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Supreme Court could open door for Exxon Mobil to face trial on human rights allegations

October 2, 2012

Also: Supreme Court ruling in Kiobel case could affect Indonesia human rights suit against ExxonMobil

http://www.dallasnews.com/business/energy/20120929-supreme-court-could-open-door-for-exxon-mobil-to-face-trial-on-human-rights-allegations.ece

Supreme Court could open door for Exxon Mobil to face trial on human rights allegations

By IAN T. SHEARN and LAIRD TOWNSEND

Special Contributors

Published: 29 September 2012 10:42 PM

Even in the distilled legal narrative of a court filing, the allegations are chilling.

In August 2000, an Indonesian man identified only as John Doe II was thrown into a truck, taken to a military camp, and severely beaten and tortured “using electricity all over his body, including his genitals.”

After three months of torture, the court papers said, his captors “took off his blindfold, took him outside the building where he had been detained and showed him a large pit where there was a large pile of human heads.” The captors threatened to “add his head to the pile.”

This was the Aceh province, on the island of Sumatra, at the height of a bloody civil war. Such accounts were commonplace. But in this case, the alleged torturers were said in the court filing to be “Exxon Mobil security personnel.” And Irving-based Exxon Mobil has been ordered to stand trial in a human rights lawsuit, with all the potential financial and reputational damage that implies.

In June 2001, John Doe II and 10 other civilian neighbors of Exxon Mobil’s Arun natural gas facility filed a lawsuit against the company in federal court in Washington, D.C. Villagers charge the company with complicity in torture, arbitrary detention and extrajudicial killings allegedly committed by Indonesian soldiers it hired to provide security.

The legal fate of Exxon Mobil now rests in the hands of the U.S. Supreme Court. On Monday, justices will hear arguments in a similar, better-known case, Kiobel vs. Royal Dutch Petroleum (Shell).

Like John Doe vs. Exxon Mobil, the Kiobel case relies on an 18th century statute called the Alien Tort Claims Act. The Nigerian plaintiffs say it gives citizens outside the U.S. the right to sue U.S.-based entities, including corporations, for internationally recognized human rights violations.

At the time of the first of the alleged Indonesian incidents, in 1999, Exxon was in the process of taking on Mobil’s assets worldwide, including the Arun natural gas facility in Aceh ­ and “essentially bought the war when they bought Mobil,” Steve Coll, author of Private Empire: ExxonMobil and American Power, said in an interview.

Included in the merger were Mobil’s hired soldiers, who were paid to guard the Aceh facility. Exxon Mobil acknowledges that it continued paying the soldiers but has steadfastly maintained its innocence in the case.

“We have fought the baseless claims for many years,” Exxon Mobil spokesman David Eglinton said in an email. “The plaintiffs’ claims are without merit. While conducting its business in Indonesia, Exxon Mobil has worked for generations to improve the quality of life in Aceh through employment of local workers, provision of health services and extensive community investment. The company strongly condemns human rights violations in any form.”

In a 2008 ruling, however, U.S. District Judge Louis Oberdorfer ordered Exxon Mobil to face trial.

“A reasonable finder of fact,” the judge wrote, citing internal correspondence from Exxon and its subsidiary, Exxon Mobil of Indonesia “could conclude that the paid security forces committed the alleged torts and that EMOI and Exxon Mobil are liable.”

Exxon Mobil appealed, but a federal circuit court panel upheld the ruling in 2011.

In the case now before the Supreme Court, Shell ­ like Exxon Mobil ­ says the alien tort statute does not apply to cases like this: that only individuals, and not corporations, can be held liable for human rights violations.

How the Supreme Court rules will almost certainly set a major precedent, legal observers say, and could have huge repercussions for companies maintaining a U.S. presence and operating internationally. More than a dozen alien tort cases involving hundreds of plaintiffs are riding on the decision. According to legal observers, the case against Exxon Mobil is among the strongest.

Alleged incidents

In the Exxon Mobil case, alleged incidents date from 1999 to 2001, a period of intensifying violence throughout Aceh. Among them:

“A member of Exxon Mobil’s security personnel” forced his way into the home of a pregnant woman, wielded a rifle, “threatened to kill her and her unborn child,” then “beat and sexually assaulted” her.

“ExxonMobil security personnel” accosted a man traveling between villages, beat him, handcuffed him and “took him to Post A-13 on ExxonMobil’s property,” where, using a knife, they “carved the letters ‘GAM’ into his back.” GAM was the name of the rebel separatist movement.

“Exxon Mobil security personnel” approached a man visiting a camp for refugees “displaced by the destruction of their homes by the Exxon Mobil security forces.” They shot him “in three places on his leg” then “tortured him for several hours while he continued to bleed from the gunshot wounds.” Taken to a hospital for treatment, the man was returned to the security personnel, who held him roughly another month and “tortured him regularly.”

Exxon Mobil would not comment on any specifics of the case, but Martin Weinstein, Exxon’s chief lawyer for much of the case, said in a 2002 interview with Public Radio International’s The World: “We have no knowledge of any of these abuses taking place around the facilities,” Weinstein said. “We condemn them if they did occur, but don’t know whether they occurred or not.”

‘Poor reputation’

Although documents in the case are sealed, Oberdorfer’s 2008 court ruling quotes from the material ­ including Exxon Mobil’s internal correspondence.

Oberdorfer cited no evidence that Exxon Mobil knew of any specific incidents alleged in the suit, much less condoned or authorized them. But he wrote that the evidence did indicate the company at the very least should have known about the Indonesian soldiers’ tendencies.

The judge said one Exxon Mobil email noted “the poor reputation of the Indonesian military, especially in the area of respecting human rights.” Another internal company report cited a news report that “armed security forces of EMOI” ­ the company’s paid agents ­ conducted “security sweeping operations at five villages near the explosive storage of Exxon Mobil” and that “thousands of people were threatened due to sweeping operations and gunfire.”

“Here,” the judge stated, “a finder of fact could reasonably conclude that EMOI was negligent in hiring ­ or at least in retaining ­ its paid security forces. There is sufficient evidence that EMOI should have known that the military security posed undue risks to local Indonesians near its Arun gas venture.”

In the 2002 interview, Weinstein said that “the government has responsibility for security” and later argued in court that Indonesia required the company to hire the troops, leaving Exxon Mobil no choice but to comply.

But Oberdorfer was not convinced. According to the contract he cited between Exxon Mobil and Pertamina, Indonesia’s state-owned oil company, Pertamina agreed to provide security “as may be requested” by EMOI.

Oberdorfer pointed to evidence that Exxon Mobil initiated that request.

“In December 1999,” Oberdorfer wrote, “Robert Haines ­ Exxon Mobil’s Manager of International Government Affairs ­ sent a memorandum to Mobil’s CEO, reporting on his meeting in Indonesia with subordinates to discuss the security concerns in Aceh,” the judge wrote. Haines said Exxon Mobil “has asked for the assistance of the military to protect its facilities.”

Oberdorfer said that even if the contract had required that Exxon Mobil hire the troops, it doesn’t absolve the company of responsibility for their actions.

“Is the owner of a swimming pool insulated from liability per se for a lifeguard’s negligence,” the judge asked, “simply because the lifeguard is required to be there? Surely not.”

Attorney Weinstein told PRI that “there is no allegation that Exxon Mobil … directed in any way, shape, or form, any of these abuses.”

But the judge said in his 2008 ruling that EMOI “had sufficient control over and, effectively ‘managed’ the security forces … to create a master-servant relationship.”

A spirited exchange between opposing lawyers in 2008 succinctly boiled down the case:

“Exxon Mobil is innocent,” Theodore Wells, Exxon’s outside counsel, offered in summary. “What took place … relates to the activities of the Indonesian government and the Indonesian military … and we have no dog in that race.”

Michael Hausfield, part of the plaintiffs’ legal team, sprung from his chair to offer his rebuttal: “Exxon fed the dog, they clothed the dog, they housed the dog and they paid the dog. Let’s bring the dog on.”

The judge consented, ordering the case to trial. Oberdorfer didn’t give the plaintiffs everything they wanted. He dismissed the alien tort charges, allowing only related tort claims in state court. It was the appeals court that restored the alien tort claims in 2011.

But the panel agreed that ExxonMobil should face the villagers in a courtroom: “Plaintiffs have provided sufficient evidence, at this stage, for their allegations of serious abuse.”

‘The jewel’

Exxon Mobil is the largest private oil company in the world, and consistently one of the most profitable, netting $41 billion in 2011. The lion’s share of those earnings comes from operations outside the U.S., in more than 200 countries ­ including places like Aceh, Equatorial Guinea, Chad and Nigeria, “where risk is endemic,” said author Coll.

“Exxon Mobil prior to 2000 [had few] properties in conflict zones,” Coll said. “They were a relatively risk-aversive company. It took awhile … to come to terms with the complexity of their position.”

Since the 1970s, Mobil had been enjoying enormous profits from the Arun facility, which one Exxon Mobil executive described to the Wall Street Journal as “the jewel in the company’s crown.”

But by 2000 the jewel was under threat of attack. The Free Aceh Movement had been fighting for independence from Indonesia since 1976. Along with other shadowy parties, the rebels began abducting and attacking Exxon Mobil employees. According to the lawsuit, Exxon Mobil paid Indonesian soldiers $500,000 a month to protect the plant. But the violence continued.

Academics, human rights advocates and journalists have said that Indonesian military posted throughout Aceh generally had two goals: to suppress the separatists, and to supplement poor wages with lucrative black-market deals, from illegal logging and gambling dens to major protection rackets. According to nongovernmental organizations and government investigators, Indonesian soldiers harassed, intimidated, robbed, tortured or killed more than 1,000 Acehnese from 1989 to 2004.

In 2002, after initially resisting, Exxon Mobil signed an accord known as the Voluntary Principles on Security and Human Rights. The principles standardized security practices to encourage “respect for human rights and fundamental freedoms.” They also helped Exxon Mobil minimize liability in places like Aceh.

As for the Aceh lawsuit, the company resorted to its “playbook,” Coll said. “They fight all the way to the end of the appeals process; they throw a lot of money at it. They very rarely settle.”

Defending this suit, Exxon Mobil has retained three major law firms and has filed at least five petitions and motions to dismiss ­ so many that at one point Oberdorfer had to remind the company about a rule against frivolous filings.

So far the case has remained largely off the public radar. Exxon Mobil has not publicly disclosed any set-aside of contingency funds for a potential judgment or settlement. In U.S. Securities and Exchange Commission filings from 2001 to 2011, in a voluntary list of potential liabilities to inform investors, Exxon listed only 28 lawsuits against it. The Aceh case was not among them.

Losing or settling the case would hardly make a dent in Exxon Mobil’s considerable net worth. Of more concern might be the negative publicity that comes from being associated with atrocities.

“The impact of such publicity,” the Product Liability Advisory Council wrote in a Kiobel brief in support of Shell, “undermines the ability of a corporation to function normally.”

The U.S. Chamber of Commerce, in its own Kiobel brief for Shell, echoes this warning. It points out that Talisman Energy Company ­ whose experience in Sudan closely paralleled Exxon Mobil’s in Aceh ­ “finally sold its assets and left Sudan” in 2003, in the wake of “continuing pressure” ­ including an alien tort suit. For its part, Exxon Mobil has remained in Aceh through 2012, only recently announcing plans to abandon the dwindling reserves of the Arun gas facility.

The Supreme Court is expected to rule on Kiobel v. Shell as early as December, and Exxon Mobil’s case is on hold at least until then. If Kiobel prevails, the earliest trial date for Exxon Mobil would be 2013 or 2014.

“You would think that ExxonMobil doesn’t care,” says Marco Simons, legal director for the advocacy group EarthRights International. Simons filed a brief for the plaintiffs in the Exxon Mobil case. “But this matters to even big oil companies. They face a tremendous vulnerability to their reputation, not unjustifiably, but because the evidence shows complicity in series of abuses. Directors do not want to be associated at cocktail parties with mass graves in Indonesia.”

The report was produced in association with the media NGO Project Word ( www.projectword.org) with reporting assistance from Emily Johnson, Mia Lobel, Hannah Rappleye, Lisa Riordan Seville and Chris Gauthier. For additional reporting on this story, visit www.projectword.org/aceh.

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http://fsrn.org/audio/audio-tag-title-raw/10951

Supreme Court ruling in Kiobel case could affect Indonesia human rights suit against ExxonMobil

MON, 10/01/2012 – 14:58

  • Year: 2012
  • Length: 6:51 minutes (6.27 MB)
  • Format: MP3 Mono 44kHz 128Kbps (CBR)

The results of Kiobel vs. Royal Dutch Petroleum could have major implications for other multinational corporations accused of complicity in human rights violations and for the victims who have been seeking justice. One of those cases centers on ExxonMobil, the world’s largest private oil company and accounts of a handful of villagers in the Indonesian province of Aceh. Emily Johnson has more from the rice fields of Aceh.

This report was produced with the support of the media NGO Project Word with reporting and production assistance from Mia Lobel, Hannah Rappleye, Lisa Riordan Seville, and Laird Townsend. For additional reporting on this story, visit www.projectword.org/aceh .

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