Business Backs Brutality
by Arvind Ganesan
Dollars and Sense magazine, May / June 1999
In the sleepy fishing village of Veldur in India, Sadhana
Bhalekar, a young woman in her mid-twenties, was taking a bath
on the morning of June 3, 1997 when police broke down her door,
beat her retarded nephew, and mercilessly dragged her naked out
of her house. They beat and then arrested her. She was three months
pregnant at the time. The police officer in charge reportedly
said, "This is Baba Bhalekar's wife, bash her head on the
road." Why? Vithal "Baba" Bhalekar, is a leading
opponent of the Houston-based Enron Corporation's Dabhol Power
project- the largest power plant in the world-in the state of
Maharashtra, India. The brutal police raid on Veldur village was
clearly an act of terror to silence critics of the project.
Police assaults against opponents of Enron's project are a
regular occurrence in Ratnagiri district, where the power plant
is located. Authorities threw in jail a high profile critic of
the project, Sadanand Pawar, an economics professor from Bombay,
because he had "spread false information to the public which
is against Enron."
The police-in what is often viewed as the world's largest
democracy-criminalized demonstrations against Enron in December
199G, by banning all "public utterance of cries, singing
of songs, playing of music" and the "delivery of harangues,
the use of gestures or mimetic representations, and the preparation,
exhibition, or dissemination of pictures, symbols, placards or
any other object or thing which may in the opinion of such authority
offend against decency or morality..." The orders squashing
free speech expire every 15 days, but police routinely renew them
to maintain the semblance of rule of law. By March 1998, more
than 3,000 people had been jailed, and some beaten, simply for
demonstrating against the project.
The Indian state government did everything it could to ensure
that Enron's project would move forward. What about the company?
Enron paid the police who arrested and beat the protesters and
continues to pay them to this day, a relationship legal under
state law. Enron also loaned police a helicopter to survey the
But the actions of the company go beyond material and financial
support for abusive police. On at least four occasions, contractors
for the company directly threatened, harassed, and attacked individuals
who opposed the project. When the victims tried to press charges,
they found the rule of law did not operate for them. The police
looked the other way in some cases. In others, the police arrested
The corporation denies any culpability. Instead, the multinational
criticizes human rights organizations for documenting its abuses.
Since the East India Company first embarked on colonial ventures
centuries ago, corporations have been complicit in human rights
abuses. Because energy companies like Enron invariably displace
residents from their land, or make it unlivable by polluting it,
they are involved in some of the worst human rights abuses today.
They have received more attention since November 1995, when the
Nigerian government executed human rights activist Ken Saro-Wiwa
and eight others who opposed the environmental devastation wrought
by Royal Dutch/Shell in the Ogoniland region. An international
campaign against Shell continues to this day even as the corporation,
the largest foreign investor in Nigeria, has endorsed United Nations
human rights guidelines and says it will devise policies to follow
Since Saro-Wiwa's death, human rights and environmental organizations
have stepped up their scrutiny of corporate abuses and ugly corporate
partnerships with repressive governments. Local and national governments
increasingly vie for lucrative business deals with multinationals
and are more than willing to sideline human rights in favor of
commerce. Similarly, the United States and other home governments
of corporations are only too happy to support these multibillion-dollar
energy or infrastructure projects by taking human rights off their
foreign policy agenda.
Companies and governments often argue that these investments
will improve human rights, but a cursory look at operations throughout
the world in the 1990s paints a very different picture.
* Mobil Oil's natural gas subsidiary provided the bulldozers
used by the Indonesian military to dig mass graves during its
murderous campaign to crush an insurgency on the island of Aceh
in the early 1990s, according to allegations that only recently
surfaced. Indonesia is the world's largest exporter of liquefied
* Since 1993, when they began construction on the Yadana natural
gas field and pipeline in Burma, the French oil company TOTAL
and the U.S.-based Unocal partnered with the brutal Burmese junta.
The Burmese military providing security for the project killed,
tortured, raped, and conscripted the labor of villagers along
the pipeline's route, according to press accounts. These charges
will soon be judged in a California federal court, where a lawsuit
filed by the Center for Constitutional Rights and Earth Rights
International alleges that Unocal benefited from the use of forced
labor and the Burmese military's human rights abuses.
* In 1996, the human rights world learned of British Petroleum's
multi-million dollar contracts with the Colombian military-among
the world's most brutal- to provide security for BP's exploitation
of the massive Cusiana-Cupiagua oil fields. These fields were
the largest discovered in the Western Hemisphere since 1967.
* Exxon is under fire after the slaughter of 20 citizens living
near the oil company's proposed pipeline through Chad and Cameroon.
The German parliament and African and European groups predict
further human rights violations, forced relocations, and environmental
damage once construction begins. Environmental organizations from
the North and South are calling on the World Bank to suspend funding
for the project until Exxon addresses these issues. The pipeline
would make Chad one of Africa's top five oil exporters.
Burma, Colombia, Indonesia, and Nigeria. All are countries
with a history of rule by repressive governments even without
the collusion of multinationals. In this context, corporations
often argue that their presence and investment will improve human
rights. Superficially, "constructive engagement," as
this argument is called, has merit: If economic activity increases,
so will the possibility of international dialogue with abusive
governments and an improvement of living standards that gives
citizens the power to raise their voices in protest.
Human rights violations become framed as a "necessary
evil" that ensures improvement in the long term. Essentially
this view serves to justify million or even billion-dollar investments
in abusive countries.
Mobil-soon to merge with Exxon-is the most vocal on the issue.
Its "editorial advertisements" lambaste government sanctions
to punish abusive governments. In one 1997 ad Mobil wrote: "Rather
than taking action that merely makes us feel virtuous, government
. should clarify its objectives and weigh the full costs before
imposing sanctions. It should seek ways to engage, not retreat..."
Joining Mobil in attacking sanctions is the American Petroleum
Institute, an industry-funded advocacy organization and think
tank. Its August 1998 report-titled "Oil and Natural Gas
Industry Promotes Human Rights Abroad"-proclaimed that the
use of "sanctions to punish regimes that abridge their peoples'
human rights" denies local people the "rights enhancements"
that oil companies "confer." This report was written
in conjunction with USA-ENGAGE, another industry-funded lobbying
organization whose purpose is to severely limit or curtail the
use of sanctions by the U.S. government.
The reality is that "constructive engagement" with
undemocratic governments is a myth. Instead, engagement has the
opposite impact as a look at only the last five years reveals.
Consider Burma, where Unocal claims its Yadana gas project-the
largest single foreign investment in the country-"is bringing
sustainable, long-term, economic and social benefits to the 35,000
villagers living in the immediate pipeline region and lasting
benefits to the people of Myanmar [Burma]."The IMF reports
that Burma's economy is collapsing, there is virtually no social
spending by the military junta, and there is no short-term prospect
for reforms, despite foreign investment. Throughout this process,
the military junta tightened its grip over the country.
Similarly, in Kazakhstan, President Nursultan Nazarbaev signed
a deal with Chevron in 1993 to develop the nine-billion barrel
Tengiz field-the world's largest single oil discovery since 1967,
worth at least $78 billion. Five years after the deal was inked,
Nazarbaev has shut down the independent media, announced snap
elections, and arrested and harassed his leading political opponent
to ensure that no credible opposition can challenge his increasingly
autocratic rule. He also appointed his son-in-law to manage the
state oil company.
The most compelling evidence, not just of constructive engagement's
failure, but of its role in undermining progress on human rights,
comes from a seemingly unlikely source-the final report of South
Africa's Truth and Reconciliation Commission. The commission found
that corporations were "willing collaborators" with
the apartheid regime since the early 1960s with "a direct
interest m maintaining the status quo. They bypassed attempts
to impose sanctions by "forming partnerships with South African
parastatal organizations." The apartheid regime "depended
on five major oil companies to break the oil ban: Shell, British
Petroleum (BP), Mobil, Caltex and Total."
"Foreign investment prevented governments from taking
any real action against apartheid" because of the pressure
exerted by these companies to maintain the system, said the commission-a
pattern we see today. Some examples of government-corporate complicity
Just this year, the Dutch government reversed its long criticism
of China's human rights record and refused to sponsor a United
Nations Human Rights Commission resolution condemning China. In
February, the Chinese government awarded Royal Dutch Shell the
largest single foreign investment in Chinese history-a $4.5 billion
contract to build an ethylene plant with a government oil company.
In March 1998, the U.S. State Department ignored its own report
on human rights abuses in Turkmenistan to okay a $96 million award
from the Export-Import Bank to four U.S. companies selling natural
gas and other equipment to the country. Any Ex-Im Bank loan over
$ 10 million requires the State Department to conduct a human
rights impact assessment "to determine if it may give rise
to significant human rights concerns." Its 1997 human rights
report began with the statement, "Turkmenistan, a one-party
state dominated by its President and his closest advisers, made
little progress in moving from a Soviet-era authoritarian style
of government to a democratic system." Its state security
forces "operate with relative impunity and have been responsible
for abusing the rights of individuals as well as enforcing the
Government's policy of repressing political opposition."
Turkmenistan possesses some of the largest oil and gas reserves
in Central Asia and companies such as Mobil, Exxon, and Royal
Dutch Shell operate there. So the State Department okayed the
deal that gives Bateman Engineering, Dresser Rand, Corning, and
General Electric $96 million in public funds.
While Turkmenistan's president Saparmurad Niyazov was visiting
President Clinton a month later, the U.S. government's Trade and
Development Administration awarded Enron a $750,000 grant to conduct
a pipeline feasibility study for a proposed $2.8 billion pipeline
in Turkmenistan. (General Electric and Bechtel, both U.S. companies,
eventually won the pipeline project in February 1999.) After the
Enron deal was signed, the White House issued a press release
stating, "Turkmenistan is committed to strengthening the
rule of law and political pluralism, including free and fair elections
for Parliament and the presidency in accordance with international
standards...." But when reporters asked Niyazov about the
government's attitude toward opposition parties, he said, "We
do not have any opposition parties-you are ill-informed. We have
none." U.S. officials said they raised human rights issues
privately with Niyazov during his April 1998 visit. The U.S. and
Turkmen governments played the game of "hostage politik"-where
repressive governments release political prisoners to gain political
and commercial favor with Washington-during the visit. The State
Department lobbied for and secured the release of 10 political
prisoners which the U.S. government then cited as an example of
improvement in human rights, in justification of its commercial
Behind the political smoke-screens, undemocratic governments
further consolidate their stranglehold over resources and revenues
once partnered with international corporations. A dictatorship
or one-party state has no incentive to distribute its gains to
a population it does not pretend to represent. Agreements between
a company and a repressive government are essentially deals between
two private parties-they are a profit-making enterprise for the
company and for those in power. When a resource brings in hard
currency, like oil, an autocratic government often becomes a kleptocratic
one, enabling a few to steal the wealth of the nation. Then there
is Enron. If increased investment necessarily leads to improvements
in human rights and respect for the rule of law, then how to explain
the human rights violations surrounding the company's power project
in India? India is considered the world's largest democracy, governing
under the banner of human rights, the rule of law, and an active
judiciary. It largely accepts free expression and peaceful assembly.
The conflict in the Ratnagiri district flows directly from the
conduct of Enron's subsidiary and the state after villagers opposed
the seizure of their lands, and the polluting and diversion of
their water. The abuses visited upon dissenting villagers are
traceable to the supposedly beneficial investment by Enron.
Despite cheerleading that promotes foreign investment as the
key to improving human rights, the reality is human rights are
not safeguarded-even in countries considered democratic-without
forceful action on the scale that defeated apartheid in South
Africa. Financial institutions must enact human rights guidelines
in their loans. Campaigns sanctioning corporate investors must
enlist the support of those suffering under corporate/government
collusion. Corporate codes on human rights-such as those enacted
by Unocal and Shell after their operations in Burma and Nigeria
were exposed-are only one piece of a project that requires action
by governments, financial institutions, and the citizenry of the