Wednesday, 19 June 2013
Breaking Down Corporate Firewalls
Examining the matter of corporate accountability is serious business. It is especially serious in the context of present day debates on whether corporations are persons in their own right and can thus enjoy the sort of rights humans enjoy. The debate is interesting because of entrenched antecedents wherein corporations enjoy rights as persons but completely escape the sort of accountability that would demand commensurate punishments. Corporations may be fined or even closed down, but they cannot be imprisoned, for instance. This corporate shield or firewall maintains the momentum of impunity.
It thus seems pertinent that when we speak of corporate accountability we must seek ways of opening up possibilities of bringing individuals hiding behind corporate firewalls to commit crimes such as environmental damage, or other objectionable activities to book. Those who commit ecocide must be held to account for their actions.
Standards for gauging corporate adherence to human rights have been set by the United Nations in its Guiding Principles. The Guide sets out global standards for preventing as well as addressing human rights abuses related to business practices.
Extractive sector companies in cooperation with the governments of the USA and the UK as well as some NGOs have also set their own guides termed “Voluntary Principles on Security and Human Rights.” These principles are supposed to guide the companies in their work to ensure Corporate Social Responsibility (CSR) and the respect of human rights. The corporations that have endorsed the Voluntary Principles include the major international oil companies in operation in Nigeria. Have they kept to the principles? That is an open question.
Corporations in Nigeria and elsewhere have become experts of spin and continually polish their image through manipulation of language and publication of glossy reports to cover up their wrongs. As an example, consider the innocuous shift of language where oil companies are no longer referred to as “oil companies” but as “energy corporations”. When seen as providers of energy they immediately assume the higher ground and amass an image of indispensability. If seen as oil companies, as they truly are, their polluting and damaging nature becomes visible.
One critique of this perception system is worth noting: "After the Ogoni and Brent Spar crises, Shell joined the larger global corporate risk management response framework, whereby perception management was re-organized to relieve pressure. Shell instituted a vigorous perception management program at the firm level whereby it sought to re-vitalize baseline legitimizing narratives, burnish its reputation, undermine opposition reputations, and co-opt the messages."
When we speak of corporate accountability we necessarily must ask the question as to whom corporations are expected to be accountable. To avoid this, corporations invented the notion of corporate social responsibility (CSR). Are they accountable to the victims or to their partners and/or shareholders? Another notion that has gained ground in the mining and oil/gas sector is the Publish What You Pay(PWYP) as well as the Extractive Industries Transparency Initiative (EITI). All these are good. But we must acknowledge their limitations.
CSR is an excellent template for corporations to show that they perform their civic responsibilities as corporate citizens. The budget for this should ordinarily come from the profits of the corporations but they largely count them as part of their operational costs. This has implications for taxes and revenues that accrue to government. In the oil sector, the companies deduct these expenses as production costs, with clear fiscal implications as the costs of those projects are not independently verified or monitored. In a joint venture situation, it is especially obnoxious that the major shareholder, the Nigerian National Petroleum Corporation (NNPC), whose logo conspicuously adorns the project signboards, never claims ownership of those projects. If NNPC steps up to claim that they provide those school blocks and clinics it would become clear that the oil companies are majorly takers and not givers - and certainly not philanthropists.
The EITI or in NEITI in Nigeria as well as PWYP provide the corporations platforms to show that they are transparent and responsible. They have also become the Achilles heel of some of the corporations, especially those in the oil and gas sector, because they are not really ready to strictly do what those platforms demand.
Both PWP and EITI require that corporations publish payments made by them to governments of countries where they operate. Interestingly, oil companies through the American Petroleum Institute and other mining companies fought a US government reform that requires that mining, oil and gas companies who trade their shares on the American stock exchange issue an annual report detailing the “type and total amount” of payments they make to foreign governments. These companies struggled to smuggle in clauses that would offer escape hatches through which they can choose which laws to obey and which to break - the laws of the United States or the laws of the countries in which they operate. They also claimed that disclosure could harm their business interests and that in some countries revenues are state secrets!
It is worthy of note that the companies had no problems with the Extractive Industries Transparency Initiative (EITI) that requires the private sector to disclose payments made to governments and for the governments to disclose payments received. According to mining giant Rio Tinto, “Because the EITI also encompasses disclosure by governments, of payments they receive from companies, we believe it is more effective than the proposed rules at improving governance and eliminating corruption in both the private and public sectors. Therefore, we urge the Commission to follow the EITI principles to the fullest extent possible.”
Publish What Crude You Pump (PWCYP)
Today, in recognition of the fact that all these transparency initiatives have overlooked a fundamental base ERA/FoEN formally launches Publish What Crude You Pump (PWCYP). We demand that the oil companies must publish the exact amounts of crude oil and gas they pump from every well. A situation where revenue estimates are based only on crude figures from distribution/export points is unhealthy. Nigerians deserve to know what is going on at both ends of the pipelines. Publish what you pump! Time to metre the wells! Enough of the oil thefts! Without this even Nigerian reserve crude oil and gas figures are fictional.
It has been said that corporations do not seek to do what is right but to close the doors of justice. Examples of this are found in their routine insistence at courts outside Nigeria that crimes committed here should not be scrutinized in their home bases. Shell failed to block the suit brought against them at The Hague by four Nigerian farmers. The Bowoto vers Chevron case was held in the USA. Now the case of Kiobel versus Shell at the Supreme Court of the USA is a key test case as Shell is challenging a longstanding law that provides that corporations should not find hiding places for crimes committed anywhere.
We have to examine ways of making corporations both responsible and accountable. One means of doing this would be to ensure that overseeing authorities or regulatory bodies are empowered, change tactics and take up their proper roles. We see this in the efforts of the Nigerian Senate to review the National Oil Spill Detection And Response Agency (NOSDRA) Act so as to provide that agency with the sort of teeth needed to make polluters pay. In the words of Senator Saraki to provide “An effective legislative framework for oil spill management needs to go far enough to ensure that apart from remedying the environment that it can provide enough deterrent for bad environmental behaviour.”
It is also essential that governments see the correct link between resource extraction and political stability or national security. Harmful resource extraction threatens security of the people and of the nation. Resources are not to be extracted on the basis of impunity simply because they generate revenue for the state.
Millions of barrels of crude oil, produced water and other toxic wastes have been spewed into the Niger Delta environment over the years. The destruction of the Niger Delta environment can be gauged by extrapolating from the UNEP assessment of the Ogoni environment. Gas flaring goes on unabated. Companies pump raw sewage into water bodies across the nation.
Extraction without responsibility is unacceptable. It is equally unbearable to see corporations avoiding accountability and instead pointing accusing fingers at governments and the people/victims. When their rusty pipes leak and spill they scream sabotage to avoid accountability. When the volume of stolen crude oil gets so high and rampant the fingers are pointed at bush refineries rather than at the big guns engaged in the international racket.
It is time to examine these and many other issues related to corporate accountability and the environment. This is just a beginning.