Challenges of Chevron's GMOU Implementation in Itsekiri Communities of Western Niger Delta
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Challenges of Chevron’s GMOU Implementation in
Itsekiri Communities of Western Niger Delta
Stephen A. FALETI
Peace & Conflict Studies Programme, Institute of African Studies, University of
Ibadan
Abstract
One of the key challenges that multinational oil companies working in various
communities in Nigeria’s oil belt contend with on a daily basis has to do with finding the
right development and relationship management frameworks that will facilitate a
conducive business environment and induce a collaborative disposition by stakeholders
in general and host communities in particular. This challenge is particularly marked in
the case of Itsekiri communities in Delta state, Nigeria. While CHEVRON’s Global
Memorandum of Understanding (GMOU)—a stakeholder engagement cum development
framework—which was adopted in 2005 is in operation in a total of eight (8) community
clusters dubbed “Regional Development Councils” (RDCs) cutting across both eastern
and western Niger Delta, it appears to have disaggregating effects in Itsekiri RDC. The
problems associated with its implementation generally have been compounded by mixed
reactions and seemingly unbridgeable crisis over selective patronage and non-
implementation of a 2002 agreement between Chevron Nigeria Limited (CHEVRON)
and Ugborodo, a prominent Itsekiri community. Perceptions flowing from these have, in
turn, weakened its projected efficacy as a model of development that claims to put the
community in the driving seat in matters relating to its infrastructural and human capital
development.
Keywords:
Multinational oil companies; relationship management; development; Niger Delta.
INTRODUCTION
Multinational corporations (MNCs) are large companies that conduct their business
operations in several states. For Grosse, insofar as a firm has sales operations in
multiple countries, production in multiple countries, or some other permutation of
international business activities physically present in multiple countries, it is2
1
multinational . As business entities established primarily for the pursuit of profits for
investors, they tend to establish subsidiaries in countries where conditions are most
favourable to their business operations and by extension, to the bottom-line (profit).
By the end of the 20th century, MNCs have succeeded in breaking former
government monopolies in various key sectors of national economies across the world
such as telecommunication, power generation and transport and they have made
successful forays into international markets.
Consequently, MNCs dominate world trade in goods and services in sectors
ranging from mining, manufacturing and energy to modern financial and
communication services of all kinds. In terms of magnitude of their operations,
UNCTAD’s World Investment Report 2004 reveals that there are currently 61,000
2
TNCs worldwide with over 900,000 foreign affiliates at least. It is estimated that
3
they account for 70% of the annual total foreign trade estimated at $ 7 trillion and
4
that their annual turnovers dwarf many national economies . For example, in 2000,
the combined revenues of only five corporations were more than twice as important
5
as the combined GDP of the 100 poorest countries . In fact, 51 of the 100 world’s
6
largest compagnies are TNCs whereas only 49 are sovereign entities .
MNCs have come to be seen more important in global affairs than many states in
which they operate as economic actors. On the one hand, they have the ability to
stimulate the flow of investment, technology, profits, and through this, the local
economy. Even as their number continues to increase, they have acquired such
prodigious influence that they not only have the ability to escape and dictate state
regulation, but also influence the destinies of national economies in the developing
world; influence the policies of governments worldwide; and cause the first world and
7
other stakeholders to bend to their demands . However, Hanakova observed that their
burgeoning powers and influence have not been matched by the minuscule level of
responsibilities that they have assumed within their spheres of influence over time:
“There is an evident disproportion between the numerous rights enjoyed by transnational
corporations and the scarce obligations undertaken by them. Given their transnational
1
Robert Grosse, “Theories of the Multinational Enterprise: Diversity, Complexity and Relevance”;
Advances in International Management, Volume 16, 2004: 83
2
UNCTAD, World Investment Report (2004), 38-39, available at
.
3
See for example, UNCTAD (2003), Multinational corporations (MNCs) in Least Developed Countries
(LDCs); Hoos, J. (2000), Globalization, Multinational Corporations and Economics, Budapest:
Kiado; “The Power of the Transnationals”, The Ecologist 22 (4) (July/August 1992); Korten, D. C.
(2001), When Corporations Rule the World; Bloomfield, Con.: Kumarian Press/Berrett-Koehler
Publishers Inc.; and Barnet R.J. & Müller R.E. (1974) Global Reach: the Power of the Multinational
Corporations, London: Jonathan Cape.
4
Jem Bendell, ‘Making Corporations work for Development: Rethinking corporate social responsibility,
id21, Insights # 54, April 2005.
5
Peter Utting, “Geneva 2000: The Next Step in Social Development”; United Nations Research Institute
for Social Development Occasional Paper 2, January 2000 (Eletronic version)
6
Sarah Anderson & John Cavanagh, Top 200: The Rise of Global Corporate Power, Corporate Watch,
at .
7
Macleod, S. & D. Lewis, ‘Transnational Corporations: Power Influence and Responsibility’; Global
Social Policy, Vol. 4(1) 2004: 773
nature, (they) have been successfully avoiding national regulations of both their home
and host states, and they are seeking to operate in countries with the lowest standards so
8
as to increase their profits” .
The catalogue of accusations is revealing. For Utting much of big business has
pursued investment, production and marketing strategies that have resulted directly in
extensive waste and degradation of natural resources or encouraged consumption
9
patterns that do the same . It is alleged that business practices are destroying life on
earth and are responsible, directly or indirectly, for the most dramatic human impacts
on the earth's ecosystems because operations are conducted with too little thought in
terms of environmental sustainability, interests of fence line or host communities.
It has also been said that MNCs, their contractors and sub-contractors easily
violate lax or non-efficient legal regulations or take advantage of low legal standards
10
in their host states in order to make profit . This has led in some cases to perception
of MNCs as pernicious elements in the world economic system that are developing as
alternative centres of power to democratically elected governments and working to
reinforce unequal distribution of wealth between the industrialised and less developed
countries (LDCs).
The paradox of MNCs existence is such that in some places where they operate,
their interventions or presence have often proved crucial to local development, while
in others, they are implicated in poverty, gross violation of human rights, and
environmental destruction. Questions have also been raised on whether business
facilitates or impedes local development spurning the prolonged debate on the nature
11
of oil-led development in resource-rich countries . While some have argued, like
Friedman, that the sole responsibility of business is the exclusive pursuit of profit
insofar as this is done without infringing local laws and regulations, others are
pushing for a closer engagement between business and society because it is in the best
interest of business to respond positively to the development needs of the social
milieu within which they operate. This is the basis of the whole discussion on
corporate social responsibility (CSR).
Corporate Social Responsibility (CSR) is an amorphous term that some have
interpreted as a culture; an alternative to government and state failure; and as a
12
generic term that addresses the role of business in society . In contemporary use,
CSR requires business managers to balance the interests of all stakeholders into
13
operation planning . The notion of Corporate Social Responsibility thus focuses on
8
Hanakova, L. Accountability Of Transnational Corporations Under International Standards; LLM
Thesis, University of Georgia School of Law (2005)
9
Utting, ibid.
10
Sarah Joseph, “An Overview of the Human Rights Accountability of Multinational Enterprises”, in
Menno T. Kamminga & Saman Zia-Zarifi eds. (2000) Liability of Multinational Corporations under
International Law. The Hague.
11
Kolodner, E., Transnational Corporations: Impediments or Catalysts of Social Development?
Occasional Paper No. 5; World Summit for Social Development, UNRISD Geneva, 1994.
12
Blowfield M. & D. Frynas, “Setting New Agendas: Critical Perspectives on Corporate Social
Responsibility in the Developing World”; International Affairs 81, 3 (2005), pp. 500-503
13
See, Schmidheiny, S., R. Chase and L. DeSimone (1997), “Signals of Change: Business Progress
towards Sustainable Development”; Geneva: World Business Council for Sustainable Development.4
issues of business ethics and principles and there is considerable interest in the
concept of corporate social performance, which includes motivating principles,
14
processes, and observable outcomes and impacts on stakeholders .
According to Robertson, the Deputy Chairman of ChevronTexaco, CSR is about
developing a corporate strategy founded on constructive interaction and dialogue with
15
a range of stakeholders according to core values . The main challenge of CSR is how
to manage complexities arising from the corporation’s interaction with host
communities, identify and build relations with critical stakeholders, and balance
competing demands. Because multinational companies operate in different contexts,
and are confronted with different demands, it is almost inevitable that their CSR
practices will reflect diversity across communities and cultures.
Most management scholars believe the firm has an obligation to work for the
social improvement of its immediate environment by engaging in different forms of
philanthropy. As Frederick puts it, “the fundamental idea embedded in ‘corporate
social responsibility’ is that business corporations have an obligation to work for
social betterment” that runs on the tracks of two closely related principles: the
“Charity Principle” (or the obligation of the rich to extend comfort to the less
fortunate) and the “Stewardship Principle” (or responsibility of business managers as
guardians of society’s resources to attend to the interests and needs of other groups
whose fate depend heavily and directly on business decisions and policies insofar as
16
doing so will not impede the bottom line) .
The core precepts of CSR listed by Frederick suggest that corporate power begets
a responsibility of care; respect for law and rules of the game that govern marketplace
relations; an attitude of “enlightened self-interest” that encourages a long-run view of
17
profits; and a socially responsible posture for greater, all-round stability . Although
18 19
Ackerman as well as Sethi have both argued earlier that responsiveness is a more
appropriate measure of responsibility, Wood is of the opinion that whether in pursuit
of social obligations, in response to pressures or in pursuit of values, CSR is
normatively about both desirable and undesirable behaviours and patterns of
behaviours in the relationship between firms and society. It addresses factors that
motivate action by obliging firms to assume and fulfil responsibilities beyond those
dictated by marketplace relationship. As she puts it:
14
See, Hopkins, M., “Defining Indicators to Assess Socially Responsible Enterprises.” Futures, Vol. 29,
No. 7, 1997, pp. 581-603.
15
Robertson, Peter (2004) “Petroleum, Poverty and Profits: Changing Philosophies of Community
Engagement” Remarks at the Eradicating Poverty through Profit Conference World Resources
Institute San Francisco, CA.
16
Frederick, W.C. (1991) 'The moral authority of transnational corporate codes', Journal of Business
Ethics 10(3): 165-177.
17
Frederick, op cit. p.144--5
18
Ackerman, R. W. (1975). The social challenge to business; Cambridge, MA: Harvard University
Press.
19
Sethi, S. P.: 1975, “Dimensions of Corporate Social Performance: An Analytical Frame-work”,
California Management Review 17(3), 58–64.5
“The basic idea of corporate social responsibility is that business and society are
interwoven rather than distinct entities; … society has certain expectations for
20
appropriate business behaviour and outcomes” .
“Appropriate business behaviour” is a fluid term and society’s expectations are
those of individuals and their interests. For Munilla & Miles responding to interests is
the key to social responsibility and rather than speaking of society’s expectations, it is
21
better to speak of the interests of individuals and groups , and possibly for that
22
reason, Baron is of the opinion that research needs to thoroughly examine both
motivation and performance before labelling any action (outcome) as CSR. For
instance, a firm’s acceptance of social obligation could be seen as non-mechanical
because it is an economic agent capable of strategic positioning in the market and also
capable of learning and adapting its behaviour to dynamic and complex situations.
The firm’s external interests and action would thus serve to advance its own private
concerns.
Munilla & Miles argue that an action deliberately motivated by self-interest from
the firm and its managers in response to a threat, taken to avoid harm or targeted at
maximizing profit could not be qualified as CSR. Thus, we may need to ask that when
MNCs committed an estimated $500 million to community development for building
schools, hospitals, provide micro-credit schemes for local people, and initiate youth
23
employment programmes in developing countries in 2001 , was this action
motivated by a need to deal with increasing threats within their immediate business
environment that may impede profit maximization or were they responding to calls to
whittle down MNC-triggered challenges that community stakeholders faced?
THEORETICAL FRAMEWORK
Conflict theorists have for long argued that disparity in access to and share of
resources as well as a high level of inequality is a structural condition which increases
24
the threat of community conflicts and frequent disruptions of business activities .
Their theories, as they relate to human security are similarly congruent with those
expounded by business ethics scholars studying stakeholder and social contract
theories of business ethics. In stakeholder theory, the argument advanced by Evan &
Freeman is that corporate organizations should take everyone who is affected by their
20
Wood, op cit, p.26
21
Munilla, L.S & Morgan P. Miles, “The Corporate Social Responsibility Continuum as a Component of
Stakeholder Theory.”Business & Society Review 110:4 (2005) (371-387), p.10
22
Baron, D. P. (2001): “Private Politics, Corporate Social Responsibility, and Integrated Strategy,”
Journal of Economics and Management Strategy, 10(1), 7—45.
23
Frynas, J. G. ‘The False Development Promise of Corporate Social Responsibility: Evidence form
Multinational Companies’; International Affairs, 81 (3) (2005)p. 581
24
Williams, Kirk R. and Michael Timberlake, ‘Structured Inequality, Conflict, and Control: a Cross-
National Test of the Threat Hypothesis’. Social Forces Volume 63 (2) 1984, p. 414; The University of
North Carolina Press.6
25
action (and inaction for that matter) into consideration . Although a number of
business ethics scholars have argued that taking into account all the interests of all
26 27
stakeholders into decision making processes does not appear pragmatic , Cohen
insists that this has to be done because stakeholders, rather than business managers,
are in the best position to identify and gauge the impact of a corporation’s action on
themselves or the environment within which they live.
In order to situate this study within a clearly defined framework of analysis, there
is a need to examine a number of frameworks that are relevant to the subject matter of
this study. These will be Social Cohesion and Stakeholders Theory: the former as an
idea on factors that condition cohesiveness within closed groups and factors that
undermine it, and the latter as evidenced within the context of implementing
Chevron’s GMoU development framework in one of its host communities in Western
Niger Delta. This study explores the arguments of each of these paradigms in terms of
how they address the underlying issues involved in intra-community divisions in
Ugborordo, an Itsekiri community and how Chevron’s disposition to the problem and
the parties has impacted its outcome.
Social Cohesion
The factors that promote social cohesion have been a subject of intensive interest,
inquiry and review for both sociologists and psychologists for a long time. This
interest has triggered multiple approaches to its study and the description of its
essence across the humanities. Despite the challenge that this creates, most
perspectives deal with the understanding of issues that have to do with the effects of
individual actions and dispositions on attitudes and behaviours of the larger group. To
that extent, a comprehensive theory of social cohesion might be obtained by
elaborating the causal mechanisms in groups linked to the attitudes and behaviours of
individuals with the social, economic or political conditions in which their group
finds itself.
Groups remain cohesive when social, economic or political conditions in the
immediate environment produce positive attitudes and behaviours and when group
members’ interpersonal interactions with significant others serve to maintain or
improve these group-level conditions. Factors that promote social cohesion will
therefore include the attitudes of individual members manifested in their identification
with or loyalty to a group and its cause, as well as their resolve to maintain, or
strengthen their participation in the group’s activities. Even though Hogg has argued
25
See, Evan, W. M., and R. E. Freeman, ‘A Stakeholder Theory of the Modern Corporation: Kantian
Capitalism’. In T. L. Beauchamp & N. E. Bowie Eds. (1993), Ethical Theory and Business, 4th
edition, Englewood Cliffs, NJ: Prentice Hall; pp75—84.
26
See for example, Fort, Timothy L. and Cindy A. Schipani (2000), Corporate Governance in a Global
Environment: The Search for the Best of All Worlds, City/Publisher (p.33); Fort, T. L., “The
Corporation as a Mediating Institution: An Efficacious Synthesis of Stakeholder Theory and
Corporate Constituency Statutes.” Notre Dame Law Review 173 (1997: 73) University of Notre Dame.
27
Cohen, S. (1995), ‘Stakeholders and Consent’; Business and Professional Ethics 14 (1), p.147
28
that attachments to a group cannot be reduced to interpersonal attachments , attitudes
that weaken groups will be related to decisions by members to pursue narrow, self-
serving interests, sever relations with individuals within the group or even the group
itself, or to weaken it, their susceptibilities to interpersonal or external influence, and
other behavioural indicators showing a lack of commitment to the group.
Group cohesiveness is a major issue in theories of group dynamics. While some
theorists attribute conceptual properties such as personal relationships, there is a
widespread consensus that cohesiveness of a social group has much to do with
whether members of such group decide to promote or subvert its corporate interests
especially in situations involving highly visible and broadly engaging matters such as
29
leadership, transitions, crises, significant policy shifts, or moral issues . This
decision will in turn determine the extent of their identification with, and participation
30
in the group . Friedkin notes for example that when contrasted with a group with a
low level of cohesiveness, a highly cohesive group will have more members who are
strongly motivated by any number of factors (personal or group ambition, ideology or
interests) to contribute to the group’s welfare, advance its objectives, and participate
actively in activities that will procure collective benefits.
Social cohesion is threatened and fragmentation becomes a distinct possibility
wherever competing groups jostle for power within a consolidated social or political
space. In such instances, personal as well as narrow group interests and allegiances
could lead to the fragmentation of elite groups and by extension the social collective.
In the study area, there are several cases where in-fighting within community groups
and clans assumed dangerous dimensions that occasioned their disintegration
especially when powerful interest groups seek to fragment the locality in order to
secure control and recognition for patronage by oil interests.
Stakeholders Theory
The Stakeholder theory is essentially a business ethics framework that helps identify
groups to which an organization has responsibilities and as an outline commonly used
31
in reference to business ethics . For Freeman, “any group or individual who can
32
affect or is affected by the organization’s objectives” is a stakeholder . Stakeholder
theory thus contains methods for identifying and managing stakeholders and the
appellation is applied on the belief that all actors so described are involved either
directly or indirectly with an organization and are entitled to one form of benefit or
33
the other .
28
Hogg, M. A. (1992), The Social Psychology of Group Cohesiveness; New York: New York University
Press
29
Friedkin, N. E. (2004), “Social Cohesion”; Annual Review of Sociology (30:409—25) p. 418
30
Cartwright D. (1968), “The nature of group cohesiveness”, in Cartwright, D. and A. Zander (ed).
Group Dynamics: Research and Theory, London: Tavistock, p. 91
31
Chapple, W., A. Crane and D. Matten. “Behind the Mask: Revealing the True Face of Corporate
Citizenship”; Journal of Business Ethics (June 2003), 109-120.
32
Freeman, R. E. (1984), Strategic Management: A shareholder approach; Boston: Pitman/Ballinger.
33
Flak, S. F. & W. Dertz (2005), ‘Stakeholder Theory and Balanced Scorecard to Improve IS Strategy
Development in the Public Sector’ (Other details not available).8
Understanding the forces that promote coalescence between firms and their
stakeholders is one of the key concerns of stakeholders’ research. It is expected that a
rational firm will work with its stakeholders as a way of furthering its own interests of
34
profit maximization, as a form of instrumental social corporate responsibility and
sometimes, because it accepts coalescence, as a form of normative moral obligation of
35
its social responsibility . The firm chooses the first option in full acknowledgement
of the possibility that its reaction to stakeholders’ interests, or lack of it, could affect
36
its economic performance and continuity . On the other hand, the second option may
appeal to it if it is keen to be seen as a responsible corporate citizen that shares the
concerns of its immediate stakeholders.
Management researchers have argued that where a firm chooses to work with its
stakeholders either for instrumental (self-serving) or normative (altruistic) reasons,
the positive outcomes could include: the articulation of a shared vision to resolve a
37
problem , finding innovative solution to gridlocked issues or reduction of costs
38 39
associated with such gridlocks , contribution to firm’s learning and/or to mutual
40
learning . On the other hand, downplaying the need to take into account the concerns
of stakeholders could trigger a chain of events that could undermine the efforts of the
firm to maximize profits and survive.
Traditional theories of business organizations are of the view that the primary
function of a business organisation is to maximize shareholders investment and that a
41
business can have no social responsibility . In contrast, stakeholder theory states that
the organization needs to consider the interests of any group or individual that affects
or is affected by its actions. While some writers consider stakeholder groups to be of
equal worth; others have argued that such position may be difficult to sustain because
where shareholders who are seen as primary stakeholders have no primacy over other
42
categories of stakeholders, a firm’s survival remains at risk . The first group argues
34
Narver, J., “Rational management responses to external effects.” Academy of Management Journal,
(1971, 14), p. 99
35
Welcomer, S. A., Cochran, P. L., Rands, G., & Haggerty, M. (2003). Constructing a web: Effects of
power and social responsiveness on firm-stakeholder relationships. Business & Society, 42(1), pp.
43—4.
36
Berman, S. L.,Wicks, A. C., Kotha, S., & Jones, T. M. (1999). Does stakeholder orientation matter?
The relationship between stakeholder management models and firm financial performance; Academy
of Management Journal, 42(5), 488-506.
37
See, Gray, B. (1989), Collaborating: Finding common ground for multi-party problems (1st edn.) San
Francisco: Jossey-Bass.
38
See, Winn, M.I. “Building Stakeholder Theory with a Decision-Making Methodology”; Business &
Society 40 (2), 2001: 133-166. See also, Wondolleck, J. M. & S. L. Yafee (2000), Making
Collaboration Work: Lessons from innovations in natural resource management; Washington, DC:
Island.
39
See, Dodgson, M., “Learning trust, and technological collaboration”; Human Relations 46, 1993:77-
95
40
See, Heugens, P., Van Den Bosch, F. A. J., & Van Riel C. B. M., “Stakeholders integration: Building
mutually reinforcing relationships”; Business & Society 41(1), 2002:36-60.
41
Friedman, M. (1970, September), ‘The social responsibility of business is to increase its profit’. New
York Times Magazine, pp. 14-20; see also, Hasnas, J. (1998), “The normative theories of business
ethics: A guide for the perplexed”. Business Ethics Quarterly, 8(1), p.22.
42
Gibson, Kevin, ‘The Moral Basis of Stakeholder Theory’; Journal of Business Ethics (August 2000),
p. 247.9
that by responding strategically to primary stakeholders’ demands, organizations gain
43
competitive advantage and will sidestep high confrontation costs .
Having presented both sides of the argument, the relevance of this framework for
the present study lies in the understanding that stakeholder theory underlines the fact
that management’s fundamental obligation is to ensure a business organisation’s
survival by balancing the conflicting claims of its different stakeholders. The theory
is particularly useful because by acknowledging that every organization attracts a
variety of stakeholders who can affect it negatively or positively, it highlights the
need for business managers to develop strategies for relating with different
stakeholders in a reflexive manner that ensures that present and future threats against
the bottom-line will be promptly and effectively neutralized.
A REVIEW OF CONFLICTS, CONTEXT AND CORPORATE CONDUCT
Analysis of conflict needs to be firmly grounded on the social and cultural context in
which it is taking place. Oil and gas exploration is the mainstay of Nigeria’s
economy. Between 2000 and 2004, incomes from oil and gas accounted for about
79.5 per cent of the government revenue and about 97 per cent of Nigeria’s foreign
exchange earnings. However, the paradox is that despite cumulative revenues from oil
resources estimated at about US$350 billion in 40 years of oil exploitation, there has
actually been a marked decline in citizens’ standard of living, and per capita income
44
has actually fallen from US$302.75 in 1973 to US$254.26 in 2002 .
Despite staggering revenues from oil and gas, Nigeria ranks among the 15 poorest
nations in the world; its economy has shrunk; and in purchasing power parity (PPP)
terms, the per capita GDP of $1,113 in 1970 has declined to $1,084 in 2000. During
the same period, poverty rate has increased almost two-fold such that close to 70
percent of the population now live with less than US$1 per day. Contradictions of
this type probably prompted Karl to conclude that countries which depend on oil for
their livelihood are among the most economically troubled, the most authoritarian,
and the most conflict-ridden in the world45.
The Niger Delta, Nigeria’s oil and gas belt is home to over 28.9 million
46
Nigerians . The region plays host to over 1,481 oil wells and an estimated 159
oilfields linked by more than 7,000 kilometres of pipelines and flow lines, and some
47
275 flow stations operated by about 13 oil companies . Despite its strategic
43
Brown, R., J. Janney, K. Muralidhar, K. Paul, and B. Ruf, “An Empirical Investigation of the
Relationship Between Change in Corporate Social Performance and Financial Performance: A
Stakeholder Theory Perspective”; Journal of Business Ethics. July 2001, p. 152.
44
World Development Indicator, 2004
45
Terry Lynn Karl (1997), The Paradox of Plenty: Oil Booms and Petro-States. Berkeley: University of
California Press.
46
United Nations Development Programme, The Niger Delta Human Development Report 2006; Abuja:
(UNDP)/ Shell, p.1
47
Report of the Niger Delta Youths Stakeholders Workshop, Port Harcourt April 15—17, 2004;
NNPC/AAPW, p.3610
importance, it is plagued by frequent schisms within communities, conflicts between
communities and multinational oil companies working in the region over problems
associated with oil extraction activities, and more recently between radical groups
within the region and the Nigerian State.
Over a long period of time, the Niger Delta got very little developmental attention
from the Nigerian State. At one point, less than 5% of revenue from oil was spent
48
directly on development projects in oil-producing areas . This contradiction
gradually led to widespread resentment that other regions with little or no
contribution to national wealth were receiving disproportionately larger doses of
development intervention from the Nigerian state while inhabitants of the oil-
49
endowed region see little signs of any government presence .
In essence, the degree of their social and economic vulnerability was far higher
than that of others who only enjoy the benefits without appreciating the costs because
problems associated with oil extraction activities have been monumental. Oil-based
contaminations of the water table make local water undrinkable. Farming and fishing
grounds are routinely ruined, while gas flaring by oil companies working in the Delta
50
is cited as Africa’s single biggest contribution to greenhouse gas emissions . The
contradiction of poverty in the midst of plenty and prolonged neglect by successive
governments prompted communities and groups within them to approach
multinational oil companies to assume development responsibilities for which the
51
Nigerian State should ordinarily be responsible .
Oil companies initially insisted that involvement of a business organization in
affairs that are clearly outside their commercial pursuits was a distraction, and that
their development undertakings in host communities amount to no more than
philanthropic indulgencies. With time, local restiveness, frequent and sometimes
violent disruptions of extractive activities and concern for the safety of facilities and
personnel prompted oil companies to support social and economic aspirations in local
communities. Although this is often presented as evidence of social responsibility to
local stakeholders, it is also a strategic move that boosts the “business case” for these
multinational oil concerns.
From the mid 1990s, vitriolic criticism of oil companies’ activities and repeated
calls that they provide concrete evidence of participatory development and livelihood
improvements in host communities prompted them to systematize their engagements
with communities and other stakeholders. In an attempt to address substantive issues
of development and environmental management, they also enlisted the support of
development partners and experts to design their interventions, introduce best
48
“Focus on Nigeria”; Africa Recovery, 1999: p.15
49
Brieger, W. R., I. O. Albert, A. Achike & S. Schwenke (2004), Strategic Analysis Of Development
Constraints and Priorities for Action In Southern Nigeria (Updates On Agriculture And Conflict);
USAID Nigeria/Management Systems International, p.16
50
Cited in Alexander “Gas & Oil Connections” (Online), May 4, 2006
51
SPDC (2000) ‘Creating an Enabling Environment for Sustainable Development in the Niger Delta.’
Lagos: SPDC, p.4.11
practices, transform community programmes towards better management of
development and stakeholder engagements in the region52.
RESOURCE CONTEXTS
Conflicts resulting from resource scarcity have been the most virulent in human
53
history . Homer-Dixon therefore urges closer examination of issues of structural
distributions of power and resources that lead to rivalries and perceptions of injustice.
For him, environmental resource-related conflicts within human communities traverse
contests over unequal access to resources to structural distributions of power and
resources. According to him, “scarcity is often caused by severe imbalance in the
distribution of wealth and power that results in some groups in a society getting
54
disproportionately large slices of the resource pie” .
Unequal access to their community development spending, employment and
contract awards appear to be a major challenge for oil companies’ development
initiatives in the volatile Niger Delta region. The resource angle is further borne out
by Human Rights Watch’s description of four years of unceasing inter-ethnic violence
in Warri, a town in the heart of the Niger Delta, as essentially a fight for control over
material resources55. Struggle for political power and access to resources has resulted
in communal violence in several communities. While the underlying causes of inter
and intra-community conflicts may be embedded in social and cultural factors within
them, oil companies are sometimes accused of increasing this conflict dynamics in a
number of ways such as favouring “host” communities over others (in contract and
scholarship awards and employment) and making direct payments to the troublesome
elements in such communities in order to gain access, secure their assets or maintain
peace whenever uproars that may threaten their operations are imminent.
Documented evidence exist that oil companies have initiated, funded and
implemented significant community development schemes in their spheres of
operation all over the world. Frynas indicated that MNOCs spending on community
development programmes globally was over US$500 million in 2001 alone. Ways in
which such investments generated upheavals in host communities are also widely
reported.
Over the years, transnational oil companies have dealt with chiefs and a wide
range of community leaders and representatives who have been asking for money and
development for their communities. The first era of community engagement was
52
SPDC, People and the Environment Annual Report 1998,
53
Daniel Byman and Stephen Van Evera, “Hypotheses on the Causes of Contemporary Deadly
Conflict,” Security Studies 7, no. 3 (Spring 1998). See also, Jeffery Herbst, “Economic Incentives,
Natural Resources and Conflicts in Africa”; Journal of African Economies Vol. 9 No. 3 (2000);
Centre for the Study of African Economies, Princeton University.
54
Homer-Dixon, Thomas F. (1999), Environment, Scarcity, and Violence; Princeton: Princeton
University Press, p.5
55
Human Rights Watch, “The Warri Crisis: Fueling Violence” (November 2003) Vol. 15, No.18 (A),
p.112
therefore hallmarked by a patronage approach that involved the signing of
Memorandum of Understanding (MOU) with host communities. In entering into
MOUs, oil companies agreed to provide development projects in return for a
commitment by communities to provide a peaceful operating environment. When
these agreements were signed either freely, or as it was often the case, in the heat of a
crisis that impeded their operations, there was usually no guarantee that vulnerable
and marginalized groups, such as the disabled, children and women were represented,
or that their interests were protected.
During the MOU era, agreements that were drawn up with individual communities
had provisions on the number of jobs, contracts, and scholarships that will be awarded
over a period of time. However, handing out development and service contracts to
community leaders, without taking steps to ensure that such interventions were used
exclusively for the development of the whole communities, triggered several
problems. Apart from the fact that most of these awards were annexed by a few
individuals, contracts awarded were either not executed at all, or they were shoddily
executed. This has prompted critics to maintain that oil companies were giving
contracts to local leaders to buy their silence56. In addition, patronage and the
privileged status that this confers on a few beneficiaries resulted in community
fragmentation and the weakening of social cohesion within them because personal,
interpersonal and associational linkages within host communities were ignored in
most cases.
What factors inform the formation of such patronage relationships in small groups
like oil-bearing communities of the Niger Delta? There are postulations in
management research that suggest that power and the degree of its asymmetry dictate
to a large extent whether certain individuals or a community group will be patronized
or not. There are studies of corporate issues management which concluded that while
firms may ignore certain stakeholders, they are compelled to respond positively and
constitute a closer working relationship with stakeholders who possess the ability to
increase or reduce their access to a critical resource and to promptly attend to issues
championed by those perceived to be powerful stakeholders57.
Stakeholders with ability to increase or reduce resource access may either support
the firm’s goals and lobby on its behalf for increased access or will strive to directly
or indirectly impede access through physical blockades, mass action, litigation,
picketing, lobbying, calls for sanctions, smear campaigns and boycotts. It is argued
that a prudent firm will respond positively to individuals or groups with negative
intentions by acceding to most of their demands and co-opting them when possible.
In the Niger Delta, long years of neglect by the Nigerian State and its failure to
attend to human security responsibilities coupled with negative perception of oil
56
Norimitsu Onishi, “Left Behind; As Oil Riches Flow, Poor Villagers Cries Out”; New York Times:
Sunday, December 22, 2002.
57
See for example, Pfeffer, J., & Salancik, G. R. (1978), The external control of organizations: A
resource dependence perspective. New York: Harper & Row; Salancik, G. R., “Interorganizational
dependence and responsiveness to affirmative action: The case of women and defense contractors”;
Academy of Management Journal, 22(2), 1979:375-394; and Fisher, R., & Brown, S. (1988), Getting
together: Building relationships as we negotiate. Englewood Cliffs, NJ: Prentice Hall.13
companies and their dispositions towards host communities threatened by the
externalities of oil exploration generated massive attention and debates on corporate
social responsibility and what constitutes responsible corporate conduct in conflict
contexts58. Despite claims of massive spending on community development and
livelihood improvement, it remained difficult for oil companies working in the Niger
Delta area to provide coherent evidence of direct impact on local livelihoods because
most spending were tailored to the strengthening of patronage networks within host
communities instead.
Attempts to influence the disposition of powerful stakeholders within communities
(including chiefs, leaders and youths) led to the establishment of patronage
relationships that facilitated resource access to a few. Rather than employing such
medium to create economic and social benefits within their communities, most
beneficiaries diverted such resources to amass personal assets in urban areas. Due
largely to the absence of pressure on the part of their benefactors to honour the terms
of community development contracts awarded, the Niger Delta area generally became
littered with half-finished or badly-executed projects. Attempts by oil companies to
manipulate local decisions and governance processes sometimes resulted in costly
stalemates and distrust.
Development workers in the Niger Delta frequently assert that one of the main
drivers of conflict in local communities was the perception that oil companies were
using “divide and rule” tactics. They were often explained as deliberate acts by oil
companies’ staff to cause disaffection and create distrust and enmity among
community members and groups such as aiding and patronising those who were
willing to cooperate with them (through homage to elders, contracts and payments to
community executives and youth, sitting allowances, ghost workers allowances,
prompt compensation for environmental disruption, Christmas and New Years gifts,
rent/compensation for landlords, employment, contracts etc) and denying these
opportunities to those regarded as dissenters. There is therefore widespread belief that
oil companies are often insincere about supporting the aspirations of local
communities and are usually unwilling to engage communities, with whom they have
misunderstandings, to find long-term solutions. Instead, they are perceived to be
essentially motivated by a need to extract oil at least cost.
UGBORODO AND CHEVRON
The Itsekiris constitute one of the five distinct ethnic nationalities that populate Delta
State in Nigeria’s Niger delta. According to Ikime, they inhabit the North Western
extremity of the Niger Delta area bounded approximately by latitudes 50 20 and 60 N
and longitudes 50 5 and 50 40 East. Their neighbours are Binis to the North, the Ijaws
58
See for example, Fort, T. L., “The Corporation as a Mediating Institution: An Efficacious Synthesis of
Stakeholder Theory and Corporate Constituency Statutes.” Notre Dame Law Review 173 (1997: 73)
University of Notre Dame.14
to the South, the Urhobos to the East and the Yorubas of Ondo province to the North-
59
West . With an estimated population of a little over than 450,000 individuals, the
Itsekiri people are a minority in Delta State. Their homeland constitutes the three
Warri Local Government Areas (Warri North, Warri South and Warri South-West) of
Delta State.
As a cultural group, Itsekiri history could be traced from the late fifteenth century
when they appointed a Benin prince as their monarch. Prior to that time, they lived
independently in different communities that included Irigbo, Ureju, Omadino and
Ugborodo. With the enthronement of the prince, the autochthonous communities
came together to become a Kingdom. The ancient Itsekiri kingdom of Warri, that was
then established, covered 1,520 square miles and had diplomatic and trade relations
with Medieval Europe between the 16th and 18th centuries.
Warri became a prominent trade centre within the Oil Rivers Protectorate during
the earliest phase of Colonial rule and the prosperity that this procured for the
Itsekiris created conditions that facilitated the emergence of prominent Itsekiri leaders
like Diare, Olomu and Nanna who served as Governors of Benin River.
Ugborodo is an amalgam of Itsekiri villages founded by migrant Ijebu fishermen
who settled in and around the current location. According to the local folklore, two
brothers and their five sons fanned out to form the various communities of
Ugborodo—the "Ikpere ale meje” (town with seven sections). Prior to the movement
of the Iwere royal family from the Benin palace, Ugborodo was already a thriving
community with its own ruler, the Olaja-Orori. Located in the Warri South Local
Government Area of Delta State, it is one of the islands of River Escravos along the
59
Obaro Ikime (1968), Merchant Prince of the Niger Delta: the rise & fall of Nana Olomu, last
governor of the Benin River, Heinemann Educational.15
Gulf of Guinea. The community is made up of seven villages namely Arunton,
Ogidigben, Madangho, Ajudaigho, Imaghagho and Iyala and Ode-Ugborodo.
In September 1963, American Overseas Petroleum Limited (later Chevron)
discovered oil in Koluama (offshore) and Okan (onshore) in the Delta. Its subsidiary
in Nigeria, Chevron Nigeria Limited (CHEVRON), operates and holds a 40% interest
multiple concessions covering 2.5 million acres around the Niger Delta. It operates
under a joint-venture arrangement with the Nigerian National Petroleum Corporation
(NNPC), which owns a 60 percent interest. By year 2006, the company’s total daily
production from 30 fields averaged 387,000 barrels of crude oil, 72 million cubic feet
of natural gas and 5,000 barrels of liquefied petroleum gas (LPG). Chevron employs
more than 1800 Nigerians in various capacities.
Gulf Oil was the first to make contact with Ugborodo town. The company
established an oil farm, employed local men and women and generally maintained a
very cordial relationship with the community group until it was taken over by
Chevron/Texaco Corporation. From that point on, the relationship became tenuous
and led to frequent face-offs over provision of economic opportunities and to
environmental issues such as oil spillages that made farming and fishing in the
waterfront area impossible; deep dredging that resulted in gradual erosion of the
community’s land and shoreline; and, a steady decline in the number of community
members employed by the company. Intermittent negotiations involving community
representatives and CHEVRON usually revolved around these issues and what the
company was expected to do in order to sort them out. As it is the case in all Niger
Delta communities, members of the Ugborodo community grew anguished over the
condition of extreme poverty amidst the affluence that has brought development to
other parts of the Nigerian federation.
In situations which appear threatening collective interests, social groups have a
tendency to create different forms of “local democracy” which would help them to
formulate community goals and erect appropriate structures that will facilitate the
attainment of these goals. It may be in the form of a local forum, the drafting of an
“action plan” or the establishment of a representative body run by elected or selected
members, which would set priorities and implement plans. In such instances, social
cohesion flows from an internally generated struggle by members of the community
to protect themselves from a perceived threat and by so doing, win social, economic
or political security.
In reaction to what they perceived as a deliberate and systematic exclusion from
local economic opportunities in several Itsekiri communities and towns in the western
delta as well as within oil companies working in the Niger Delta, Itsekiri leaders
repeatedly voiced their concerns over what they saw as a disturbing trend. In a
communiqué issued at the end of its general conference held in Warri in January
1999, ‘Itsekiri Patriots’, a think-tank on Itsekiri development noted among others
that:
“Itsekiris… are hardly represented in the workforce of oil companies talk less of the
management levels, especially in Chevron Nigeria Limited, which has the bulk of its
production in Itsekiriland … Even Ugborodo and Ogidigben its operational base has no16
electricity, water and motorable road. Indigenes still depend on rainfall and shallow well
as sources of drinking water. In terms of employment opportunity, the Itsekiris are the
60
least to be considered and the first to be sacked usually for no just cause” .
Apart from allegations of systematic exclusion and deliberate neglect of
development responsibilities in Itsekiri communities, they also accused CHEVRON
of using a policy of “divide and rule” to play off community groups against one
another, and in some cases, subtle attempts to manipulate the election or selection of
preferred candidates as community leaders. This latter issue appeared to be the factor
that precipitated a long-drawn conflict in Ugborodo that threatened Chevron’s own
strategic objectives and the implementation of a framework it developed for
accelerating local development in its host communities in the Niger Delta—the
“Global Memorandum of Understanding”.
The Preamble
Early in 1998, CHEVRON sought to acquire additional land in Ugborodo community
for its Escravos Gas Tank Phase II project. The company contacted the Ugborodo
Community Trust (UCT), the bona fide and legitimate organ of the Ugborodo
Community entrusted with responsibility for addressing such requests which had been
dealing and mediating for the Community in all matters relating to their relationships
61
with oil companies in the community . As a statutory body registered under the Land
(Perpetual Succession) Act, 1958, the Trust has the mandate of the community to
manage, protect, control, and administer Ugborodo community land in conjunction
with the Council of Elders headed by the Olaja-Orori. On the 15th April 1998, the
Community Representatives duly transferred the requested 141 hectares of land to
62
CHEVRON for N110 million and another N5 million Chevron agreed to pay .
Three months after the transaction, but before the money due was paid, the
Ugborodo Community Trust led by Mr. Sandys Uvwho was dissolved for it was
alleged that it could not account for about N171 million (one hundred and seventy
one million naira) of the community money placed in their care. Chevron was briefed
on the reasons for dissolving and reconstituting the Trust and given evidence that the
Delta State government had ratified the reconstitution. Citing litigation initiated by
the sacked executive, Chevron objected to the new Governing Council which it
described as “a faction of the community”. It insisted on working with the sacked
Trust with which it earlier negotiated. Chevron’s defiance and continued recognition
of the group worsened the community crisis that began with the discovery of the
embezzlement of the Community funds and the sacking of the former UCT
63
executives .
60
See Communiqué of the Itsekiri Patriots General Conference held in Warri, Delta State, Nigeria 23 –
24 January, 1999
61
Ugborodo is also host to Shell Petroleum Development Company (SPDC).
62
Neville Amorighoye, “Ugborodo gives oil firm ultimatum to pay compensation”, Vanguard
Newspaper (Nigeria) Friday, 13 August, 1999.
63
Confirming Chevron’s claim that the crisis in Ugborodo was spurred by internal wrangling by groups
within the community, Oritsegbemi Omatete, an indigene of Ugborodo opined that the crisis stemmed
from a “quagmire of self-destructive counterclaims” (See “Cry my Beloved Ugborodo (Escravos?)”).17
After the killing of the new chairperson of the UCT S.A.K. Metseagharun by
persons suspected to be Ugborodo indigenes on Wednesday, 23 September 1998,
CHEVRON expressed its readiness to reopen discussions in November 1998 but only
through the Sandys Uvwho-led group. On 25th February 1999, the company published
in the Punch Newspaper a 24 hours notice for an Ugborodo General Meeting that
would take place in Ugborodo. Despite the absence of the Council of Elders, the
Registered Trustees, and the newly constituted Governing Council of the Trust at the
meeting, due notification that three rulings: in Warri High Court (June 1998), Federal
High Court, Benin (14th August 1998), Effurun High Court (March 1999), and a letter
from the Inspector General of Police dated 2nd June 1999 notifying Chevron of the
rulings and the need to maintain the peace by respecting the status of the reconstituted
Trust as the only body empowered to act for and on behalf of the people, Chevron
accepted an “Interim Committee” that was set up to oversee affairs previously
handled by Ugborodo Community Trust. It was to this “Interim Committee” that
Chevron paid the sum of N20 million on behalf of the community and another ex-
gratia payment of N5 million.
In apparent surprise at what they considered an affront on their traditional ruler,
the Olaja-Orori, the community as a whole and the Council of Elders protested to
CHEVRON. On 23rd March 1999, the Legal Advisor of the UCT wrote to the
company warning it of the illegality of the Interim Committee that was set up on 26th
February 1999 and the consequences of proceeding with its course of action. In
another letter dated 2nd April 1999 addressed to CHEVRON’s Managing Director, the
UCT’s Public Relations Officer, Steve Wilkie, alleged that the company’s General
Manager in charge of Government and Public Affairs had demanded a 15 million
Naira kickback in order to facilitate truce and payment of the agreed sum. He also
accused Chevron of employing a ‘divide and rule’ strategy:
“The reason why Chevron prefers to deal with these people is clear. They are the ones
who fight the people. They are the ones who take the compensation money and know
how to give a few ones among us so that there can be no common ground with which to
fight Chevron for destroying the socio-economic basis of the people in the last few
decades. Chevron likes this, it does not want the people of Ugborodo to co-operate with
one another because it fears that we'll demand for our rights. It's doing everything to
64
make sure that we're not united; its way of doing this is to play us against each other ”
When it became clear that the company will not desist from what was considered
its partisan support to the “Interim Committee”, the Ugborodo Community Trust
published an open letter in the Sunday Vanguard of October 3 1999, commenting on
what it described as “the atrocious acts of Chevron Nigeria Limited”. The
communiqué of a General Meeting held in Ugborodo community on December 4,
1999, similarly alluded to CHEVRON’s divisive strategy and corrupt practices by its
officials:
A press release by Chief Hope Harriman, a one-time Chairman of the Ugborodo community Trust
also described the town as a “troubled community that has long been ravaged by internal strife.”
64
Quoted in Environmental Rights Action (ERA) Field Report 50; January 12, 200018
“The community is unhappy with the divisive tactics of Chevron, whose corrupt officials
are more concerned with lining their pockets than building a good image of the
company. It is hoped that the new managing director would restructure the image
department of Chevron to secure the goodwill of our people. Any continuation of this
65
divisiveness by Chevron may produce catastrophe very soon” .
In a memorandum submitted to the Oputa Panel on Human Rights Violation
Investigation that sat in Enugu, the family of the late S.A.K. Metseagharun accused
CHEVRON officials of complicity in the death of their father. They also alleged that
although CHEVRON is fully aware of the existing political and social framework and
the identity of the preferred and legitimate representatives of the people, it funded,
encouraged and collaborated with a renegade group, and refused to cooperate with the
66
late chairperson because he frustrated their plan to defraud Ugborodo community .
Relations between Ugborodo community and CHEVRON continued to deteriorate.
Angered by CHEVRON’s silence on their written appeal for action on community
development and empowerment interventions in the wake of the crisis, and frustrated
by the seeming inability of their leaders to get CHEVRON to fulfil its part on the
1998 land transaction, women of Ugborodo community invaded and occupied
Chevron’s terminal and tank farm between July 8 and 18 in 2002. Their grouse, very
much in line with allegations made by Itsekiri Patriots in 1999, included concerns that
CHEVRON has remained largely deaf to their plight; that infrastructures within the
community have been dilapidated; and that unemployed members of the community
were openly discriminated against in jobs and contracts awarded by the company. The
women demanded that CHEVRON leaves their community since its presence has
added no value to their lives as a people:
“We want Chevron to leave our land…our farms are all gone, due to Chevron’s pollution
of our water. We used to farm cassava, okro, pepper and others. Now all the places
67
we’ve farmed are sinking, we cannot farm, we cannot catch fishes and crayfish” .
After protracted negotiating with the women, Chevron management agreed to hire
more local youth, erect classroom blocks, increase student scholarships and provide
electricity, water and other facilities through a direct connection to the terminal.
Chevron also pledged to resume the construction on the abandoned Ugborodo New
Town project that started in the mid-1990 so that the people would have a place to
65
See ERA Field Report 50; January 12, 2000. Reports by other Civil Society actors also allude to the
use of “divide and rule tactics” by oil companies. For instance, findings in a field study by Centre for
Social and Corporate Responsibility/African Centre for Corporate Responsibility (CSCR/ACCR),
Stakeholder Democracy Network (SDN) and IKV Pax Christi: “Local Perspectives on Security and
Human Rights in the Niger Delta” (April 2008) included the observation by different community
groups that violence in the Delta was a result of failure of government to provide basic services,
economic opportunities, and protection against injustices; a resulting lack of trust, sincerity and social
contract; and use of divide and rule tactics by oil companies.
66
The document presented to the Justice Oputa Human Rights Violation Investigation Panel titled
“Further and better particulars of the involvement of Chevron Nigeria Limited in the murder of late
Mr. S.A.K. Metseagharun, Chairman Ugborodo Community Trust, by their execrable, surreptitious
and atrocious roles in the lingering Ugborodo crisis” was obtained from the Public Relations Officer
(PRO) of Ugborodo Community.
67
Abiola, A. C., “Chevron Ignores Demand of Women for Employment and Clean Environment”; ERA
Field Report 103 (July 14, 2002), p.6.You can also read
