The New Republic
January 31, 2005
A cheery sign at the waterfront of Elem Sangama says “Sea Side Lane,” and, on first glance, the village seems a bright spot in the otherwise unpleasant Niger Delta. In addition to its paved walkways, Sangama has a health clinic and a water tower, rarities for villages in Nigeria, where poverty has all the subtlety of an equatorial downpour.
Sangama’s appearance of well-being is due to the generosity of its giant neighbor, the Shell Petroleum Development Company of Nigeria, which operates a natural gas plant a few miles away. Shell paid for the village’s civic improvements. Yet Sangama is an example of what happens when good intentions, or good p.r., go bad. As I learned during a visit in October, the health clinic has never operated because, villagers say, Shell opted against paying for any medicines or doctors. The water tower has not distributed a drop of anything because Shell did not dig a well or connect it to the water system at its plant. Even the waterfront sign is a fib–Sangama sits along a creek, not a sea.
According to villagers, Shell decided its job was done when it finished construction; the government would have to take care of the rest. The government, to the surprise of no one, said it had no money to help out; Nigerian officials rank among the most corrupt in the world. When I mentioned to a village leader that oil executives had told me they should not be held responsible for the sins of a kleptocracy, he replied, “But did you ask if it is their responsibility to take our resources?” A highly developed sense of irony, it appears, is all Sangama has gained from its encounter with corporate generosity.
Sangama is hardly alone. In the past decade, Shell has ramped up its social spending in response to criticism that it profits while Nigerians suffer. Its efforts are in step with other oil companies, and their good works are not confined to Nigeria. Across the globe, “corporate social responsibility” has become a mantra of multinationals accused of despoiling the planet and exploiting poverty or, at the least, being insensitive to the misery that coincides with their profitable operations. The timing is not arbitrary–boycotts, or the threat of them, have jolted Nike and Shell, among other global brands. But in Nigeria, from which multinationals extract more oil than any other African country, even expatriate executives admit their social programs have minimal impact. The cycle can even be disastrous: The oil companies funnel some of their good-works money through the corrupt Nigerian government, watch as much of the cash is wasted, and then use the waste–a common problem throughout the developing world–to justify stinginess in new spending. So, after nearly a decade of intensified efforts to be good corporate citizens, the oil companies are realizing something their shareholders in America and Europe don’t: Their money isn’t doing much good in Nigeria.
It is customary for environmentalists and human rights activists to berate multinationals, but it is less customary for multinationals to berate themselves. In 2003, Royal Dutch/Shell assembled a scathing internal report examining the company’s role in the oil-rich and violence-rich Niger Delta. The report, which was leaked last year but virtually ignored by the U.S. media (even though Nigeria is a key oil supplier to America), said, “[T]he manner in which [Shell] operates and its staff behaves creates, feeds into, or exacerbates conflict” in the Delta, where fighting kills 1,000 Nigerians a year. “[Shell] is an integral part of the Niger Delta conflict environment…. The cumulative effect of [its] practices is a perception amongst communities that they cannot engage with [Shell] other than through forceful or obstructive actions.” Finally, it warned that, unless swift action is taken to tamp down violence in the Delta, Shell would be forced to abandon its onshore operations by 2008.
How does a multinational that portrays itself as a force for good and has an interest in behaving well become, by its own admission, part of the problem? Unfortunately, Shell is trapped in a vortex it helped create. The report documented a panoply of practices that local human rights activists had decried for years, including the deployment of abuse-prone police and army units to protect Shell facilities and staff. Shell has also been stingy in compensating locals. The report said the sums paid for destruction of trees, crops, or buildings are less than market prices and do not take into consideration long-term consequences, such as the income lost.
It also noted that Shell fueled conflicts by allotting contracts, resources, or compensation to community leaders who shared little with their communities, thereby sparking divisions within them. A Shell executive told me that, when his firm gave several fishing boats to a village chief, the chief promptly sold the boats for cash. And, even if leaders share with their villages, adjacent communities can turn on their enriched neighbors. A ChevronTexaco executive told me that a clinic his firm built in the Niger Delta was torched by nearby villagers jealous that they had been passed over. The clinic was rebuilt and, again, burned down. “It’s very difficult for private sector to replace government,” the executive sighed. “It’s not our role.”
Indeed, oil executives who work in Nigeria are far less boastful about their nation-building efforts than the p.r. departments at their corporate headquarters in Houston or London; it can seem that, for every $1 spent on good works in the developing world, $2 are spent publicizing it in the developed world. A day after I visited Elem Sangama, I was in the Nigerian commercial capital, Lagos, in the top-floor office of Chris Finlayson, chairman of Shell Nigeria. Finlayson, who previously worked in the troubled Nigerian oil town of Warri, seemed fed up with expectations that Shell could fill the vacuum created by Nigeria’s corrupt government. “We should be socially responsible,” he began, “but I should not be deciding whether this village or that village has a greater right to a school. That is social planning. That is the very essence of what government should be doing.”
Of course, Nigeria is not Norway. In annual rankings by Transparency International, the graft-watching organization, Nigeria usually comes in as one of the most corrupt nations on earth. In 1999, newly elected Nigerian President Olesegun Obasanjo set up the Niger Delta Development Commission (nddc) to oversee projects in the region. As a new organization, it was supposed to be cleaner than older ones, but, like every other government organ, it is nonetheless viewed as grossly inefficient.
Yet Shell chooses to funnel much of its development money through the government, when it could do so via local nongovernmental groups–or through its own offices. That is hard work, of course; coaxing crude from the center of the Earth is easier, in some respects, than operating a health clinic in the Niger Delta. In 2003, the latest year for which numbers are available, Shell Nigeria gave $54 million to the nddc and spent only $30 million on development programs of its own. By funneling even their development funds through a government agency, oil companies like Shell do little to diminish the notion, held by many Nigerians, that they are accomplices of a regime that cheats, steals, and kills. After all, a key complaint of ordinary Nigerians is not that their oil is being extracted by foreign companies but that the revenue–generally estimated at about $300 billion since the 1970s–was paid to the government without any pressure for accountability. Year after year, Shell, Exxon, and other firms paid billions in royalties and taxes, and, year after year, they looked away as those billions were stolen or wasted by politicians and bureaucrats. As a result, in the Niger Delta, oil workers travel through the creeks with army or police escorts, and senior executives rarely venture off the wellsecured grounds of the facilities they visit by helicopter.
And, when development projects fail, as they often do, oil companies like Shell throw up their hands and scale back whatever hopes they might have had for doing more. In its latest annual report on social-responsibility spending, Shell’s self-disclosed failures for 2003 included the building of a health center that was not, in fact, built; and the completion of a neonatal ward that could not be used because it was not connected to a source of electricity. (The report did not mention the clinic and water tower at Elem Sangama because they were built, and abandoned, several years ago.) The report included an audit by KPMG of Shell’s development strategy; KPMG said that, due to unreliable information from Shell, it could not render a verdict. Finlayson himself noted to me that Shell’s outlays for development, which totaled $84 million in 2003, are “a drop in the ocean” compared with the $1.8 billion in royalties and taxes it paid to the government. Not surprisingly, nearly a decade after Shell started “community assistance” projects in the Delta–which were ultimately rebranded into “sustained community development”–the oil industry has little to show for its labors there, except a new local rebellion led by an ethnic Ijaw militant, Asari Dokubo, whose fighters believe their talismans will stop bullets from piercing their skin.
I drove from Finlayson’s office, in the heart of Victoria Island, Lagos’s commercial center, to the campus-like headquarters of ChevronTexaco, a short distance away. The city’s normally abysmal traffic was not as bad as expected, so I arrived earlier than planned. That was fortunate, because the main entrance to the complex was blocked by protesters who had thrown oil on the ground and strung fishing nets over turnstiles as they sang songs with lyrics like, “We have suffered enough in the hands of Chevron / And we cannot continue to suffer like this.” The protestors told me they had come to Lagos from fishing villages around Ilaje, several hundred miles away, to protest two oil spills that had fouled their waters. One of their leaders handed me a letter that said, if compensation was not awarded, “We will have no option than to go into practical war against ChevronTexaco.” The letter was signed by twodozen chiefs and princes from Ilaje.
Because such demonstrations are now routine in Nigeria, Chevron’s operations were not interrupted and I was able to proceed to my interview with Chuck Taylor, general manager of Chevron’s joint venture with the Nigerian government. Taylor welcomed me into his sparse office and said the firm had not yet granted compensation to Ilaje because an investigation was underway to determine whether the spill was its fault. The company’s caution was understandable, to a degree–the oil could have come from a passing tanker or been the result of a botched attempt by smugglers to siphon oil. But, from the perspective of the villagers, the oil company most likely responsible for their misery was stonewalling, again.
In 2003, Chevron issued its first “corporate responsibility report,” which outlined its worldwide social, economic, and environmental programs. This was seen as a new embrace of the credo of social responsibility and was released with suitable fanfare. But the firm seemed to take a step back in 2004 by merely releasing an update rather than a new report. So I asked Taylor why Chevron, in response to the near-collapse of government activity in the Niger Delta, did not devote far greater funds to community development–to do what the government is not doing and, along the way, to make more friends. “We have a responsibility as a corporate citizen to ensure that communities in which we operate benefit from our presence, or at least are not damaged by our presence,” he said. “It is not, however, the role of an oil company to provide the basic fundamentals that are required for communities to thrive. It is not our mission as a corporation. It is not our identity as a corporation.” That is a clear message, but don’t expect to hear it during a commercial break at the Super Bowl.