Why The Foreign Corrupt Practices Act Needs Reform

As the Bowoto v. Chevron trial wraps up in San Francisco, a disturbing trend has emerged that raises questions about Chevron's commitment to human rights. Well, I guess that means another disturbing trend has emerged -- I've already written about some of the disturbing threads that have emerged regarding Chevron's legal department (looking at the questionable tactics of General Counsel Charles James and the hiring of the controversial William Haynes who signed off on water boarding and other "harsh interrogation techniques" while working for Donald Rumsfeld) and some of the "interesting" defenses that the company has asked the jury in the case to buy.

But in light of all of this, it wasn't too surprising to learn in the Bowoto trial that Chevron regularly paid the Nigerian military forces for private protection -- including a bonus for the "special duty" that they performed in May 1998 when they shot and killed two protesters and wounded several others who had occupied a Chevron oil platform. Remember, evidence from the Bowoto trial proves that Chevron knew that these military forces had a track record of committing vicious human rights abuses. Even the US State Department had documented their abuses in the department's annual Country Reports. Yet, Chevron paid them anyway. Why? It seems that their very brutality is what made them attractive to Chevron. After all, such a reputation can be a powerful disincentive to local residents who want to protest.

Paying the soldiers of foreign countries to moonlight as a private security force is an inherently corrupting practice that undermines the rule of law and the neutrality of a foreign army. Imagine the uproar if PDVSA, Venezuela's national oil company, decided to pay U.S. soldiers from Fort Bragg a bunch of cash to guard local Citgo gas stations with high-powered weaponry while they were on active duty. That's exactly the model that Chevron was using in Nigeria, with the primary difference being that at least a Citgo gas station would probably not be poisoning local water sources.

Payments of relatively small amounts of money can cause local soldiers, most of whom earn meager salaries, to be more loyal to company (Chevron) than to country. The risk is these soldiers can easily turn their guns on the very citizens they are supposed to be protecting in the name of providing "security" to an American company. That's the essence of what happened on Chevron's oil platform that day in Nigeria. Soldiers lost all sense of mission because they had been corrupted by an American company that essentially bribed them to turn their weapons against their fellow citizens.

You'd be surprised at how common the practice is even if the results are usually less tragic than what happened in Nigeria. In a fascinating expose, Jane Perlez of the New York Times demonstrated how the Louisiana-based Newmont Mining Company was paying soldiers in Indonesia huge salaries to protect operations in that country that were causing massive environmental damage. Similarly, the Burmese army guarding Chevron's pipeline in Burma has been accused of rape, murder, and forced conscription. In Ecuador, where Chevron is on trial for environmental damage, the company was scandalized in the national press for paying soldiers -- apparently in violation of Ecuadorian law -- for protection and housing for its lawyers at a local military base. In each of these cases military forces receiving "supplements" from Chevron became the company's local armed thugs who presumably were acting in the company's interests and under Chevron's orders.

This entire structure allows corporations to evade accountability. Because the armed forces are not directly employed by Chevron, Charles James can throw up his hands and claim Chevron had no control. Yet the victims generally cannot sue their own armed forces without risking further retaliation.

Given these dangers, Congress should extend the Foreign Corrupt Practices Act to outlaw direct payments by American companies to foreign military forces. Companies should pay taxes in their host country, the proceeds of which can help professionalize these forces. If security is such a problem, companies like Chevron can hire private security guards with clear lines of accountability to the company.

Comments

[mjt218]

Sorry to burst your bubble, but Chevron was acquitted on charges of human rights violations in the Bowoto trial. In the US, that means they were not proven guilty, and it wasn't a legal technicality.

[Andrew Woods - Huffpost Blogger]

Thanks for your comment - and you're correct, Chevron was acquitted in the trial (I actually submitted this post before the jury returned a verdict). But it is precisely the acquittal of Chevron that highlights the need for reform of the FCPA. I believe that the payment of the military troops in Nigeria was an inherently corrupting act that precipitated the tragedy that occurred in the underlying action in Nigeria. My post was meant to highlight the shortcomings of the FCPA (which no one, to my knowledge, is currently accusing Chevron of violating in the Bowoto case), and to call for reform to fill a disturbing gap in the coverage of the act. Though Chevron kept to the letter of the law as written, I believe that the payment of military troops compromised their loyalty to their country and led to them acting more aggressively in pursuit of Chevron's interests, rather than Nigerian interests. Because of this, I think that it is time for the relevant governmental bodies here in the U.S. need to review the FCPA and extend its reach to support the stated goals of preventing corruption from delaying the development of other nations.

[mjt218]

So US government security forces would not be called in if protestors or hostage takers engaged in a takeover of a Citgo gas station or refinery? I find that hard to imagine. If not military we'd at least have local police, SWAT, State Troopers etc.

I'm not sure an equivalent exists in Nigeria and I believe the Nigerian Government does not allow private security contractors to operate for internationls oil companies. They require the army to provide any needed security.

As a result, I'm not sure how this situation would be handled, even by an expanded FCPA. Perhaps our State Department could be involved to encourage the Nigerian Government to relax its policies and allow for private security forces?