CASE 6

Introduction

In 1995, a Nigerian military tribunal, in what most observers decried as a sham trial, ordered
the execution of noted author and playwright Ken Saro-Wiwa and eight other members of the
Movement for the Survival of the Ogoni People. The Ogoni are a 500,000-member ethnic group of
farmers and fishermen that live in Nigeria's coastal plain. For several years, the Ogoni had been waging a
vigorous political campaign against Nigeria's military rulers and the giant oil company Royal
Dutch/Shell. They had been seeking greater self-determination, rights to the revenue stemming from
oil exploration on traditional Ogoni lands, and compensation for the environmental degradation to
their land caused by frequent oil spills from fractured pipelines. Shell had been pumping oil from Ogoni
lands since the late 1950s. In 1994, four Ogoni chiefs who advocated cooperation rather than
confrontation with Nigeria's military government were lynched by a mob of Ogoni youth. Though he was
not present, Saro-Wiwa, a leader of the protest movement, was arrested and subsequently sentenced
to death along with eight other Ogoni activists.

Despite intensive international pressure that included appeals to Shell to use its influence in the
country to gain clemency for the convicted, the executions went ahead as scheduled on November 10,
1995. After the executions, Shell was criticized in the Western media for its apparent unwillingness to
pressure Nigeria's totalitarian regime. The incident started some soul-searching at Shell about the social
and environmental responsibility of a multinational corporation in societies such as Nigeria that fall short of
Western standards for the protection of human rights and the environment.

Background

In 1961, the African nation of Nigeria won independence from Britain. At that time, many
believed that Nigeria had the potential to become one of the engines of economic growth in Africa. The
country was blessed with abundant natural resources, particularly oil and gas; was a net exporter of
foodstuffs; and had a large population that by African standards was well educated (today Nigeria has the
largest population in Africa, with over 110 million people). By the mid-1990s, it was clear that much of that
potential was still to be realized. Thirty-five years after winning independence, Nigeria was still heavily
dependent on the oil sector. Oil production accounted for 30 percent of GDP, 95 percent of foreign
exchange earnings, and about 80 percent of the government's budget revenues. The largely
subsistence agricultural sector had failed to keep up with rapid population growth, and Nigeria, once a
large net exporter of food, now had to import food. GDP per capita was a paltry $230, one-quarter of
what it was in 1981, and the country was creaking under $40 billion of external debt. Nigeria had been
unable to garner financial assistance from institutions such as the International Monetary Fund
because of the government's unwillingness to account for how it used the revenues from oil taxes.

Political problems partly explained Nigeria's economic malaise. The country has suffered from
internal strife among some of the more than 250 ethnic groups that constitute the nation. In the 1960s,
the country was racked by a particularly nasty civil war. In December 1983, the civilian government of
the country was replaced in a coup by a military regime that proceeded to rule by decree. In 1993,
democratic elections were held in Nigeria, but the military government nullified the results, declaring
there had been widespread ballot fraud.

Royal Dutch/Shell is the main foreign oil producer operating in Nigeria. The company was
formed at the turn of the century when Holland's Royal Dutch Company, which had substantial oil
operations in Indonesia, merged with Britain's Shell Transport and Trading to create one of the world's
first multinational oil companies. Shell is now the world's largest oil company with annual revenues that
exceed $130 billion. The company has been operating in Nigeria since 1937, and by the md-1990s
was pumping about half of Nigeria's oil. Nigerian oil accounts for about 11 to 12 percent of the
company's global output and generates net income for Shell of around $200 million per year.

Problems in the Ogoni Region

In 1958, Royal Dutch/Shell struck oil on Ogoni lands. By some estimates, the company has
extracted some $30 billion worth of oil from the region since then. Despite this, the Ogoni remain
desperately poor. Most live in palm-roofed mud huts and practice subsistence agriculture. Of Shell's
5,000 employees in Nigeria, in 1995 only 85 were Ogoni. Because they are a powerless minority
among Nigeria's 110 million people, the Ogoni are often overlooked when it comes to the allocation of
jobs either in government or the private sector.

Starting in 1982, the Nigerian government supposedly directed 1.5 percent of the oil revenue
it received back to the communities where the oil was produced. In 1992, the percentage was
increased to 3 percent. The Ogoni, however, claim they have seen virtually none of this money. Most
appears to have been spent in the tribal lands of the ruling majority or has vanished in corrupt deals.
Although there were 96 oil wells, two refineries, a petrochemical complex and a fertilizer plant in the
Ogoni region in 1994, the lone hospital was an unfinished concrete husk and the government
schools, unable to pay teachers, were rarely open.

In addition to the lack of returns from oil production in their region, the Ogoni claim that their
lands have suffered from environmental degradation, much of which could be laid at the feet of
Shell. Ogoni activists claim that Shell's poor environmental safeguards have resulted in numerous oil
spills and widespread contamination of the soil and groundwater. A Shell spokesman, interviewed in
1994, seemed to acknowledge there might be some basis to these complaints. He stated, "Some of
the facilities installed during the last 30 years, whilst acceptable at the time, aren't as we would build
them today. Given the age of some of these lines (oil pipelines), regrettably oil spills have occurred
from time to time."1 However, the same spokesman also blamed many of the more recent leaks in
the Ogoni region on deliberate sabotage. The sabotage, he stated, had one of two motives—to back
up claims for compensation and to support claims of environmental degradation.

On hearing of these claims, Ken Saro-Wiwa called them preposterous. Saro-Wiwa argued that
although uneducated youths, frustrated and angry, may have damaged some Shell installations in one
or two incidents, "the people would never deliberately spill oil on their land because they know the so-
called compensation is paltry and the land is never restored."2 To support his position, Saro-Wiwa
pointed to a spill from the 1960s near a settlement called Ebubu that still had not been cleaned up. In
response, Shell stated that the spill occurred during the civil war in the 1960s>and cleanup work was
completed in 1990. Subsequently, sunken oil reappeared at the surface, but Shell claims it was unable to
do anything about this because of threats made against its employees in the region. In January 1993,
out of concern for their safety, Shell barred its employees from entering the region.

In April 1993, the Ogoni organized their first protests against Shell and the government. Ogoni
farmers stood in front of earthmoving equipment that was laying a pipeline for Shell through
croplands. Although Shell stated that the land had been acquired by legal means and that full
compensation had been paid to the farmers and the local community, some of the locals remained
unhappy about what they viewed as continuing exploitation of their land. Seeing a threat to the
continuity of its oil operations, Shell informed the Nigerian government about the protest. Units from the
Nigerian military soon arrived and shots were fired into the crowd of protesters, killing one Ogoni man
and wounding several others.

Subsequently, in a series of murky incidents, Nigerian soldiers stormed Ogoni villages, saying
they were quelling unrest between neighboring Ogoni tribes. The Ogoni claimed the raids were
punishment for obstructing Shell. They stated that the military had orders to use minor land disputes,
which had long been settled with little violence, as an excuse to lay entire villages to waste. A feared
unit of the mobile police with the nickname "Kill and Go" conducted some of the raids. Although
details are sketchy, it has been reported that hundreds of people lost their lives in the violence. The
cycle of violence ultimately culminated in the killing of the Ogoni chiefs who argued for compromise
with the Nigerian government. This provided the government with the justification they needed to
arrest Ken Saro-Wiwa and eight associates in the Movement for the Survival of the Ogoni People.

Nigeria and Shell under Pressure

Saro-Wiwa's arrest achieved the goal that the protests and bloodshed had not; it focused
international attention on the plight of the Ogoni people, the heavy-handed policies of the Nigerian
government, and Shell's activities in Nigeria. Several human rights organizations immediately pressured
Shell to use its influence to gain the release of Saro-Wiwa. They also urged Shell to put on hold plans
to start work on a $3.5 billion liquefied natural gas project in Nigeria. The project was structured as a
joint venture with the Nigerian government. Shell's central role in the project gave it considerable
influence over the government, or so human rights activists believed.

Shell stated that it deplored the heavy-handed approach taken by the Nigerian
government to the Ogoni people and regretted pain and loss suffered by Ogoni communities. The
company also indicated it was using "discreet diplomacy" to try to bring influence to bear on the
Nigerian government. Nigeria's military leadership, however, was in no mood to listen to discreet
diplomacy from Shell or anyone else. After a trial by a military tribunal that was derided as nothing
more than a kangaroo court, Saro-Wiwa and his associates were sentenced to death by hanging. The
sentence was carried out shortly after sunrise on November 10, 1995.

Aftermath

In the wake of Saro-Wiwa's hanging, a storm of protest erupted around the world. The heads of
state of the 52-nation British Commonwealth, meeting in New Zealand at the time of Saro-Wiwa's
execution, suspended Nigeria and stated they would expel the country if it did nbt return to democratic
rule within two years. US President Bill Clinton recalled the US ambassador to Nigeria and banned
the sale of military equipment, on top of aid cuts made in protest at Saro-Wiwa's arrest. British Prime
Minister John Major banned arms sales to Nigeria and called for the widest possible embargo.
Ambassadors from the 15-nation European Union were recalled, and the EU suspended all aid to
Nigeria.
 But no country halted purchases of Nigerian oil or sales of oil service equipment to Nigeria.
The United States, which imports 40 percent of Nigeria's daily output of 2 million barrels, was silent on
the question of an oil embargo. Similarly, no Western country—many of which had national companies
working in the Nigerian oil industry—indicated they would impose an embargo on sales to, or purchase
from, the Nigerian oil industry. Alone among major public figures, South African President Nelson
Mandela called for a ban on Shell."The call was echoed by several environmental groups, including
Greenpeace and Friends of the Earth, both of which urged their supporters to boycott Shell products.
However, South Africa never enacted a formal ban, and the boycott calls met with only limited success.

For its part, Shell indicated it would go ahead with its plans for a liquefied natural gas operation
in Nigeria in partnership with the Nigerian government. In a public notice published in British
newspapers, Shell stated, "It has been suggested that Shell should pull out of Nigeria's liquefied natural
gas project. But if we do so now, the project will collapse. Maybe forever. So let's be clear who gets hurt
if the project gets cancelled. A cancellation would certainly hurt the thousands of Nigerians who will be
working on the project, and the tens of thousands benefiting in the local economy."3

In November 1996, the Center for Constitutional Rights filed a federal lawsuit in the US
District Court in Manhattan on behalf of relatives of Saro-Wiwa who were now residing in the United
States. The lawsuit accused Royal Dutch/Shell of being part of a conspiracy that led to Saro-Wiwa's
hanging. Shell denied the allegations and stated that they would be refuted in court.

In May 1997, at the annual general meeting of Shell Transport and Trading in London, a group
of 18 institutional investors tabled a resolution that would have required Shell to establish an
independent external body to monitor its environmental and human rights policies. John Jennings, the
outgoing chairman of the company, told reporters after the meeting that proxy votes from
shareholders were running 10 to 1 against the resolution.

One reason for the defeat of the shareholder resolution was that the company had already
indicated it was taking steps to reform its culture and improve its own monitoring of environmental and
human rights policies. Before the shareholder meeting, the company issued its own report on its policies
in Nigeria, in which the company admitted that it needed to improve its monitoring of environmental
and human rights policies. Under the leadership of its new head, Mark Moody-Stuart, Shell
subsequently stated that it expected its companies to express support for fundamental human rights
in line with the legitimate role of business and to give proper regard to health, safety, and the
environment consistent with their commitment to sustainable development. The company also
embraced the UN Universal Declaration of Human Rights, pledged to set up socially responsible
management systems, and to develop training procedures to help management deal with human rights
dilemmas.

Commenting on these steps, a spokesman for Human Rights Watch stated, "I'm prepared to
give them some credit that they realized they had to look at what their own operations were and
how to respond. They acknowledged that big companies have social responsibility, and that's a pretty
big step for the multinational corporations.