Private Empire: ExxonMobil and American Power (46 page)

As part of ExxonMobil’s broader campaign to engage and persuade Informed Influentials, Cohen’s department had developed the dialogues as a hybrid institution—part private retreat, part focus group, and part lobbying briefing where ExxonMobil could roll out its 2030 PowerPoint slides for environmental leaders, human rights researchers, journalists, and think tank analysts, as well as test some of its advocacy positions. The dialogues were designed and managed in such a way as to suggest that ExxonMobil considered its Irving and Houston executives on the one hand, and influential Democratic-leaning nonprofit leaders in Washington on the other, to be members of slightly different species who would require a safe, controlled setting in which to assess each other peaceably.

That evening the ExxonMobil executives mingled awkwardly with their fourteen invited guests—two senior energy-policy analysts from the Brookings Institution, a human rights activist at Freedom House, climate specialists, business ethics professors, socially responsible investors, and religious activists. Most of the guests were very liberal, but the group included at least one conservative Christian leader. They shared concerns about ExxonMobil’s record of corporate citizenship. During the cocktail hour, one of the guests, who worked at an environmental nonprofit, chatted casually with Cohen about her most recent project, and she mentioned the brutal hours she was putting in to get it finished. “He was shocked,” she recalled. “He said that he thought people who worked in environmental groups in Washington had a cushy life.”
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Another participant recalled thinking of his corporate hosts: “These were clearly thoughtful, smart, articulate people—they just lived in a totally different world than we live in.” The
New York Times
had just published a story about Lee Raymond’s $398 million retirement package; in response to the incredulous asides of their guests, the ExxonMobil executives labored to explain the difference between pensions and stock options and restricted stock, in an effort to suggest that the package was not as rich as it might appear. “You know you can’t win on that message, right?” the participant thought as he listened. “You’re talking to people who can’t even take the Acela to New York.” The Acela was a fast, expensive intercity train between Boston and Washington; to conserve funds, some nonprofit groups ordered their employees to take slower, cheaper trains—or the bus.

The next morning they assembled in a conference room around a table arranged as a hollow square. The agenda included two “dialogue sessions” on climate change and a third on corporate transparency and human rights. As ever, the ExxonMobil team ran through the PowerPoint slides laying out the corporation’s forecasts of oil-and-gas-dominated energy demand and sources until 2030.

Cohen shared some of his internal polling about the corporation’s reputation. In one survey ExxonMobil had received 47 percent approval for overall corporate citizenship and 24 percent for environmental stewardship. Environmental issues remained a challenge. In countries such as China, the ExxonMobil executives acknowledged, environmental regulation was being taken more and more seriously. As middle classes grew around the world, so would environmental concerns, they knew.

On climate change, Cohen and Stuewer flashed PowerPoint slides outlining draft language of a new formulation of ExxonMobil’s position. “They were really dancing around the question of certainty” about the risks of global warming and the evidence that man-made activity contributed, recalled Leslie Lowe, one of the participants.
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Lowe introduced the metaphor of having insurance against fire: Why
not
work against man-made contributions to climate change, even if there remained uncertainty about every last detail of cause and effect?

Yes, the ExxonMobil side responded, but you don’t spend all of your money in life on insurance. You calculate how large and valuable an asset you are trying to insure, and how big a risk you face. Climate was like everything else ExxonMobil did: It was a matter of risk management, Cohen emphasized.

The participants talked about imposing a price on carbon, through gasoline taxes or other formulas. “If you tax gasoline, people will be hurt,” Cohen said. Even if you tax gasoline and then rebate the money to middle-class and working households, commuters would just be forced to take the rebates and “go out and buy gas with it,” the ExxonMobil executives argued.

The nonprofit leaders asked Cohen about the funding he had provided to groups such as the Competitive Enterprise Institute and The Heartland Institute that had so stridently attacked the validity of mainstream climate science. Cohen told them that as part of ExxonMobil’s review of its options on climate policy, the corporation had decided to pull funding from the most controversial groups. The disclosure was the beginning of a quiet campaign to clarify that ExxonMobil had altered some of its public policy funding—without quite admitting that what it had done earlier was wrong or misguided. The more strident groups were a distraction, Cohen indicated; they were focused heavily on the validity of climate science, whereas ExxonMobil now wanted to leave that subject to focus the debate on research and policy choices.

The participants on both sides spoke gently; they were trying “to be ever so polite,” Lowe recalled. That night at dinner, she found herself sitting with Dave Kingston, the downstream vice president. In an unthreatening tone, she asked, “Look, you’re a science-based organization. How can you not accept the science that is basically confirmed by most mainstream thinkers?”

Kingston talked about the inherent uncertainties in weather modeling and forecasting.

She listened patiently, then asked, “What are you going to say to your grandkids when they say, ‘Grandpa, why did you fuck up the planet?’”

The ExxonMobil executive just chuckled.
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It proved difficult for each side not to simply ratify its assumptions about the other and move on. “They did get defensive, but they didn’t lose their temper,” a participant recalled. “It was sort of, ‘You don’t understand.’ I felt like someone was sort of patting me on the head, ‘You poor thing.’” Some of the nonprofit leaders felt disrespected, manipulated, and sensed little but condescension and closed mindedness from Cohen’s team over the course of the Airlie Dialogue; others left more impressed by the corporation’s subtlety and sophistication than they had been when they went in. One guest in the latter group marveled, nonetheless, about how the ExxonMobil executives “were so wedded to their oil and gas image, identity.” It seemed perplexing to him that such intelligent, research-driven executives could come up with a communications and positioning strategy that seemed so obviously to be self-limiting, if not an outright loser. Perhaps they let the research tell them what they wanted to hear.

On January 11, 2007, ExxonMobil forwarded an e-mail from Ken Cohen to the Airlie participants. The Irving climate policy committee’s work had now yielded firm decisions by Tillerson to support a new communications campaign to try to clarify and redefine ExxonMobil’s position without creating legal jeopardy.

“ExxonMobil’s position on climate change continues to be misunderstood by some individuals and groups,” Cohen began. As to the new stance: Climate change presented risks, Cohen wrote, despite the scientific uncertainties, and so it would be “prudent to develop and implement strategies that address the risks, keeping in mind the central importance of energy to the economies of the world. This includes putting policies in place that start us on a path to reduce emissions . . . among other important world priorities, such as economic development, poverty eradication, and public health.” Tillerson was prepared to say publicly, “We know our climate is changing, the average temperature of the earth is rising, and greenhouse gas emissions are increasing.” That went further than Lee Raymond had ever gone, yet Tillerson would not go so far as to accept a causal link between rising greenhouse gas emissions and rising temperatures—the fundamental finding of climate scientists about global warming.
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In 2007, the Intergovernmental Panel on Climate Change reported that it was now an “unequivocal” fact that the earth’s surface temperature was rising and that there was “very high confidence” that human activity was a factor. Amid an emerging scientific consensus of such a firm character, Rex Tillerson’s evasive silence and small concessions could hardly be counted as a decisive turn. Subtly, however—so subtly that it was very difficult for outsiders to detect the change—the corporation slid during 2007 into a new position.

Even after the dialogue at the Airlie Center, it was as if Cohen and Tillerson felt they needed to keep auditioning and refining the nuances of their advocacy language in public, adjusting to each audience’s reactions, like theater producers developing a risky new musical in secondary cities. In essence, however, ExxonMobil would henceforth decline to offer a formal opinion about whether the burning of fossil fuels contributed to global warming (a neutrality that protected its legal defenses), but the corporation acknowledged, for the first time, that it would be sound public policy, nonetheless, to limit man-made greenhouse gas emissions to at least some extent, because of the potential risk that the worst climate change forecasts might prove to be correct.

It remained palpably painful to extract this last admission from Ken Cohen’s lips, however.

“Are you saying you now accept that human intervention is the main source of global warming?” a climate researcher asked during one of Cohen’s early 2007 appearances aimed at publicizing ExxonMobil’s new lobbying language.

“There is no question that we understand the physics of the warming caused by CO
₂
and we welcome the discussion of what the in-depth link is. . . . We are involved in this discussion.”

Still, he went on, having learned by now to interrogate himself before others did: “Should we be on a path to do something about anthropogenic emissions? The answer is yes.”
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Sixteen

“Chad Can Live Without Oil”

S
cores of oil platforms had spread across the red clay ravines and subtropical bush of southern Chad by 2006. There were by now 368 wells in all, scattered across just over twelve thousand square miles. Each rig pointed at the sky like a thirty-foot rocket prepared for launch. In the dry seasons heat baked the ground to an amber shade and blown dust caked the equipment. When the rains came, low clouds hung in wisps around the metallic caps topping the derricks. At the main production facility at Kome, known within ExxonMobil as Kome-5, some of the Africans who worked behind the tall fences illuminated by safety lights, and who found their lives constrained by ExxonMobil’s extensive rule making, facetiously referred to the compound as Guantánamo. The joke’s suggestion of exclusion captured a larger truth about ExxonMobil’s operations in Chad. Since it was not feasible for the corporation to devise solutions to all of the problems of a very poor country, the logic of ExxonMobil’s systems management argued for engineering Chad and its pathologies out of the equation to the greatest extent possible. ExxonMobil’s one thousand expatriate workers and managers rotated in and out of the country on twenty-eight-day tours without ever interacting with the world outside their compound chain-link fences, which were nine feet high and topped with a barbed-wire anticlimbing barrier. In addition to Kome-5, there were 9 ExxonMobil camps across southern Chad, as well as 450 oil production areas and 50 construction sites. The corporation’s expatriate workers and managers flew on commercial or chartered flights into N’djamena’s international airport, transferred without leaving the grounds to an ExxonMobil shuttle plane, flew to the corporation’s private airport at Kome, and then checked into barracks or bungalows within the fenced perimeter. For the next four weeks they could neither drink alcohol nor leave the facility. The corporation’s roughly five thousand Chadian employees followed the same rules. Those who worked in Kome-5 checked through the employee security gate for twenty-eight-day shifts and could not leave but for approved emergencies, unless they were prepared to give up their lucrative salaries. It was like being entombed, one of the Africans remarked.
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Inside the Kome-5 complex, ExxonMobil employees enjoyed twenty-four-hour electricity, high-speed Internet service, satellite television programming, refrigerated and packaged food, and as many other amenities of middle-class Houston as it was possible to supply by airlift at reasonable cost. Immediately outside the fence stood a shantytown known locally as Quartier S’Attend, “the Quarter of Waiting.” It had sprung up as a settlement for hopeful Chadian laborers when the oil field construction work began. After the initial building slowed, the settlement became an iniquitous way station for Chadians entering or leaving “Guantánamo.” Its stalls were stocked with bottles of the potent millet home brew “billi-billi,” or the even more potent “Argue.” Prostitutes from Cameroon staffed the back rooms. In the bush beyond the quartier there were small villages where the homes were constructed from kilned brick and thatched straw, with tall, conical roofs shaped like a farm wife’s sun hat. Oxen, pigs, donkeys, horses, and shirtless children wandered through sandy lanes. Here there was little reliable electricity.

“Public relations efforts have fallen short of the locals’ expectations and a growing resentment is building towards the oil project and its workers,” noted an embassy cable written about six years after the World Bank, ExxonMobil, its corporate partners, and the government of Chad had agreed to a radical plan to ensure that the country’s oil profits were not stolen or wasted.
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The oil region presented a booming industrial economy behind the ExxonMobil fence but little sign of sustainable progress outside. Rather than engineering social and economic change to improve the conditions of most ordinary Chadians, the bank experiment had created conditions under which ExxonMobil could produce and sell oil the way it did everywhere else, in a setting where that might otherwise be impossible. Without the bank, the corporation could not have easily profited from its reserves in Chad, but whether the bank succeeded with its broader development goals was fading as a material concern for ExxonMobil. Chad’s geology had proved challenging, project costs had ballooned over budget, and oil production remained lower than originally forecast. But rising global oil prices cured these business ills. During 2005, the corporation’s oil sales from Chad reached the point where it had recouped the costs of construction and investment; the project was now profitable and even susceptible to Chadian taxes at a 60 percent rate, over and above a 12.5 percent royalty ExxonMobil had paid on gross oil sales to Déby’s regime from the beginning.

The security of ExxonMobil’s operation and investment remained a worry, however. ExxonMobil and its partners recognized “that the oil fields in southern Chad are of strategic interest to any group seeking to overthrow the regime,” the embassy noted to Washington. As in Indonesia, ExxonMobil protected its oil field perimeter with a forward defense. In southern Chad there were very few armed rebels; President Idriss Déby had brutally wiped out an incipient guerrilla movement as ExxonMobil prepared to construct its oil wells. By 2006, the groups that most threatened President Déby operated from Sudan, many hundreds of miles away. Still, the desert could be traversed quickly: Rather than sit behind its fences and wait for some unexpected rebel group wearing bandannas and wraparound sunglasses to arrive in pickup trucks toting rocket-propelled grenades, ExxonMobil employed about twenty-five hundred unarmed private security guards in southern Chad and equipped them with white sport utility vehicles and portable radios. The Jeeps conspicuously patrolled the roads around Kome and bumped through villages, watching for outsiders. With ExxonMobil’s encouragement, camouflaged soldiers from the formal Chadian gendarmerie shouldered automatic rifles and maintained checkpoints and encampments along the roads to and from the oil area, prepared to seal off the region in the event of trouble.
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American intelligence officers picked up and passed to ExxonMobil reporting that “suspected extremists” had surveilled the oil fields; afterward, the security officer at the U.S. embassy was invited by the corporation to inspect the facility to assess its vulnerabilities. He found it wanting. There were holes in the fences and the Chadian paramilitaries protecting the region were found “either in their T-shirts and flip-flops playing cards and eating or sleeping in their tents.” The facility was “totally unprepared for any level of terrorist attack. . . . The Gendarmes often go months without pay. . . . What is provided [by Chad’s government] lacks numbers, motivation, discipline and training. Their morale is poor and their equipment is not good.” Locals complained that the police preyed upon them. For its part, after its travails in Indonesia, ExxonMobil was doubly sensitive about allowing local forces guarding its facilities to shoot aggressively at attacking guerrillas. The corporation’s Chadian executives told the U.S. security officer that they were more likely to shut down and evacuate Kome than defend it, if Chad failed to do the job. In the worst case, since they had already made their money back, they just might “sell what remains to the Chinese.” To defend ExxonMobil, the assessing officer suggested that the United States “should consider providing to the local police and Gendarmes . . . basic to advanced firearms training as well as instruction in police and patrol tactics to counter any terrorist threat.”
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A small leadership and analysis team from ExxonMobil Global Security supported the local guard force from the capital, N’djamena. The team worked from a compound of bungalows and offices that made up the corporation’s country headquarters on the Avenue Charles de Gaulle. They were former police and retired military men. They built an intelligence-collection operation separate from and in many ways better sourced than that run by the small Central Intelligence Agency station in the nearby American embassy. ExxonMobil enjoyed privileged access to Déby and his military and intelligence advisers because, in 2006, the corporation and its partners would transfer to Déby some $774 million, whereas U.S. government aid, all totaled, including the counterterrorism assistance provided by the C.I.A., was in the neighborhood of 1 percent of that amount. That equation had changed little since the World Bank–sponsored oil project began; Déby’s aides hardly required calculators to understand where their interests lay.

Statisticians at ExxonMobil’s upstream division headquarters in Houston helpfully prepared PowerPoint slides for use by the U.S. embassy––slides that emphasized the outsize benefits of the corporation’s activities in Chad for the United States: one thousand American jobs per year during the construction phase of the Chad oil project; two hundred expatriate jobs for Americans in the country generating about $70 million in total revenues; a projected 24 million barrels of direct oil exports to American refineries annually; and more than $1 billion in profits returned to American shareholders over about six years. American diplomats in N’djamena transmitted statistics, fed to them by ExxonMobil’s country manager, in cable after cable to Washington. In N’djamena, ExxonMobil’s security officers used their influence and inside access to Déby’s security regime to school themselves like political science scholars in the region’s alphabet soup of liberation armies and quasicriminal gangs, and they monitored reporting inside Déby’s palace for emerging threats, particularly any mutiny that might reach the south, target ExxonMobil directly, or otherwise call for an employee evacuation plan to be activated. The Global Security team continually planned, mapped, and exercised evacuation routes into Cameroon by road and air.
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The salaries earned by the corporation’s local guards poured into a corrupt, inflation-wracked regional economy. Before oil the south was a region of marginal subsistence farming. Sorghum and cotton were staple crops. The rains were erratic, and the roads to market could be impassable when wet. The construction and employment boom that followed ExxonMobil’s arrival flooded the area with cash. Farming families that might previously have earned $125 in a year received as much as $7,500 in one-time payments for land rights. Food prices spiked; the cost of a sack of staple millet doubled. World Bank development specialists encouraged schemes of micro lending to local households in the hope that this temporary influx of capital could be converted to self-sustaining entrepreneurship, but too many borrowers absconded or blew their funds on motorbikes and billi-billi. Labor contractors connected to Déby’s administration brokered construction jobs in the oil fields and skimmed off what a Chadian court later determined to be $7.5 million in wages, money that never reached the workers who actually built the derricks. (About half that amount was later paid out to four thousand workers in a settlement; the stolen money was never traced.)

At times, depending on the ambassador, the U.S. embassy in N’djamena provided optimistic assessments to Washington. ExxonMobil is “regarded as a model company, particularly in respect to continuing good community relations and environmental consciousness,” one cable reported. The corporation has “upheld American standards in terms of worker entitlements to wages, safety and health.” But ExxonMobil’s disciplined systems and investments did not resolve the country’s weak governance, corruption, poverty, or unmet aspirations. “The influx of oil revenue has created little improvement, frustrating heightened expectations,” a confidential U.S. State Department-led fact-finding team reported in early 2006. “Many Chadians told the interagency team they were ‘better off before the oil.’”
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Armed with advice from consultants in poverty reduction and corporate responsibility, ExxonMobil allocated modest sums to local projects in the south intended to demonstrate Irving’s commitment to global citizenship. Among other things, the corporation constructed a water storage tower in a village about a twenty minutes’ drive on rutted roads from the Kome fences. In a decision that seems unlikely to have crossed Lee Raymond’s desk during the latter part of his tenure, ExxonMobil’s regional managers installed solar panels to generate the electricity needed to pump well water into the newly constructed village tank. Thieves ripped the panels out, however, and soon all that remained was the storage tower and the metal rails that had once held the solar panels in place. Theft at ExxonMobil’s properties was rampant; the corporation lost $500,000 worth of equipment in 2006 alone. Kome-5’s security doors were a favorite target; locals made beds from them. Popular disenchantment increased when local officials imposed what was regarded as an “Esso-imposed 6 p.m. curfew” in response to the looting.
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During the hopeful days when the World Bank and Exxon had planned the Chad project as a pioneering experiment in nation building and social engineering, Exxon erected a health clinic in Kome. When the Chadian government also requested a nurse, medicine, and equipment, the corporation refused—it locked up the building until Chad hired its own health care workers to staff it.

ExxonMobil’s managers in Chad took justifiable pride in the $16 million in annual wages, training, education, and exposure to global norms in health and education that the corporation provided to the Chadians in its direct employ. The knock-on benefits of these improved lives would be substantial, if hardly enough to right Chad. Yet ExxonMobil considered the construction of deeper social and physical infrastructure in the country to lie outside of its responsibilities. That was why the corporation had so purposefully recruited the World Bank into the high-risk Chad oil project in the first place. When ministers in Chad’s government or local human rights activists begged ExxonMobil to build a health clinic or lay a road, the corporation typically demurred, explaining that oil production was its core competency and that it intended to follow the letter of its contract. As oil production grew and Idriss Déby did not become a better president, and Chad’s social and health indicators failed to improve significantly, ExxonMobil’s executives privately blamed the World Bank. The bank had simply not done what it promised to do when it endorsed and funded the 2000 plan to manage oil revenue for the greater good of Chadians, ExxonMobil’s managers argued. There was some truth in their complaints. ExxonMobil operated on time and under budget in a way that a sprawling, multinational bureaucracy such as the World Bank never could. The oil company’s criticism assumed, however, that the experimental governance goals embraced by all of the project partners—including ExxonMobil—had been realistic in the first place. By 2006, this no longer seemed a defensible claim.
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Irving prided itself on its realism. The most honest assessment was that the two main parties to the Chadian oil project had always been ExxonMobil and its partners and shareholders on the other side, and Déby and his kleptocratic clansmen on the other.