May 07, 2009

Ogoni: Shell Faces Trial

Active ImageA group of Nigerians suing Royal Dutch Shell Plc over government attacks and killings in their country will try to do the unprecedented -- persuade a U.S. jury to find a company liable for aiding in crimes against humanity.
Below is an article published by Bloomberg Press:

A group of Nigerians suing Royal Dutch Shell Plc over government attacks and killings in their country will try to do the unprecedented -- persuade a U.S. jury to find a company liable for aiding in crimes against humanity.

Shell faces a trial May 26 [2009] in Manhattan federal court of a lawsuit by three alleged victims of attacks and relatives of seven activists killed from 1990 to 1995, including the writer Ken Saro-Wiwa. The plaintiffs claim Shell’s Nigerian unit assisted the government in the abuse and murder of opponents of the company’s operations in the Niger Delta.

If prior trials are a guide, the plaintiffs face an uphill battle. A Birmingham, Alabama, jury ruled in July [2008] that Drummond Ltd., a U.S. coal producer, wasn’t liable for the deaths of union leaders at a company mine in Colombia. In December [2008] a San Francisco jury cleared Chevron Corp. of responsibility for the 1998 deaths, shootings and torture of Nigerian protesters.

“These are hard cases both on the law and the facts for the plaintiff,” said Anthony Sebok, a professor at the Benjamin N. Cardozo School of Law in New York. “Publicity is often what a lot of the plaintiffs want,” he said, adding the aim of such suits is often a public forum to expose corporate misconduct.

Jennifer Green, a lawyer for the plaintiffs against Shell, said her clients are chiefly concerned about the company’s accountability. She declined to speculate on possible damages.

“It’s holding Shell responsible for what Shell did,” said Green, of the not-for-profit Center for Constitutional Rights in New York.

Shell Comments

The Hague-based company, Europe’s largest oil producer, denies any wrongdoing. The company didn’t encourage or advocate “any act of violence,” according to a statement.

A verdict against Shell might prompt some investors to sell shares because they don’t want to be affiliated with a company found responsible for rights violations, said Gudmund Halle Isfeldt, an Oslo-based analyst at DnB NOR ASA.

“An increasing number of even mainstream investors do pay attention to how well a company manages environmental, social, human-rights issues,” said Stephen Hine of Ethical Investment Research Services, a London-based adviser.

Among the laws cited by the plaintiffs is the U.S. Alien Tort Claims Act, a 1789 statute rarely used until federal courts broadened its application in 1980.

Since then, U.S. courts have interpreted the statute to allow civil cases by noncitizens claiming violations of international law. U.S. District Judge Kimba Wood, who will preside over the jury trial, ruled April 23 [2009] that Shell must defend the suit.

First Trial: 2007

In July 2007, the Drummond case became the first Alien Tort Claims Act case against a company to reach trial. A Shell loss would be the first time a company was held civilly liable for aiding and abetting crimes against humanity, Green and Sebok said.

Shell began exploring in Nigeria in 1938 and drilled its first successful well there in 1956. It disputes claims in the complaint, saying it campaigned to save the writer Saro-Wiwa and other activists killed and tortured by the military regime in the West African nation.

“They’re prepared to go to court and hopefully get their name cleared,” said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh. Shell may offer evidence of the programs it runs to benefit the country’s people, Kenney said.

The Shell plaintiffs alleged that they or their relatives were jailed, tortured and killed by Nigeria’s government, at the company’s instigation, as reprisal for opposing Shell operations.
Plaintiffs’ Claims

Shell is alleged to have appropriated land and polluted the air and water in the Ogoni homeland, sparking protests and rallies by the Movement for Survival of Ogoni People, which Saro-Wiwa led.

Shell recruited Nigerian police and military to attack villages and suppress the movement, according to the complaint.

Saro-Wiwa and five others were hanged on Nov. 10, 1995. Shell agreed a month later to invest $4 billion in a national gas project in Nigeria, the plaintiffs said.

“If a company is participating in human-rights violations, they are liable for those violations,” Green said. “They can’t say someone else pulled the trigger. They can’t say someone else put the noose around Ken Wiwa’s throat.”

Shell has said it spoke out on Wiwa’s behalf during his trial, sought clemency for him and others, and offered to clean up oil spills in the Ogoni region. The company organized human- rights awareness workshops for senior government security officers, the company said on its Web site.

148 Million

Nigeria, a nation of 148 million people, has an estimated 36.2 billion barrels of oil, or 2.9 percent of proved global reserves, according to BP World Proved Oil Reserves. The country is due to ship at least 1.78 million barrels a day in June [2009] from 14 of its biggest fields. Most of its oil is in the Niger Delta.

Nigerian oil accounts for about 14 percent of Shell’s global production, the plaintiffs said in the lawsuit. The Shell Petroleum Development unit produces 43 percent of Nigeria’s oil.

Sixteen years of military rule ended in 1999, three years after the suit was filed. Ex-President Olusegun Obasanjo, who took power in 1999, handed authority to President Umaru Yar’Adua in 2007 in the country’s first peaceful civilian-to-civilian transition.

Juries hearing Alien Tort Claims Act cases may hesitate to blame companies for the wrongdoing of government security forces, Sebok said. Plaintiffs may have difficulty showing a company provided material support to a regime knowing its help would be used to violate human rights, he said.

Damage Award

And if the jury does rule against the company, any damage award may be cut or overturned by judges, he said.

Most Alien Tort Claims Act cases have been dismissed in preliminary stages. A few have been resolved out of court.

Unocal Corp., now a Chevron unit, agreed in 2004 to settle claims of human-rights violations during the construction of a pipeline in Myanmar. Terms were confidential.

Kenney, the analyst, said a Shell loss wouldn’t discourage the company from drilling in Nigeria, where its operations are increasingly centered on offshore reserves. Kenney has a “hold” recommendation on Shell stock.

An adverse verdict wouldn’t have a significant impact on Shell’s shares, according to Kenney and Isfeldt, who has a “buy” recommendation on the stock.

Shell first-quarter revenue was $58.2 billion, and net income was $3.49 billion, a 62 percent drop.