The Lundin Consortium

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The Consortium that signed an agreement with the Government of Sudan in February, 1997 consisted of International Petroleum Corporation (IPC, the operator, having a 40,375% stake in the concession), Petronas of Malaysia (www.petronas.com.my, with 28,5%), OMV of Austria (www.omv.com, 16,125%), and the Sudanese state owned oil company Sudapet (www.sudapet.sd, 5%).

In 1998 IPC merged with Sands Petroleum to form Lundin Oil, who continued to operate the Block 5A consortium. When Lundin Oil was sold in June 2001 to the Canadian oil company Talisman, the concession in Sudan was excluded from the sale and transferred to a new company, Lundin Petroleum (www.lundin-petroleum.com). At its entry to the Stockholm stock exchange in 2001, Block 5A was its only valuable asset. Commercial oil reserves were found in Thar Jath in April 1999. Four years later, in June 2003, the company sold its stake in the Block 5A to Petronas with a profit of SEK 930 million.

In November 2018, the War Crimes Unit of the Swedish Prosecution Authority finalised its investigation into aiding and abetting international crimes in Sudan, in which Lundin Petroleum’s Chairman Ian H Lundin and CEO Alexandre Schneiter are the suspects. On 15 November 2018, they were informed about the charges and received the case files. They have been given 9 months to prepare their defense and request additional investigations. If found guily, they may face life imprisonment. Furthermore, Lundin Petroleum received notification by the prosecutor that he will seek a penalty of SEK 3,285 million from the company. The trial is likely to start by the end of 2019 and may take a year.

The legal case against Lundin Petroleum in Sweden does not directly affect its fellow consortium members Petronas and OMV. Even though they share the same responsibility, they are likely to escape legal accountability. Still, they may at some point show courage, face their past, and assume responsibility for the fate of the victims of Sudan’s oil war.

 

The Lundin Consortium and Human Rights

Lundin Petroleum, Petronas and OMV are disregarding the human rights standards that they claim to respect, notably the OECD Guidelines and UN Guiding Principles, as they

  1. never conducted an appropriate due diligence for their Sudanese operations;
  2. make no effort to know their human rights impacts; and
  3. do not show how they address alleged adverse human rights impacts.

Businesses must avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur (UNGP 13), including remedy for victims. The members of the Lundin Consortium are duty bound to contribute to remedy of victims of abuses in Block 5A if their acts and omissions contributed to abuses, which is plausible because

  1. The members of the Lundin Consortium accepted the risk of complicity in international crimes by signing a contract with the Government of Sudan without any guarantees that human rights and international law would be respected; at the time the contract was signed, the Sudanese Government was in the middle of a civil war and had a record of committing international crimes; and the Government’s access to oil wealth was likely to be challenged with force. Nevertheless, the companies failed to prevent and mitigate the significant risk that their operations presented to human rights.
  2. The violent displacement, killings and other crimes that were committed by Government forces and militias were predictable, as they had occurred previously in neighbouring oil areas, but the Lundin Consortium did not avoid contributing to these crimes. Instead, throughout the war in Block 5A, it worked alongside the perpetrators of international crimes.
  3. The members of the Consortium should have been aware of the abuses committed by the armed groups that partly provided for their security needs, but they did not prevent their occurrence, mitigate their adverse impact, or address the catastrophic impact on the population.
  4. Furthermore, armed raids against, and the forcible displacement of, significant parts of the population enabled the exploitation of the Consortium’s concession.
  5. The Consortium’s infrastructure enabled the commission of crimes by others.
  6. The members of the Consortium have benefitted immensely from war crimes and other gross and systematic human rights violations.

Unfortunately, none of the companies acknowledge any role or responsibility, whether for yesterday’s abuses or today’s consequences, issuing general denials of wrongdoing instead.

Most victims will not be able to claim remedy and reparation before a Swedish court. In cooperation with the victims, PAX and other NGOs are seeking other avenues to realise their right. Unfortunately, a proposal to Lundin Petroleum’s 2017 AGM asking the company to set aside SEK 5 billion and to request the Swedish Government to design mechanisms to compensate the victims, was voted down by a whopping 99,84% majority. This confirms the conclusion of a recent study by Swedwatch and the Fair Finance Guide that the human rights policies of major investors in the company are flawed.


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