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Skeletons in the Corporate Closet: Shell


Allegations from Nigeria still haunt the company's reputation.


Last June, Royal Dutch Shell (RDS-A) one of the world's largest oil conglomerates, decided to pay $15.5 million dollars to settle a lawsuit accusing it of human rights abuses in the Niger Delta area of Nigeria, rather than go to court.

The suit asserted that in the early '90's, Shell became concerned about author and activist Ken Saro-Wiwa's high-profile campaign to protest the impact of oil production throughout the Niger Delta's region and sought to eliminate that threat through a systematic campaign of human rights violations.

In 1990 Saro-Wiwa had created the Movement for the Survival of the Ogoni People (MOSOP) and began organizing for political, economic, and environmental justice. The author, one of Shell's biggest critics in Nigeria, claimed that Shell damaged the Delta communities, especially by destroying mangroves to make way for pipelines. In January 1993, MOSOP organized peaceful marches of around 300,000 Ogoni people -- more than half of the Ogoni population.

In 1995 Saro-Wiwa and eight other activists were murdered. In response, the families of the executed activists brought the suit that was settled last year. In addition to the alleged murders, they also claimed that Shell was partially responsible for torture, illegal detention, forced exile, and shootings of hundreds of Ogoni protesters during the 1990s.

The oil company, which has been in Nigeria since 1958, has denied any wrongdoing. According to Shell, the decision to agree to a court settlement was "a humanitarian gesture and opportunity to assist the process of reconciliation and help the Ogoni people towards a better future in a way that could not have been achieved in a courtroom," Malcolm Brinded, Shell's Executive Director Exploration and Production, told the Guardian newspaper. (The company had no comment about the settlement's impact on the company's operation or stock price.) The Guardian article went on to say, "The settlement, reached on the eve of the trial in a federal court in New York, was one of the largest payouts agreed by a -multinational corporation charged with human rights violations."

The money from the settlement will go to Saro-Wiwa's family for their loss and to cover a portion of their legal fees and costs, and to an educational and social trust fund intended to benefit the Ogoni people. The trust is in addition to the contribution to community development that Shell-run companies make in the Niger Delta (including Ogoni land), which in 2008 totaled more that $240 million (Shell share $82 million).

Other oil companies have faced similar problems in countries around the world. In 1998, Chevron (CVX) was accused of complicity in the shooting of Nigerian villagers who occupied an offshore oil barge to protest Chevron's environmental record and hiring practices. A San Francisco court cleared the company. In 2004, Unocal, a California oil firm accused of using slave labor in Burma for the construction of a pipeline, agreed to compensate villagers in an undisclosed settlement.

Even though Shell has continuously denied any blame in the Nigeria killings, many speculate that the company settled to avoid further negative press, including damning documentaries, such as this one by the Earth Rights International and the Center for Constitutional Rights. The company also may have to avoid public reporting on what may been revealed in court. Before the case was settled, the Guardian newspaper wrote:

If it does go to trial, the case is expected to last up to a month, with Shell calling 11 witnesses and the Ogoni campaigners presenting up to 20. Among the latter will be Ken Saro-Wiwa Jr, the son of the executed leader, who will be pressing for compensation for his father's death.

The jury will be presented with evidence that the subsidiary told its parent company that Saro-Wiwa would be convicted and that he would never go free. They will also hear that two key witnesses at the trial that led to the hangings of the Ogoni nine later recanted, saying they had been bribed to give false testimony with offers of Shell jobs.

Neither shareholders nor consumers would find it easy to ignore such allegations and still fill up at a Shell pump.

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