Sunday, October 30, 2011

Genocide in Wilmington - Save the Corporations!

We hear all the time about the genocides taking place in Rwanda and Sudan and the Congo. But there is another genocide taking place much closer to home. Quietly, with little notice, during normal business hours every day of the year, people are being killed by faceless bureaucrats. It happens in all states, but the epicenter is in Wilmington, Delaware. The office responsible – operating under the sadistically ironic moniker “SOS” – is the Secretary of State.

As publicized recently by human rights activist Mitt Romney, the Supreme Court of the United States declared boldly and unequivocally in its 2010 Citizens United decision that corporations are people. The court noted that “certain disfavored associations of citizens – those that have taken on the corporate form – are penalized for engaging in the same political speech” as other kinds of people – those who have taken on the human form. The Citizens United decision has gotten a huge amount of attention in the national dialog about free speech rights. But, astonishingly, while we, as Americans, have gone to great lengths to assure that our corporate brothers and sisters can express themselves as guaranteed by the First Amendment to the Constitution, we seem to be utterly un-phased by the fact that these same corporations are being systematically and summarily exterminated in clear violation of their even more fundamental right – the right highlighted in the preamble to the Declaration of Independence – to life.

Corporations are people. These people are being exterminated every day. Systematic and widespread killing of a people, based on the kind of people they are, is the very definition of genocide.

If a person in the form of a corporation ceases to be useful to its “owners,” it can be eliminated. The process is easy and doesn’t take more than a few minutes. It just takes filing a one page Certificate of Dissolution with the SOS and paying a $204 processing fee. It can be done by fax. No originals needed. Expedited 24 hour confirmation can be obtained for $50 more. The form has to certify that the dissolution was approved by the corporation’s board of directors and shareholders in accordance with the General Corporation Law of the State of Delaware, list some contact information, and that’s about it. No reason has to be specified. No due process. No testimony from loved ones. The execution is easy, efficient and – the moment the SOS worker’s rubber stamp hits the paper – absolute.

Government death panels can order “judicial dissolution.” Failure to file an annual franchise tax report can result in repeal of a corporate charter – one more euphemism for the same termination of a corporate life.

Corporations that have not paid their annual franchise taxes in Delaware are dragged out for what is essentially a gruesome public hanging by no less than the Governor of the state. Each year, shortly after the March 1 payment deadline, Jeffrey Bullock, Secretary of State and, Jack Markell, Governor, sign, and post on their website, an elegant certificate listing all the corporations whose charters have been repealed for failure to pay taxes. As a society, we decided centuries ago that people in the human form cannot even be jailed for failure to pay debts. But if you’re a corporate person who, when the bell tolls on the first of March in any fiscal year, is unlucky enough to owe the state a few bucks, you will be executed and your lifeless corporate shell dragged out in front of the masses as a morbid reminder of the government’s power to kill at will. This year’s genocidal proclamation can be viewed here (caution – graphic contents!):

It gets worse.

A large portion of corporate executions are performed in the context of what the killers call “reverse triangular mergers.” A reverse triangular merger is a way for a buyer to structure the acquisition of a target company. As part of this innocuous-sounding process, the buyer creates a corporation – often given an impersonal, throw-away name like “Merger Sub, Inc.” – for the purpose acquiring the shares of the target company and then being merged into the target. Very often, Merger Sub will have been created just two or three business days before the merger. The Certificate of Merger that must be submitted to the Delaware SOS to consummate a merger has required fields for the names of the “constituent corporations” and the “surviving corporation.” That’s all. It doesn’t ask for the name of the “sacrificed corporation” or the “murdered corporation.” It’s just understood. One of the constituent corporations will be the surviving corporation. One will not. Simple as that, a life is ended.

There are all kinds of other ways to structure an acquisition, including ways in which all corporate entities involved will remain fully intact. But structuring an acquisition as a reverse triangular merger can often save a buyer a few bucks in federal taxes. It’s hard to even imagine the outcry that would result if human babies were created to serve our commercial desires (organ harvesting? smaller bodies that can fit more easily into mine shafts?) and then thrown out. But if the purposeful execution of a week-old baby happens to be one of the externalities of a business deal, and if that baby happens to take the corporate form, well so be it.

I wish I could say that I was just a neutral observer of this genocide, but, unfortunately, no, I am an active participant. Over the course of my career as a corporate attorney, I have created and killed hundreds of corporations. Sometimes I have my subordinates do it for me. I can set the process in motion with a 20 second phone call to a friendly, smiling paralegal. The deed is done. I don’t usually have to give much more than a glance at the paperwork that will be filed. Until Citizens United, the process never bothered me. I thought corporations were just a web of contractual agreements and statutory constructs. But now that I know that corporations are people, just like you and me, how can I live with myself? A recently proposed amendment to the Mississippi state constitution declaring that life begins at conception would make it even worse. If a client wanted to incorporate an entity and I talked them out of it, or if I got to the SOS office after hours, effectively preventing the filing to be made, impeding corporate conception, what would that make me? A condom in a suit?

Now – disengage sarcasm. We are not bothered by corporate genocide because corporations are not people. They are not living beings, and they do not have inherent Constitutional rights that trump the desires of people – actual living, breathing people. That laws made by human beings, through their democratically elected representatives, can be overturned in the name of inherent free speech rights of corporations is ridiculous. The Citizens United decision does not even pass the laugh test. It is disingenuous and absurd. Yet it is the law of the land, enacted by the Supreme Court, interpreting the Constitution of the United States. The only real way to correct this ludicrous insult to our collective intelligence is to amend the constitution to say what it obviously was already meant to say – that to be a person, you must be a human being. Great minds are already at work on this. Check out In the meantime, like Heinrich Himmler, I’ll continue to just “do my job.”

1 comment:

jeff williams said...

Great stuff. You have a new reader.