THE NIGERIAN OIL INDUSTRY, POLITICAL GOVERNANCE AND THE CRISIS OF SOCIO-ECONOMIC DEVELOPMENT: ANALYZING THE BOUNDARIES OF CORPORATE RESPONSIBILITIES IN THE DELICATE RELATIONSHIPS BETWEEN NIGERIA AND MULTINATIONAL OIL COMPANIES



I.       Introduction
            Undoubtedly, in the context of multilateral economic intercourse between the Multinational Oil Industry and the Host Countries, there are underlying national imperatives as well as trans-nationally superimposed economic imperatives. However, despite the variant characterization of this relationship in terms of economic nuances of parties to international petroleum contracts, the fact is, beyond all posturing exists extra-legal legitimate demand for the relationship. For instance, beyond the mechanics of doctrine of pacta sunt servanda, there are the imperatives of responsible corporate citizenship. The issue of corporate social responsibility is at the core of the general purpose of the relationship because without sustained peace in the business environment, economic activities cannot flourish. 

However, while the industry has the tendency to argue that it is not contractually accountable to the host communities of the oil producing areas (which is true in the case of Nigeria), these communities too must come to the realization that corporate social responsibility is a matter of social contract. The bitter truth is that the socio-economic and political development of the host country is not the prerogative of the Multinational Oil Industry under the subsisting international petroleum agreements. The agreements are structured in such a way that the issue of corporate social responsibility does not impose any legal duty on the Industry and does not overlap into the realm of public governance. The purpose of this discussion is to provide analysis on the boundaries of corporate social responsibility within the context of international petroleum contract between Nigeria and the Multinational Oil Industry.


II.      Distinguishing the Responsibilities of the Multinational Oil Industry   from those of the Nigerian Government

            As far as facts from this research are concerned, the Niger Delta has suffered two wrongs: Firstly, degradation of the environment of the Niger Delta through oil operations and unintended consequences of environmentalism.[1] Secondly, neglect of the region by successive governments during the last three decades in the Niger Delta.[2] Considering these issues, it is obvious that the responsibilities of the government and the industry have been determined by the nature of the wrong.
            Although the private interests of companies and the public interest of government are almost always divergent, it appears from the opinion of the people of the Niger Delta region that the above two interests are fundamentally contrast with the feeling of the people of the region.[3] It is the considered view among these communities that classification of the responsibilities of both government and the companies in terms of public and private interest in basically academic.[4] As far as they are concerned, the responsibilities of both to the communities are joint and complementary. There is a legal basis for this argument; for sure the two are involved in a joint venture and the companies operate on that basis in the Niger Delta.[5] Therefore, it is only logical that any charges of environmental wrong arising from the operation of the joint venture are levelled against the joint partners. From that standpoint, every joint partner is liable to perform its part in the socio-economic development of the region. To the communities, it is not the distinguishing means that matter but whether it impacts on the lives of the communities.
            However, as espoused in the doctrine of equity that “Whoever seeks equity must do equity”,[6] it would be fundamentally wrong to ignore the legal status of the entities in defining the scope of their responsibilities to the oil-producing communities. What then are the responsibilities of both based on this characterisation?           


III.     The Corporate Responsibilities of the Multinational Oil Industry to    Oil Producing Communities of the Niger Delta

Without a doubt, the strategic position of the multinational oil industry in the socio economic and political life of Nigeria places huge responsibilities on the shoulders of the industry.[7] Its dominant position meant a privilege capacity to influence the policies of the government, in short an indispensable element of the decision making processes of the government. At the end of the day, it is the wealth they create that sustains the government; therefore, the symbiotic relationship puts both in a position of mutual influence.


A.      The Political Sphere

In the context of the Niger Delta, its dominant economic position, coupled with contact with the successive governments over a period of five decades, meant the industry was destined to play a crucial role in the political future of the country. The strategic areas of concern to the communities in particular and the country at large would be restoration of democracy,  fiscal discipline and return to true federalism, the promotion of rule of law, and human rights.[8] The Federal Military Government had deployed troops to restore some semblance of law and order in the area since 1993.[9] The conflict is expressed in the form of native activism against the activities of the multinational oil industry in the region. In the course of discharge of their constitutional duty of managing violence, the Nigerian security forces have been accused of extra-judicial executions, arbitrary detentions, and draconian restriction on the rights of the communities.[10] In the words of human rights watch commissioned studies of 1999:

... Human rights violations in the Delta were connected with the suppression of protests at the oil companies’ activities ... There were repeated incidents in which people were brutalised for attempting to raise grievances with the companies; in some cases security forces threatened, beat, and jailed members of community delegations even before they presented their cases”.[11]

            In Nigeria, the climax of this allegation was the arrest, trial and execution of Ken-Saro Wiwa and eighteen others during the regime of General Sani Abacha.[12] The chain of events that led to the arrest, trial, and execution of Saro Wiwa has been linked to the covert Memorandum of Understanding (MOU) or the Joint Operating Agreement (JOA) between companies and the Nigerian Military Government regarding the security of their facilities.[13]
            Although this thesis does not hold a brief for the multinational oil industry, it is right to argue that some of these allegations are misplaced and unrealistic. Firstly, trans-national investment law and policy, and the practice of states guiding the treatment and management of foreign investment placed responsibilities on the Nigerian government to protect it against vandalism. Therefore, the MOU or rather the JOA on security of operational facilities should not be an issue. Besides, the nationalisation of the 70’ shad taught the industry a lesson on the price of meddlesomeness into the internal affairs of their host countries, so they do not want to push their luck too far about the state’s political ideology.[14] After all, they are business outfits concerned about profit maximization, admittedly with a moral obligation to promote social justice within the context of democracy and rule of law, but it would be unrealistic to assume that these corporations are emissaries of Western Political culture.[15]
            This was the response of the industry to calls from the Commonwealth, the European Union, and the United States for Shell-BP, Chevron, and Texaco to withdraw from Nigerian in view of the intransigence of the latter to return the country to democratic rule.[16] Agreed that the companies are in a position to exert pressure on the government, at the same time they are wary of their limits, and public resentment of foreign interference in a perceived area of national sovereignty.[17] Therefore, it is arguable that an objective judgment on the contribution of these companies in the areas of political development of the host government would not be on the basis of the magnitude of the problem, but the nature of the issues and circumstances of the industry.
            Undoubtedly, there have been instances of human rights abuses in the Niger Delta, but not as magnified by the Human Rights Watch.[18] Human rights abuses are general characteristics of a military dictatorship[19] as noted earlier; the constitution is normally abrogated by the military Government. This would mean that the basis of enforcement is frozen and makes fragile the claim to it and not least the infrastructure for its enforcement.[20]
            On the issue of Ken-Saro Wiwa, their brand of activism bears the character of contempt for the federal government, which is treated as treasonable felony under the Nigerian criminal code.[21] As a matter of fact he was not tried for treason but for murder under the Nigerian Criminal Code and, traditionally, cases of such profile are sometimes adjudicated by a Special Military Tribunal (SMT). For instance, armed robbery, drug trafficking, coups, and economic crimes: military tribunals headed by a retired judge, try money laundering and failed banks offences.[22] As regards the severity of the sentence Justice Auta Tribunal passed on Ken and others, the point is that the death penalty is still part of the Nigerian Criminal Justice System.[23] During the period, given the frustration of the government about the unrest in the Delta, and its defiant temperament to calls for clemency by the international community (America, the British Commonwealth, the ED, OAD and International NGOS),[24] it would be extremely unlikely that the intervention of the international industry could have made any difference to the government’s resolve to execute the judgment of the tribunal. Without hesitation, this discussion agrees that under the present democratic dispensation the industry has the wherewithal and the opportunity to do more.
            In the area of human rights the dawn of evolving realities have proved that the multinational industry can no longer afford to be complacent in view of the challenges posed to its future.[25] The pre-emptive approach and the case by case approach to environmental and human right issues are no longer adequate. As an evolving phenomenon, this thesis concurs with the International Association of Geophysical Contractors,[26] in that effective management of human rights and environment issues require planning, training, consultation, and evaluation. The evaluation of the human rights profile of the Niger Delta would capacitate the industry to make an educated decision about operations and determine its activities with potential environmental and human rights impact. Where the impact is inevitable it allows the industry to make appropriate investment decisions, as to whether considering the potential threats and the mitigation of costs it would be economically worthwhile for a project to go ahead or not. Additionally, the industry should always insist on environmental and human rights impact assessment for every project, regardless of whether or not provided for under the national law of the host countries.


B.       The Socio-Economic Sphere

            The Niger Delta region constitutes a wetland of approximately 70,000 square kilometres, inhabited by 1,600 standing communities with a population of 7 million.[27] The demography of the area has been variously influenced by the oil industry; in fact the oil and gas industry drives the economy of the region and, to a greater extent, the social activities in the entire area.[28] The background hard fact about Nigeria is that, as noted earlier, it is the largest producer of oil in Africa, and oil accounts for approximately 90% of the foreign exchange earnings.[29] Yet, despite its huge oil and natural gas reserves and untapped solid materials deposits, as at 1999/2000 its per capita gross national product stood at US $260.[30] The implication of these statistics is that, from 1956 when oil was discovered right up to this present time, oil revenue has not significantly impacted on the socio-economic condition of the people.[31] Undoubtedly, however, is the fact that oil exploitation and development has transformed the local economy and, in the process, the elite from those areas have benefited immensely from the transformation.[32] The destruction of the traditional skills of the communities in fishing and agriculture created a false sense of socio-economic prosperity but ultimately left the communities impoverished.[33] As the saying goes “To whom much is given much is expected”. In the same spirit, the multinational oil industry operating in the Niger Delta has the obligation (strictly speaking, not legal) to revamp the local economy by reinvesting part of its profit in capacity building (development of structures) that would improve the socio-economic condition of the people. The truth is that, the industry has evolved pilot in the region.[34] Shell-BP, which is the dominant oil company operating and controls 40% producing capacity of the entire industry, has invested in health care, agriculture, water and sanitation, education, micro-credit and business development, and infrastructure development. See Appendix VI.


1.         Shell BP’s Investment in Nigeria’s Health Sector

            Between 1999 and 2000 Shell-BP invested in capacity building in order to enhance efficiency in delivery.[35] During the period the company renovated health-care centres, upgraded equipment, and drugs were supplied through a drugs revolving scheme. Immunization and HIV support programmes have received support from the industry.

Hospitals Built and Currently Financed by Shell-BP
Aminigboko Cottage Hospital
Umuebulee Cottage Hospital
Souk Cottage Hospital
Owaza Cottage Hospital
Okoroka Cottage Hospital
Erhoike Cottage Hospital
Ogulagha Cottage Hospital
Egbemo-Angalabiri Cottage Hospital
Oben Cottage Hospital
Okpare Health Centre
Out-Jeremi Health Centre
Otuasega Cottage Hospital
Ellu Cottage Hospital
Tomagbene Cottage Hospital
Kalaibiama Cottage Hospital
                               Source: Shell-BP: People and Environmental Annual Report 2000

This is in addition to about sixteen other rural health centres taken over and renovated by the company in different parts of the region.[36]


2.         Shell BP’s Pilot Programme for Nigeria’s Agricultural Development

            In the area of agriculture, the emphasis of the industry’s social performance programme is in the area’s agricultural-income generation and employment-creation projects, supported by micro-credit schemes.[37] There has been reasonable investment support in the areas of oil-palm plantations, commercial oil-palm nurseries, and integrated fish ventures.[38] Similarly, the industry has liaison with local and international NGOs, the International Fund for Agricultural Development (IF AD), the Living Earth Foundation (EFDI), the International Institute for Tropical Agriculture (UTA), the Nigerian Institute for Oil Palm Research (NIFOR), and National Root Crop Research )NRCRI). This strategic partnership is focused on seed multiplication, crop protection, agricultural finance, and training and capacity building in agro-allied areas.[39] See the table below.

Planting Materials Supplied by the Industry to Farmers
Items
1998
1999
2000
Cassava Stem Cuttings
Pineapple Suckers
Banana/Plantain Suckers
Fish Fingerlings
Oil Palms Seedlings
Paddy Rice Seeds (kg)
Cowpea Seeds (kg)
7.0m
200,000
17,000
280,000
32,000
720
360
7.0m
228,000
53,000
358,000
43,000
1500
750
5.6m
259,000
64,000
334,000
43,000
5000
1,200
Source: Shell-Petroleum Development Company of Nigeria Limited: Operator of the NNPC/Shell/EIF/Agip Joint Venture


3.         The Multinational Oil Industry’s Investment in the Educational Sector

            The focus of the industry in this area of provision of educational infrastructure is an adult literacy programme.[40] “Teachers for Africa” is the cornerstone of its social performance in the educational sphere. This is a sort of exchange programme that allows experienced teachers from the US to organize in-house seminars to enhance efficiencies in education administration, curriculum development, and general performances in the sector. The most crucial of the industry’s effort is a scholarship scheme for university scholars within Nigerian, and secondary schools students from the region. See the table below

Table 111

Shell-BP Nigeria Limited Education Scheme
Programme
1996
1997
1998
199
2000
University (AOA) Scholarship
427
430
430
430
430
University (NA) Scholarship
130
130
153
150
153
Post Pri-Scholarship
2,600
2,600
2,600
2,600
2,600
Science Teachers
66
252
383
360
349
Scholl with Science teacher
14
57
63
64
55
                                                 Source: Shell-BP Nigeria Limited

            The above presentation raises two issues; firstly, the above statistics though produced by the industry, have never had their authenticity challenge either by the regulatory arm of the government or the oil-producing communities of the Niger Delta. Secondly, it is the industry’s concern about its public image that made it extremely important to document its activities, possibly to be used by a PR counter offensive. Thus it is incontestable that the industry is involved in several socio-economic initiatives intended to ameliorate the despair of the oil-producing communities.[41] From my interviews, it was discernible that what has happened over the years is a total lost of confidence in the industry, engendered by broken promises and a lack of transparency on the part of the industry.[42] In addition, activism and oil nationalism has captured the psychology of the people so much that, in defiance of the constitution, they consider the oil “their own.”[43] Therefore, it was the majority view that it was not common sense for the region to commend the industry for reinvesting part of the wealth it had made through exploration of the resources of the region.[44] In such euphoria about how much the industry makes, there is the temptation to weigh the socio-economic contributions of the industry in terms of such overwhelming sentiment.


C.       The Role of Government

            There is no doubt that government as the supreme authority over the entire country, and most importantly as the licensor that sets the ground rules for the operations of the multinational oil industry, owes huge responsibilities to the region.[45] As the licensor, government regulates the inflow of foreign investment and its utilization in the resources sector of the economy. From this standpoint, government has the ultimate responsibility of developing strategies and formulating policies for effective management of the potential environmental problems. Sadly, due to competing priorities and unsustainable eco-centric mentality of leadership in the developing countries, there has been less enthusiasm and commitment to environmental management.[46] In some instances, the apparent deficiencies in terms of enabling legislation and sophisticated machinery to withstand the complexities of issues involved in environment automatically relegates environment to the background.[47]
            In the area of socio-economic development, surely the Niger Delta deserves better attention in v view of its vulnerabilities to hazards associated with petroleum exploitation and development. However, what has often been ignored is the fact that the entire country is the constituency of the federal government, and therefore the appropriate index for development plan would be the country. The holistic but hard truth about the general circumstances of the country is that lack of progress on the socio-economic front cannot be limited to the Niger Delta; it is a national phenomenon. This is the consistent error of judgment, which has become the common feature of successive studies and analysis of the Niger Delta problem.
            Having asserted that, it is undeniable that the ecological circumstances of the Niger Delta, vis-a vis oil activities, underscore its special needs and the priorities of those needs in national development planning. It is these special needs that made imperative the creation of the Oil Mineral Production Areas Development Commission (OMPADEC) in 1988.[48] The mandate of the commission was to draw up a master plan for the accelerated socio-economic development of the Delta region.[49] Native to the area, Chief Albert Horsfall was appointed the pioneer executive chairman of the commission directly answerable to the presidency. Between 1988 and 1996, when Horsfall presided over the OMP ADEC, it received a federal budgetary allocation of 36 Billion Naira ($ 28 million).[50] Under this stewardship, the OMPADEC executed 1,182 projects in the areas of: water supply, land reclamation (environment), fire protection, road construction, electricity, health facilities, markets, education, and drainage, scholarships, and a small business loan scheme. According to the distribution chart of the development projects, 177 projects were executed in Rivers State, 56 in Delta State, 25 in Imo State, 14 in Abia State and 8 in Akwa Ibom State.[51] In 1996, due to allegations of corruption and growing cynicism about the activities of the commission, it was dissolved and was replaced in 1999 by the Niger Delta Development Commission (NNDC).[52] Under the Niger Delta Development Commission Act 23 of 1999, the Commission inherited the structures of OMP ADEC and was reassigned the assignments of the defunct organization.
            On the strength of the foregoing it is not entirely correct to say that the government has not been sensitive to the plight of the Niger Delta region. The reality is that, due to oil nationalism, there is very high expectation far beyond the competing scarce resources at the disposal of the government.[53] In addition, the official corruption that is endemic in every facet of national development, undermines the successes of the government’s limited efforts and creates a sense of total neglect. But the lack of accountability is attributable to the psyche of the area. In 1994 the then chairman of OMP ADEC, Prof. Opia, was accused of embezzling 4 billion naira ($30.4 million), and was investigated and demised.[54] The response of his home state was a politically motivated demonstration with the chanting of “Oil is our own and Opia is our Son ...”[55] while this is not a generalization about the Niger Delta, this kind of attitude to national issues does have a negative impact on the sense of honesty and the general conduct of public officials. Additionally, the general conduct of the multinational industry leaves much to be desired in the area of corporate social obligation. Invariably, this has engendered a sense of alienation, cheating, neglect, and exploitation.  
              

IV.     Conclusion

            From the discussion above it is evident that as long as Nigeria continues to produce oil, international petroleum contract despite its unpopularity is bound to continue.  Nigeria like other oil producing developing countries is wholly dependent on foreign investments as well as technology to create and sustain its capacity to produce oil. In the same vein, the Multinational Oil Industry (seven sisters) depends on Nigeria’s natural endowment of proven and non-proven oil reserves to boost both its producing capacity as well as its share of the international oil market. Therefore, it is supposedly a symbiotic relationship albeit always in favour of the Multinational Oil Industry, it has the characteristics of a most relationship and beyond all extremes, a common ground is always found. It is the opinion of this paper that while international petroleum contract is about mutual imperatives of proportionate responsibilities, rights and duties, there is a distinction between the demands of corporate social responsibilities and the responsibilities of Nigeria’s public governance. Until and unless these differences are recognized by both parties and the petroleum contract is made pragmatic to adapt to the changing dynamics of the host business environment, this delicate relationship will continue to be dogged by controversies. The most classical example of what could happen to the relationship could be seen in the case of the Nigeria’s Niger Delta whereby the Industry is ignorantly considered alternative government and social corporate responsibility is likewise considered a legal right. It suffices to say that international petroleum contracts had travelled a difficult road to its present status, however, if this journey must staggered on  to guaranty a future for the industry, host governments and the Multinational Oil Industry must work on a common purpose.  
                                 
                                  


* Ph.D, Lecturer, Faculty of Law, University of Abuja, F.C.T.
** LL.M (Ph.D candidate) Lecturer, Faculty of Law, Ebonyi State University, Abakaliki
[1] Van Dessel Report: Frynas Supra note 3.
[2] UN Report Supra note 97.
[3] Interview with a group of persons in Okrika and Effik Communities in Port Harcourt (River State) and Calabar (Cross River State) 2000/2001.
[4] Ibid
[5] Nigeria’s Joint Venture Model Contract 1988.
[6] Obilade Supra Note 53.
[7] R. Welford, Corporate Environmental Management Systems and Strategies (London: Earthscan Publication 1996), part 1., Human Rights Watch Supra Note 92.   
[8] E.E. Osaghae, ”Human Rights and Ethnic Conflict Management- The Case of Nigeria”, Journal of Peace Research 33(2): 171-181.
[9] Guardian, “Military in the Niger Delta to protect lives and properties-I Bamayi (Chief of Army Staff)”, 7th March 1997.
[10] Human Rights Watch Supra Note 98.
[11] Ibid. p.1. of 12 (Summary).
[12] Ken-Saro Wiwa Trial report 1995, Preamble.
[13] C. Doudu, “Shell admits Importing Guns for the Nigerian Police”, The Observer 28 January (1996).
[14] T.H. Moran, “Trans-national Strategies of Protection and Defenses, Multinational Corporations: Spreading the Risk and Cost for Nationalization”, 27 Int. Organ. 273, (1973)., G.R. Delaume, “State Contracts and Transnational Arbitration”, 75 AM, J. Int. K. 784 (1981)., H. S. Zakariyah, “Political Risks of Transnational Petroleum Investment: The Mitigating Role National and International Insurance programmes”, 11 Nat. Resources F. 165 (1987).
[15] Prof. Sornarajah, International Law on Foreign Investment (Cambridge: Cambridge University Press 1996), pp. 3-303.  
[16] Doudu, Supra Note 113.
[17] Sornarajah Supra Note 115, P. 303.
[18] Human Rights Watch Report 98.
[19] Constitutional Rights Project, Military Tribunals and Due Process in Nigeria (1999)., Suppressed Rights: Constitutional Violations in Military Decrees 1984-1999., Nigeria: The Limit of Justice (1993)., Human Rights Practices in the Nigerian Police (1993). 
[20] The Constitutional Suspension and Abrogation Decrees of 1966, 1976, and 1983 are all instances in view.
[21] S. 220 & 222 of the Penal Code of Northern Nigeria.
[22] National Deposit Insurance Corporation Decree of 1994, and Money Laundering  Decree of 1995.
[23] Doudu Supra Note 113.
[24] The International Community Snubbed: Ken-Saro Wiwa and others executed Guardian Newspaper (1995).
[25] CPMLP Journal Supra note 63.
[26] Ibid
[27] Shell BP Annual Report (2000),P.7
[28] Ibid.
[29] Central Bank of Nigeria Annual Report (1979), p.12.
[30] Human Rights Watch Report 98, p. 4 of 12
[31] Ibid
[32] Human Rights Watch Report 98, p. 4 of 12
[33] Ibid.
[34] This is the claim of the Public Relations Department of Shell BP, backed up by statistics. This was not denied by the natives during my interviews, but they complained that more often than not these projects are executed without prior consultation to formed out the priority areas of their needs. This is a fact corroborated even by the Human Rights Watch report of 1999.  
[35] Shell BP Annual Report (2000), p. 16.
[36] Ibid.
[37] Ibid,  p. 20.
[38] Ibid, p. 19.
[39] Ibid.
[40] Ibid., p. 23. Corroborated by statistics from the Department of Petroleum Resources Abuja, Nigeria.
[41] Ibid.
[42] This fact has been corroborated by the earliest studies, conducted by both Human Right Watch (1999), and Frynas (2000).
[43] CPMLP Journal Supra Note 63.
[44] Ken-Saro Wiwa “Government, Multinational Oil Industry and US”, Daily Times 5th Oct. (1994).
[45] Osaghae Supra Note 108.
[46] J.J Warford, M. Munasinghe, & W. Cruz, The Greening of Economic Policy Reforms (The World Bank Environmental Department and Economic Development Institute 1993), pp. 9-11. 
[47] Ibid.
[48] Oil Mineral Producing Communities Decree No. 23 of 1988.
[49] Ibid.
[50]O. Madukaife, “OMPADEC Not a Failure, Horsfall Tells Senate”, Vanguard: Niger Delta, 6th Feb. 2001, at http://www.vanguardngr.com105022001/d2060201.
[51] Ibid.
[52] O. Madukaife, “How to Make NDDC Work-Horsfall”, Sunday Vanguard: Interview 11 Feb. 2001, available at http://www.vanguarddnr.com/05022001/si211201.htm.
[53] Vision 2010 Report (1997)
[54] E. Nnadozie, “Ex OMPADEC boo, Opia declared Wanted”, STH Feb. 2001 at http://www.Vanguardngr.com/05022001/c20S0201.htm. Special Police Gazette: Force Directive CID No. 48 (2001). 
[55] H. Sirajo, “Oil is our own Opia is our Son”, Democrat, May (1994).
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