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Exxon Under Fire in Indonesia

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By Jane Perlez

The Moscow Times
July 16, 2002


The silvery pipes that extract hundreds of millions of dollars in natural gas per year for Exxon Mobil glint in the tropical sun, a glittering contrast to the ramshackle huts and rice fields of the villagers nearby. The disparity might spell trouble enough in an era of increasing sensitivity about the gap between the wealth of Western corporations and the foreign workers who labor for them. But adding to the tension, this gas field, protected at its barbed-wire perimeter and beyond by Indonesian soldiers, sits in the middle of a brutal conflict against separatist rebels here in Indonesia's northern province of Aceh. That leaves the company, the largest long-term foreign investor in Indonesia and one of the world's most profitable businesses, under siege.

Exxon Mobil is also the object of a lawsuit filed on behalf of villagers who accuse the company of turning a blind eye to brutality by Indonesian soldiers, who have a long history of human rights abuses and have been paid to ensure the plant's security. The company denies the charges. But the suit and Exxon Mobil's travails in Indonesia encapsulate the problems faced by big companies that do business under the protection of ill-trained foreign armies, in places where the United States has strategic interests. The Indonesian government is now considering imposing a military emergency in Aceh, which could spell still more trouble for the plant and rankle Congress, where U.S. President George W. Bush's administration will be pushing soon to renew ties with the Indonesian army.

Last year, attacks by the separatist guerrillas of the Free Aceh Movement, who argue that the gas revenues belong to the province, forced the plant to shut down for four months, the first closing of its kind for a company that prides itself on toughing it out. Since the plant reopened a year ago, a beefed-up contingent of more than 3,000 Indonesian troops have patrolled much of the 80-by-16-kilometer swath of territory, where the gas operations cut into fertile forest, next to the simple plots of some of the world's poorest people. At night, the executives sleep in shipping containers inside the plant, having been forced to abandon their ranch-style homes a few miles away.

Villagers are hostile. They say the presence of the oil and gas giant has brought them little but grief -- no tangible improvement in their living standard and the perpetual threat of violence from unwelcome Indonesian soldiers. On the outskirts of the complex, where generations of fishermen have eked out a living, a 60-year-old villager named Abdullah said: "I used to own land here. When they built the plant, we had to move. Now I pay rent."

The suit against the company was filed last July in the United States on behalf of 11 villagers by a workers' rights group, the Washington-based International Labor Rights Fund, and it is now coming to a critical juncture in the courts. It asserts that the villagers were victims of murder, torture and kidnapping by Indonesian soldiers paid to protect the plant.

The U.S. State Department is to deliver an opinion on Aug. 5 on whether the suit interferes with the Bush administration's policy in Indonesia, the world's most populous Muslim country and an uneasy partner in its campaign against terror. Lawyers for Exxon Mobil asked for the opinion, apparently in the expectation that an administration with a bent toward the energy industry would favor dismissing the suit.

The case has aroused fractious debate at the State Department, pitting officials who view Indonesia as an important nation that needs all the money it can get against those who say the United States should stand firm on human rights. It is part of a rash of suits that have been brought under the Alien Tort Claims Act of 1789, which has been used by foreigners to sue corporations in the United States over charges of human rights abuses abroad.

In the Exxon Mobil case, the judge has said that the State Department's opinion will be nonbinding. But Exxon Mobil's interests and those of the Bush administration are likely to be one and the same, and in the past the department's view has clearly been taken into account. Earlier this year, the State Department said that pursuit of a lawsuit against international mining company Rio Tinto in Papua New Guinea would harm American interests, and the lawsuit was dismissed.

But the State Department saw no conflict in another case against Unocal, the California-based oil and gas corporation, involving accusations of abuses committed by the government of Myanmar, its partner in the development of a gas field. The gas field in Lhokseumawe, the biggest in the country, holds more than symbolic importance for both Indonesia and Exxon Mobil, which industry analysts say would be reluctant to relinquish the operation. The field generates more than $1 billion per year for the government, analysts say. When Exxon Mobil shut down operations last year, a senior government minister, angered over the loss of revenues, called the company "cowards."

For the people of Aceh, who want independence, or at the very least a fair share of the natural gas revenues they send to the central Indonesian authorities, the gas production has been a vast disappointment since it first began in the mid-1970s. The fact that the plant employs about 800 local people as permanent staff members and 2,500 more as contract workers is small solace, critics say, for the permanent presence of the military. Unabashedly, villagers describe the Indonesian troops, who they say intrude, often brutally, in their daily lives, as "the Exxon Mobil army."

To bring the suffering home to the company's investors, an Acehnese woman, Cut Zahara Hamzah, addressed Exxon Mobil's annual shareholder's meeting in Dallas in May. "With the pretext of searching for the Free Aceh Movement guerrillas, who are fighting to free Aceh from Indonesia, they arrest, detain, torture and kidnap innocent villagers," she said of the Indonesian troops. In the suit, the identities of the villagers alleging abuses have been kept hidden for fear of reprisals, human rights experts said. One woman, identified as Jane Doe, says that on Dec. 2, 2000, she went to a nearby rice field after hearing cross-fire and found her husband dead. "Three witnesses who were in the fields with my husband said that soldiers from Unit 113, the Exxon soldiers, arrived in military vehicles and shot at the group of farmers who were working in the fields," she says in the suit.

Ronald Wilson, president and general manager of Exxon Mobil Indonesia Inc., the subsidiary that operates the plant and is 100 percent owned by Exxon Mobil, said the company "doesn't condone human rights violations anywhere in the world, including Indonesia."


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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.