made machines powered by products of the oil companies he castigates ! .
The Martin Act (1921) exists only in New York. Critic’s of the act claim that in recent years the effectiveness of the Act has only served to extract huge payments from companies to glorify politicians and help ambitious attorneys general win election to higher office.
Even supporters of the Act agree that New York Attorney General Eric Schneiderman’s crusade against Exxon is political grandstanding, without any legal merit.
It’s a bad principle to allow a misuse of prosecutorial power, instead of legislation to achieve political objectives.
The evidence, from what I can see of it, looks pretty damning, but I’m very much an “innocent until proven guilt” kind of a guy. Again, it will be very interesting to see where all this goes.
” Evidence ” ? But of what ?
So what if Eric Schneiderman’s accusations are correct and he is able to establish that back in the 1970’s, some scientists employed by Exxon developed a working hypothesis relating to climate change, which Exxon chose to ignore.
That’s not ” lying to investors ” since despite the vast array of material concerning published over the years, Exxon’s share price has remained unaffected. There has been no “catastrophic collapse” of the share price.
Eric Schneiderman’s alternate charge that Exxon somehow “suppressed ” information supporting climate change advocates, is absurd. Even if Exxon did exactly that, it’s still not criminal behavior. Exxon has no obligation to revel such material to assist any political group.
In fact prosecuting Exxon could be harmful for climate change advocates. Exxon’s lawyers could build a case for the growing evidence of public harm done by accepting the inaccuracies of unreliable climate change advocates, and publicize the growing evidence of wide-spread fraud and chicanery affecting the veracity of climate change research.
Eric Schneiderman is a pretty vengeful sort of Attorney-general. He spends an inordinate amount of time and money on grandstanding lawsuits against his political enemies, while letting friends and supporters slide. This is especially true if those friends and supporters make large campaign contributions.
It’s this growing seductiveness when conducting public witch hunts that is becoming increasingly disturbing. That’s why I continue to urge you to raise your voice and comment on the increasing number of frauds and misconduct to be found among the activities of leading climate change advocates.
(or do you believe the end always justifies the means ?)
We’ll see what happens.
That ExxonMobil could sue climate scientists is a real possibility, given what’s happened to Michael Mann and this fellow in Canada: http://thinkprogress.org/climate/2015/02/09/3621026/always-read-the-comments/. Yet this is certainly not a very strong strategy, given that 97% of these people are saying the precise same thing and the evidence supporting their case (AGW) is overwhelming.
Having said that, anything’s possible in the world today; it’s hard to rule anything, regardless of how apparently absurd.
Graig,
In both the cases you mention, the Judges were very careful to make no comment or finding on the veracity of climate change. Indeed both judges were careful to express that issue of climate change played no part in their judgement.
The claimants won because they had been personally vilified with unfounded and extreme attacks on their character, that could not be reasonably substantiated, or justified.
“97% of these people are saying the precise same thing and the evidence supporting their case (AGW) is overwhelming. ”
Um, what “people “, ? Who are these “people” and how were they counted ? What is your reference for that often quoted, but completely erroneous statement ?
Oh, do you you mean those people standing over in the corner of the room beside the Elephant, mmm ? You mean those 20 individuals whose names I provided, whom you seem most reluctant to acknowledge ? Do you mean those 20 earnest activists and advocates being currently investigated for their participation in the $ hundreds of millions of taxpayers money, fraudulently converted and misappropriated ?
Corruption and criminal behaviour is inexcusable. It doesn’t matter if it’s perpetrated by a director of a large corporation, a Climate Change advocate, or a Renewable Fuel operator.
There is no evidence that Eric Schneiderman knowingly received or sought any campaign contributions from the now defunct IGES, or it’s director Jagadish Shukla,……(well not yet anyway !). Nor do I believe Schneiderman considers himself dishonest or corrupt. He’s just in the inevitable position of being a prosecutor-politician, ambitiously wanting to get re-elected and achieve even greater political fame to aid in a future bid for higher office. .
Sadly, such a position is not electorally conducive for fair, considered and responsible conduct. The NY electorate seems to reward less big showy, populist grandstanding against unpopular targets.
I hear you. We’ll see what happens. Personally, I see huge parallels here to the travails of Big Tobacco. An industry knew that its product was causing damage and conspired to hide that. Lots of people suffer physical damages, AND lots of investors lose money. So which crime do you pursue? Which law do you use to prosecute? That’s up to the attorneys general to decide, but it seems to me that the Martin Act makes sense, at least on the surface.
Graig,
There is no legal comparison between Oil and Tobacco. In the case of Tobacco the industry denied the process of manufacture enhanced the addictive nature of a product which had no positive benefits.
The oil companies have never denied the toxic qualities of their products, only for a period didn’t release some material, which if accurate, might support the contribution made by the industry to the theory of AWG. In 1970 AWG was far from a widely accepted theory, even today there is considerable debate about scale of effects among the scientific community, which tends to be drowned out by political and ideological disinformation.
So their simply is no “crime” ! . Eric Schneiderman’s use of the Martin Act without any real complainant is simply a misuse of power for political purpose.
Nor is your statement ” Lots of people suffer physical damages, AND lots of investors lose money ” make any sense. The Martin Act has no provision for redress of general health claims, and since no investor lost any money, any legal action brought under the previsions of the Martin Act are spurious ! There simply is no legal justification for this purely political abuse of power.
Chevron and other Oil companies, could point to their expensive published scientific studies on the harmful effects of the production and use of Marine grade no. 6 oil (bunker oil) dating back to the 1980’s and the refusal of the US Federal Government to remove the legal requirement to manufacture the product.
Exxon could also argue that oil energy (especially in 1970) was an integral part of US defense and security interests. Irresponsible release of such material may have at that time been considered a breach of Nation Security. (National Security)
But, at the end of the day, with no damage to shareholders and an as yet irreplaceable product, where is the point of such a law suit ? Holding different opinions, and employees the hypothesis of employees, is not a crime.
The basis of any court action must be to either enforce the law, or grant redress. Since no law has been violated, and redress is impossible since there is no real complainant, at the best this petition is seeking to achieve a political result in the absence of legislative process. Courts can’t legislate.
I remain fascinated by your (and your colleagues) refusal to comment on the instances of fraud among AWG advocates, and the Renewable Energy Industry. Where is your indignation for these miscreants?
I also note you can’t substantiate your reference to 97% ! Now if even such a well intentioned and informed advocate as yourself can’t disassociate himself from employing inaccurate disinformation because it may conflict with what you want to believe, how can you possibly justify the prosecution of an oil company executive for the same lack of objectivity back in 1970 ? ,
Well said!
Whow! Whow! Whow! MarcoPolo, you seem to suggest that a scientific investigation during which Exxon spent over $100,000 to outfit a tanker to collect data was simply an interoffice memo by some crackpot scientist. The suit is not about climate change specifically. It is about a statute and corporate responsibility to obey the law.
Clearly the suggested connection between fossil fuels and climate warming was sufficiently damming for Exxon to spend reasonably large sums on research. The results of that research further suggested a connection. At that point Exxon had an obligation to inform its stockholders of a potential risk to its stock value. This they failed to do. That is what this suit is about.
By going on about climate change you are not enhancing a perception that you have any knowledge of the facts or the circumstances of the case.
You can attempt to argue climate change poses no risk or that it poses no risk to Exxon’s stock value “generally” but if Exxon’s own research gave specific results that would have created an obligation to stockholders. In what will no doubt be a decade long trial Exxon will attempt to define its obligation, and other terms like “risk” The research and climate change in general will likely be less important legal aspects of the trial.
The fact that Exxon then proceeded to support a campaign of climate denial is simply suggestive of Exxon management attempting to avoid the consequences of their research similar to what we have discovered was the pattern set by big tobacco. If there is a guilty verdict this may play some aspect in determining fines and damages to be paid, but again it has no specific bearing on the upcoming fact finding in the case.
What we know so far is primarily based upon a seven month investigation by some reporters. More may be revealed during the “discovery” period of the trial.
Clearly you are not a lawyer. That’s ok, but to understand the validity of Eric Schneiderman’s prosecution, you would find a degree of legal training useful.
Firstly, the “Martin Act ” 1921 (New York General Business Law article 23-A, sections 352–353) grants extraordinary and discretion to the New York State Attorney-General to fight financial fraud. No other legislature in the US, including the Federal Government, has enacted such extreme powers to a prosecutor. In fact, it’s difficult to find any parallel in the Western world !
The act was originally intended as a measure to be employed against-racketeering and Ponzi scheme operators.
To prove ” fraud ” Eric Schneiderman’s prosecution requires requires an actual complaint from a shareholder who suffered a genuine loss, or was recklessly and knowingly placed in danger of a loss. Since no loss occurred, (nor was the any foreseeable element of risk) there is no genuine complaint or complainant.
Exxon has no “public ” duty to revel scientific information, nor does it have to act on the information it receives except when there is hard evidence of negligence or foreseeable risk.
Those elements don’t exist.
There can be no “guilty” verdict, as being wrong, or holding a contrary view isn’t against the law. Exxon is fully entitled to fund whatever research it likes. Indeed it could be argued that the directors of Exxon have a duty to their shareholders to fund the widest range of opinion and research a a measure of prudence and in compliance with other provisions in the New York General Business Law Act.
Indeed, the directors of Exxon would be perfectly within the rights to argue that by releasing a study showing that the share price maybe catastrophically affected, panic selling may have occurred, only to be corrected by an immediate rally when it was discovered that such reports had no effect on the companies earnings. Shareholders who lost money, could complain that the reckless release of such material was irresponsible and obviously liable to create foreseeable market panic and financial mischief.
Eric Schneiderman has a history of misusing these extraordinary powers as his totally bizarre prosecution of Donald Trump has proved.
Now you may think that Donald Trump is a buffoon with surreal tonsorial taste, but an impartial examination of the highly expensive and flimsy case launched against him by Eric Schneiderman, give considerable credit to Trump’s claims of improper use of the office of Attorney-General and accusations of corrupt behavior by Eric Schneiderman.
We may find that the case against Exxon-Mobil is proven and the result is less than satisfactory. There was a case proven against an oil company, GM and Firestone for conspiracy to buy up trolley companies and sell off the assets to eliminate the competition. They received about $1000 in fines. Perhaps the fix was in and not much has changed to this day. http://www.brooklynrail.net/NationalCityLinesConspiracy.html
Oh, I grant that it’s anyone’s guess where this will go.
Graig,
Most modern countries require responsible investor information to be divulged as investor information by corporate directors.
However, corporate directors are not required to divulge speculation or opinion, especially when mixed with ideology or political belief. “Scientific ” information can often be interpreted by different stakeholders, and is often simply a matter of opinion.
Allowing legislatures to support an ever increasing intrusion in the lives of citizens, doesn’t just lead to a ” nanny state”, it can also give acceptance to the idea the state can impose moral ideologies on citizens, by removing choices.
You are quick to castigate the Energy companies for what you perceive as misdeeds, yet you remain silent about the blatant frauds and criminal activity committed by organizations supporting extreme climate change activism .
Why ?
If you are so eager to see criminal behavior prosecuted, why do you restrict that vigilance to only those politics and opinions you oppose ?
The Fossil Fuel has it’s faults, but the products it produces, and the economic contribution it makes are essential to maintaining not only the world economy, civilized society, but the daily lives of billions of people. That’s reality.
But let’s have a look a the company you are keeping these day’s, when you cry for “prosecuting the corporate heads of energy companies” ?
Let’s examine the example I previously brought to your attention, the non profit ” Institute of Global Environment and Society (IGES). ” which has gained more than $66 million in taxpayer funding for “scientific research into climate change” .
Except it turns out that the money really funded a complex propaganda machine designed to propagate more funding and credibility for a network of similar organizations. Oh, yeah, and along the way personally enrich the organizers and their family members.
It turns out that this organization, is merely the tip of the iceberg. A similar European organization attempted to blackmail and extort funds from Total Oil. The organizations leading scientists saw no “moral problem” extorting money from Total Oil , although the French prosecutors noted that the money was to be spent largely on improving the lifestyles of the organizers, rather than for altruistic purposes.
It’s worth remembering that the leader of the now defunct ” ICES” was Prof. Jagadish Shukla, a leading Climate Change advocate and major contributor to the 2007 UN IPCC report on Global Warming. Shukla, has also been touted as the next Chairman or the IPCC.
It may be that several hundred of the world leading “Climate Scientists” and a vast number of “scientific” studies, may have been manufactured, distorted, and manipulated for political purposes by the dishonest activity of advocate organizations and individuals.
Jagadish Shukla, was not alone in practicing his deception :-
Edward Maibach, George Mason University, Fairfax, VA
Paul Dirmeyer, George Mason University, Fairfax, VA
Barry Klinger, George Mason University, Fairfax, VA
Paul Schopf, George Mason University, Fairfax, VA
David Straus, George Mason University, Fairfax, VA
Edward Sarachik, University of Washington, Seattle, WA
Michael Wallace, University of Washington, Seattle, WA
Alan Robock, Rutgers University, New Brunswick, NJ
Eugenia Kalnay, University of Maryland, College Park, MD
William Lau, University of Maryland, College Park, MD
Kevin Trenberth, National Center for Atmospheric Research, Boulder, CO
T.N. Krishnamurti, Florida State University, Tallahassee, FL
Vasu Misra, Florida State University, Tallahassee, FL
Ben Kirtman, University of Miami, Miami, FL
Robert Dickinson, University of Texas, Austin, TX
Michela Biasutti, Earth Institute, Columbia University, New York, NY
Mark Cane, Columbia University, New York, NY
Lisa Goddard, Earth Institute, Columbia University, New York, NY
Alan Betts, Atmospheric Research, Pittsford, VT
Each of these ” climate scientists ” went along for the ride. How many were aware of the magnitude of Shakla’s deception is unknown, but most have now run for cover.
One thing is for sure, each took advantage and endorsed the organizations service to ensure favorable ” Peer Review” of published papers, by each agreeing to endorse each others work without unfavorable criticism.
Nor is Shakla’s activity just ” one rotten apple”. He and his organization, may just be the tip of a vast iceberg.
Evidence is emerging that NASA, National Science Foundation, the National Oceanic and Atmospheric Administration, and others may have intentionally, or in response to pressure from the Obama administration, or just plain idealism, suppressed, distorted and manipulated unfavorable information and scientific data.
Graig, dishonesty is dishonesty, whether practiced by a Fossil Fuel company, or a demagogue hiding behind high minded ideology . The End never justifies the Means.
As Edmund Bourke said ” “The only thing necessary for the triumph of evil is for good men to do nothing.”
But Edmund Bourke didn’t mean you could be selective !
“Clearly you are not a lawyer. That’s ok, but to understand the validity of Eric Schneiderman’s prosecution, you would find a degree of legal training useful.”
I am sure on several fronts that you are a great fisherman, but line may be empty this time. Thanks for the smile.
@ Breath on the Wind,
My comment wasn’t meant as a criticism. It was just meant to indicate that what might seem of public benefit to a layman, may not to a lawyer who understands the limitations of the legal system.
Eric Schneiderman gained much admiration for successful, and highly publicized prosecutions against a series of easy corporate targets, who decided for whatever reason, that it was easier to pay settlements rather than fight protracted court battles.
For reason best known to himself, he failed to prosecute similar matters against friends and campaign supporters, and came to disaster when he tackled a far tougher and more determined litigant in Donald Trump. The vindictive, flimsy and legally unjustifiable action against Trump shows Schneiderman’s willingness to use the Martin Act for political purpose backfires when litigants are prepared to stand and fight, rather accept being bullied.
(Setting aside Donald Trumps accusation that Schneiderman fury was motivated by Trump’s refusal to continue financially supporting Schneiderman’s political ambitions)
“My comment wasn’t meant as a criticism. It was just meant to indicate that what might seem of public benefit to a layman, may not to a lawyer who understands the limitations of the legal system.”
… A thrust and then a feign, one might almost think you were schooled. If by “layman” you mean someone of a lessor knowledge than a “lawyer,” than you state the obvious, that knowledge can guide us away from false hope and misunderstanding. … Which bears no relationship to the unintended consequences of an intentional action.
Neither a thrust nor a feign, just an observation that every field of expertise operates by different dynamics than may be understood by those unfamiliar with the intricacies.
Law is like any other profession or trade, but unlike most trade it’s practice is often misrepresented for dramatic effect by the media, especially film and TV.
But since Craig and Cameron are reluctant to comment on the instances and implication of fraud, duplicity, misappropriation of public money and deceptive dissemination of adulterated information by eminent climate scientists and advocates, I would be sincerely interested in your attitude toward these deplorable events?
Lol. Give me (us) a break. I know a great number of these climate scientists personally. Most of them are aging university professors leading teams of grad students and post docs in research that began many decades ago. I’d sooner conclude that these people are frauds than that my mother is an undercover CIA agent. Mom: I need your support here. Lol
I like you, but you need a new line of reasoning here.
I can appreciate that you don’t want to think ill of the people you admire. It must be very disheartening to discover that some people have feet of clay.
However, I will remind you that all the people on that list were not just innocent bystanders. Each of those people signed an open letter calling for the criminal prosecution of their opponents. Each of these people was prepared to move from science to activism, in bid to restrict the right to free debate and vilify, persecute and even imprison others as “heretics”.
Each of these folk belonged to an organization that misappropriated, stole, defrauded and subverted the US taxpayer of tens, maybe hundreds of millions of dollars.
Obviously it’s possible that some of the signatories were just naive, or even sincerely ignorant about the gravity of what they were doing. Some may have been unaware of the seriousness of the wrong-doing by IGES. But that innocence is not assisted by their unwillingness to step forward and condemn the wrongdoing, or even co-operate with investigators. Evidence of IGES corruption exists in black and white. The idea that it’s ok because the stealing stopped when discovered and exposed, we should all forget about their transgressions of the individuals, is a bad principle.
Does your personal friendship extend to Dr Jagadish Shukla ? Do you condone his actions or feel he should be excused, just because you don’t want to consider him to be dishonest ? Perhaps you should read http://www.nationalreview.com/article/424875/climate-extremist-taxpayer-funded-ian-tuttle.
What about those in the Renewable Energy Industry involved in criminal scams, misappropriation of taxpayer funds, including political contribution to favored candidates ? Are they to be tolerated also ?
If I had my way, I would prosecute the French Government, and Total Oil, for conspiracy to destroy the Qaddafi regime and murder the Qaddafi family. The decision to destabilize Libya was not motivated by any desire to remove a repulsive dictator, but because Libya decided to stop selling oil to Total Oil (the French government being the largest shareholder) in favour of the Peoples Republic of China.
Criminality is criminality, just because the particular criminal endorses an ideology or political party you endorse, doesn’t make the actions less criminal.
I guess the point I’m trying to make is that the science is becoming lost among the activism and money spent of “green energy” politics.
New Hampshire Republican Sen. Kelly Ayotte, is an interesting example. Like many Republicans Sen. Ayotte consistently expressed her doubts about Climate Change activism. That is until she realized that she was finding it hard to match her opponents campaign war chest.
Fortunately for the Senator, she was introduced to some new “friends” . One of these new “friends” is Jay Faison of the ClearPath Foundation. Jay has promised to spend millions to change conservatives’ minds on global warming. This includes backing candidates they believe will push climate and green energy policies.
Another “friend ” is environmentalist billionaire Tom Steyer who spent $73 million last election supporting Democratic candidates.
Suddenly, the good Senator seemed to undergo a “Road to Damascus” conversion., Perhaps the fact that the Senators campaign just swelled by several million, could just be a coincidence ! ( but I wounder if her new benefactors were Oil companies, would you be so willing to forgive) ?
Hey Marco I waded thru all this, you are on the wrong side of many issues . If you believe in your positions as adamantly as you write to all the others and argue thin points and you do thrust and feign many times. Well if you believe then volunteer to donate funds like money to EXXON tohelp them in court.
time for you to put money into the game if you really believe the Untenable position that you have taken. No need to speak to the indefensible. later on go build nukes in Tar sands has more Merits than this LOL