Jun 11th 2009 | LAGOS
From The Economist print edition
A payout could encourage others
ON JUNE 8th Royal Dutch Shell agreed to pay out $15.5m to the Ogoni people of the Niger Delta to settle a long-running court case brought against the oil giant in America by nine plaintiffs, including relatives of Ken Saro-Wiwa, an environmentalist and writer. He was executed by the brutal government of General Sani Abacha after a charade of a trial in 1995. Mr Saro-Wiwa had led a successful campaign against Shells activities in his homeland, even forcing the company to quit Ogoniland in 1993. The plaintiffs accused Shell of complicity in the activists death.
Shell denies any wrongdoing. It says the payout was a humanitarian gesture; some of the money will go to a new trust fund for the Ogoni. Shell now hopes that it might even resume oil production in the region. But things are unlikely to be that simple.
There has been a mixed reaction to the settlement in Ogoniland. Some Ogonis are disinclined to forget years of mistrust and others are in talks to clean up the oil spills that have been left untended, still oozing into farmland and rivers after 15 years. Ogoniland is just a sliver of Shells onshore oil fields, and the out-of-court settlement is unlikely to end the companys longstanding troubles in a volatile part of Nigeria that is even more violent now than it was back in the 1990s.
The payout could also spark further court battles invoking the same American law, the Alien Tort Claims Act of 1789, originally intended to counter piracy, under which the Shell case was brought. It has been used to great effect in recent years, first against foreign officials who violated human rights, and later against firms that appeared to abet such acts. Most of the lawsuits against big companies, however, have been settled out of court, setting no clear precedents.
Pfizer, an American drugs company, is arranging details of a $75m payout to plaintiffs in the northern city of Kano. There, the Kano State and federal government of Nigeria originally claimed the equivalent of about $6 billion in damages following the 1996 trial of a meningitis vaccine that was alleged to have killed some children and left others mentally damaged. Pfizer also denies any wrongdoing. But, in a country known for its scammers and operators, the size of the payouts is likely to get people thinking.
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