http://www.public-i.org/story_01_022801.htm
Condoleezza Rice’s
Chevron Service
Could Pose Conflicts
By Erin Bartels
(Washington, March 7) Not everyone in the new Bush administration has an oil
tanker bearing his or her name. But not everyone has had Condoleezza Rice’s
depth of involvement in the oil industry.
On Jan. 22, Condoleezza Rice assumed her duties as assistant to the president
for national security affairs. For Rice, it’s her second tour of duty on the
National Security Council; she served from 1990 to 1991 in the administration
of the senior Bush, specializing in Soviet foreign relations. Between her
stints at the NSC, she served as a director of Chevron Corp., a position that
gave her experience in international relations far beyond the former Soviet
states.
The national security adviser inevitably will be confronted with decisions
that directly affect the business of her former company. Chevron operates in
25 countries scattered over six continents, dealing in a product — oil —
that’s been a major factor in U.S. foreign relations for the past 50 years.
From containing Iraq in the Middle East to dealing with separatist movements
in Southeast Asia to setting African policy, Chevron’s interests will come
into play at almost every turn.
Chevron christened the Condoleezza Rice, a 136,000 deadweight-ton,
double-hulled ship, early on in Rice’s decade-long stint on the oil giant’s
board of directors. Rice, a member of Chevron’s board of directors since
1991, explained on television’s Fox News Sunday in August that Chevron had a
policy of naming tankers after its directors. "There’s also a George Schultz
and a David Packard," she remarked.
That honor is not the only compensation she has received: As a corporate
board member, Rice was paid a $35,000 annual retainer, $1,500 for each board
meeting attended, $1,500 for each board committee meeting attended, and
$1,500 for each committee meeting chaired, according to Chevron’s 2000 proxy
statement. She also holds 3,014 shares of Chevron stock, valued at
approximately $241,000, her single largest asset. (According to a news
release from the company, Rice has resigned from the board and will sell her
stock in the company.)
In 1999, Chevron, which recorded net income of $2.1 billion, had oil and
natural gas exploration and production operations in 25 countries. From the
Middle East to Africa to Southeast Asia to Latin America, Chevron flies its
corporate colors on drilling platforms on six continents. As a member of the
oil giant’s board, Rice has served on and chaired the board’s public policy
committee. According to Chevron’s 2000 proxy statement, the public policy
committee "identifies, monitors and evaluates domestic and foreign social,
political and environmental issues" and "recommends to the board policies and
strategies concerning such issues."
The Public i attempted to contact Rice about her experience with Chevron, but
she did not return calls. However, she said on the Fox TV broadcast, "I’m
very proud of my association with Chevron, and I think we should be very
proud of the job that American oil companies are doing in exploration abroad,
in exploration at home, and in making certain that we have a safe energy
supply."
But it hasn’t all been smooth sailing for Chevron abroad. The oil giant has
been accused of complicity with the Nigerian military and Mobile Police — a
force so brutal it is known locally as the "Kill ’n Go" — in perpetrating
human rights abuses, including extrajudiciary killings, beatings and
detentions against local communities who have protested Chevron’s production
activities in Nigeria’s delta region.
The problems surrounding Chevron’s oil and natural gas production and
exploration in the Nigerian delta have their roots in the country’s political
and economic history.
Oil revenue at all costs
Prior to the democratic election of President Olusegun Obasanjo in May 1999,
Nigeria was ruled by military regime for 16 years. Under Gen. Sani Abacha,
and then under his successor, Gen. Abdulsalami Abubakar, the government
relied heavily on revenue from oil exports and pursued such revenue at all
costs, often to the detriment of the environment and the social and political
rights of its citizens. The vast majority of Nigeria’s oil reserves are
located in the delta region of the country, a 7,700 square mile region that
makes up Africa’s largest wetlands.
Oil is the lifeblood of the Nigerian economy. That sector accounts for more
than 80 percent of government revenue, more than 95 percent of total exports,
and more than 90 percent of the country’s foreign exchange earnings. A member
of the Organization of Petroleum Exporting Countries since 1971, Nigeria has
estimated proven oil reserves of 22.5 billion barrels, and produced an
average of 2 million barrels of crude oil per day in 1999. That same year,
the country exported 623,000 barrels of crude per day to the United States
(13.8 percent of U.S. imported crude oil), making it the sixth largest crude
exporter to the United States. Only Saudi Arabia, Mexico, Venezuela, Canada
and Iraq ranked higher. (Under the humanitarian "food for oil" program
introduced in 1996 and administered by the United Nations, Iraq is allowed to
sell as much oil as it can produce in return for shipment of food and
humanitarian aid.)
Since the discovery of oil in Nigeria in 1956, multinational companies such
as Chevron have drilled for crude oil, and later natural gas, in the delta.
The companies operate joint ventures with the Nigerian National Petroleum
Corp., the state oil company. Chevron Nigeria Ltd. is a subsidiary of Chevron
Corp.; the subsidiary participates in a joint venture with the Nigerian
National Petroleum Corp., with a respective 40-60 ownership split. In 1999,
Chevron Nigeria Ltd. produced 420,000 barrels of crude oil per day, or 21
percent of Nigeria’s total production. The company plans to increase
production to 600,000 barrels per day by 2003.
Since the early 1990s, civil unrest has increased in the Nigerian delta as
the rivers and streams have become polluted, farmlands contaminated by oil
spills, and the air polluted by gas flaring. Local citizens say multinational
corporations and the government have reaped the benefits of their
petroleum-rich land while they suffered the consequences of the energy
business. The people of the delta region largely belong to ethnic groups
other than the three major ones in Nigeria (Hausa-Fulani, Yoruba, and Igbo),
and have long complained of marginalization by the regional and federal
governments. The economics of the country’s oil industry have only
exacerbated those feelings.
The delta region’s people are poorer than the national average, despite the
enormous wealth derived from their land. As a result, youth in the region
have protested against the oil multinationals, demanding compensation for
environmental damages as well as jobs, scholarships and other community
investment.
The government’s responses have often been violent. It has used the military
and the Mobile Police to break up the protests, often resulting in killings,
beatings and detentions. The oil multinationals have been accused of
complicity in these abuses. They have allegedly supplied the military and
police with weapons, vehicles and other equipment to defend the oil
operations.
Human rights abuses investigated
These are among the charges leveled at Chevron in a civil suit in the U.S.
District Court court in San Francisco. The suit comes as a result of two
incidents in which Chevron allegedly supplied helicopters, boats, and other
equipment for the military and Mobile Police to carry out attacks in the
delta region. Several of the people injured and the families of some of those
killed in these attacks have filed suit under the Alien Tort Claims Act,
which allows non-citizens to sue in U.S. courts. The plaintiffs have charged
Chevron with gross human rights abuses.
According to the complaint in the case, "Plaintiffs allege that defendant
Chevron, in conjunction and in concert with Nigeria’s military and police,
which acted as Chevron’s agent and co-conspirator, did willfully, maliciously
and systematically violate plaintiffs’ human rights, including summary
execution, torture, and cruel, inhuman and degrading treatment, for the
purpose and with the effect of suppressing plaintiffs’ and others’ peaceful
protests about Chevron’s environmental practices on and near plaintiffs’
properties." The complaint goes on, "The grievous harm suffered by plaintiffs
was inflicted by a combination of Nigerian military and police personnel who
were acting at the behest of, and with the support, cooperation and financial
assistance of defendant Chevron, including but not limited to the presence
and participation of Chevron personnel."
The plaintiffs also charge that Chevron’s management in San Francisco, as
well as in Nigeria, conspired with the Nigerian military and police and
provided them with the funding and the means to carry out the attacks. They
maintain that Chevron and its employees met regularly with the Nigerian
military and police to plan "security operations," including raids and terror
campaigns.
In addition to the human rights violations covered under international law,
the plaintiffs charge Chevron with other offenses actionable in the United
States, including wrongful death, negligence, infliction of emotional harm,
civil conspiracy and violation of business and professional practices. They
seek compensatory and punitive damages and injunctive and declaratory relief,
as well as disgorgement of profits from Chevron’s unfair business operations
in Nigeria; the suit does not specify the amount of money sought. The case is
still pending in U.S. federal court.
But the lawsuit is not the only matter that has passed before the board
regarding Nigeria. Several of Chevron’s shareholders petitioned the
company’s board to include a resolution in Chevron’s 1999 proxy statement.
The proposed resolution, submitted by the Christian Brothers Investment
Services, Inc., on behalf of several religious orders holding stock in
Chevron, called on the oil company to reevaluate its code of business conduct
with an eye toward adopting an "explicit commitment to human rights, social
justice and environmental responsibility towards the communities in which we
operate." Triggered by a May 1998 incident on an oil platform (see Chevron
Facing Lawsuit Over Attacks in Nigeria), the resolution encouraged Chevron’s
board to take into consideration cases of "demonstrations and occupations of
our company’s facilities" and "allegations that our company has collaborated
with security forces that have been responsible for human rights abuses."
But the resolution never appeared in Chevron’s proxy statement, and
Chevron’s shareholders never got the chance to vote on the measure. In
response to a petition by Chevron, the U.S. Securities and Exchange
Commission allowed the company to exclude the resolution from its proxy
statement on the grounds that the shareholders had twice voted down similar
resolutions within three years. Under SEC rules, a company can petition to
exclude a resolution if it deals with substantially the same matter as a
prior proposal that has received less than 6 percent of the votes cast on its
second submission.
In 1996 and 1997, shareholder resolutions related to Nigeria garnered 5.7
percent and 5.8 percent of the vote, respectively. However, in a letter to
the SEC, Christian Brothers Investment Services points out that "while some
[of] the ‘whereas’ clauses are similar to the resolutions of 1996 and 1997,
the 1999 resolution includes substantially new text that refers to human
rights abuses involving Chevron and shut-downs of Chevron production
facilities in Nigeria that took place subsequent to Chevron’s last annual
meeting." Indeed, the resolution made specific mention not only of the May 28
platform incident, but also the impending lawsuit against Chevron. Despite
Christian Brothers’ objections, the SEC issued a "no action" letter, and the
resolution was excluded from Chevron’s 1999 proxy statement.
Actions questionable in Indonesia
But Nigeria is not the only part of the world where Chevron has been
criticized for its dealings. Consider the company’s actions in Indonesia.
When U.S. government policy opposed any breakup of Indonesia’s territory,
Chevron took foreign policy into its own hands.
Faced with difficult contract negotiations with the central government over
an oil field in Riau province, the site of a growing autonomy movement, a
spokesman for Chevron’s joint venture operation, Caltex, voiced his support
for the Riau provincial government’s quest to gain full control of the
Coastal Plains Pekanbaru field when Caltex’s contract expires in 2001.
"Caltex will be ready to operate the block as it is doing now, if it is
trusted" by the Riau provincial administration, spokesman Poedyo told the
Antara news agency. If the company continued to operate the field, as was
likely, Caltex might be able to get a better deal from the local government.
Days later, the company claimed that the quote was taken out of context, and
that, as a matter of policy, it did not involve itself in political issues.
Regardless, Caltex has put Jakarta in a very tough position. The central
government, under President Abdurrahman Wahid, is currently in the process of
renegotiating several of the government contracts from the Suharto era, 1966
to 1998, with foreign extraction companies. If it yields to one company,
there could be a domino effect. And in other regions, such as Aceh, Timor and
Irian Jaya, where the foreign extraction industry also dominates, there have
been similar autonomy movements — only those have turned violent.
Pipeline mileage could double
In addition to exploration and production operations on six continents,
Chevron owns, wholly or in part, 4,178 miles of crude oil pipelines, 950
miles of which lie outside the United States. The company also has ownership
interests in 961 miles of natural gas pipelines, of which 325 miles lie
outside of U.S. borders.
But the company’s overseas crude oil pipeline mileage would nearly double
upon completion of the Caspian Pipeline, a proposed 900-mile project
stretching from western Kazakhstan to the Black Sea. To be completed in
mid-2001, the pipeline would primarily benefit Chevron by connecting the
Tengiz oil field to the Black Sea port of Novorossiysk in Russia. Chevron,
the largest oil company member of the Caspian Pipeline Consortium, holds a 45
percent ownership interest with the Republic of Kazakhstan in Tengizchevroil.
The 40-year, $20 billion joint-venture company was formed in 1993 to develop
the Tengiz field. Tengiz is one of the world’s largest oil fields with 6 to 9
billion barrels of recoverable oil.
From Nigeria to Indonesia to Kazakhstan a
