Corporation Crackdowns:
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 demonstrators.

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 victims.

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 them.

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 natural gas.

* 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 in abuses:

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 interests.

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 world.

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