Big Oil on Trial

By Jeremy Klaszus

When Ottawa Citizen reporter Kelly Patterson heard about new evidence being presented in the lawsuit against Talisman Energy in the U.S. District Court of New York, she set to work. She got on the phone. She researched. For several days, she investigated the latest chapter in a long story about Talisman's controversial involvement in Sudan.

The Citizen published her story on October 22, 2005, almost three years to the day after Talisman CEO Jim Buckee announced his company would be ending its stay in the war-torn country, having been attacked from all sides for its presence there. From 1998 to 2003, the company was a 25 per cent stakeholder in the Greater Nile Petroleum Operating Company (GNPOC), a consortium that included China's and Malaysia's national oil companies. Talisman sold its holdings to a subsidiary of India's national oil company in 2003.

Patterson's story focused on a slew of previously confidential documents that had recently been made public. The lawsuit had been filed in the New York court on November 8, 2001, by the Presbyterian Church of Sudan and a group of Sudanese citizens and refugees. The suit names Talisman and the Sudanese government as co-defendants, alleging they collaborated "in a brutal ethnic cleansing campaign against a civilian population" to enhance their "ability to explore and extract oil from areas of southern Sudan."

It continues: "The armed campaign, which...has resulted in massive civilian displacement, the burning of villages, churches and crops, and the extrajudicial killing and enslavement of innocent civilians, is possible only through Defendants' collaboration and the Government's use of equipment and infrastructure, such as vehicles, helicopters, aircraft, roads and airfields, owned, chartered, constructed and/or maintained by Talisman."

Talisman denies the allegations, calling them "baseless" and "demonstrably false." In court papers, Talisman has argued: "It is not sufficient to show that Talisman Energy sometimes provided services to the Government of Sudan, and that it knew or should have known in some general way that the Government of Sudan was abusive of human rights…As a matter of fact, Talisman Energy never rendered any assistance to the Government of Sudan. GNPOC, not Talisman Energy, had facilities in Sudan."

The Sudanese civil war -- fought between the Arab Muslim north and the mostly Christian and animist south -- has raged on and off since the mid-1950s. There was a hiatus in the war from 1972 until 1983, but peace agreements collapsed and fighting broke out again and continued until another peace agreement was signed in 2005. Between 1983 and 2005, an estimated two million people were killed and over four million displaced.

The war was often portrayed as nothing more than a religious and cultural conflict between Muslims and Christians, but human rights groups say it was more about resources than religion. Groups such as Amnesty International and Human Rights Watch found that oil revenues -- including those that came from Talisman -- directly fuelled the war. When the GNPOC pipeline started operating in 1999, oil money poured into Sudanese government coffers. Oil accounted for just over seven per cent of total government revenue in 1999. In 2000, the first full year of production for GNPOC, that number was up to 43 per cent. And as the revenues increased, so did military spending.

Human rights groups also found that civilians were being killed and driven from their homes near oil concessions. Canada's own 1999 fact-finding mission to Sudan found the same things. "…[T]wo things are certain," says the government-commissioned Harker Report, released in 2000 by a delegation led by special envoy John Harker. "First, the gunships and Antonovs [Russian cargo planes used as bombers by the military], which have attacked villages south of the rivers, flew to their targets from the Heglig airstrip in the Talisman concession. Second, it is a prominent perception of southern Sudanese that Talisman, 'the Canadian oil firm,' is in active collaboration with the GOS [Government of Sudan], economically, politically and militarily."

The 300-plus pages Patterson obtained for the Ottawa Citizen had been submitted by the plaintiffs as part of a failed motion to elevate their suit to a class action. The documents include internal company memos and e-mails. Among them is a response to the Harker Report written in 2000 by Mark Reading, Talisman's security adviser at the time, who described the Sudanese military's use of the Heglig airfield¬, which GNPOC had paid to improve. "This bombing most certainly happened...the airstrip was definitely used during this period to conduct war against the South, of that there can be no doubt," he wrote.

The company's response points out that the Sudanese government, not Talisman, owned the Heglig airfield. Furthermore, it asserts, "there is no indication in any of the documents or testimony that during the brief period that Antonov bombers used the government airstrip at Heglig, the Antonovs were being deployed against civilian populations." Talisman argues that the planes were used against rebel groups, which is "conduct not violative of international law."

In a 2000 internal Talisman report made public in the New York court last year, former company security advisor Mark Reading described what an Antonov attack is like. "These bombing runs are extremely terrifying to the people on the ground because they can hear what is trying to kill them but cannot see it," Reading wrote. "A lot of locals refer to this as 'whispering death.' This certainly is not precision bombing and as we know it leads to many accidents. Schools, hospitals and a whole manner of targets have been frequently hit."

In some of the e-mails made public, company employees vividly describe what was happening on the ground in Sudan. "I watched one of their [military] gunships refuel at our company fuel tanks today," says an e-mail dated November 2, 1999, from Talisman employee Larry O'Sullivan. "I have watch [sic] soldiers going to the battle be transported in our company trucks… Nobody can tell me that this oil is not buying more military power."

To any reporters worth the notebooks they write in, these documents had news value. The Alberta press, however, ignored them completely, even though Patterson's story was readily available to the Edmonton Journal and Calgary Herald for republication, since the Citizen, the Herald and the Journal are all part of the CanWest Global chain.

"I think there were some problems with [the story]," says Charles Frank, the Herald's business editor. "There were some legal issues with it. I think the decision here was that we weren't totally comfortable with that story, so we didn't run it."

The Citizen, however, was comfortable enough to publish it, even after Talisman pressured them to fill the space with something else. "Talisman has a lobbyist who repeatedly phoned the Citizen," says Patterson. "He phoned both the business editor and the editor-in-chief, trying to convince them that we shouldn't run the story."

Talisman responded swiftly once the story was published. David Mann, the company's senior manager of corporate and investor communications, wrote a rebuttal, which the Citizen published. Mann chastised the newspaper for printing "a very select number of excerpts without proper context." He denounced the allegations as "outrageous and implausible" and explained that Talisman was being sued under an arcane law put to "imaginative" use.

The suit is being heard under the US Alien Tort Claims Act (ATCA), a once-obscure law created in 1789 as part of the Judiciary Act to extend court jurisdiction to non-U.S. citizens who violated international law. Since the late 1990s, the law has been used against U.S. and non-U.S. companies.

"Fortunately for us, human rights law has progressed to a point...where even governments aren't allowed to do anything they want to their own civilians," says Carey D'Avino, the plaintiffs' lawyer. "And since a sovereign is not allowed to commit certain crimes like genocide, war crimes and crimes against humanity, certainly no private entity is entitled to be absolved from participation or aiding and abetting in those crimes."

Talisman has tried several ways to get the suit thrown out. The company has twice argued in court that corporations, unlike states, are incapable of violating international law. District Judge Allen Schwartz dismissed that argument as illogical and "anachronistic" in March of 2003.

Another argument the company has repeatedly put forward is that it shouldn't be tried in U.S. courts, but in Sudan or Canada. When Talisman argued this in New York, Schwartz noted that an Alberta court would most likely apply "the law of the place where the activity occurred" -- in this case, Sudanese sharia law. "Under Sudanese law, plaintiffs as non-Muslims would enjoy greatly reduced rights," Schwartz wrote in his landmark opinion dated March 19, 2003, three days before he died of a heart attack. He concluded that New York was the most appropriate forum for the suit.

"The case is particularly significant because there's no equivalent to the ATCA in Canada," says Craig Forcese, a law professor at the University of Ottawa. "The prospect of ever actually litigating a Talisman-like case in Canada is theoretically possible, but there isn't an easy way of doing it. It would be tough and expensive and would require all sorts of new precedent."

The Canadian government is also a big player in this story, though one wouldn't know it from reading Talisman's 2005 Corporate Responsibility Report. The report says, correctly, that the U.S. Department of Justice filed a statement of interest in the New York court "expressing the U.S. government's view that the lawsuit interferes with U.S./Canada relations."

What the report doesn't say is that Washington filed the statement at Ottawa's -- and ultimately Talisman's -- request. In July of 2005, Toronto Star scribe Rick Westhead reported that Talisman sent a letter to then-Prime Minister Paul Martin's senior foreign policy adviser asking the government to intervene on the company's behalf.

The Canadian embassy dutifully complied with Talisman's request by sending two diplomatic notes to the U.S. Department of State in 2004 and 2005. The second note, dated January 14, 2005, protested the policy ramifications of U.S. courts exercising jurisdiction over a Canadian company. The note says the Talisman suit "creates a 'chilling effect' on Canadian firms engaging in Sudan."

Upon receiving the second note, Washington filed its statement of interest informing the court that the case frustrates Canadian foreign policy. "Canada's judiciary is equipped to consider claims such as those raised here," it read. But the plaintiffs pointed out that Canada's legal system isn't at all sufficiently equipped, and that the Canadian government had consistently "stood mute" on Talisman's involvement in Sudan. District Judge Cote emphatically rejected Talisman's, Ottawa's and Washington's arguments, pointing out that the court had already decided "Canadian courts are not able to entertain civil suits for violations" of international law.

Professor Forcese calls the Canadian government's position "utterly unpersuasive."

"The Canadian government is deeply hypocritical on several levels," he says. "They're hypocritical on the specifics of the Talisman case where, by its own admission in terms of the Harker report from 2000, the Canadian government said this was a bad thing that was going on, did nothing, and now there's some effort to hold Talisman to account and they're actively resisting it. It's quite disturbing."

As the Talisman case draws closer to its tentative trial date of January 2007, it remains to be seen whether the media's silence will be broken. At the Calgary Herald, Frank says sending a reporter to New York to cover the trial wouldn't be out of the question. "We like to view ourselves as reporting on the industry in its entirety, so certainly it would be on the table," he says. "I think it's an interesting story, and I think people are always looking for the story behind the story."

But if the story behind the story is going to be told, news organizations will have to stop sweeping it under the rug and start actually reporting on it. "It's a matter of public interest," says Forcese. "And as a matter of public interest, it deserves comment in the media. It's exactly the sort of issue that needs to be discussed.