NEW YORK (Reuters) - In early 2006, ExxonMobil was caught in the middle of a standoff between the authoritarian leader of Chad, Idriss Deby, and Paul Wolfowitz, the head of the World Bank, journalist Steve Coll says in his new book on the world’s biggest oil company.
Deby needed more weapons to defend his African nation against rebels supported by his former ally, Sudan, whose militias had driven more than 200,000 refugees into Chad.
But good governance clauses in loans Chad had procured from the World Bank largely restricted him from arms purchases, and Wolfowitz was threatening to freeze critical bank accounts.
Deby, in response, threatened to shutter ExxonMobil’s Chadian operations, jeopardizing billions the company had invested in the country.
No problem. At the behest of ExxonMobil, Coll says, the U.S. Ambassador to Chad helped resolve the situation, following a failed rebel attack. Deby ended up with more leeway on spending on weapons and ExxonMobil continued pumping oil, the Pulitzer Prize-winning reporter says in his new study, “Private Empire: ExxonMobil and American Power.”
“By now ExxonMobil had made its own choice clear,” writes Coll, now a staff writer for The New Yorker. “It was more interested in the survival of Chad’s oil production than it was in the World Bank’s experiment in nation building.”
Chad was typical of the complex geopolitical and financial dilemmas the secretive multinational corporation faces on a continual basis, Coll explains in his lengthy portrait.
Checking in at more than 600 pages, and based on more than 450 interviews, “Private Empire” is almost academic in its breadth and density. Perhaps nothing less would do for a proper assessment of the largest publicly traded oil and gas company in the world, with operations in more than 150 countries.
Coll delves deeply into the cold pragmatism that reflects the ExxonMobil’s activity in dangerous locales, coping with threats from kidnappings to coups and the often spotty human rights record of host countries; its wary approach to global warming and public relations; its dealings with the Bush and Obama Administrations; its commitment, above and beyond all else, to satisfying its shareholders.
“I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.,” Coll quotes Lee Raymond as saying, citing the burly and brash CEO of the company who retired in 2005 with a financial package worth almost $400 million.
At stake, Coll says, is the fight for proven reserves of oil, which giants like ExxonMobil can exploit for years and represent a critical benchmark for investors as a pointer to the company’s future performance.
Unfortunately for Big Oil, these reserves have been and are increasingly found in the jungles and deserts of weak, war-torn nations rife with corruption like Chad, Equatorial Guinea, Iraq and the Aceh region of Indonesia, Coll writes.
“More and more of the world’s oil and gas lay in red-shaded transitional countries, as they were marked in confidential ExxonMobil binders,” Cole says, describing the corporation’s method of dividing nations into three groups: democracies, authoritarian regimes and transitional governments.
The Chad situation was emblematic of a common thread running throughout “Private Empire”: ExxonMobil’s push-pull relationship with the White House, with which the corporation enjoyed exceptional access under President George W. Bush.
Raymond had known Vice President Dick Cheney for more than two decades; this included Cheney’s tenure as CEO of Halliburton, which regularly contracted to do work for Exxon, Coll writes. Wolfowitz was another Bush White House veteran.
ExxonMobil usually sought to keep its distance from the administration, lest it appear to be an arm of U.S. foreign policy. After the U.S. invaded Iraq in 2003, ExxonMobil resisted State Department entreaties to open an office in Baghdad, Coll says. Raymond, in particular, became increasingly disillusioned with rising instability in Iraq, which was bad for business.
“Throughout his cultivation of the Bush Administration �Raymond purposefully kept ExxonMobil at arm’s length from the administration’s attempts to remake post-Saddam Hussein Iraq,” the author says. “It was not in ExxonMobil’s interests to become tainted by failed nation-building projects in a country that held one of the world’s largest unproduced oil and gas resource bases.”
ExxonMobil sets its own agenda. On April 19, 2012, Iraq’s oil ministry said it disqualified the company from bidding on a new round of oil exploration rights after it signed a separate deal with the semi-autonomous Kurdish region in northern Iraq.
But Coll says the corporation wastes no time in leaning on the White House when it really needs it. After a call from Raymond, Coll writes, Cheney called contacts in the United Arab Emirates when ExxonMobil was competing for a stake in a 50-billion-barrel oil field, which would provide the winner with “a substantial boost to its booked oil reserves.”
The UAE later awarded ExxonMobil a 20-year contract, citing the company’s technical prowess.
“The corporation’s executives often claimed that they did not require favors from the U.S. government, did not take direction from the White House, and preferred global independence,” Coll writes. “The reality was more complex. The corporation had a direct line to Cheney and negotiated with State and Abu Dhabi as its interests dictated.”
Coll’s analysis is insightful, though not definitive on every issue. On climate change, for instance, ExxonMobil was criticized in 2005 when it hired Philip Cooney, a former lobbyist with the American Petroleum Institute hired by the Bush White House as an environmental policy adviser. Cooney had just resigned after the New York Times reported that, despite no scientific training, he repeatedly revised government scientific reports to cast doubt on global warming arguments.
“Britain and continental European democracies have already taxed themselves to ease the climate risk faced by future generations,” Coll says in a passage many environmentalists would dispute. “In the United States, most of the major oil corporations that had earlier undermined the findings of climate science, including ExxonMobil, now accept, if reluctantly, that a price on carbon is coming, and that it might be justified.”
But overall the book is a thorough and useful discussion of ExxonMobil’s profitability and political influence during the years of Raymond and current CEO Rex Tillerson, shedding light on the growing power of corporations in the American political and economic system.
“Corporate profits in 2011 made up a larger share of American national income, when compared to workers’ wages and small business income, than at any time since 1929, when such statistics were first recorded,” Coll writes. “ExxonMobil had evolved into the most profitable corporation headquartered in the United States - and one of the most politically active - in an era of corporate ascendancy.”
Editing By Peter Bohan