Corporations and nuclear plants

Corporations and nuclear plants

March 3, 2009

Managing For Society column, The Manila Times

Two issues have been occupying the news lately and I can’t help but tie them together. The first is the issue of the charges filed by the BSP against a local group of banks for alleged financial malpractices which have resulted in losses for thousands of depositors. The second is the proposal to activate the long mothballed Bataan Nuclear Power Plant (BNPP) which is facing stiff resistance from many quarters including the Catholic Church.

A nuclear plant shares many characteristics with the modern corporation. These are two of the most powerful inventions of mankind and they do produce benefits. A nuclear plant concentrates nuclear fuel and uses physical science to generate enormous power to benefit energy users for long periods of time. A corporation, on the other hand, concentrates capital and uses business science to generate employment, goods, services and profits to benefit investors and other stakeholders. The growth of modern economies could not have been achieved without the corporation.

As with most powerful things, there is a downside. To ordinary people, nuclear plants and corporations are quite complex to understand. Because of this, they can pose threats that may catch many unaware. A nuclear plant can malfunction or be badly managed, with devastating effects on entire communities and the environment. This was seen during the Chernobyl plant incident. This possibility is the main concern of the opponents of the BNPP activation. A corporation can also be badly managed with equally devastating effects on countless people and the environment. We are seeing this now in the creeping recession resulting from the bad decisions of banks and mortgage companies in the US and the global climate change due to the excessive use of fossil fuels in .

The scariest thing about nuclear plants and corporations is the potential scale of damage they can inflict on people and the environment. It’s their very power that is their most worrisome feature. When designing systems which can potentially harm people, engineers build in safety and fail-safe mechanisms. Elevators have sensors to keep their doors from closing and hurting people. Car windshields are designed to make other cars and people appear closer than they are to the driver and thus help prevent collisions and sideswiping accidents. If the BNPP is to be activated, extraordinary safety mechanisms must be put in place as well.

Beyond engineering design, institutional checks and balances must be put up as well. The US Atomic Energy Commission strictly enforces standards on American nuclear plants. An equivalent agency manned by the most capable scientists and diligent regulators will have to monitor the BNPP. Do we have the people for this? Do we have the institutional discipline to do this? I have a simple question for those who think so: Will you or your loved ones want to live near the BNPP when it is activated?

How can people be protected from abusive corporations? We do have several laws that are supposed to protect employees, customers, creditors, and other stakeholders of the corporation. Current corporate law and SEC regulations do not ensure transparency and accountability among managers of corporations. Besides, in a country where many do not trust the justice system, seeking protection through the law is not a very attractive alternative. Certainly, we have seen how large corporations have institutionalized exploitative and unsound practices, from over-selling products and services beyond their capacity to deliver and contractualizing employees beyond any hope of personal security and development. Until serious flaws in corporate governance practices are implemented, the public will always be vulnerable to corporate abuse.

Man’s ability to invent powerful things sometimes outstrips his ability to properly govern them, with dire consequences for many. While potentially beneficial, such creations must always be employed with a healthy combination of humility and the utmost prudence.

Dr. Ben Teehankee is the Sen. Benigno Aquino associate professor of business and governance of the Ramon V. del Rosario Sr. Graduate School of Business at De La Salle University. He may be emailed at teehankeeb@dlsu.edu.ph.