Royal Dutch Shell Case Study

The key reasons for the success of Shell Oil Company are associated with the oil major's multinational oil business operations backed up by more than 22.000 staff and the consolidated companies. Shell's main business direction is natural gas production, petrochemical, gasoline and natural gas marketing. At that, Shell leads the market through the network of its branded gas stations exceeding 25.000 in the US alone. This ensures the corporation solid public presence.

On an international scale, Shell partners with Saudi Aramco to jointly operate refineries. With the help of its partners (Chevron) and subsidiaries (Aera Energy LLC; Motiva Enterprises), Shell expands strategic drills in offshore locations; produces fuels, oils, and explores, produces, and refines petroleum products.

Furthermore, Shell Oil Company has always associated its success with the high-quality workforce regarded as its most invaluable asset. The corporation therefore invests solid funds into the improvement of professional capacity of it enormous staff and attempts to implement flexible working practices as far as possible. Overall, the company pays competitive dividends, and makes considerable investments to ensure the company's profitability.

Recently, Shell faced serious ecological challenges considering the reports of the U.S. Environmental Protection Agency. In connection with the Notice of Violation, Shell violated the Clean Air Act in 1998. At that, within a week 28.4 m. gallons of gasoline were released in the air without the compulsory vapour recovery equipment. This resulted in 56 t. hazardous emissions in the atmosphere. Another accusation was related to the illegal construction of loading bay without the allowance from the State Department of Environmental Protection.

In accordance with the most recent 2008 lawsuit launched against Shell, the company allegedly violated Clean Air Act.

Therefore, the company is seriously challenged with the environmental concerns, including sulphur dioxide emissions, volatile organic compounds, carbon monoxide emissions; emissions of nitrogen oxides. In addition to this, Shell operations are reported to produce adverse affects to the vast majority of migratory birds' community due to drilling operations North Sea. Taking these and other facts into account, Shell should reconsider its environmental policies and limit hazardous effects to the surrounding environment in the foreseeable future.

Considering the effects of the spreading financial crisis, Shell is prone to take certain measures to keep a competitive pace. For Shell, as well as other major oil players, the overall situation is intensified by the oil reserve crisis. Since the prices per barrel have substantially decreased, Shell should smartly coordinate its price policy and spot the current tendencies on global markets.

The current situation is such that in light of the financial crisis, energy prices are plunging and force oil companies to delay their projects and scale back spending. Therefore, major oil players like Shell are expecting the soonest moderation of the industry costs. As many oil players, Shell is leading well-balanced business strategy to foresee further economic fluctuations and win competitive advantage.

Most importantly, the company is becoming less environmentally hazardous and only this factor may assure the company high publicity and brand promotion in the near future.

Overall, the briefs enabled to analyse the current business situation of some lead multinational players that are currently expanding their global markets. In most cases, their business success is associated with sound brand management and international expansion through partnerships, mergers and acquisitions, and re-branding. At that, the companies tend to emphasize on the cutting-edge technologies and human factor as their main asset while managing enormous workforce internationally.

On the other hand, however, mainly all companies have recently been subject to serious claims and lawsuits associated with the lack of social responsibility, and most importantly, unsound environmentally-based policies. Now, it is high time these internationally acclaimed brands reconsidered their environmental and social-oriented policies and made them more transparent and sufficient.

Furthermore, the ongoing financial crisis places additional challenges to these multinational players. Overall this indicates the uncertainty of future forecasts and corporate strategies intended even for the short-term periods. At that, it is apparent that the revenue rates and financial stability of the aforementioned brands have not suffered during the third quarter of 2008.

The Case Against Shell

 


Royal Dutch Shell, plc (Shell) began oil production in the
Niger Delta region of Nigeria in 1958 and has a long
history of working closely with the Nigerian government to
quell popular opposition to its presence in the region. At the
request of Shell, and with Shell’s assistance and financing,
Nigerian soldiers used deadly force and massive, brutal
raids against the Ogoni people throughout the early 1990s
to repress a growing movement against the oil company.
The Center for Constitutional Rights (CCR), EarthRights
International (ERI) and other human rights attorneys sued
Shell for human rights violations against the Ogoni. After
thirteen years of litigation, the case against Shell ended in a
historic $15.5 million settlement for the plaintiffs.

 

Who are The Ogoni ?

Ogoni is the name of a region in the Niger Delta of
southern Nigeria as well as the name of the ethnic group
that lives in that region.

For the Ogoni and the people of Nigeria, oil and oil
companies have brought poverty, environmental devastation
and widespread, severe human rights abuses.
Currently, almost 85 percent of oil revenues accrue to 1
percent of the population while, according to the African
Development Bank, more than 70 percent of Nigerians live
on less than US$1 per day. Ogoni is home to several
environmental treasures, including the third-largest
mangrove forest in the world and one of the largest
surviving rainforests in Nigeria. Oil drilling by Shell and
other oil companies has had a devastating impact on the
region’s environment. Oil spills, gas flaring and deforestation
have stripped the land of its environmental resources, destroying the subsistence farming and fishing based economy of the Ogoni.


What is MOSOP?


The Movement for the Survival of the Ogoni People
(MOSOP) is a human rights group founded in 1990 that is
committed to using nonviolence to stop the repression and
exploitation of the Ogoni and their resources by Shell and
the Nigerian government. Upon its founding, MOSOP
quickly garnered wide support and in 1993, at least half
the total Ogoni population publicly supported the group.
Ken Saro-Wiwa, founding member and president of
MOSOP brought worldwide attention to the human rights
violations committed against the Ogoni through international
campaigning and his poignant writing. He was nominated for a Nobel Prize and awarded the Right Livelihood Award and the Goldman Prize for his environmental and human rights activism.

What happened to the Plaintiffs in this Case?


As the peaceful movement of the Ogoni grew, so did the
Nigerian government’s and Shell’s brutal campaign against
the Ogoni and MOSOP. In early 1993, Shell requested
military support to build a pipeline through Ogoni. When
plaintiff Karalolo Kogbara was crying over the resulting
bulldozing of her crops, she was shot by Nigerian troops
and lost an arm as a result. In a separate incident later that
year, plaintiff Uebari N-nah was shot and killed by soldiers
near a Shell flow station; the soldiers were requested by and
later compensated by Shell. Plaintiff Owens Wiwa was
detained repeatedly under false charges in 1994 to prevent
him from protesting; he was beaten and threatened throughout
his detentions. Michael Vizor, another plaintiff, was
arrested for his political activities and upon his arrest his
daughter was raped. When he would not confess to a false
charge, he was beaten and tortured. Mr. Vizor’s son was
also beaten and detained when he attempted to bring his
father food.


In 1994, Ken Saro-Wiwa and other Ogoni leaders were
prevented by the military from attending a gathering; at that
very gathering, four Ogoni chiefs were killed. The military
governor promptly announced that Ken Saro-Wiwa caused
the deaths, and he and other leaders were taken into
custody. Despite the lack of any connection between
MOSOP and the deaths, the military used the deaths as a
pretext to conduct raids on 60 towns in Ogoni and to detain
and beat several hundred men suspected of involvement with
MOSOP.

A three-man tribunal was created by the Nigerian government
to try the Ogoni leaders —known as the “Ogoni Nine”--
for the murders of the four chiefs. The tribunal denied the
Ogoni Nine access to counsel, a fair trial, and the opportunity
to appeal their decision. During the course of the trial
they were tortured and mistreated, as were their relatives.
The Ogoni Nine were convicted and were executed by
hanging on November 10, 1995. Plaintiffs in this case
include family members of Ken Saro-Wiwa, John Kpuinen,
Dr. Barinem Kiobel, Saturday Doobee, Daniel Gbokoo and
Felix Nuate.


How was Shell involved?

Shell continued its close relationship with the Nigerian
military regime during the early 1990s. The oil company
requested an increase in security and provided monetary
and logistical support to the Nigerian police. Shell frequently
called upon the Nigerian police for “security operations”
that often amounted to raids and terror campaigns against
the Ogoni.


In response to growing Ogoni opposition, Shell and the
Nigerian government coordinated a public relations
campaign to discredit the movement, falsely attributing
airplane hijackings, kidnapping and other acts of violence to
Ken Saro-Wiwa and MOSOP.


Shell was involved in the development of the strategy that
resulted in the unlawful execution of the Ogoni Nine. Shell
told the Nigerian regime they needed to deal with Ken
Saro-Wiwa and MOSOP. Shell monitored Ken Saro-Wiwa,
and closely followed the tribunal and his detention. Prior to
the trial, Shell Nigeria told its parent companies that Saro-
Wiwa would be convicted and told witnesses that Saro-
Wiwa was never going free. Shell held meetings with the
Nigerian regime to discuss the tribunal, including with the
military president Sani Abacha himself. Shell's lawyer
attended the trial, which, in Nigeria, is a privilege afforded
only to interested parties. Brian Anderson, the Managing
Director of Shell’s Nigerian subsidiary, met with Owens Wiwa,
Saro-Wiwa’s brother and offered to trade Saro-Wiwa’s
freedom for an end to the protests against the company. At
least two witnesses who testified that Saro-Wiwa was involved
in the murders of the Ogoni elders later recanted, stating that
they had been bribed with money and offers of jobs with Shell
to give false testimony – in the presence of Shell's lawyer.
 

One month after the executions of the Ogoni Nine, Shell
signed an agreement to invest $4 billion in a liquefied natural
gas project in Nigeria.

What’s the Status of “The Case Against Shell”?

Beginning in 1996, the Center for Constitutional Rights (CCR),
EarthRights International (ERI) and other human rights attorneys
brought a series of cases to hold Shell accountable for human
rights violations in Nigeria, including summary execution,
crimes against humanity, torture, inhuman treatment and
arbitrary arrest and detention. The lawsuits were brought
against Royal Dutch Shell, Shell Nigeria, and Brian Anderson,
the head of its Nigerian operation.


The cases were brought under the Alien Tort Statute, a 1789
statute giving non-U.S. citizens the right to file suits in U.S. courts
for international human rights violations, and the Torture Victim
Protection Act, which allows individuals to seek damages in the
U.S. for torture or extrajudicial killing, regardless of where the
violations take place.


Over the course of thirteen years, Shell made many attempts to
have these cases thrown out of court, which the plaintiffs
defeated. The United States District Court for the Southern
District of New York set a trial date of March 27, 2009. On
the eve of the trial, the lawsuits were settled for $15.5 million in
what is being hailed as a milestone moment in the movement
towards corporate accountability and human rights.


 

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