The Front

Chevron Escapes Liability

Chevron is not liable under U.S. law for the 1998 killing and abuse of protesters on a company oil platform in Nigeria, a federal jury found in December.

The case, Bowoto v. Chevron, stemmed from a 1998 incident in the Niger Delta, where approximately 100 villagers from the small Ilaje ethnic group occupied Chevron’s offshore Parabe Platform facility [see “Corporate Bullies: The 10 Worst Corporations of 1998,” Multinational Monitor, December 1998]. Chevron contacted Nigerian military forces, who subsequently shot at the unarmed protesters, killing two and injuring others. In 1999, victims of the attack and their families filed suit in U.S. courts, seeking to hold Chevron accountable for the shootings.

After a decade of legal wrangling, the case went before a federal jury in San Francisco in October. After four weeks of trial, the jury issued a verdict in favor of Chevron. The plaintiffs have announced they will appeal.

“We are gratified by the decision of the jurors in this case who listened to weeks of testimony, weighed all the evidence presented, and arrived at a just and fair verdict,” said Chevron in a company statement.

But advocates for the Ilaje were unbowed. “Although the plaintiffs did not prevail today, Chevron now knows that it cannot conceal complicity in human rights abuses from public scrutiny,” said Richard Herz, an attorney with the Washington, D.C.-based EarthRights International and co-counsel for the plaintiffs.

They Kill and Go

Like other ethnic groups in the Niger Delta region, the Ilaje remain very poor, despite the enormous oil riches tapped from their region by multinational oil companies.

In May 1998, the Ilaje petitioned the state military administrator, asking for relief from the “marginalization” they suffered due to Chevron and other oil operations. They charged that Chevron’s operations had contaminated fresh water canals with sea water, making them unfit for drinking; that salinity and explosives had destroyed local fish populations, undermining the livelihoods of fishing communities; that the Ilaje did not receive sufficient or good jobs with Chevron or other oil companies; and that social amenities — drinking water, medical facilities, electricity, schools — were entirely absent or totally inadequate.

“The Ilajes who are predominantly living at the coastal areas of Ondo State which happened to be rich in the ‘Black Gold’ have been marginalized for a long time by the oil prospecting and exploiting companies,” they wrote. “The exploration and exploitation by these companies has brought untold hardships to the inhabitants. Their peace-loving attitudes [are] exploited by the companies who turned deaf ears to their plight.”

Acting on these grievances, and following negotiations between Ilaje elders and Chevron, on May 25, 1998, more than 100 villagers occupied the Parabe platform. According to advocates for the Ilaje, Nigerian military forces remained on the platform, and in control, during the occupation. A Chevron fax to the U.S. embassy reported that, “The villagers were unarmed and the situation has remained calm since their arrival.”

In the early morning of May 28, a Nigerian military outfit, known locally as the “kill and go” were flown on Chevron-controlled helicopters to the Parabe platform. They opened fire and killed two protesters and injured others. Other protesters were arrested and allegedly tortured.

Over the last decade, and in the October trial in California, the Ilaje claimed that they were peaceful and posed no threat. They said they had announced their intention to leave on the same day that Chevron flew in a military corps famous for its abusive policies. The Ilaje argued that Chevron should thus be civilly liable for the death and injuries suffered by the protesters.

Chevron characterized the incident differently. Chevron contended that the Ilaje threatened Chevron with violence if they were not given money and jobs. “Weeks later, they followed through on their threats by seizing the oil platform, an adjacent barge and a tug boat on May 25, 1998, holding CNL [Chevron Nigeria Limited] employees and contractors hostage and demanding money and other considerations. CNL attempted to negotiate a resolution without success.” The protesters threatened to set the barge on fire, Chevron claims.

“Fearing for the safety of its workers, and with tensions mounting, CNL asked for assistance from the Nigerian Navy.” After some of the Ilaje attacked the military, “shots were fired.” Chevron says it regrets the loss of life, and that it was never the company’s intent that anyone be harmed.

Exactly what swayed the jury is unknown, but they found in favor of Chevron. They might have been persuaded by Chevron’s version of the factual dispute, or concluded that Chevron should not be liable for the actions of the Nigerian military.

A Legal Pathway

That the case made it before a jury in the United States at all represented something of a victory for the plaintiffs.

They filed their case under the Alien Tort Claims Act, a longstanding statute that enables people outside of the United States to file suit in U.S. courts for violations of international law, including against parties not connected to the United States. Human rights victims have used the statute to file lawsuits against their abusers, serving them with legal papers when they are in the United States. Following the effective use of the statute against torturers, victims of violence perpetrated by or at the behest of multinational corporations have increasingly employed the statute. Business groups have advocated stridently that these uses be blocked by court ruling or legislative action.

Many of the corporate-related cases seeking to employ the Alien Tort Claims Act have failed to overcome procedural stumbling blocks and the massive legal resources that multinational corporations can deploy in such cases.

The plaintiffs in Bowoto v. Chevron were able to able to overcome these obstacles, suggesting that the Alien Tort Claims Act may be a valuable tool in similar cases in the future.

“The fact that Bowoto v. Chevron made it this far in the process is a victory in and of itself,” says Laura Livoti, founder of the group Justice in Nigeria Now, “because it means that we have demonstrated that there is a clear pathway in the U.S. court system for holding corporations accountable to the rule of law. This is the first time a case against a company for aiding and abetting human rights violations overseas has even gone before a jury.”

— Robert Weissman

Ecuador’s Debt Default

Ecuadorian President Rafael Correa announced in December that his government would default on payments on some of its commercial debts.

The announcement followed recommendations of the Public Debt Audit Commission (CAIC, its Spanish acronym), an independent commission set up to audit the country’s public debt. 

Ecuador’s public debt stands at more than $13.5 billion, and the country spends more on debt servicing ($1.75 billion in 2007) than healthcare and other social services combined. Ecuador’s growing debt over the last three decades, the CAIC concluded, “has been characterized by little transparent management,” and has led to debt servicing crowding out other budgetary expenditures and “the recurrent dependency of the State and the national economy” on ongoing credit and negotiations from foreign lenders.

The CAIC found that a significant portion of the debt could be traced to illegal or improper activities by foreign banks. “Evidence of illegal and illicit procedures in multiple renegotiations with international private banks has been discovered,” the Commission found, “which harmed Ecuador and benefited the interests of creditors,” along with “the use of accounting tricks and the waiver of the statute of limitations.”

Following the issuance of the report, Correa announced in November a delay in payment of $30.6 million in interest on “Global 2012 bonds,” which the Commission had found particularly tainted. In December, Correa announced the default.

The CAIC investigation also blames “irregularities and illegalities” on former presidents, finance ministers, Central Bank presidents and inspectors general.

Correa turned the report over to Attorney General Washington Pesantez, in order for him to undertake civil and criminal legal action, where relevant, as urged by the audit commission against “those responsible for illegal acts” in the process by which Ecuador became deeply indebted between 1976 and 2006.

Correa said he was confident that the attorney general “would do his part, in the face of history and of the country.”

Indigenous leader Ricardo Ulcuango, one of the members of the CAIC, says that there was documentary evidence showing that “a significant part of the debt benefited the financial sector and transnational corporations, often to the detriment of the country’s interests.”

“There are documents demonstrating that various debt restructuring processes were carried out in favor of the creditors, with clear signs of corruption,” he says.

Ulcuango adds that in the 30-year period in question, Ecuador received just over $80 billion in loans and has already paid more than $130 billion. “Nevertheless, the country still owes nearly $14 billion,” he says.

“The CAIC determined that in the negotiations of the Global 2012, 2015 and 2030 bonds (issued as part of a debt restructuring in 2000), enormous damages were done to the country and there were signs of corruption on the part of those involved in the restructuring,” says Ulcuango.

He also says Ecuadorean officials at the time shared the responsibility with creditors who fomented the corruption.

In 2000, Quito refinanced part of Ecuador’s public debt and replaced the Brady Bonds with the Global Bonds, worth nearly $4 billion, which pay interest rates considered extremely harmful to the country.

According to the CAIC report, the evidence of irregularities and illegalities would justify a default on at least $10.3 billion in foreign debt.

The CAIC commission blamed the illegitimate debt on bankers and ex-government officials who negotiated the debt restructuring plans with international banks, multilateral lenders and industrialized countries.

Ulcuango says that creditors, in alliance with several previous administrations, imposed conditions that had serious economic, social and environmental impacts.

Only 14 percent of the money from the loans went into social projects and services like expanding the piped water supply, the power grid and telecommunications, or building roads, while 86 percent merely went toward paying off previous debts.

According to Ulcuango, the process was not transparent, and the loans generated dependence because in order to service the foreign debt, the country was forced to go deeper and deeper into debt.

The one-year investigation revealed the “mechanisms used to contract foreign loans, the pressure brought to bear by the creditors, the obsequiousness of government officials and the reluctance to establish clauses in the contracts designed to protect the country’s interests,” says Ulcuango.

According to the commission, basic principles of international law were violated, such as good faith, the ban on usury and environmental law, as well as international conventions and domestic legislation.

The audit of the country’s foreign debt focused on the process of contracting and renegotiating the public debt, the origin and use of the funds, and the implementation of the programs and projects financed with the domestic and international credit.

The commission examined the loan contracts between the public sector and foreign governments, multilateral lenders or foreign and domestic private banks. In each case, it determined the technical, economic and social viability of the loan, and studied the financial and commercial conditions that were agreed, the conditionalities, the uses to which the funds were put, and the individuals who arranged the loan.

In the investigation, which began in July 2007, the CAIC had authorization to study all of the public documents that its members deemed necessary. The committee members complained, however, that on many occasions, functionaries in the Economy Ministry and other government bodies threw hurdles in the way of their investigation.

The decision on what extent to follow the CAIC recommendations rests with President Correa. There is no international process for countries to challenge what they believe to be illegitimate debt.

— Third World Network Features/IPS