CORPORATE SOCIAL RESPONSIBILITY AND MULTINATIONAL OIL CORPORATION; A PANACEA FOR PEACE AND DEVELOPMENT IN THE NIGER DELTA REGION OF NIGERIA.

CORPORATE SOCIAL RESPONSIBILITY AND MULTINATIONAL OIL CORPORATION; A PANACEA FOR PEACE AND DEVELOPMENT IN THE NIGER DELTA REGION OF NIGERIA.

CHAPTER ONE

                                                          INTRODUCTION

1.0 Background of the Study

          Under the contemporary practice of the multinational oil industry, the license regime is regarded as the basis of the Joint Venture Agreements with their host countries. These agreements define the scope of the rights and obligations of the companies and those of the government. However, as these companies have realized over the years, they are vulnerable to constraints as conflicts arise regarding complex domestic politics between centralized government and local forces pushes corporate social responsibilities beyond the boundaries of legal paraphernalia . The watertight nature of these agreements in defiance of complex extra-legal realities is the dilemma of multinational oil industries .

In international petroleum arrangements between host Countries and oil companies, each party has a common goal to make possible the exploitation of the Country petroleum resource and maximize its economic return. The ideal arrangement is seen as one that effectively accommodates the common as well as the divergent aspiration of both parties. The result of this is a constant tension from the desire of the host State to retain control over its natural resources and the expectations of oil companies to maximize the rate of return on its investments with little or no developmental activities in the local communities . Hence there is always a demand for effective legal and regulatory framework with clear and transparent social, legal, policy and fiscal terms that represents the development of Host State and Local Communities .

In the purview of the Niger Delta, there is frustration and a deep sense of betrayal for the socio-economic under-development of the region that produces oil, which accounts for 90 per cent of the country foreign exchange earnings . Meanwhile, the companies are the technical partners that provide the technology and significantly the funds for the exploitation of the oil resources. The agreement of the companies is that their operations are guided by specific contract terms, which they have complied. They have also distinguished their role as private enterprise from that of the government as a provider of social services to its population. To say the least, the arguments may only exist in legal technicalities but they do not appeal to the social economic dynamics of the circumstances. At any rate, corporate constructive social engagement is not necessarily statutory but is in fact an indispensable ingredient of stakeholder relations’ management. Corporate practice has shown that effective management of stakeholder relations can be a pre-requisite for a win-win outcome for a firm and its stakeholders, in the form of increased revenue, stock value and profit .

The arguments of the multinational oil companies are rooted in the English law principle of Pacta Sunt Servanda (Sanctity of contract). The doctrine of sanctity of contract is without doubt a very important doctrine in the international petroleum contract. The doctrine was first given expression in the case of Paradine v Jane . In this case, the court held that, when the party by his own contract creates a duty or charge upon himself, he is bound to make it good if he can, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract . Since this judgement in 1647, the doctrine has become a powerful defensive instrument in the overall toolbox  of the strategies of political risk management at the disposal of the multinational oil corporations. In modern International Petroleum contracts, stabilization clauses are employed to stipulate constraints on the legislative power of the government . The problem of contract instability and the demand of stabilization guarantees are not very common in western countries because political risk for foreign investment is not acute. The scenario is completely different in developing countries and transition economies. The Sanctity of contract is an issue between multinational oil corporation and government; what it has not envisaged are complex national questions such as resource control, and natural resources self-determination as is the case with the Niger Delta.

The issue confronting Nigeria Niger Delta region over the last few decades, beginning with the discovery and subsequent exploitation of oil and gas resources, have caused increasing national and international concerns. Nigeria economic strength is based on the immense oil and gas wealth located in the region. Ironically, however, there is little evidence that the region is benefitting from the wealth being generated from oil production. The vast revenues derived from the exploitation of the oil and gas deposits in the region have barely touched the delta own pervasive local poverty. There are formidable challenges to sustainable human development in the region, including the conflicts over resources among communities, and between communities and oil companies, who the people perceive as agents of the insensitive federal government. There is no gainsaying, therefore, that real and perceived inequity in the distribution of Nigeria oil and gas wealth is responsible for the increasingly intense and frequent conflicts that threaten Nigeria political and economic stability and growth. And to compound an already bad situation, the modes of dispute management that have been adopted over the years to tackle the Niger Delta crises have failed to yield meaningful results.

The dilemma of the multinational oil industry is better expressed in the paradigm of contractual obligation in contrast with social obligation as dictated by the circumstances of the host communities. The difficulty with the multinational oil industry operating in the Niger Delta is its strict complaint approach predicating upon the principles of pacta sunt servanda. The implication is that International Petroleum Contracts are sacrosanct and should be interpreted distinctively of what is regarded by them as incidental social obligations . 

            Legally speaking, under the Nigerian Petroleum Contract Law; the natives of Niger Delta agitating for better terms from the oil companies are not privy to the existing Joint Venture Petroleum contracts . However traditions and customs, which crystallized into customary law though subject to principle of repugnancy are still recognized under the Nigeria legal system .

The Niger Delta crisis revolves around three key players: the oil producing communities (OPCs), the multinational oil companies (MNOC) and the Federal Government of Nigeria.

1.1 Statement of the Problem

Presently, it is obvious that oil companies are not living up to expectations of their duties in the host communities. This contributed immensely to environmental degradation of the region, the air, water and land pollution, destruction of natural habitations and waste disposal system that are harmful and destructive to the host community. Lack of corporation to tackle the problem and reduce the effects of drilling activities on the environment and raise the standard of living of the people in the host communities became a source of concern to the youth of the region.           Secondly, lack of infrastructures and social amenities in the host communities of Niger Delta region by the federal government and oil companies operating in the region. Thus, the researcher is intended in finding out the cause of these problems in the region.

 1.2 Aims and objectives of the study

The aim of this study is to discuss how the multinational oil companies operational in the Niger Delta Region have been able to affect the community especially in ensuring peace and development, and a general appraisal and possible solutions for the problems discussed will also be attempted in the course of the study.

1.3 Research Question

This research will attempt and give answers to the following questions;

I. Whether there are derivable rights by the host community of a multinational oil company from oil exploration of its area? 

ii. How does the Host community benefits from oil exploration in its area?

iii. What is the relationship between the government contracts with multinational oil companies and host community?

iv. Can there be a contractual relationship between the host communities and the multinational oil companies in their exploration activities within the host communities?

v. Are there other beneficial rights the host community of a MNOC can enjoy from the activities of the MNOC in the area?

1.4 Significance of the Study

This research is important in that, it provides an examination on the concept of Corporate Social Responsibility (CSR) and Multinational Oil Companies (MNOCS). This research work will examine how these companies have been able to carry out their Corporate Social Responsibility to the Host Communities, to ensure peace and development exists in these communities where oil exploration and exploitation takes place in the Niger Delta region of Nigeria. The findings of this research will be useful to academic researchers, civil society organizations, policy makers, legislatures, and legal practitioners. 

1.5 Scope of the Study

  The scope of this study would focus on multinational oil companies operating in the Niger Delta communities like Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, River, Delta etc from the period of 1993 during the Ogoni struggle that bought consciousness on the idea of Corporate Social Responsibility of Multinational Oil Companies to their host communities till the present.

1.6 Structure of the work

This research work is divided into five chapters, Chapter one will deal with the general introduction and serve as the basis for this research, chapter two will give an insight of the Niger Delta Region; it geographical location, discovery of oil in Nigeria, impact of oil exploitation, as well as violence and crises in the region. Chapter three will discuss the different multinational oil companies operating in the Niger Delta Region. Chapter four will look at how the concept of corporate social responsibility would lead to the sustenance of peace and development in the local communities in Niger Delta where the multinational oil companies carry business activities. The last chapter, which is chapter five, will deal with the recommendations and conclusion. 

1.7 Research Methodology

The method to be employed in this research work will be doctrinal. It involves research based on the review of relevant literature in this area of law. Research materials used in this research work are derived from primary and secondary sources. The primary source materials are statutes, case law, international conventions, while the secondary source materials are: books local and international articles, online materials, journal, documentary papers, newspapers related to the Corporate Social Responsibility of Multinational Corporations.

1.8 Literature Review

Introduction

This work intends to study the work of different scholars on the issue of Corporate Social Responsibility of Multinational Oil Companies to their Host Communities, especially in the Niger Delta Region of Nigeria.

According to Rebecca Enuoh and Sunday Eneh , Business organizations are expected to meet certain social obligations in terms of corporate social responsibility (CSR). In the Niger Delta region of Nigeria oil Multinational corporations (MNC) have not been left out in this regards. There have been remarkable changes in the host communities as most of the facilities provided by the MNCs have either been absent, insufficient or dysfunctional. Despite the activities of the MNCs, the opinion and attitudes of the host communities portray an act of antagonism rather than support for the MNCs giving rise to an imaginary gap between what is done and how it is perceived. The questions then are; what could be responsible for such attitude? And in whose interest is CSR by the MNCs. 

Olubisi Friday Oluduro and Olubayo Oluduro  saw that there was a need for provision and sustenance of energy around the world necessitated the exploitation of crude oil in different part of the globe. However, the technology for this exercise so far, is limited to corporations from the technological advanced countries which operate in the oil- rich areas. The corporation otherwise called Multinational corporations (MNCs) has been found to employ discriminatory operational standards in countries of their operation as against what obtains in their countries of origin, particularly, where such are developing countries, lacking in requisite technology to tap their own resources. Their work examines some of the environmentally destructive methods of oil exploration adopted by the oil MNCs in developing countries, like Nigeria which may not be acceptable in developed countries where these companies are based. It argues that while the oil MNCs freely pollute and degrade the environment in the developing countries with little or no attention paid to the local inhabitants and the eco system, the reverse is always the case in developed countries as well as their home countries where they operate.

Eze Wosu  examined the thrust of corporate social responsibility as a core value for community engagement interface on oil exploration activity. They argued that lack of genuine community engagement by the TNCs in oil activities is the major problem in the Niger Delta crisis.

Aderoju oyefusi  examines oil- dependence and civil conflict in Nigeria focusing on the economic dynamics of resource- induced conflicts. It identifies two dimensions to oil- related civil conflict in the country. The first is the violent rent- seeking political violence that oil- availability generates between the various ethno- regional groups; the second is the Niger Delta crisis.

Godwin Uyi Ojo  is of the view that poverty and conflicts are endemic in the Niger Delta even as oil companies operating in the region intensify their corporate social responsibility (CSR) in community development. Yet there is hardly any assessment of the transnational companies (CSR) initiative privilege evidence from host communities. The author assesses how communities in social investment seem to conflict with managing negative impact of oil production on host communities and their livelihoods. Beloved Odochi Nwankwo  evaluates the nature of corporate social responsibility related oil conflict with emphasis on the key reasons for the conflict in the Niger Delta region that has remained impoverished despite the region’s huge contributions to the Nigeria economy for many decades. The problem is that the region has been underdeveloped despite its contribution to the national economy. Andabai Priye W. and Basuo Bio K.  where of the view that for peace and development to be maintained in the oil producing communities (Niger Delta Region of Nigeria), the concept of Corporate Social Responsibility must be fully imbibed by the Multinational Oil Companies.

David Ogula  Poor community-company relations in the Niger Delta have drawn attention to the practice of corporate social responsibility (CRS) in the region since the 1960s transactional oil corporation operating in the Niger Delta Region have adopted various CRS strategies yet community – company relations remain adversarial.

            Different scholars and writers have written about Corporate Social Responsibility of Multinational Oil Companies in the Niger Delta Region but none has written on Corporate Social Responsibility and Multinational Oil Companies; A penance for peace and development in the Niger Delta Region of Nigeria, this research work seek to fill this gap.

1.9 Conclusion

             This chapter contains the general introduction which deals with the background of Corporate Social Responsibility and Multinational Oil Companies in the Niger Delta Region of Nigeria and the visible problems, it also consist of the aims and objectives which discussed how the Multinational Oil Companies have been in operation in the Niger Delta Region and how they have been able to ensure peace and development in this region, the research question, the significance of the study which is to provide examination on the concept of CRS and MNOC, the scope of the study from the period of 1993 till date, the structure of the work which is divided into five chapters, the research methology been doctrinal and finally the literature review which consider the works of different scholars in relation to the topic.

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