On December 1st, the international Brotherhood of Teamsters filed a shareholder proposal at Chevron Corporation. The proposal asks Chevron shareholders to demand that the company disclose the risk factors it considers when doing business in foreign countries. This resolution, though obscure in its intentions, addresses a major problem facing Chevron and other companies in the oil and mining industries, namely political risk.
The Political Risk in Oil
Chevron faces many challenges in its global operations. Perhaps the greatest challenge is the risk associated with extracting oil in developing countries: Nigeria, Angola, Kazakhstan, China and Burma (Myanmar) just to name a few of the places where it operates. The Teamsters proposal focuses on Chevron’s operations in Burma. However, Chevron’s political risk problems are much wider in scope.
Nigerian Protesters Killed by Chevron Backed Soldiers
Chevron was acquitted by a jury in San Francisco this week for its role in the killing of two people on a Chevron oil platform in Nigeria several years ago. The company was absolved of wrongdoing stemming from the deaths of local protesters who occupied an oil platform off the coast of Nigeria. The company called for assistance from the Nigerian military and in the ensuing attack on the platform, two protesters were killed. The military authorities subsequently tortured several other protesters at the site.
Representatives of the victims sued Chevron in federal court in the U.S. under the Alien Tort Claims Act. Attempted only once before, the plaintiffs in this case hoped for a first time victory that would have brought justice to what was considered a violation of human rights by the company against citizens of that central African country.
Chevron’s Operations in Ecuador
In Ecuador, Chevron is fighting a lawsuit stemming from pollution that has contributed to a wave of illnesses in part of the Amazon jungle. “The suit alleges that Texaco, which operated an oil-field in Ecuador years before Chevron bought the company, left pools of petroleum and hazardous chemicals scattered around the field, eventually covering them with thin layers of soil rather than removing them.”
Burma’s Yadana Pipeline
In a report released earlier this year, a human rights group – EarthRights International – says that Burmese soldiers guarding a Chevron Corp. pipeline have killed nearby villagers while ordering others to serve as forced labor. “Chevron co-owns the pipeline, along with French oil giant Total and a Burmese company. Total runs the project, while the other companies act mainly as investors. EarthRights does not accuse Chevron or its partners of committing any human rights abuses themselves.”
Chevron and its partner in the venture, the French company Total, are credited for being the primary financial supporters of the Burmese junta through revenues generated from the pipeline.
In the context of global condemnation of the Myanmar government and its maltreatment of its people, Chevron naturally becomes a target for rights groups concerned about the situation in that country. While opponents of the regime want companies doing business in the country to pull out, companies like Chevron make the argument that if they leave, other businesses – most notably Chinese businesses – will step in their place and will likely make things worse in that country. By and large unscrupulous on the human rights front, Chinese oil companies hovering in the shadows make for a rather intractable human rights situation.
The company has been fairly tight lipped in discussing the situation on the ground with shareholders. It’s web site paints a rosy picture in Myanmar and argues that third party monitors have found not problems.
The political blowback from activists, investors, non-governmental organizations and political leaders from its conduct in each of the countries in which it operates poses real risks for the company. Unfortunately, Chevron is not alone in facing these risk challenges. Exxon, Shell and many mining companies have been in the news with respect to these sorts of problems.
The Teamsters Proposal
The Teamsters shareholder proposal, up for a vote of Chevron shareholders this spring, is expected to garner a vote of 8 to 10 percent. Though not enough to force the company to act on the substance of the proposal, it is hoped that it will trigger a process for moving the debate and triggering action in a desperate part of the world.
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