Law, it is often said is what separates us from the barbarians. But law can also be used to stop so-called civilizing forces from performing barbaric actions abroad. As four Nigerian farmers and fishermen take oil giants Shell to court, this premise will be tested to the maximum.
If they succeed, a new avenue for seeking remuneration, and through it the compliance of more ethical practices, will be secured. If they fail, the cloak of immunity that has for too long surrounded multinationals working in the developing world will be drawn tighter still.
Indigenous communities the world over, activists, developing nations, not to mention multinationals, will be watching the outcome of the case launched last week closely. If the civil court in The Hague finds Royal Dutch Shell guilty of negligence when it delivers its verdict next year, activists say thousands of similar claimants would come forth.
Ultimately, the decision will stand as a benchmark against which to examine the degree of firms’ accountably in terms of environmental, social and economic damages in non-western countries. If the case is successful, it may offer more hope that the dreaded consequences of the resource curse can be better managed.
The civil suit waged by four Nigerian farmers, backed by the Dutch wing of environmental organization Friends of the Earth, is relatively straightforward.
The men from the oil-rich but generally impoverished Niger Delta region accuse Shell of not properly maintaining its pipelines, not sufficiently guarding against oil spills and subsequently, failing to adequately clean up leaks. The case specifically relates to four instances that occurred between 2004 and 2007, and does not discuss countless other spills which have happened before and since.
A similar case was brought against Shell in London in March by 11,000 Nigerians furious over inability to settle over a 2008 oil spill in the Bobo region.
The Nigerian plaintiffs in Holland claim that the pollution from the 2004 -2007 leaks wreaked environmental catastrophe on their once fertile, fishing-reliant region and deprived them of their livelihoods. They have tried to provide proof that the pipes were allowed to corrode under Shell’s watch and demand an unspecified amount in damages from Shell, estimated to have a market cap of roughly $25 billion.
“Shell knew for a long time that the pipeline was damaged but didn’t do anything. They could have stopped the leaks,” Channa Samkalden, lawyer for the Nigerians, told the court.
The case is the first waged against a Dutch multinational on its home turf for acts performed by one of its subsidiaries abroad. In this case, the Shell Petroleum Development Company is Nigeria’s largest oil and gas company.
Shell counters the accusations and insists that the pollution is a result of sabotage and theft carried out by local communities. The company has provided compelling evidence to support their defence and produced video clips that show saw marks, in some cases 20 inches deep, cut into the pipes.
“There is no way that normal operational flaws could create such damage on pipeline infrastructure,” Shell spokesperson Allard Castetein told the BBC.
Whether or not corrosion and insufficient maintenance did contribute to the leaks as the farmers claim, however, Shell’s case is strong.
The company has long admitted – as have Nigerian authorities – that between $5 to $7 billion is lost each year through theft or sabotage. Violence and insecurity are the lay of the land in Nigeria, especially in the southern Niger Delta region, which harbours the majority of Nigeria’s oil.
As Shell said in a statement: “The real tragedy of the Niger Delta is the widespread and continual criminal activity, including sabotage, theft and illegal refining, that causes the vast majority of oil spills.
“It is this criminality which all organisations with an interest in Nigeria’s future should focus their efforts on highlighting and addressing.”
The question is therefore not whether Shell is to blame for the specific instances it is on trial for, but rather who is to blame for the underlying instability that has allowed such a lawless situation to fester for decades.
The Hague trial is in essence a microcosm of Nigeria’s much larger system of corruption, death and environmental destruction, all classical illustrations of the worst effects of the so-called resource curse. Nigeria and countries like it that rely on a single commodity for more than 30 percent of their revenues, will have to escape the dreaded curse cycle if they are to have a serious chance of offering their citizens a safe and sustainable future.
Nigeria’s cursed past
In the early 1960s, as large amounts of oil were first discovered underneath swaths of the Niger Delta, local communities were given token payouts for exploration rights. Shell, as the largest oil company operating in the country, was responsible for securing the majority of the agreements.
When the drilling started on mass, however, the communities revolted. They initially engaged in peaceful protests but as the military moved in to crush dissent, the movement turned violent and the Nigerian equivalent of clans began raising their own militias.
As journalist Peter Maas writes in his book, Crude World, it was at this point that the ongoing process of “national breakdown” began and the embryonic Nigerian state, which had won independence from Britain in 1960, started to crumble.
What has emerged since is a “closed loop of recirculate violence.”
For decades, oil companies have paid the army to guard facilities, while paying the militias to not sabotage pipelines and steal supplies. The strategy has been misguided at best. Stability and progress cannot be achieved by dishonest brokering.
In search of more money, the militias soon began kidnapping and holing oil workers to ransom, while the military raised their protection rates to keep compounds safe. Then, militias began turning against one another, and a cycle of inter-community strife, where civilians suffered the most, was unleashed.
Since independence Nigeria has fought countless insurgencies and a bloody civil war ensued, killing an estimated 2 million people between 1967 and 1970. In the last eight years there have been two amnesty agreements for rebels. The first in 2004 quickly collapsed, while the latest, agreed in 2009, hangs by a thread.
For now, the pact has restored a semblance of security which has largely helped oil revenues to start rising again. So far though, they have not trickled down to the general population. GDP per capita has barely risen in recent years, and if more equal shares of the oil spoils are not dished out, and with companies like Shell forced into re-evaluating their practices, the prospect of conflict looms ever-present.
Is it all about the oil, and is it really all about Shell?
Certainly, not all of Nigeria’s problems can be blamed on oil. Nigeria is a country of some 160 million people, split along religious lines and made up of hundreds of clans, and countless sub-clans. But oil has played a major part in nation-wide institutional instability, and Shell has been a major contributing factor.
Nigeria is currently the world’s 8th biggest oil producer, with petroleum accounting for between 80 to 90 percent of its annual exports. According to the Nigerian Central Bank, Nigeria generates oil revenues of anywhere between $50 billion in the last few years to over $90 billion last year, largely thanks to improved security.
Yet in 2010, 85 million lived below the international poverty line of $2 a day, and 68 million below the subsistence level of less than $1.25. Nigeria remains one of the most corrupt countries in the world, ranking 143rd globally out of 182 countries in Transparency International’s 2011 Corruption Index. Indicative of this are World Bank findings that suggest 80 percent of its oil wealth has gone to just 1 percent of the population.
The oil money has flown into the government coffers freely but not down to the population. Buying acquisition and contracts has therefore been easy, while not relying on the people for taxes and support (due to external funding) has made authorities neglect their own population.
Even an internal report “Peace and Security in the Niger Delta” commissioned by Shell, and later leaked to the media, acknowledged the problem:
“The manner in which (Shell) operates and its staff behaves creates, feeds into, or exacerbates conflict. After over 50 years in Nigeria it is therefore reasonable to say that (Shell) has become an integral part of the Niger Delta conflict system.”
Even the money that has not been stolen has been spent inefficiently. Grand and wasteful infrastructure projects, such as factories that don’t produce anything, are just some of the evident signs of Nigeria’s misguided excess.
Oil has also stunted the growth of other industries, and prevented institution building. Today it accounts for upward of 90 percent of government revenue.
In turn, traditional industries such as farming have been devastated by pollution. A recent UN report shows that the true extent of the environmental damage is even worse than was already feared.
While the farmers are lobbying against the four spills, government statistics show that in the period between 1976 and 2001, there were some 5 spills each week. The actual figure is thought to be significantly higher.
Shell is certainly not the only company in Nigeria, but it is the largest and has been working in the country the longest.
It has already faced down a 1995 boycott in the UK and US when it was accused of complicity in the Nigerian government’s detention and later execution of non-violent activist Ken Saro Luina.
The public relations disaster that followed forced Shell to diverge more funds to development projects. Building of model towns and hospitals began, but it was often a case of too little, too late.
Following the Niger Delta’s first revolt in 1966, its share of national oil profits dropped from 50 percent to practically nothing. So, when Shell began building model towns and giving away generators, the villagers did not have enough money to buy petrol to run them. Nor could they build pipes to connect their new homes to water supplies. Hospitals would be built, but funding for medicine and doctors not provided.
Rival communities, long at war over oil profits, also revolted against one another and burnt the Shell-built facilities. According to more media leaks between 2007 and 2009, Shell spent $383 million on security in Nigeria, a clear sign that its good will measures have failed to subdue the population.
The current reprieve in violence may help Nigeria emerge more stable and prosperous, but if the root causes of its problems – corruption and violence spurred by oil revenues – are not checked, history could repeat itself. By proving that theft and sabotage were behind the four 2004 to 2007 spills, Shell will not prove its innocence in the Nigerian national crime.
The fact that the case is being waged in its native Holland means that Shell will once again be placed under domestic scrutiny for its actions abroad. With public perceptions long not on their side, Shell may well finally be forced into an overreaching re-evaluation of its involvement and the Nigerian government forced to reconsider its own actions as a result.