Experience file Dossier : Business and conflict, business and peace.

, Saint Hilaire du Touvet, November 2008

Corporate power contested

Civil society challenging Shell’s power in Nigeria.

Keywords: To analyse conflicts from a politic point of view | To analyse conflicts from an economic point of view | | | | | | | Nigeria

I. Contesting corporate power

This is by no means an example that can be generalised since it is based on a very accurate study of power relations, it highly depends on the type of business activity and the political context. Numerous other examples of business corporations that engage with civil society as a result of their capacity for international mobilisation of the public opinion can be mentioned: the diamond industry’s launching of the Kimberly Process as a result of an international campaign against “blood” or “conflict” diamonds, Nike after a law suit filed against them by a group of civil society organisations for the conditions in their factories, the pharmaceutical industry after the “Treatment action campaign” demanding cheaper retroviral drugs to treat HIV/Aids patients and many others.

There are also numerous examples of confrontations between business corporations and civil society that remain unresolved like the closed Coca-Cola factories in the district of Kerala, India, after mass demonstrations and several law-suits. A situation that negatively impacts boths sides as the population of the district faces unemployment and the Coca-Cola company looses its investment and benefits from its activity.

II. Shell example

In the case-study above, MOSOP had made a good assessment of Shell’s need for security and its need for consumer consent in order to sell its products. It also accurately assessed its power to mobilize, choosing a highly symbolic cause like the right to public goods. Tragically enough it was the announcement of Ken Saro Wiwa’s death through hanging that shocked the world and led to increased international support for the Ogoni cause. From focusing on the Nigerian State and its police and military force, the company shifted its security strategy in 1998, when it organised the first of a series of planned workshops to discuss environmental and development issues in relation to its Nigerian operations with community representatives and other interested parties. In May 1999, Shell stated that it had engaged in “meetings and consultations… with a range of Ogoni groups and organizations” with the objective of building “trust and understanding as a basis for addressing substantive issues of development and environmental management…” (1). Realism imposes on us to point out that the success of the resistance has been temporary as the situation in the Niger Delta is far from remedied. With the grievances of the population not being sustainably addressed, the resistance is getting more and more violent. Violence is becoming a goal in itself in the region, leaving political objectives on the side. It is certain that discourse and practice on the side of Shell do not necessarily collide (2) but the fact that Shell has been required to have such a discourse is an interesting point in itself. In strategic terms, this is a sign of disadvantage and an evidence of being challenged in its power position.

III. Between discourse and practice, where lies business responsibility?

Our hypothesis is that when differences in power distribution require justification, this can be interpreted as a sign of changing power relationships. Below a brief analysis of Shell’s changing discourse regarding its responsability in relation to state responsibility in the Niger Delta over the period 1995 - 2008.

Since 1995 Shell increasingly justifies its actions in a series of communications. Their 1995 publication « The Ogoni Issue » mentions for example that most of MOSOP’s demands are « outside the business scope of oil operating companies and within the government’s sphere of responsibility » (3). Other arguments that stress the separation of responsibilities between state and corporate actors are: “SPDC [Shell Petroleum Development Co.] agrees that, in the past, not enough oil revenue has been returned to the oil producing areas for developmental purposes. But the company cannot dictate how its contribution to the national purse should be spent - this is a matter for Nigeria and is indeed at the heart of most Nigerian political discussion” (4).

In 2008, the Shell world website gives you the option to read about Shell’s relation to people, environment, development etc. The first story in the section “People” is an interview with the director of Shell Nigeria, Basil Omiyi, who answers questions about social concerns in the region (5). He stays in line with the 1995 role division between the government and companies: “Some of our critics seem to believe that because the oil companies are the avenues through which the central government gets its oil revenue, we are therefore party to the dispute - which we’re not. […] It’s not their role to replace government.” At the same time he insists on Shell’s strategy to improve community relations on the ground: “After a number of experiments, we chose to engage local communities using broad framework agreements we refer to as ‘General Memorandums of Understanding’ (GMoU). […] In this new form of cooperation, the communities themselves are in charge of identifying priority projects and implementing them, with the help of NGOs. Shell provides its own funding and syndicate funding from other partners, including the government and NGOs. So the communities articulate their own future. And we hope this form of cooperation will contribute to building self-help capacity, increasing social cohesion, and reducing crime”. Royal Shell further informs us on their development strategy explaining that Shell implements some development programmes by themselves and “In others, we work with partners like USAID, UNDP and Africare. These are big development agencies that we fund because they are better at this kind of work than we are.”

How to understand this contradiction between stressing the different responsibilities of government and business corporations on the one hand while insisting in the other hand on their contribution to development and engagement with local communities (6)? Does this mean that the philosophical distinction between responsibilities is troubled on the ground in the context of states that are failing to provide human development? In order to establish good reputation and to keep their operations running, they have to engage directly with local communities and concerns. Above justifications for not interfering with state affairs put forward by Shell insist on the rights and obligations of sovereign states. A country’s right to sovereignty however is increasingly questioned in the international political domain if its leadership and/or government is considered illegitimate in the eyes of its population (7), as was clearly the case with the Abacha regime.

In addition to development, another domain where the distinction of responsibilities gets blurred is the provision of security for its activities. In contradiction to earlier mentioned statements, there is abundant evidence of a collusion between Shell and the Abacha regime regarding security measures during the period of the Ogoni uprising (end ‘80’s, beginning ‘90’s). Human Rights Watch points out in 1999 that Shell was involved in negotiations for the import of arms for use by the Nigerian police. The report continues that community members stated that the Task Force coerced individuals to sign statements “inviting” Shell to return. On top of that, there was the “supernumerary police”, existing of members of the Nigerian police force permanently attached to Shell facilities and paid for by Shell, a system common to all the oil companies. Ogoni detainees also alleged that they were detained and beaten by Shell police during the same period (8). In their website’s section on “Shell and society”, the company goes into some dilemma’s of its operations, like “Payments to governments”. It recognises that: “Oil and gas revenues can transform developing countries by invigorating economic growth and funding social services such as schools and hospitals. But managed badly they can have the opposite effect, stimulating corruption and conflict. It further provides information about Shell’s support for the ‘Publish what you pay campaign’ boasting that in 2003, the Shell Petroleum Development Company of Nigeria (SPDC) was the first company to disclose how much money it paid to the Nigerian government.” (9)

IV. Conclusion

Could we interpret their arguments as a forebode to changing responsibilities for actors and therefore a change in the distribution of power among them? Beyond discourse, it is in a new power equilibrium that business can show its responsibility: in allowing civil society and legitimate government to play an important role, accepting the principle of co-governance.


A striking example of how corporate power can be contested is the worldwide action against Royal Shell led them to withdraw from the Niger Delta in the early ‘90’s (10). As a result of the Ogoni resistance in the Niger Delta and international support for the movement, Shell has undergone a period of profound strategy review (11). The example demonstrates in what way a company can be challenged by civil society and as a result, how it has redefined its relationship with other societal actors, in this case civil society and government.


  • (1) : Shell Petroleum Development Company of Nigeria Limited, People and the Environment: Annual Report 1998 (Lagos: SPDC, May 1999), pp.15–16 in B. Manby, Shell in Nigeria:Corporate Social Responsibility and the Ogoni Crisis, A case study published by the Carnegie Council on Ethics and International Affairs, Carnegie Council on Ethics and International Affairs.

  • (2) : See for example the report “Behind the mask, the real face of Corporate Social Responsibility”, Christian Aid

  • (3) : Shell, The ogoni issue, cited in “The Ogoni factsheet”, www.ratical.org/corporations/OgoniFactS.html

  • (4) : Shell ‘The Ogoni issue’, consultable on Shell’s website: www.shell.com/home/content/nigeria/about_shell/issues/ogoni/ogoni.html

  • (5) : Q&A with Basil Omiyi, interview by Michael Adande and Norbert Both.

  • (6) : Principle 6 of Shell’s general business principles 2007 concerns local Communities: “Shell companies aim to be good neighbours bycontinuously improving the ways in which we contribute directly or indirectly to the general wellbeing of the communities within which we work.”

  • (7) : The report of the International Commission on Intervention and State Sovereignty, “Responsibility to protect” , was a breakthrough in this regard. The authors are from the International Development Research Centre, Ottawa, Canada, 2001

  • (8) : Human rights Watch, “The Price of Oil: Corporate Responsibility and Human Rights Violations in Nigeria’s Oil Producing Communities.”

  • (9) : www.shell.com/home/content/responsible_energy/society/using_influence_responsibly/political_activity_and_public_advocacy/political_activity_and_public_advocacy.html

  • (10) : In the early ‘90’s two polemical issues arose regarding Shell; Brent Spar and the execution of Ken Saro-Wiwa and 8 other leaders of the Ogoni resistance. The collusion of these two events led to a heightened impact on the company. Consumer boycotts (mostly in Germany) were the result of an Europe-wide campaign against led by Greenpeace and other environmental groups, in repsonse to the decision of the British government to give a liocence to dump Brent Spar in the Atlantic Ocean.

  • (11) : Some examples of Shell’s strategy revions: 1997 shareholders meetings of the Royal Dutch/Shell group: publication of the first annual report on the operations of SPDC (joint venture Shell and Nigeria) looking at issues of environmental standards and human rights. 1997: publication of first group-wide report on health, safety, and the environment. 1998: Shell International published its first social responsibility report, “Profits and Principles—Does There Have to Be a Choice?” 1999: Shell report “People, Planet and Profits: An act of commitment”.