Private Empire: ExxonMobil and American Power

by Steve Coll

  Only after Suharto’s regime cracked and collapsed under pressure from democracy campaigners in May 1998 did it prove possible to investigate past abuses. That summer human rights researchers interviewed villagers around the Mobil gas fields, documented the names of missing young men, and, guided by informants, dug in the ground for evidence. B. N. Marbun, a member of the National Human Rights Commission, estimated that at least two thousand Acehnese torture victims lay buried in secret graves. He and other investigators identified a dozen such locations and found remains in six of them; in one grave, in the village of Bukit Sentang, they dug up at least a dozen bodies.13

  On October 10, 1998, a coalition of seventeen Indonesian human rights groups issued a statement alleging that Mobil Oil “provided crucial logistic support to the army, including earth-moving equipment that was used to dig mass graves” to bury Aceh’s torture victims and missing young men. BusinessWeek published a cover story two months later under the headline, “What Did Mobil Know?”

  The oil company’s executives told the magazine that the answer was, essentially, “nothing.” Their employees had occasionally loaned the Indonesian army heavy equipment such as excavators during the New Order years, but only for “peaceful purposes.” The Mobil executives said they believed their equipment had been used to build roads.14

  These human rights allegations had surfaced just as Lee Raymond and Lou Noto entered into their final talks about merging Exxon and Mobil. Noto flew hurriedly to Jakarta. He met with Gelbard’s predecessor as U.S. ambassador to Indonesia, J. Stapleton Roy, who “expressed concern” about the issue. Noto said that Mobil was unaware of any abuses by T.N.I. soldiers guarding its facilities and did not know anything about its bulldozers being used to dig graves. He flew back and appeared with Raymond in New York on December 1 to announce their merger deal.

  Along the Pipeline Road and around the gas fields Indonesian human rights researchers continued to dig for corpses.

  The Clinton administration cut off aid to the Indonesian military and suspended training contacts because of the human rights abuses committed by the T.N.I. Many of the abuses that concerned the administration took place in East Timor, another disputed province of Indonesia, where the T.N.I. sought, unsuccessfully, in 1999, to prevent a separatist-minded population from voting for independence in a United Nations–sponsored referendum. East Timor’s history and status under international law made it a special case; G.A.M.’s independence drive in Aceh enjoyed none of the same U.N.–sanctioned legitimacy. Isolated and embittered after losing East Timor, the T.N.I.’s commanders redoubled their focus on suppressing the rebellion in Aceh. Mobil still paid the salaries of T.N.I. soldiers and officers deployed to protect its fields, despite the official American sanctions over human rights abuses. Legally, Mobil was a subsidiary partner of the Indonesian state oil company in Aceh, and the security payments were one of its contractual commitments. Agus Widjojo, a serving Indonesian general at the time, recalled that his colleagues in the military’s high command felt “confusion and ambivalence” about Aceh’s rebellion as democracy took hold in their country. Indonesia seemed fragile and beset by centrifugal forces; the generals regarded themselves as the last guardians of national integrity.15

  In 2000, Indonesian security forces “were responsible for numerous instances of, at times indiscriminate, shooting of civilians, torture, rape, beatings and other abuse, and arbitrary detention in Aceh” and elsewhere, the U.S. State Department reported. “Army forces, police, and G.A.M. members committed numerous extrajudicial killings.” The U.S. embassy in Jakarta did not regard Mobil as culpable, however. Its diplomats accepted the corporation’s account of itself: “The companies are unable to control military/police actions, including the use of equipment, that may result in human rights abuses,” a cable to Washington reported. “Mobil faces this dilemma in Aceh.”16

  Private profit-making companies had been waging war independent of their home country governments since at least the days of the East India Company and the colonization of the Americas in the eighteenth century. The idea that such corporations had a legal or moral duty to refrain from facilitating organized violence in their areas of operations was more recent. During the nineteenth century, Quaker ethical movements and antislavery campaigners in the United States and Great Britain, among other places, presaged the ideas that were lumped, toward the end of the twentieth century, under the rubric of “corporate social responsibility.” The 1970s brought an expansion of popular and political campaigns to codify corporate conduct for the sake of the public interest. By 2001, reports of human rights abuses carried out by military forces protecting oil and gas operations in Colombia and Nigeria—as well as the questions raised about Mobil’s complicity in Aceh’s violence—had given birth to a formal compact, the Voluntary Principles on Security and Human Rights, cosponsored by the Clinton administration and Tony Blair’s Labor Party–led government in Great Britain.

  The compact, as its title indicated, was not binding. It advocated that oil companies undertake human rights risk assessments when they worked in violence-prone regions; communicate their human rights values to host armies that protected their facilities; avoid working with “individuals credibly implicated in human rights abuses”; and permit the use of force “only when strictly necessary and to an extent proportional to the threat.” The companies should also “to the extent reasonable, monitor the use of equipment provided by the Company and to investigate properly situations in which such equipment is used in an inappropriate manner.” The language suggested a corporate version of the Rules of Engagement guidance typically issued by the White House to the Pentagon in wartime.17

  Chevron, Shell, British Petroleum, Conoco, and a number of mining companies signed the agreement. Lee Raymond refused. “Exxon just didn’t see the relevance to them,” recalled Arvind Ganesan, a Human Rights Watch lawyer who participated in the negotiations. “They just disengaged.” There was some skepticism among the corporation’s decision makers about whether the initiative would outlast the expiring Clinton administration, and in any event, ExxonMobil did not habitually join political compacts initiated by outsiders; it wrote its own rules worldwide. ExxonMobil’s place in the Aceh conflict created legal and reputational risks that adherence to the Voluntary Principles could help reduce, but the corporation was convinced that it could handle those risks. Particularly during the first Bush term, ExxonMobil displayed unilateralism in its foreign and security policies. “We don’t sign on to other people’s principles,” an executive later explained. The corporation said it would monitor the accord, perhaps to reevaluate later.18

  ExxonMobil’s security team was aware of the T.N.I.’s human rights record, internal corporate documents show. An ExxonMobil e-mail acknowledged “the poor reputation of the Indonesian military, especially in the area of respecting human rights and in their predilection for ‘rogue’/clandestine operations.” Another internal report found that the Indonesian soldiers around the Aceh gas fields “were undisciplined, lacked professional deportment and were not in any state of readiness.” As a third internal assessment put it:

  Local security forces [are] ineffectual and often present as great a threat as the activists. The military presence is a double-edged sword, with some military personnel acting as information brokers, thieves, extortionists and intimidators.19

  There was no evidence that ExxonMobil’s security advisers encouraged or participated in the T.N.I.’s torture and extrajudicial killing in Aceh. Exactly how the corporation handled from day to day its knowledge that such human rights abuses were taking place is not clear. Because of the Indonesian military’s political power and the sensitivities surrounding the conflict, neither Indonesia’s government nor independent human rights investigators could interview or examine the records of the T.N.I. units that worked in partnership with ExxonMobil or, before it, Mobil Oil. Evidence trails faded as the years passed.

  Within ExxonMobil, responsibility for assessing Aceh’s
violence and managing relations with the Indonesian military fell to the Global Security department. Global Security’s roster of overseas employees and contractors conjured the lineup of a Hollywood action film: former K.G.B. officers, veterans of the British Special Air Service and French special forces, and retired officers of the Central Intelligence Agency and the United States military.

  At the time of the Mobil merger, Lee Raymond elevated Mike Farmer, a career corporate security professional, to lead Global Security. Under Farmer, the Aceh case fell to Tommy Chong, who had a background in Singapore law enforcement; he ran ExxonMobil’s Southeast Asian security operations out of an office in his native country.

  ExxonMobil’s executives understood the reputational and other risks they bore. Aceh had witnessed a “complete breakdown of law and order,” Robert Haines, an international relations manager in Washington, wrote in a memo to his superiors on December 13, 1999. Haines emerged as an important adviser to ExxonMobil on its Aceh problem after the merger. He was a West Point graduate who had commanded an armored cavalry troop in Vietnam, leading rural sweep operations near Da Nang. After that tour, he resigned his commission and entered law school; a long career in Mobil’s office of general counsel had led him eventually to Fairfax, Virginia, where he headed up the international section of the corporation’s public affairs office at the time of the merger. He was one of the few Mobil hands in Washington that Exxon kept on. His Vietnam experience had equipped him to assess Aceh: The presence of Indonesian troops around the gas fields “only serves to inflame the population and results in suspicions that [ExxonMobil] is linked to the military,” he wrote.20

  In the spring of 2000, after the merger closed, ExxonMobil Global Security concluded that it could use some fresh eyes on its Aceh problem. Mike Farmer assigned John Alan Connor, an Arabic-speaking retired U.S. Army lieutenant colonel who had served as a Special Forces officer with the Green Berets and worked extensively in the Middle East, to the Indonesia security team. Connor had joined Exxon after leaving the U.S. Army. (There was a sizable contingent of former military men at the corporation.) In Yemen he had successfully negotiated truces with tribal sheiks around Exxon’s oil fields, and in Africa he had helped scope out security for oil field operations in areas prone to insurgency. Farmer asked Connor to undertake a “risk assessment” of ExxonMobil’s position in Aceh.21

  Connor looked at how Indonesian soldiers used and misused ExxonMobil equipment. He found that T.N.I. soldiers occasionally approached Indonesian-born employees to demand a bulldozer or dump truck, according to accounts of his study that circulated within ExxonMobil. If the employee refused, he might be beaten up or threatened. Connor’s assessment found “nothing as dramatic as mass graves dug with ExxonMobil equipment,” according to a person familiar with the internal reporting. The review did document cases of equipment being hijacked by Indonesian soldiers for unknown purposes in the midst of a conflict rife with abuses. This sort of strong-arming of ExxonMobil equipment by local security forces was a chronic problem for the company worldwide, particularly in Africa. Such “borrowing” by local security forces posed legal risks to the corporation. Under the Foreign Corrupt Practices Act, the American antibribery statute, there were limitations to what equipment or services ExxonMobil could provide to host governments and militaries without charging market prices. Each time the T.N.I. demanded a free ride on one of ExxonMobil’s corporate airplanes or asked to “borrow” a truck, the request had to be reviewed by the corporation’s lawyers—who often turned down the requests. In Indonesia, this had left T.N.I. officers frustrated and even more inclined than before to take what they wanted at gunpoint. ExxonMobil told its local employees not to sacrifice their “physical safety” if threatened, but if possible to resist demands by soldiers to take equipment and to call for help.22

  High-level executives reviewed the assessments of the corporation’s relationship with the Indonesian military. Farmer forwarded a report entitled “Indonesia Strategic Security Study” to ExxonMobil vice president Lance Johnson, noting that it “identifies a range of critical tasks that must be completed quickly . . . to respond to ongoing and potential security concerns.” A second internal report concluded that it would be necessary to enforce “uncompromising controls across the board.”23

  Connor stayed on in Aceh to support the security mission. He and other Exxon security officers—some permanently stationed in the province, others rotating in and out—tried to develop close working relationships with the Indonesian army battalion and company commanders deployed around the gas fields. The corporation’s security executives felt it was “ludicrous” to think that ExxonMobil should be held responsible for T.N.I. brutality or the use of excavation equipment outside of their control. Yet there could be little doubt that ExxonMobil exercised some authority over the T.N.I. soldiers assigned to its Acehnese fields. ExxonMobil’s contract, for example, gave the corporation the right to influence the Indonesian forces’ “deployment logistics,” and it “assisted in the management of security affairs” with the T.N.I.24

  As Mike Farmer recalled it, ExxonMobil’s corporate security officers on-site would take “business requirements to the military and say, ‘This is what we’d like to do over the next week or over the next ten days—can you take the appropriate steps to make sure that that’s done.’” For example, the corporation might be starting up gas wells in a certain field or might be moving employees in a convoy, and it would ask the T.N.I. to deploy support. A typical written instruction from Tommy Chong carried the subject heading “Deployment of Military Resources” and began, “We have revised the deployment logistics of the new military resources as follows: POINT A: 40 soldiers inclusive of 15 to handle military escorts for employee travels. . . .” Another internal document made explicit ExxonMobil’s authority over the T.N.I. units it paid. It carried the heading “Increase in Military Deployment” and instructed that the Indonesian army be asked to confirm that ExxonMobil “has the right to influence the security plan.”25

  The Global Security department sought to reduce the risk that Indonesian soldiers would engage in abuses by requesting that the soldiers refrain from sweep or offensive operations. Yet the corporation endorsed the Indonesian army’s and police’s plans to construct a layered defense around the Mobil property, including a forward perimeter of security posts, to catch G.A.M. guerrillas as they tried to approach. In effect, this defensive system created an infrastructure of patrolling and interrogation on and adjacent to Mobil’s fields. ExxonMobil urged the T.N.I. units in Aceh to be “defensive, not offensive,” according to an individual involved, as “nobody wanted to have any sort of cloud over our operations.” The Indonesian military units “were supposedly in static defensive positions that would go out roughly five kilometers on each side to prevent direct or indirect fire from coming at us.”

  Inevitably, even defensive patrolling would involve detentions and interrogations of G.A.M. suspects. Published human rights reports—including by the U.S. government—made clear that the questioning of guerrilla suspects by Indonesian officers was not likely to be polite. Yet as late as 2003, ExxonMobil had no written internal codes or guidelines for the use of force that could be handed out to soldiers or police protecting the corporation’s property, according to statements made by ExxonMobil executives to American officials in another country with mounting security problems, Nigeria. Even if ExxonMobil did not like the Voluntary Principles, there were other international standards for police conduct. These included the United Nations Convention on Human Rights, the United Nations Code of Conduct for Law Enforcement Officials, and the United Nations Guidelines on Use of Force. The International Committee of the Red Cross also published standards for the appropriate use of minimal force by police. Royal Dutch Shell, which had already confronted allegations arising from police and military excesses in defense of its oil properties in Africa, had developed “Rules for Guidance in the Use of Firearms by the Police,” which it wrote down on two-side
d laminated cards and handed out to personnel assigned to defend its properties. ExxonMobil resisted writing down any such rules. American lawyers advised their international oil clients that “such a formal move could expose the company to undue liabilities,” according to a State Department account.

  The constraints ExxonMobil sought to impose on the T.N.I. were therefore conveyed informally. In private meetings, ExxonMobil’s security officers told their Indonesian counterparts, “We couldn’t operate without you guys, we recognize the sacrifice you’re making and we respect the professionalism—and no human rights issues.”

  These lectures on human rights reached “the point of being a cliché,” recalled an individual involved. “The instruction we got was, ‘Do not look like you’re aiding or abetting the Army in any way,’” recalled a second individual involved. The Indonesian army officers sometimes resented the lectures they received. Some of the Indonesian officers battling G.A.M. made clear to their ExxonMobil liaisons that they thought the Americans were out of their depth.26

  Gusty winds blew a cold rain across Washington on March 12, 2001. Alwi Shihab, Indonesia’s foreign minister, an Islamic scholar with a doctoral degree in religious studies from Temple University in Philadelphia, arrived by limousine at the State Department. He entered under a canopy and ascended to the ornate seventh-floor office occupied by Colin Powell, his counterpart in the Bush administration.

  After an exchange of pleasantries, Shihab raised the conundrums of Aceh’s war. G.A.M.’s threats against ExxonMobil amounted to “blackmail,” the foreign minister told Powell. He hoped investments by American corporations in Indonesia would lead the new administration to support his government. “With $38 billion at stake in Indonesia, the United States would not want to see the country disintegrate.”