Private Empire: ExxonMobil and American Power

by Steve Coll

  Larson agreed that the “investment of U.S. companies” in Equatorial Guinea “strengthens the bilateral relationship” with America. He warned, however, that the more prominent Equatorial Guinea became as a global oil supplier, “there will also be increased scrutiny from human rights groups around the world.” There was nothing the Bush administration could do about that—it was a fact of global life in an age when the power of nongovernmental campaigners and media was increasing. Larson “encouraged Obiang to continue to work constructively” with ExxonMobil, Marathon, and Hess, “who have shown so much confidence in [Equatorial Guinea] to invest so much there.” On the question of the royalty rate and other financial matters, Larson “assured” Obiang that the American companies would “deal squarely” with Equatorial Guinea.19

  Al Qaeda terrorists struck Washington and New York four days later. Obiang was still in town, ensconced at the luxury Willard Hotel, which is located on Pennsylvania Avenue between the White House and the Capitol. He was smuggled out of the hotel through the garage. Terrorism fears now joined oil dependence as glue in the emerging U.S.-Obiang relationship. The Bush administration soon briefed Equatorial Guinea on “increased Al Qaeda operations under way throughout the world and the possibility that Al Qaeda might target petroleum facilities.”20 Obiang readily invited American diplomats to talk with him about security issues. His regime lived in perpetual insecurity, plagued by internal coup plots and menaced by much larger neighbors, particularly Nigeria, that might covet the country’s oil wealth. Rising fears within the Bush administration that seaborne Al Qaeda–inspired terrorists might attack American offshore oil platforms would draw Malabo and Washington toward a security partnership, some of Obiang’s advisers believed. Equatorial Guinea’s production, moreover, was expanding by the month. The country pumped out just fewer than 300,000 barrels per day in 2002 and expected more than 350,000 barrels per day in 2003. This would mean, a State Department cable noted, that Equatorial Guinea “will become the third largest oil producer in sub-Saharan Africa, after Nigeria and Angola.”21 Hardly anyone had noticed the country’s emergence on world oil markets. The Bush administration at last overcame its hesitations; the White House approved the embassy and prepared for its reopening.

  George Staples arrived in November 2001 as the new American ambassador. He was a career foreign service officer, an African American who wore wire-rimmed glasses and who spoke Spanish, French, and Turkish. Staples had divided his tours among the Carribean, Latin America, the Middle East, and the Continent. He had served a previous tour in Malabo, as a political officer, during the 1980s.

  On January 23, 2002, Staples flew to Equatorial Guinea for the first time after a fifteen-year absence. The country he saw dazzled him—road construction under way, new hotels, the modern corporate enclaves of ExxonMobil and Marathon, and small supermarkets. Obiang remembered Staples from his earlier tour, when they occasionally bumped into each other while jogging on the airport road. They met now at the president’s palace above Malabo harbor. The atmosphere in the receiving room was formal; bodyguards and aides stood by in attendance. The president greeted Staples warmly; they spoke in Spanish.

  “America is our friend, versus Spain and some other Europeans who have other agendas,” Obiang said. “The American companies made this possible,” he said, referring to his country’s boom. “The Europeans lied to us. We’ve never stopped believing this.”

  It was gratifying to see a country that he remembered as one of the world’s poorest developing so rapidly, Staples replied. “You have to recognize that great wealth brings with it great responsibilities,” he added. It was vital that Obaing use his wealth “in a responsible manner, and not waste it on foolish programs or see it disappear through corrupt practices that could destroy the country’s reputation and erode its moral fiber.”

  Obiang declared that he was “determined” that Equatorial Guinea would not “become another failed African state.” He elaborated: “Not a single West African oil state can be called a success. What has happened with all the oil money that came to Nigeria, Cameroon, Gabon, and Angola? When African leaders gather at Organization of African Unity meetings, they look to South Africa as the continent’s engine of growth, when Nigeria and other oil states could have performed this function long before apartheid ended.”

  As to human rights, Obiang said he was “trying to develop a democratic system,” but his countrymen “were not sophisticated and sometimes had a low tolerance for opposing opinions.” When opposition politicians were “harassed and attacked,” it was “not on orders from the government.” The same was true of other human rights abuses made against his regime.

  “Help us,” he said.22

  Like many diplomats, Staples was optimistic about the potential of the United States to improve a country such as Equatorial Guinea. Here it seemed more apparent than usual that American corporations and international nongovernmental organizations could lift the quality of governance. When he visited Malabo, Staples sometimes stayed overnight at the compounds of the several international oil companies, including ExxonMobil’s; construction of international business hotels was under way in Malabo, but none had yet been opened, and the State Department had yet to lease its own housing. The oil industry executives he met during these stays “spoke highly of Equatorial Guinea’s potential to become an African success story.”23

  The ambassador suggested ideas to his hosts, including ExxonMobil, about how they might directly contribute to Equatorial Guinea’s development, outside of pumping oil, by flying in teachers to run seminars on business formation, accounting, and the like. Staples soon learned, however, that while ExxonMobil’s local representatives were sympathetic and interested, they had trouble winning approval for such initiatives from headquarters. ExxonMobil, along with Marathon and other firms, did invest in malaria eradication in Equatorial Guinea, but the corporation shied away from anything that involved interaction with the country’s politics or business classes. ExxonMobil’s lawyers in the upstream division in Houston feared, for example, that if they trained young Equato-Guinean people and their businesses subsequently failed, the oil corporation might be somehow judged liable. To the American ambassador, this seemed careful in the extreme, but it did in fact reflect ExxonMobil’s strategy in poor and volatile countries. The issues of concern to ExxonMobil were largely limited to the production of oil and the sanctity of contracts. “We are an oil company; we are not the Red Cross,” as Andre Madec, an ExxonMobil executive who oversaw global community relations, once put it. “We don’t want to be seen as the de facto administration.”24

  Obiang remained hopeful about the strategic partnership he could eventually build in Washington through oil and security. The president bought big houses for family members throughout the suburban Washington region and he traveled regularly to the capital and to New York. At the Riggs branch across from the White House, Obiang’s aides arrived with heavy, bulging suitcases filled with plastic-wrapped hundred-dollar bills—up to $3 million at a time—and handed them over as cash deposits, which Riggs’s account managers gratefully accepted.

  In tandem with the oil companies and Obiang’s lobbyists, Riggs’s executives tried to burnish Obiang’s reputation as best they could. “The president has requested to come to the bank to pay a courtesy call and brief us on developments in Equatorial Guinea,” Simon Kareri, the bank’s African-born account manager handling the Obiang and related accounts, wrote to Joseph Allbritton, the bank’s chairman. “I would like to suggest that we recommend that the President hire a P.R. firm.”25

  Kareri briefed the bank’s leaders on the political risk equations involving their idiosyncratic client. There was potential for coups or internal fracturing in Equatorial Guinea, and yet major American oil companies had “established a significant presence in the country and U.S. officials appear anxious to maintain good relations,” he noted. “The country could be valuable to the U.S. from a geostrategic view, given its location in Central Af
rica and the abundance of oil.”

  Obiang passed through the branch’s soaring columns and into a paneled conference room one summer day. The bank’s senior executives listened as the president described his country’s progress. Obiang mentioned that there had been “pressure” from other banking and financial institutions to move some of his business elsewhere, on the grounds that Riggs was not equipped to handle all of the nation’s finances. However, “the President’s regard and loyalty to Riggs is unquestionable because he has dismissed all possible suitors as ‘speculators,’” Kareri’s notes of the meeting recorded. As to the allegations about his human rights record, publicized by Human Rights Watch and others, Obiang told the bank executives that he had not reacted to “the innuendoes” about such matters. “The President clearly regards his engagement of such discussion as demeaning to his stature,” Kareri noted.

  Obiang did have one piece of business he wished to mention while he was visiting his bank: He requested a $34.4 million loan to purchase a presidential jet from Boeing Corporation, a 737-700 that would be outfitted with a king-size bed and gold-plated bathroom fixtures.26

  Seven

  “The Camel and the Jackal”

  On New Year’s Day, 2000, about two months after he arrived in the capital city of N’djamena to serve as United States ambassador to Chad, Chris Goldthwait sat down to write a letter home to friends entitled “Is It Hopeless?” He was referring to Chad. Certainly it was a troubled place. Goldthwait was a senior officer in the Foreign Agricultural Service and a part-time novelist. He had been posted overseas before, but never as a full-fledged diplomat; the State Department dispatched him to Chad as part of an effort to recruit ambassadors from outside of its own ranks. During his first weeks in the country, he took the embassy boat, which had been acquired to allow the ambassador and his colleagues to escape to neighboring Cameroon in the event of coups or other violent unrest, out on the wide Chari river to look for hippopotamuses. He found a few, but he was more entranced by the families living in adobe brick huts—premodern-looking dwellings supported by mats and poles, their tin roofs “held down against the wind by concrete blocks or big stones.” Goldthwait was single and entering the twilight of his professional life; he was a self-contained man, ready to travel and inspect his vast assigned territory. It didn’t take him long to discover that “all aspects of life are starker here than at home—greed, poverty, hatred, disease, death, honor, friendship and love.”

  If Chad’s history was “our standard for judgment,” then there was little evident cause for encouragement. To seize the territory for the French empire, two colonial captains invaded from Senegal late in the nineteenth century. They left a trail of burned villages and decapitated bodies before their African troops mutinied and murdered them. After independence, a succession of coups, rebellions, incursions from neighboring Libya, French interventions, and American cold war–inspired covert maneuverings left Chad’s eight million people in the grip of Hissène Habré, who arrested, tortured, and murdered several tens of thousands of his countrymen. One of Habré’s French-trained generals, Idriss Déby, eventually overthrew him; the dictator fled to exile in Senegal with as much gold as he could load onto his escape plane. Like his predecessor, Déby trusted only his northern tribal kinsmen and “lavished upon them the lion’s share of governmental largesse and responsibility,” Goldthwait noted. “It has meant that a government with meager resources, degenerating early after independence into corruption, has come to be viewed mainly as a patronage system.”

  Chad’s borders on international maps mark a landlocked expanse almost twice the size of Texas and breathtaking in its internal diversity. Its people speak 128 distinct dialects. The country’s southern forests and agricultural lands, bordering Cameroon, receive as much rainfall as the American East Coast. In the north, nomads roam with camels and cattle through parched dunes and rocky crags. There are fewer than eighty miles of paved roads in the entire nation. Chad’s poverty ran even deeper than Equatorial Guinea’s.

  Life expectancy at the century’s turn was just forty-six years, according to the United Nations Development Programme; less than half the population was literate and only a third of school-aged children were enrolled in classes. The economy suffered from “poor to non-existent infrastructure, chronic energy shortages, high energy costs, a scarcity of skilled labor, limited understanding of the English language, a high tax burden, and corruption,” according to a formal U.S. embassy assessment cabled to Washington. Five of Chad’s six neighbors—Libya, Niger, Nigeria, the Central African Republic, and Sudan—were politically unstable. Idriss Déby, like coup makers worldwide, had promised reforms when he came to power, but he had settled into a self-protecting regime made up of relatives and cronies with apartments in Paris, ruthless palace guards, half-loyal regional militias, and a training contingent of about a thousand French troops and airmen on standby at N’djamena’s airport. Déby had some skills: He was a thin, composed man with a general’s sense of military maneuver and a tribal sheik’s instincts for political balancing. Still, although the Chadian elites in the precarious capital spoke a “perfect French,” Chris Goldthwait wrote, “there isn’t anything behind it in the way of knowing what to do to solve problems.”

  Hopeless? The arriving American ambassador chose to believe otherwise. Democracy movements had swept even the poorest African countries during the 1990s. National economies had been growing across the continent, even in the midst of civil violence. By the time Goldthwait landed, Chadians had become “marvelous at saying what they know we want to hear from them about democracy, development, national reconciliation, etc.—sooner or later they will start to believe some of it themselves.” He wrote to his friends:

  So no! It isn’t hopeless, only incredibly difficult. More difficult than the miracles of development in East Asia. More difficult than the recovery of the District of Columbia in our own country. More difficult than the challenges facing South Africa or other African lands. But the people here will face the challenge because they have no choice. Is there anything we can do to help them?1

  ExxonMobil employed considerably more geologists than political scientists. The complexity of Chad that attracted their attention involved the subterranean formations of the Chari river floodplain, particularly around the Doba basin. Exxon’s local subsidiary—Esso Exploration & Production Chad, Inc.—had started exploration and development work in the basin in 1977. Its engineers confirmed significant deposits at Bolobo. The oil there was thick and sour, meaning that it was infused with sulfur and thus less valuable than the “light and sweet” crude blends that attracted the highest prices on global markets. (Those lighter blends were easiest to refine into gasoline and other fuels.) The viscosity of Chad’s oil presented production challenges, as did the diverse and inconsistent strata of rocks and water beneath Chad’s eroded land, which complicated efforts to pump oil to the surface.

  The scientists who puzzled over Chad’s subsurface worked mainly out of Houston, in the upstream division of ExxonMobil charged with buying, developing, and producing oil and gas. After the merger, to reduce head count and improve flexibility, Raymond oversaw a reorganization that moved many of these scientists into “skills” groups that could deploy worldwide, like geology special forces teams, to support local business units and projects. Their ability to accurately assess oil reservoirs improved year by year as faster computing and improved graphic and imagery software allowed for more accurate visualization of underground geology than in the past. There was a basic Geophysics skills group, with obscure-sounding subunits such as the Gravity Magnetics Group. There was a skills group called Geological Operations that brought scientific expertise to well and pipeline engineering. There were scientists grouped together to work on New Field Development and Mature Field Development, as well as a group specializing in Stratigraphy, a field of geology that studies how complex layers of rocks and sediments such as those beneath Chad’s Doba floodplain change over time, influe
nced by water and weather. One of the most important scientific groups based in Houston was called Formation Evaluation. These were the specialists who bought, captured, and analyzed seismic and other data about where undiscovered oil and gas formations might lie beneath land or ocean floors. As Houston struggled to define an economically viable plan to lift Chad’s thick, dispersed oil to the surface, its stratigraphers wrestled with geological problems tens of millions of years in the making.

  Then there was the challenge of transport, even if Chad’s oil could be coaxed to the wellhead. There was no profitable market for large volumes in Chad’s neighborhood. The oil would have to be piped hundreds of miles overland to the Atlantic Ocean and then shipped to refineries in Europe or the Americas.2

  During the cold war, despite his torture rooms, Hissène Habré had maintained cordial ties with the United States, which regarded him as a regional counter to Libya’s leader, Moammar Gaddafi. The Reagan administration trained elements of Habré’s notorious security service and provided the regime with tens of millions of dollars of military aid each year. When Habré visited Washington in June 1987, Reagan assured him, “Chad now knows it can count on its friends.” The American president took note, too, of Chad’s economic problems, particularly its recent “locust plagues.”3 Exxon’s oil discoveries offered relief from such trials. Bolstered by the Reagan administration’s alliance, Exxon outflanked French oil companies, negotiated with the dictator’s aides, and, in 1988, produced the Convention for Exploration, Exploitation and Transportation of Hydrocarbons in Chad. It provided for a thirty-five-year compact among Chad’s government, Exxon, and two partners; Exxon would be the lead operator, and eventually, the corporation secured Chevron and PETRONAS as partners. The terms were favorable to Exxon and its partners in comparison with typical contracts elsewhere: Chad would receive a 12.5 percent royalty on all oil produced, plus taxes equal to 50 percent of the consortium’s net profits, which could rise to 60 percent if world oil prices soared. Chad’s take of less than two thirds of revenue after expenses compared to rates closer to 90 percent in Nigeria.