Monthly Archives: August 2012

Update on Kiobel and Niger Delta Litigation

English: The Supreme Court of the United State...

In a previous post on the Kiobel case, I discussed the potential for foreigners to file human rights suits against American multinational corporation in American courts using the Alien Tort Claims Statute. For over 30 years, human rights litigators have been looking to the ATS as one of their most powerful legal tools in bringing cases on behalf of non-Americans that would otherwise not be litigable in the U.S. Previously, the Justice Department had supported the Supreme Court’s openness to trying the case against Shell brought by the family members of a judge summarily executed by the Nigerian government as part of the Ogoni Nine.

Just recently however, the Justice Department filed an amicus curiae brief on the case, which will be heard on October 1, apparently reversing its support. The brief argues that the ATS is inappropriate for Kiobel and any other cases involving foreign corporations accused of complicity in human rights violations with a foreign government outside of the United States. It concluded that any Court of Appeals’ decision recognizing the “federal cause of action under the ATS based on actions occurring within the territory of a foreign sovereign” should be affirmed, and any judgment that a “corporation can be a proper defendant in a suit under the ATS” should be reversed.

It must be a complicated path for the Justice Department, State Department, and Department of Commerce to navigate together, each having varying stakes in the outcome of ATS-based litigation. Interestingly, the Justice Department alone filed the brief.

For another interesting point of view, see this Reuters Editorial from a few weeks ago. For more information on the ATS, see: http://harvardhumanrights.wordpress.com/criminal-justice-in-latin-america/alien-tort-statute/

Online Kiobel symposium: The Alien Tort Statute and the foreign relations fallacy : SCOTUSblog

Online Kiobel symposium: The Alien Tort Statute and the foreign relations fallacy : SCOTUSblog.

Nigeria’s new Sovereign Wealth Fund: Just another way to shuffle money about?

Ngozi Okonjo-Iweala (Finance Minister of Niger...

The AP just reported today that Nigerian officials will place $1 billion in their sovereign wealth fund (SWF) in the coming months to better invest some of the nation’s oil revenue. Okonjo and the Finance Ministry said the board managing the fund will be led by Mahey Rasheed, a board member at Nigeria’s First Bank PLC, and Uche Orji of UBS will be the fund’s managing director and CEO.

Nations use SWFs to invest in stocks or securities. The funds are essentially government-run investment portfolios that buy into anything from stocks and bonds to direct foreign investment. Nigerian authorities pushed for the creation of a SWF as a means to better save the billions of dollars the nation annually earns annual from oil revenues. These revenues currently go into the Excess Crude Account (ECA), which currently has about $7 billion in it but does do much in terms of investment.

Nebulous budgeting and corruption means much of the money is siphoned away in the current ECA, which will co-exist with the new SWF until the former has time to become more institutionalized. Some critics are saying that only investing $1 billion out of the $7 billion available is too little, but I think that is plenty for an uncharted venture in a country that already suffers from poor economic decision-making and opaque regulations. Unsurprisingly, state leaders have opposed the centralized SWF, saying more money should go to Nigerian states. After all, how can they skim off state shares of oil revenues if all that money is tied up in investments?

Ultimately, I don’t think changing where revenue is held will make much difference in a country that suffers from such profound structural and institutional impediments to economic development.

 

Generating Capital in Africa (II)

Destroying Makoko

One of Africa’s oldest and best-known slums is being dismantled

Aug 18th 2012 | LAGOS 

This story from The Economist brings together two issues I have written about, the problems posed by rapid urbanization in Lagos (see posts Nigerian Urbanization I and II) and most recently, the necessity of official property rights for Africans who live and work extralegally.

“PADDLES splash through oily water and propel dugouts along narrow channels separating wooden shacks on stilts far out in the shallow lagoon on which much of Lagos, Nigeria’s business hub, was built. A quarter of a million people live in Makoko, learn to swim before they have walked on land, go to school, buy goods from traders drifting down the main channels, build fishing boats and go to sea. A few narrow bridges connect elevated platforms anchored, like everything else, six feet below the waterline. They say the only thing you won’t find in Makoko is a grave.

Or the government. For more than 120 years the fishing community has been left largely to its own devices. But that changed last month when a hundred officials with chainsaws razed dozens of shacks. Lacking property deeds, residents were given only 72 hours notice to go. One died in a clash with police. Steve Adji, an indignant community chief, says, ‘The government speaks of shanties but these are homes.’

The entire district may soon be gone. The government is eager to reclaim what has become prime waterfront land. It is only half-fair to depict it as heartless and greedy. Built on a swamp, Lagos is fighting for survival. Ceaseless migration is strangling it. City fathers foresee the doubling of the population to 40m within a few decades, which would make it the most populous city in the world. Lagos’s economy is growing so fast that it is bigger than, for instance, the whole of Kenya’s.

Lagos has long been a byword for urban chaos. Traffic is legendarily bad, crime is a perennial sore and public services reach few. Re-elected last year, the city government is striving to change all this. It has commissioned a rail network, tried to control unruly motorbike taxis and invested in roads. The clearing of slums is part of its effort to unclog the city and spur the economy. But all too often it is the poor who pay the price.”

Generating Capital in Africa

With an ever-increasing population of 163 million people, Nigeria has a lot of consumers. Nigeria also has a lot of business entrepreneurs.  Nigeria also has a lot of money. So how is it that people with all the ingredients for developing their economy still live on an average of $2 a day?

In The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, Hernando de Soto has an idea. He argues that a lack of legally protected property rights in the global south impedes people’s ability to transform their meager assets into greater capital.  Poor countries have the “stuff” necessary to not be poor, but because their stuff isn’t legally legitimate they can’t buy, sell, or trade that stuff in order to build up the economy. They remain in this rut of dead capital. For example, the rural-to-urban migrants living in self-made islands around Lagos may have shacks worth hundreds or even thousands of dollars, but because they do not legally own that property in the eyes of the state, they cannot take out loans against their property in order to make larger investments.

In contrast, property rights in Western law create beneficial economic effects that undergird the health of European and the American economies.  He writes that Western law fixes the value of assets, puts all asset information in one place, tracks and protects transactions, and makes assets “fungible,” meaning that they can be modified to suit different types of transactions. Additionally, it networks business agents so they can engage in transactions that build more capital as well as makes business people accountable for their practices, accountability that is sorely lacking in Nigeria.

In reading, I wondered how I could apply his argument to my analysis of law in rural Niger Delta.  I remembered that one of the common themes in my interviews with protesting women was their sense of injustice that the state and oil companies had extracted crude on their property without consulting or compensating them.  When I asked them if they owned the land, a first cluster of women said that they did, but their grandfather has passed away and he was the last elder who could attest to it, or they had lost their deeds decades ago, or that they had inherited it based on a public agreement.

A second cluster didn’t have titles per say, but that it was theirs “collectively” as Ogoni people. I wondered why in their minds it didn’t belong to just the people of the village, or Rivers State people, or Niger Delta people. Some also said that the land was theirs personally because their family had farmed on it for many years. As an urban American, I didn’t understand these responses initially.

The answer is social contract. Property and rights are socially constructed first, and then legitimated in formal written law second. In rural villages property disputes are resolved by asking the eldest community member where they remember boundaries being drawn or which family they remember as being the owner; land titles filed with the state are not the basis of ownership necessarily.  For the second cluster, this land was “Ogoni property” long before the advent of the post-independence Nigeria legal system, and for them their ownership based on social contract will always remain more salient that the modern state’s claim to that same land. When the federal government or oil companies use that land as if it belonged to the state, Nigerians view that property use as illegitimate and thus engage in collective action.

The women who claimed to own their land because they had farmed it are in good company.  When settlers were initially dividing up vast tracts of American land two centuries ago, they gained official titles based on the idea that the land belonged to them because they had made use of it. However, American pioneers had the benefit of staking claim to virgin territory in the legal sense.  Deltans’s claims are obfuscated by legal pluralism, their pre-existing social contracts co-existing with formal Nigerian law derived from British common law as well as foreign companies’ claims to access that land. It is therefore not surprising that such frustration and feelings of violation would have lead to collective demonstrations in the area over the past twenty years.

To de Soto’s point, Deltans have assets, e.g. huts, houses, farmland, etc.  But, they can’t officially prove so because they long ago lost their titles or don’t have the literacy necessary to file paperwork, or most commonly, because Nigerian government bureaucracy is so unnavigable that people are forced to work and live extralegally. Functioning outside of the protections of law limits their ability to utilize their property in ways that drive the economy, e.g. they can’t use property as collateral on a loan or apply to open a legal business if they don’t “own” the property.  Law is supposed to fit the needs of its people, but Nigerians have been forced to fit into the confines of a post-independence legal order that does not have a foundation in social practices. And that, it could be argued, is a big part of why so many Nigerians are still so poor.

For a critical look at de Soto’s book, see the New York Times Book Reviews.

Wealth Distribution

deltalaine:

My friend, Marc Maxson, has a gift for aesthetically-pleasing visual representations of complex data. In this blog post, he shows the inequality of wealth distribution across the globe. “Where does the Money Go?” would indicate how broken the international aid system is. As an example, the Nigerian state has lost more money lost to graft and corruption since 1960 than it is has ever received total in international donor funds. Clearly, Nigeria does not lack money, it lacks an accountable system with responsible leaders that stop politicians from looting it all.

Another great source of artful data display can be found on informationisbeautiful.net. “What are the Wall Street Protesters so Angry About?” shows that the U.S. ranks just under Cameroon and Iran in terms of fair distribution of wealth. Many developing countries without the American institutions of financial regulation actually have far greater wealth equality than the United States, e.g. Uzbekistan, Turkmenistan, Venezuela, Burundi (and yes, Nigeria too). The paradox is that these countries listed are all ranked by Transparency International (TI) as the most corrupt in the world. Although one could argue that it is easy to have equal distribution of wealth when everyone in a country lives on a dollar a day, there is also something very wrong when the top 1% have 43% of financial wealth, and actually get richer during an economic meltdown. Somehow, I think that runs counter to the ideals of American democracy, a country purportedly “very clean” on the TI index.

Originally posted on Chewy Chunks:

Here are some of my favorite infographics to explain the real gaps between wealthier and less wealthy, and our collective misconception about it:

Same data, but shown with different sized people.

XKCD: Where money comes from, and where it goes.

Where aid money goes in the world.

The best, and clearest infographic on the subject, from Dan Ariely.

Here is the same data, but made far less clear by some infographic idiot who believes bar charts are the only way to present quantitative data:

Where aid money goes in the world, 2011.

Nice because it’s bar chart data, but presented in a more visually appealing way. Contrast that with the bar chart above, you’ll understand that we’ve been using some pretty crummy visuals to complicate otherwise simple stories.

Last: My own global wealth infographic.

The Earth represents real global wealth assets of about $56 TRILLION.
The shaded Earth represents the…

View original 38 more words

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Corporate Fines and Settlements (BP, Shell, and Exxon)

Corporate Fines and Settlements (BP, Shell, and Exxon)

You might want to click on it to enlarge it, but this infogram demonstrates the largest corporate fines and settlements for the last seven years. I am most interested in the disparity among the oil companies. Exxon-Valdez paid $507 million in fines for its 1989 spill in Alaska (which has not been totally cleaned up yet). This is just 11% of its annual earnings. In contrast, the BP Gulf of Mexico spill cost that corporation 110% of its annual earnings, and rightly so. I would attribute this to heightened environmental sensitives regarding environmental damage in the U.S. However, unless I am not interpreting it correctly, the display also says that Shell paid 6% of annual earnings to settle a Niger Delta case in 2000. Perhaps we have different sources of data, but Shell’s earnings in 2006 were $25.36-25.44 billion and not just over 26 billion, but I suppose when analyzing such an absurd profit that doesn’t make much difference. My main point is that the well-known Wiwa settlement occurred in 2009, not 2000, and it was for $15.5 million, not $1.5 billion. This large discrepancy means the settlement was actually a mere .004% of annual earnings, not 6%. To put that in perspective, the Shell corporation earns about $2.5 million per hour, so they worked off the irreversible destruction of millions’ of farmers and fishermen’s land in just over 6 hours.