Shell Nigeria

1. Introduction

This post is requested by a friend who wanted to know more about Shell in Nigeria. This is quite a long report which i have to thank Albert ten Kate, who is a wonderful freelance researcher on CSR issues.
To start off, one must understand Shell's presence in Nigeria. Shell companies have operated in Nigeria for over 50 years. They generate billions of dollars of income for the government, create jobs and provide energy for the country. They supply international markets with oil and gas. And they spend millions of dollars a year on community development. The video below shows clearly Shell's position in Nigeria, the issues of bunkering from pipelines or theft on industrial scale and environmental damage of flaring.

However it is not all "rosy" even if it seems like it. In the Niger Delta, where most of the oil is produced, poverty and violence are serious problems, making it one of the most difficult places where Shell companies do business. Shell constantly faces charges of damaging the environment, ripping off the poor and corruption at the highest government levels.

SPDC 

Shell Nigeria is the colloquial name for Royal Dutch Shell's Nigerian operations carried out through four subsidiaries—primarily through Shell Petroleum Development Company of Nigeria Limited (SPDC). Royal Dutch Shell accounts for more than 40% of Nigeria's total petroleum production (899,000 barrels per day (bpd) in 1997) from more than eighty fields.

Shell Petroleum Development Company (SPDC) is the largest fossil fuel company in Nigeria, which operates over 6,000 kilometres (3,700 mi) of pipelines and flowlines, 87 flowstations, 8 natural gas plants and more than 1,000 producing wells. SPDC's role in the Shell Nigeria family is typically confined to the physical production and extraction of petroleum. It is an operator of the joint venture, which composed of Nigerian National Petroleum Corporation (55%), Shell (30%), Total S.A. (10%) and Eni (5%). Until relatively recently. it operated largely onshore on dry land or in the mangrove swamp.

The Problem at Hand

I can go on for pages talking about how great Shell and how wonderful their contributions are to a poor country like Nigeria through projects like Afam or Gbaran-Ubie integrated oil and gas projects or the Bonga deep water project. But they cannot hide the fact that In recent years, oil and gas production in Nigeria has been severely disrupted by militant violence, sabotage and large-scale industrial theft of oil and condensate – a liquid form of natural gas – in the Niger Delta. Heavily armed and well organised groups have kidnapped staff, invaded oil and gas facilities, shut down operations and vandalised pipelines.

Attacks on facilities such as well heads and pipelines have caused widespread environmental damage from spills, delayed projects and damaged livelihoods in local communities. As a result companies have been forced to suspend some operations and Nigeria’s production has fallen. This takes millions of dollars of potential revenue out of the hands of the government each month.

Below is an eye-opening video, everyone must see because things like these do not get aired on your local news channel. These problems exist and we need to pressure their government and big corporations (in this case: SHELL)  to act now!

2. Digging out the truth

Shell in Nigeria

In oil production, Nigeria is the most important country for Shell. During the period 2006-2010, Nigeria accounted for about 16% of Shell's worldwide production of oil and liquid natural gas. During the year 2009, production falls due to disrupting activities by militant groups in the Niger Delta reached their peak for the time being. During the year 2010, production climbed back again, with Nigeria accounting for almost 19% of Shell's worldwide production of oil and liquid natural gas.[1]

Happy Nigerian worker

Nigeria's share in the profits of Royal Dutch Shell has been estimated at an annual average of USD1.8 billion over the period 2005–2009, representing 7.3% of Shell's total profit and 10.4% of its profits from upstream operations.[2] Shell's business in Nigeria seems to do well.

Shell's Nigerian activities are divided among three companies. The largest is the Shell Petroleum Development Company of Nigeria Ltd (SPDC). SPDC is also Nigeria’s largest oil and gas joint venture. Most of its oil production takes place onshore in the Niger Delta. Shell is the operator of SPDC and has a 30% stake in the joint venture.[3] SPDC has been pumping oil for more than 50 years in the Niger Delta. The other businesses of Shell in Nigeria refer to liquefied natural gas (LNG) for export, and offshore oil operations (among other the Bonga field). This case focuses on Shell's onshore activities in the Niger Delta. This is the area where most environmental problems are manifested (such as oil spills and gas flares) and where oil production has caused severe conflicts. 

The Niger Delta, resembling the South of Nigeria, is made up of fertile wetlands. It is one of the most densely populated regions of Africa. It has more than 30 million inhabitants. Subsistence farming and fishing are the mainstay of the people. The number of communities hosting oil / gas facilities in the Niger Delta is estimated at 1,500.[4]

Map of Nigeria

The SPDC-activities in the Niger Delta, as operated by Shell, are spread over some 30,000 square kilometres (about three-quarters the size of the Netherlands) and include a network of more than 6,000 kilometres of flowlines and pipelines, 86 oil fields, 1,000 producing wells, 68 flowstations, 10 gas plants and two major oil export terminals at Bonny and Forcados.[5]

Nigeria is a poor en corrupt country. It ranks number 142 (out of 169 countries) in the Human
Development Index of the United Nations [6] and number 134 (out of 178 countries) in the Corruption Perceptions Index.[7] Over-reliance on crude oil and gas (accounting for about 95 per cent of foreign earnings and over 80 per cent of federal budget) has weakened investment in other vibrant sectors of the economy, including agriculture. The oil sector employs just one per cent of the labour force. Many reports and studies have reiterated that, despite its vast resources, Nigeria ranks among the countries with the widest gap between their poorest and richest citizens. Its 54.4 percent official poverty prevalence translates to about 70 million poor persons. Within the last decade the traditional challenges facing Nigeria – mass poverty and unemployment, absence of transformation and prevalence of high inequality – have remained largely unchanged.[8] 

2a) Oil Spills

Oil spills in the Niger Delta
 
Oil spills from oil installations (pipelines, flowlines, well-heads, flowstations, storage tanks etc.) occur at a regular basis in the Niger Delta, some ten times a week. According to the National Oil Spill Detection and Response Agency (NOSDRA), oil companies reported 2,054 cases of oil spill incidents (spills of more than one barrel) between June 2006 and June 2010.[9]
 

Human suffering 

Amnesty International has concluded that the oil companies in the Niger Delta are linked to violations of several internationally recognized human rights as stipulated by the United Nations. These rights comprise the right to food, the right to work, the right to an adequate standard of living, and the right to health and a healthy environment.[10] Audrey Gaughran, Amnesty International’s Head of Business and Human Rights, describes the impacts of oil spills on communities as follows: “People living in the Niger Delta have to drink, cook with and wash in polluted water. They eat fish contaminated with oil and other toxins – if they are lucky enough to be able to still find fish. The land they farm on is being destroyed. After oil spills the air they breathe smells of oil, gas and other pollutants. People complain of breathing problems and skin lesions – and yet neither the government nor the oil companies monitor the human impacts of oil pollution”.[11]

 

Shell's spill data 

Shell experiences some 150 to 200 oil spills each year[12], spread out over the Niger Delta and affecting several communities.

According to Shell, the volume of oil spilled from Shell-installations in the Niger Delta has been increasing over the years:
- In the period 1989-1994 (six years), SPDC recorded a total of 37,000 barrels of oil spilled. Shell attributed 72% of this volume to ageing facilities and operational failures, and 28% to sabotage.[13]
- Over the period 1999-2004 (six years), Shell's spillage totalled around 169,000 barrels. Shell
attributed 63% of this volume to sabotage/theft by third parties and 27% to its own operational
failures.[14]
- Over the period 2005-2010 (six years), the total spillage amounted to 299,000 barrels. Shell claims that 72% of the spillage was due to sabotage/theft by third parties.[15]
 

Figure: Development of oil spill volumes from Shell-installations in Nigeria, according to Shell

Over the years, Shell has been using some other figures. For example, during 2009 the company stated that some 85% of the volumes of oil spilled was caused by sabotage/theft.16 Sometimes Shell related this percentage to 2008, sometimes it would not specify the time period. It was not until May 2010 that Shell in Nigeria revealed that its updated data for the year 2008 showed that 48% of the volume was caused by sabotage/theft.[17]
 
Probably due to ongoing public pressure, in 2011 Shell has started to publicly register all the spills that have occurred in the Niger Delta, including photographs and the report by the Joint Investigation Team.[18] The Joint Investigation Team (JIT) is the team that visits the site, after a leak occurs. The team comprises government agencies, SPDC and representatives of impacted communities. It determines the spread, the volume and the cause of the spill. During 2008 and 2009, SPDC spilled more than 100,000 barrels of oil.[19] During 2010 (27,580 barrels) and 2011 so far (around 6,000 barrels as of 28 April), the volume has decreased. This can partly be explained by the amnesty given to militants in Bayelsa State and Delta State in late 2009. Since then, explosions of pipelines have decreased drastically.[20]
 
Oil spill data Shell challenged
 
In January 2011, Amnesty International and Friends of the Earth International filed a complaint against Shell at the Dutch and UK National Contact Points dealing with the OECD Guidelines. They claim that Shell's misleading and incomplete reporting about oil spills in the Niger Delta constitutes a breach of the OECD Guidelines, specifically Sections III (Disclosure) and VII (Consumer Interests) as well as Section V (Environment). The complainants state that the oil spill investigation system – on which Shell bases its data - is totally lacking in independence. Both organisations found that in many cases oil companies have significant influence on determining the official cause of a spill. The complainants also allege that Shell, in several communications, has used misleading figures (70%, 85%, 90% and 98%) to attribute pollution and contamination to sabotage. According to Amnesty International and Friends of the Earth International, the implications of Shell’s repeated claims are both serious and negative for the communities of the Niger Delta. Firstly, when spills are classified as the result of sabotage Shell has no liability or responsibility with respect to compensation for damage done to people or their livelihoods. Secondly, these figures have tended to be used by Shell to deflect attention away from legitimate criticism of its own environmental and human rights impact in the Niger Delta and as such to mislead key stakeholders – including consumers of Shell’s products and investors in the company.[21]

I think you need a bigger bucket mate!

 
The OECD Guidelines are meant for multinational enterprises that are based in OECD member countries, accession candidate countries and enhanced engagement countries, and/or with activities in these countries. The United Kingdom and the Netherlands are OECD member countries; Nigeria is not present in any of the country categories mentioned above.[22] The OECD guidelines cover standards on labour rights, human rights, the environment, consumer protection, and corruption.[23] National Contact Points (NCPs) handle the complaints from organizations and individuals concerning alleged violations of the guidelines. At the end of mediation between the bringer of a complaint and the defendant company, the NCP may publish a final statement with its conclusion on the alleged violation of the OECD Guidelines. It used to take a few years before NCPs would come to a final statement. Recently, however, NCPs have promised to speed up their process.
 
Pending court case in the Netherlands 

In November 2008 and May 2009, four Nigerian citizens and Friends of the Earth Netherlands/Nigeria filed a civil lawsuit against Shell in a Dutch court. The plaintiffs in the “People of Nigeria versus Shell” lawsuit accuse Shell of negligence with regard to the prevention and proper clean-up of oil spills. The four Nigerians, farmers and fishers, reside from the villages of Goi, Oruma and Ikot Ada Udo in the Niger Delta. Oil from Shell-installations has leaked onto their fields and into their fish ponds. The plaintiffs want Shell to prevent any spills in the future and to clean up the remainder of the pollution. They want to fish and farm once again.[24]

Protests against Shell

It is the first time that a Dutch company's liability for pollution overseas is asserted in a Dutch court. The following Shell-companies were summoned: Royal Dutch Shell plc (head quartered in the Netherlands); Shell's subsidiary in Nigeria; the predecessors of Royal Dutch Shell (Koninklijke Olie BV en Shell Transport and Trading). In May 2009, Shell stated that its subsidiary in Nigeria is a Nigerian company, and thus not required to appear before a Dutch court. There was a court session on this matter. In December 2009 and February 2010, the court dismissed Shell’s arguments that the Dutch court would not be authorised to rule on its Nigerian subsidiary. The plaintiffs had overcome the first hurdle in this groundbreaking case.
 
Presently pending is the issue on Shell's exhibition of evidence papers. Much information in relation to the oil spills that occurred near Goi, Oruma and Ikot Ada Udo resides within Shell. Already in May 2008, the lawyer representing the farmers and Friends of the Earth had asked Shell to disclose these evidence papers. Some papers were handed over by Shell, and many papers were not. Therefore, in March 2010 the lawyer asked the court to force disclosure of the evidence papers by Shell. Shell replied by saying that there are several formal reasons why it can't or won't hand over the evidence papers, and that it might appeal a decision by the court on this matter. On 19 May 2011, the court session will take place, with a decision expected in summer 2011. Most probably at the beginning of 2012 the court will finally be able to focus on the core issue: has Shell been negligent with regard to the oil spills?[25]
 
Shell's double standard 

What Nigeria's flag might look like with Shell

Asset integrity work is a term for improving the quality of the pipelines, well-heads, flowlines,
flowstations and terminals to get the oil out of the ground and export it. In 2007, the managing director of SPDC, Basil Omiyi, was quite clear about the integrity of SPDC's assets: “We do (...) have a substantial backlog of asset integrity work to reduce spills and flaring.”[26] There have been a few attempts to get to know more about the (poor) status of Shell's assets to reduce spills, and its plans for improvement.
 
In 2004, questioned by the NGO Christian Aid, a Shell Vice-President admitted that the overall picture of the age and condition of SPDC's pipelines was incomplete. He promised improvements in transparency.[27] These promises have not been met.
 
December 2007, Olav Ljosne, Shell’s former Regional Director Communications Africa, replied to an email by U.S. professor Richard Steiner: “The Asset Integrity Reviews are internal Shell operating documents designed to provide information on the state of our assets and improvements that are necessary - and are regarded as strictly confidential and business sensitive.”
 
Late 2010, Professor Steiner concluded in a report that Shell Nigeria continues to operate well below internationally recognized standards to prevent and control pipeline oil spills. It has not employed the best available technology and practices that it uses elsewhere in the world – a double standard. The author stated that, while the injured environment in the Gulf of Mexico (due to the BP Deepwater Horizon disaster in April-July 2010) stands to receive substantial funding and government attention, such environmental damage in the Niger Delta is left largely unattended. Clearly this constitutes another double standard, the author proceeds, and far greater attention needs to be paid to the chronic long-term damage from oil and gas operations in the Niger Delta.[28]

2b) Primitive Gas Flaring

The gas flares of Nigeria 

Below the surface, crude oil is often found mixed with natural gas. The natural gas must be separated from the oil during extraction. Technically the gas can easily be captured and utilized. In Nigeria, however, the associated gas is primitively flared in the open air. Rushing for oil exports in the 1960s and 1970s, Shell and the Nigerian government only built oil pipelines. They didn't care about infrastructure to utilize the valuable natural gas: just burn it. There are currently approximately 100 continuously burning gas flares in the Niger Delta and just offshore, some of which have been burning since the early 1960s.[29]
 

Based on satellite data, the World Bank estimates that the amount of gas flared by Nigeria has
reduced from 21.3 billion m3 in 2005 to 15.2 billion m3 in 2009, a decrease by 29%. In 2010, Nigeria represented 11% of global gas flares. Only one country flared more gas than Nigeria: Russia.[30] In 2009, Russia flared about three times more gas than Nigeria. However, it produced about 4.5 times more oil than Nigeria. Per litre of oil produced, Nigeria exceeded Russia in flaring gas.[31]
 
Mainly due to the flaring and venting of gas, the greenhouse gas emissions of crude oil production in Nigeria are among the world's highest.[32] A recent study, at the request of the European Commission, refers to two different studies that have calculated the emissions of Nigerian oil production. The first study puts the oil production emissions at 16.8 grams of CO2 per megajoule[33], the second one is quoted as putting the emissions at 21.1 grams.[34] The study at the request of the European Commission, puts the most likely average emissions of conventional oil production for the European market at 4.8 grams of CO2 per megajoule. So, oil production in Nigeria is considered to cause 3.5 to 4.4 times more greenhouse gases than average conventional oil production.[35]
 
Greenhouse gases are not the only reported problems with respect to gas flares:
- The United Nations Development Programme has declared that gas flares destroy natural resources and local livelihoods, alienate people from their land, and “adversely affect human development conditions”.[36]
- In November 2005, a federal high court in Benin ordered Shell to stop gas flaring near the village of Iwherekan, after the community had applied for an order enforcing or securing the enforcement of their fundamental right to life and dignity of human person. The judge ruled that gas flaring is a “gross violation” of the constitutionally-guaranteed rights to life and dignity, which include the right to a “clean poison-free, pollution-free healthy environment”. Shell appealed and the case is still pending.[37]
- The Nigerian Gas Association (NGA) has estimated that Nigeria has lost about USD 72 billion in revenues (about USD 2.5 billion annually) in the period 1970-2006 period due to not selling, but burning the gas.[38]
- In a report published in 2005, the Climate Justice Programme and Environmental Rights Action / Friends of the Earth Nigeria have calculated the yearly health impacts from gas flares in one of the Niger Delta states: Bayelsa. The particulate matter and benzene emissions from gas flaring at the 17 onshore flowstations in Bayelsa state would likely cause, each year, at least: 49 premature deaths, 4,960 respiratory illnesses among children, 120,000 asthma attacks and 8 additional cases of cancer.[39] SPDC declares, however, that there is no evidence to support the argument that flaring damages the health of local communities.[40]
- The federal government of Nigeria states that heat stress and acid rain from gas flaring continue to degrade the ecosystem.[41]
- Local communities have reported numerous other impacts of the gas flares, such as: the eyes may turn red; there is never any darkness; corrugated roofs corrode more quickly; there is constant noise from the gas flares; the walls of houses crack due to ground vibrations caused by the gas flares.

Gas Flares can be romantic too (0.o)

Shell's Nigerian flares: mystifying messages 

Estimating from what is stated in Shell's Sustainability report 2010, SPDC (government share 55%, Shell share 30%) must have released about 7 million tonnes of greenhouse gases (measured in CO2 equivalents) through gas flaring during the year 2010.[42] This is equivalent to the annual greenhouse gas emissions of about 3 million cars driven on roads in Europe.
 
Shell states that in the period 2002-2010 SPDC's flaring has decreased by about 50%.[43] The company mentions two reasons for this:
- Since 2000, SPDC has spent over USD 3 billion on installing associated gas gathering infrastructure at 32 flowstations. These projects reduced continuous flaring by more than 30%.[44] This 30% result was already achieved in 2005. There has been little progress from 2006 onwards.
- The rest of the decrease is a result of reduced production since 2006 in Nigeria[45] and, to a lesser extent, the installation of gas gathering equipment in 2010.[46]
 
In 2007, SPDC promised “to shut down production from any fields where there is no prospect of a solution for gathering the associated gas by 2009”.[47] In May 2009, SPDC stated that it would need to invest another USD 3 billion to gather some 85% of the total associated gas produced in its operations.[48] Wikileaks revealed a statement in October 2009 by the Shell Executive Vice President (EVP) for Shell Companies in Africa, Ms. Ann Pickard. She stated that the SPDC-flares could be out by 2011. SPDC would have to spend USD 4 billion to do this, but the Nigerian government would also have to fund its part and that was a risk. Shell would shut in oil production in fields where it is uneconomic to end gas flaring.[49] In 2011, Shell stated that it still needed funding from partners to execute projects that would bring flaring down by 90%.[50] In a letter dated 31 December 2008, the government directed SPDC and other oil companies to continue with production (and therefore flaring) until instructed otherwise.[51] During this process of oil extraction the oil fields will be running out of oil, making investments in gas gathering infrastructure less economically attractive. Thus, gas might be flared to the bitter end of oil operations. 

In May 2010, SPDC announced that it was working on a series of projects totalling investments of more than USD 2 billion. The Managing Director of SPDC, Mutiu Sunmonu, said: “SPDC is pleased to be able to restart work on delayed projects and begin new ones to further reduce gas flaring in our operations to the lowest practical volume. Security and funding conditions permitting, we have a real chance to progress our flaring reduction plans through these key projects.”[52] SPDC did not provide for a time-line as to when the facilities would be fully functioning, and how much associated gas would be gathered. By mid January 2011, three additional associated gas gathering sites had been completed.[53]
 
As of this moment, it is not clear how the gas flare picture of SPDC will evolve in the near future. In 2010, Shell's flaring rose by 32% compared to 2009. This was mainly due to increased oil production in Nigeria and the start of its oil production at the Majnoon field in Iraq.[54] In 2010, Shells oil production in Nigeria rose to 302,000 barrels of oil per day, up from 231,000 barrels of oil per day in 2009.[55] Whenever the security situation allows SPDC to produce more oil, its gas flaring might increase again. On the other hand, the series of projects SPDC is working on at present might decrease gas flaring to some extent.
 
Over the years, SPDC has been spreading mystifying messages with regard to its flaring operations. The company has never shown a breakdown of flowstations where gas is flared. It has also never publicised a detailed plan to achieve a flare-out status. Like with oil spills, the company has never made a serious effort to get the facts clear with regard to the damages communities in the Niger Delta have suffered and still suffer.
 
Meanwhile, the Nigerian government may be busy with some deadlines to end gas flares, as it has been since the 1980s. Experience shows that these efforts can't be taken too seriously.[56] 

2c) Conflict and Corruption

Shell assesses its contribution to conflict 

With regard to conflict in the Niger Delta, Shell often profiles itself as one of the main victims. In July 2009, the company wrote: “We hope people recognise that the employees and contractor staff of [SPDC]…have to carry out their work against a backdrop of crime, violence, threats of kidnap and community actions.”[57] Indeed, the Niger Delta is an extremely difficult environment for any company to operate.

 
However, one could also assess how Shell's activities might contribute to conflict. In 2002 and 2003, Shell commissioned such research. The resulting report, released in December 2003, was written by three external conflict resolution experts. The insights in the report drew “heavily on the experiences of more than 200 individuals consulted during its preparation.”[58] Shell had declined to publish the independent report, but it was leaked in June 2004. The report states that “after operating in the Niger Delta for over 50 years, SCIN [Shell company in Nigeria] is an integral part of the regional conflict environment (….) and the manner in which the SCIN operates and its staff behave creates, feeds into, or exacerbates conflict.”[59]
 
Examples of fuelling conflict 

The report listed several examples of how oil companies fuel underlying factors causing conflict in the Niger Delta:
- The role of the oil companies in fuelling corruption is significant. Numerous examples can be found in how companies seek to maintain their license to operate through short-term cash payments, giving in to monetary demands following facility closures, exorbitant homage payments, use of ghost workers, surveillance contract implementation, contracting procedures, employment processes, and kick-back schemes in community development projects.
- The role of the oil companies in fuelling perceived or actual discrimination is largely related to unclear communications, poor transparency, the non-fulfilment of obligations, as well as corporate arrogance.
- The role of the oil companies in fuelling inequitable distribution of revenue and infrastructure is largely related to the non-fulfilment of obligations.
- The role of the oil companies in fuelling social disintegration largely comprises the design of the benefit distribution process that allows groups to fight over access to cash, jobs, contracts and power.
- It is important to note that accusations abound of “divide and rule” tactics and an active role of oil company officials in fuelling specific communal conflicts. Whereas this is likely to be the case where individuals or small groups of oil company staff are engaged in criminal activities, there is no evidence to suggest a company-wide “conspiracy” or manipulation of conflicts in the Niger Delta.

Pipeline in Nigeria bombed

- The role of the oil companies in fuelling crime and criminal cartels is largely related to corruption in the contracting process and the payment of ransoms that make crime lucrative.
- Beyond the impact of the oil industry on the economy (“Dutch disease”) oil companies do not directly fuel youth unemployment. However, the interaction between companies and youth groups who control employment at a community level is important. Contracts that routinely contain inflated and imaginary elements, excessive numbers of workers and payment, kick-backs, etc. serves to corrupt youth.[60]
 

Shell may be indirectly responsible for many deaths

 
The report was published in 2003, and it was meant to assess how SCIN can contribute to conflict resolution and sustainable peace in the Niger Delta. For this report, due to lack of available information it is not examined to what extent Shell has altered the practices described above presently.

Co-opting militants 


In 2006, it became clear that some of the militant leaders linked to the attacks on oil facilities in the Niger Delta earn tens of thousands of dollars from contracts with Shell. Leaders of the Federated Niger Delta Ijaw Communities (FNDIC), involved with violent activities in Delta State in 2003, later ran contracting companies working with the oil majors. The payments included “incident free” bonuses. Officials told the Financial Times that subcontracting work to local strongmen is one method some oil companies have used to buy off militants threatening attacks on oil facilities in the Delta.[61] In September 2008, the Shell Executive Vice President (EVP) for Shell Companies in Africa, Ms. Ann Pickard, said that Rivers State Governor Rotimi Amaechi lacked the connections among Rivers State militant leaders to successfully co-opt them as the governors in Delta and Bayelsa states have done with militants in their states.[62] Co-opting militants seems to be one of the tactics to (temporary) reduce conflict. However, it can also be seen as a measure that serves conflict and corruption.
 
Corruption 

On paper, Shell's stance against corruption is clear. Its Code of Conduct gives employees detailed instructions on the behaviour Shell's Business Principles require. With regard to bribery and corruption the Code of Conduct contains the following principles:
- Never offer, pay, make, seek or accept a personal payment, gift or favour in return for favourable treatment, to influence a business outcome or to gain any business advantage.
- Ensure people you work with understand bribery and corruption is unacceptable.
- Tell Shell if you suspect or know of corruption in Shell or in any party (company or individual) Shell does business with.[63]
 

No comments!

Relevant staff must undergo specific training in areas such as combating bribery and corruption.
Shell's global helpline and supporting website allow staff and business partners to report concerns confidentially. In 2009,165 violations of the Code of Conduct were reported (204 in 2008). As a result, Shell stated that it has ended its relationships with 126 staff and contractors (138 in 2008).[64]
 
Corruption is rife in the Niger Delta. On 27 January 2009, Shell's regional executive vice president for Africa, Ann Pickard, met with the U.S. ambassador in Nigeria in Abuja, Nigeria. During the meeting, she stated that corruption in the Nigerian oil sector was worsening by the day. Pickard said that Nigerian entities control the lifting of many oil cargoes and there are some “very interesting” people lifting oil (People, she said that were not even in the industry). As an example she said that oil buyers would pay Nigerian National Petroleum Corporation (NNPC) General Managing Director Yar'Adua, (Note: not related to President Yar'Adua. End Note), Chief Economic Advisor Yakubu, and the First Lady Turai Yar'Adua large bribes, millions of dollars per tanker, to lift oil. Pickard also said that a former associate of hers had told her that he had been present when Attorney General Aondoakaa had told a visitor that he would sign a document only if the visitor paid USD 2 million immediately and another USD 18 million the next day.[65]
 

Shell fined USD 58 million 

The extent of Shell's involvement and practices with regard to corruption in the Niger Delta is not known. Late 2010, Shell paid a total of USD 58 million to U.S. and Nigerian authorities to head off the threat of legal action for corruption. SNEPCO, a 100% Nigerian subsidiary of Royal Dutch Shell, had paid approximately USD 2 million in the period 2004-2006 to its subcontractors with the knowledge that some or all of the money would be paid as bribes to Nigerian customs officials to import materials and equipment into Nigeria in relation to the offshore Bonga project. SNEPCO and the U.S. based Shell International Exploration and Production Inc. employees were aware that as a result of the payment of the bribes, official Nigerian duties, taxes, and penalties were not paid when the items were imported.

In November 2010, the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC) announced that Shell had agreed to pay USD 48 million to settle investigations on violation of the U.S. Foreign Corrupt Practices Act (FCPA).[66] The Deferred Prosecution Agreement Shell signed with the U.S. Department of Justice (DOJ) still requires Shell to report to the DOJ, promptly, any credible evidence of questionable or corrupt payments.[67] Separately, Shell also agreed to pay USD 10 million to the Nigerian authorities.[68]
 
Shell started an internal research in 2007, and found that a small number of its employees knew or should have known of the incorrect payments. These employees have been subject to disciplinary sanctions or were fired, according to the company.[69]
 

The Ibori case 

In November 2007, it became publicly known that the UK Metropolitan police was investigating alleged money laundering by James Ibori, a former governor who ran the oil-rich Delta state until May 2007. According to a witness statement, the former governor had used banks in Britain to stash GBP 20 million in stolen funds during 2005-06. Since 2005 funds from Nigeria, intended for education and engineering projects, “[were] allegedly stolen by James Ibori [and] have been laundered through the UK banking system”. Over three years, Shell, Chevron and the Nigerian National Petroleum Company paid GBP 3.6 million into a Barclays account controlled by Ibori for renting out houseboats to foreign employees.[70] Nuhu Ribadu, chairman of Nigeria's Economic and Financial Crimes Commission (EFCC), which worked closely with the British investigators, told the Financial Times that he was “investigating huge payments made by Shell and Chevron to MER Engineering” over the hiring of the houseboats. Shell admitted that MER was on its register of approved contractors. It declined to elaborate on the amount and type of work done by MER.[71]
 
A leaked report from the Nigerian Army Intelligence Corps, dated November 2007, linked James Ibori also to thousands of arms stolen from governmental storage depots for onward transfer to Niger Delta militants from the year 2000 to 2007.[72]
 
Mr. Ibori had close ties to Umaru Yar'Adua, the former president of Nigeria. Mr. Yar'Adua sacked Nuhu Ribadu, the head of the EFCC, after 170 charges were brought against Mr. Ibori. In a very
questionable Nigerian court case, in December 2009, a judge dismissed all cases.[73] A Wikileaks cable sent from the UK embassy in London in May 2009 stated that Attorney General Aondoakaa had directly told the UK that the Nigerian Government would not begin negotiations on a prisoners transfer agreement, unless the UK would drop its case against James Ibori and his associates.
 
Mr. Ibori denies all charges against him. He was arrested in Dubai in May 2010 after the intervention of the global police agency Interpol. Dubai's highest court ruled in December 2010 that he could be extradited to Britain to face corruption charges. Mr. Ibori's sister and his alleged mistress are already convicted of money laundering and sentenced to five years in UK prison in June 2010. Mr. Ibori's wife and his UK lawyer face similar charges.[74]
 
Shell and the murder of Ken Saro-Wiwa 

Ken Saro-Wiwa (10 October 1941 - 10 November 1995) was a well known Nigerian author and
television producer. He was also president of the Movement for the Survival of Ogoni People
(MOSOP), an organization set up to defend the environmental and human rights of the Ogoni people in the Niger Delta. In January 1993, Saro-Wiwa gathered 300,000 Ogoni to march peacefully to demand a share in oil revenues and some form of political autonomy. MOSOP also asked the oil companies, especially Shell, to begin environmental remediation and pay compensation for past damage. In May 1994, Mr. Saro-Wiwa, who had been briefly imprisoned several times before, was abducted from his home and jailed along with other MOSOP leaders in connection with the murder of four Ogoni leaders. Amnesty International adopted Saro-Wiwa, a staunch advocate of non-violence, as a prisoner of conscience. Meanwhile, the Nigerian military took control of Ogoniland subjecting people to mass arrest, rape, execution and the burning and looting of their villages. In October 1995 a military tribunal tried and convicted  Saro-Wiwa of murder. Governments and citizens' organizations worldwide condemned the trial as fraudulent, and urged the Nigerian dictator Abacha to spare Saro-Wiwa's life. They also called upon Shell to intervene. On 10 November 1995 Saro-Wiwa and his eight codefendants
were hanged.[75]

In 1996, the Center for Constitutional Rights and EarthRights International and other human rights lawyers sued Shell in U.S. court for their role in the repression of the Ogoni and the executions of the “Ogoni Nine”. The case Wiwa vs. Shell charged Shell with complicity in human rights abuses against Ogoni people in Nigeria. Shell financed, armed, and otherwise colluded with the Nigerian military forces that used deadly force and conducted massive, brutal raids against the Ogoni, with a motive of restarting oil operations on Ogoni territory. Shell was also allegedly involved in a strategy that resulted in the executions of the nine Ogoni leaders. The plaintiffs in the case included surviving family members of the murdered Ogoni leaders, Owens Wiwa (Ken Saro-Wiwa’s brother) who was detained and tortured for his activities on behalf of the Ogoni; and two other (relatives of) victims of violence by Nigerian troops. After thirteen years of litigation, in June 2009 the case against Shell ended in a USD 15.5 million settlement for the plaintiffs.[76]
 
The settlement meant that the testimonies by witnesses were never made public. In December 2010, The Independent on Sunday gained exclusive access to witness accounts that were to be used in evidence in the case Wiwa vs Shell. One of the key witnesses due to testify was Boniface Ejiogu, Lt- Col Okuntimo's orderly in the Internal Security Task Force, a coalition of army, navy and police. Mr Ejiogu described how, just days before the Ogoni elders were murdered, he drove with Lt-Col Okuntimo to Shell's base in Port Harcourt, where seven large bags of money were received. On another occasion, Mr Ejiogu witnessed four bags being given by a Shell security official to Lt-Col Okuntimo at the official's house late at night. Another witness, Raphael Kponee, also due to testify, was a policeman working for Shell. On a different occasion, he saw three bags being loaded into Lt- Col Okuntimo's pick-up truck by his driver and another driver in front of the security building at the Shell base.
 
Mr Ejiogu also offers compelling evidence as to who may have murdered the four Ogoni elders at a meeting on 21 May 1994. Saro-Wiwa was due to speak but was turned away by the military. Mr Ejiogu said he heard Lt-Col Okuntimo tell his task force commander to “waste them... in the army you waste them is when you are shooting rapidly”. Within 24 hours Saro-Wiwa was arrested and charged with the murders. A Shell spokesman replied to the allegations: “Allegations concerning Okuntimo and Shell are not new. There is a lack of any credible evidence in support of these allegations. Shell Petroleum Development Corporation and Shell at the time spoke out frequently against violence and publicly condemned its use.”[77]