Tuesday, May 14, 2013

Benefit Corporations – Fascist State Part 3


 

Benefit Corporations: Expansion of the Public-Private
Fascist State, Part 3

By Stephen Poole   
Wednesday, 17 August 2011 11:09
When most people first hear about legislation to create
a new type of corporation in which the directors must
provide a “general public benefit” while being freed
from bothersome constraints such as maximizing profit
or considering the needs and concerns of shareholders,
their usual response is, “So what? If people want to
invest in a company that doesn’t care about making
money, go ahead and let ‘em.”
I’ll admit that was my immediate reaction when I was  
told about the North Carolina Benefit Corporation Act,
or SB26, which is now in the House Judiciary Committee.
Apparently it was also the reaction of many of our
supposedly “conservative” Republican state senators:
the Senate bill passed on a 50-0 vote.
But for some reason I couldn’t stop wondering about the  
legislation, and a Latin adage kept popping into my head:
Cui bono?,” which fittingly enough means “to whose
benefit?” Anyone who’s studied the corrupt history of
tax-exempt foundations and non-profit organizations
knows immediately that the only reasons for such an
open-ended and convoluted piece of legislation are that
there’s money to be made, an agenda to be fulfilled, or
both. This became even clearer when I discovered there’s
absolutely nothing stopping corporations from drafting
charters that would make themde facto Benefit
Corporations by specifying that one of the corporate
purposes is to create a “general public benefit” and then
giving its director greater protections from profit-mad,
torch-and-pitchfork-wielding shareholders.
So I went back to the text of the legislation and again
read one of the key clauses:
A benefit corporation shall have as one of its corporate
purposes the creation of a general public benefit. A
benefit corporation may include in its articles of
incorporation other corporate purposes, including
the purpose of engaging in any lawful business.”
Earlier in the bill we’re told what constitutes a
 “general public benefit:”
A material positive impact on society and the
environment, taken as a whole, as measured by a
third-party standard, from the business and
operations of a benefit corporation.”
In Part 2 of this series, I wrote about the only
viable “third-party standard” currently in existence:
the B Corporation™ created by a non-profit group
called B Lab. When you examine what’s involved
in garnering the cherished B Corporation™
designation – as well as the promises being
made by the people that created the standard –
you begin to realize this is simply a backdoor
method of implementing Sustainable
Development/Agenda 21 policy without our
elected officials realizing what they’re approving.
It’s not clear whether or not SB26 will require a
Benefit Corporation to become a B Corporation™
under the aegis of B Lab, although I’m sure B Lab
wouldn’t mind if that were the case. Here’s a
look at how much it receives annually from
companies that receive the B Corporation™ certification:
Annual Sales*
Annual Certification Fee
$0 – $1,999,999
$500
$2 M – $4,999,999
$1,000
$5 M – $9,999,999
$2,500
$10 M – $19,999,999
$5,000
$20 M – $99,999,999
$10,000
$100 M+
$25,000
*Presumably this should read “revenue.”
So much for B Lab’s “team of attorneys from
three national law firms.”
Again, keep this in mind: a company can
become a certified “B Corporation™” and do
all the wonderful, beneficial things they want  
without any law being passed. In fact, in Step 3
of “Become a B Corporation” we read,
Begin adopting the B Corp Legal Framework:
For most companies this will entail an amendment
of corporate governing documents to incorporate
stakeholder interests.” No mention of being in a
state that has authorized Benefit Corporations,
merely the factual statement that corporate
governing documents can be amended to suit
“stakeholder interests.”
Aside from coughing up the dough for the
certification fee, becoming a B Corporation™
seems to be a pretty painless – and not very stringent
 – affair. It’s basically a six-step process: Take an
“Impact Assessment,” have your answers reviewed,
adopt the B Lab legal framework paperwork (the
NC version is here), swear allegiance to the concept
of “interdependence” and B Lab by signing a Term
Sheet, document some of the answers on the Impact  
Assessment, and submit to onsite reviews. A few
salient points about the process:
·        B Corporations must provide documentation
for only 10% of the answered questions on the Impact
Assessment, and then only after they’ve been certified.
When contacted by e-mail, B Lab would not confirm  
(i.e., they never responded) whether every company
had to verify answers to the same 10% of questions,
or if it was up to B Labs’ discretion as to which 10%
had to be verified. If it’s the latter, a strong case could
be made that B Lab has the power to make it easier f
or some companies to become B Corporations™.
·        Onsite reviews “generally last between 4-8 hours
depending on the size of the company.” It’s hard to
believe that any type of comprehensive audit could  
possibly be conducted in this amount of time even at
small to mid-size businesses, particularly given the
nature of some of the questions in the Impact Assessment.
·        The only way a company can fail an audit is “if
B Lab staff determines that a company has intentionally  
misrepresented themselves in their survey answers.”
But SB26 doesn’t seem to place much importance on
a Benefit Corporation actually creating… you know…
benefits. An analysis of the legislation says “the director
is… not liable for failure of the benefit corporation to
create a general or specific public benefit.” If the director
of the corporation isn’t liable for not creating the “benefit”
that’s supposedly the purpose of the corporation, then who is???
And since this whole to-do is supposed to be about
“general public benefits,” just what does the “Impact
Assessment” consider those to be?
To gain certification, a company must score 80 out
of a possible 200 points – but only 30 or so of those
points are directly related to “benefits and services.”
A look at the Sample Assessment on the B Lab Web site
reveals just how vague an answer can be and still qualify
as a “public benefit.” Respondents can avow direct or
indirect impacts their products or services have on their  
customers in economic equality (for individuals and
communities), environment, health, education (arts,
science, and “knowledge”), and my favorite, “flow
of capital to purpose-driven enterprises.” (I didn’t
know Rick Warren had a hand in this!)
Check out these examples that qualify for each category,  
noting the italicized phrases and “industries:”
Category
Example
 
 
Economic Equality (individual)
Direct: Job training, education,
products that directly address
economic equalities for the
underserved
Indirect: Educational toys
Economic Equality (community)
Direct: CDFI, low-income
housing, utilities for “underserved”
communities Indirect: YMCA,
summer camps
Environment
Direct: Renewable energy,
recycling technology, green
building design and development,
sustainable technologies
Indirect: Products made from
recycled or sustainable input
(paper, cups, FSC certified, etc.)
Health
Direct: Disease prevention or
cure, such as AIDS or other
vaccines, cancer clinics
Indirect: Products promoting    
healthy living (organic food,
mountain bikes, etc.)
Education
Direct: Museums, photographers
/artists, independent media,
publishing, research labs
Indirect: Intl. travel agent, book
stores, sound equipment, fine
jewelry
Capital investments
Direct: Fundraising for purpose-d
riven enterprises, socially
responsible investing    
Indirect: Consulting to purpose-
driven enterprises, ad agency
for purpose-driven companies
Would hip-hop mogul Russell Simmons’s pre-paid
“Rushcard,” which is laden with fees and surcharges
and which is aggressively marketed as “financial
freedom for the underbanked,” count as a product
directly addressing economic equalities of the
underserved?   Why wouldn’t it? Would a payday
checking service qualify? Again, why not? How  
about an income-tax preparation service located
in a low-income neighborhood? Seems like that
would be good to go, too. And let’s not forget the
“public benefits” created by photographers,
publishers, international travel agents,   book stores,
audio component stores, fine jewelry boutiques, and
of course “consultants for ‘purpose-driven enterprises.’”
Serving the underserved: $9.95 per month, activation
fee between $3.95 and $14.95 and $2.50 ATM fees
starting with the third   transaction each month.
Now THOSE are benefits!
I think you get my point – namely, that it takes just a little  
imagination to make almost any product or service have
some type of impact in one of those areas, particularly
given the leeway the standards’ creators have shown in
the examples. And let’s not forget that a corporation’s
answers to these questions might not even be included
in the initial 10% that must be verified, or that a corporation
could potentially go ten years before undergoing a full
review from B Lab (“10% of B Corporations are audited
every year – so in a two-year term, all B Corporations
have a one in five chance of being audited.”)
But the glaring point here is that this section of the  
Assessment isn’t detailing the “general public benefit”
referred to in SB26. These are the specific public benefits
a Benefit Corporation might elect to have in addition
to the general public benefit it must have. You can tell
at a glance by simply pulling up SB26 and looking at
55-18-3 (a) 7, which mirrors the above categories.
So our state legislature is considering a bill that
allows a third-party to define a “general public
benefit” when the phrase doesn’t even appear in
the third party’s “standard” – which can only lead
us to conclude that the Assessment as a whole
defines “general public benefit.” And when we
look at the various categories of the Assessment and
how many points are available to be earned in each,
we can see that B Lab’s idea of “general public benefit”
is a bit different from what most of us might think of
when we hear the phrase.
Category
Points
Employees
50
Environment
50
Community (Suppliers, Local, Diversity, Charity
40
Consumers (Beneficial Products/Services)
30
Accountability
10
(Note: the totals here add up to only 180 instead of 200.  
Don’t blame me, blame B Lab – the math is screwy
throughout the Sample Assessment.)
“Employees” deals with benefits, employee ownership,
flex scheduling and career options and so forth – good
for workers, yes, but certainly not “public benefits.”
“Environment” is the usual claptrap you would expect:
 “carbon footprints,” renewable energy usage, water usage,
“environmental benefit models,” etc. These might be
public benefits if you believe the propaganda regarding
global warming, peak oil, and other hysterical scenarios.
Don’t think the Community section will necessarily
reveal a lot of “general public benefits,” either. While
some of it’s about donating to charities and hiring
“underserved populations” such as women and minorities
(particularly grating to this writer, a white male who’s  
been “underserved” by the “employment sector” for two
years), a lot is about the supply chain and whether the
Corporation is sourcing materials from environmentally
conscious, “fair wage” type suppliers – i.e., other Benefit  
Corporations.
In short, the B Lab Impact Assessment – the “third-party  
standard” – isn’t really so much about a “general public
benefit” as it is about Green Jobs, Green Energy, Social
Justice, Economic Equality, and Racial and Gender quotas.
But after all this, we’re still left with the nagging question:
Cui bono? Who benefits?
In the fourth and final (I promise) installment, the entire  
picture will come into focus. If you’re somehow still
unconvinced this is a singularly bad piece of legislation,
I strongly urge you to stay tuned for the grand finale. In
the meantime, here’s a visual that might give you a hint  
what this is really all about.
 The completion of the New World Order Dialectic:  
Communism + Capitalism = Fascistic Socialism (Image
courtesy of Freedom Advocates http://www.freedomadvocates.org)
Tonight’s suggested reading: “The Future is Calling”
by G. Edward Griffin.
Here are the other links to Stephen Poole's Benefit  
Corporations series: As a graduate of Wake Forest
University, Stephen Poole emerged from that institution
as a zombified collectivist incapable of critically  
analyzing the socialist shibboleths with which he'd been
indoctrinated. After awakening to the untenable nature
of his "beliefs," he's now a an individualist who believes
in truly free markets, Constitutionally limited federal
government, the eminence of personal liberty, and
unalienable rights granted by God.
Benefit Corporations: Expansion of the Public-Private
Fascist State Part 3 by Stephen Poole
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