Frontline World

COLOMBIA - The Pipeline War, November, 2002



THE STORY
Synopsis of "The Pipeline War"


CHARTING THE WORLD'S OIL
Interactive Map of Global Oil


WHO'S WHO
Context for the Pipeline War


PHOTO ESSAY
Civilians Caught in the Crossfire


U.S. CORPORATE INTERESTS
Occidental Petroleum, BP, and more


FACTS & STATS
Learn More about Colombia


LINKS & RESOURCES
Human Rights, Colombia's Civil War, Media Resources


MAP


REACT TO THIS STORY

   


Global Reach: U.S. Corporate Interests in Colombia
Colombia's bloody civil war and violent drug trade have long served to limit foreign investment in a country with some of world's richest untapped natural resources. But Colombia's place in the global economy may be changing, as its business-friendly government eases restrictions on corporate newcomers and with the U.S. now dedicating military aid to protect multinationals' interests in the country. As more global companies are lured by lucrative returns in Colombia, labor and human rights advocates fear a growing corporate presence will cause increased violence in a country that already is home to the murder capital of the world.

Read more about U.S.-based Occidental Petroleum Corporation, other leading investors in Colombia, and corporations' role in the country's 38-year conflict.

By David Montero and Kelly Whalen

OCCIDENTAL PETROLEUM CORPORATION

Occidental Petroleum Corporation is one of the largest U.S.-based oil and gas multinationals, with exploration projects in three states and nine foreign countries, including Colombia. It has operated in Colombia for more than three decades; in 1983, Occidental discovered Caño Limón, Colombia's second-largest oil field and one of only 50 billion-barrel-class fields in the world. Occidental's investment in Caño Limón paid off long ago, with its share of production yielding hundreds of millions of dollars annually. Even through years of rebel attacks and pipeline closings, Caño Limón Field continues to be a profitable venture for Occidental.

In recent years, Occidental has simplified its oil and gas operations by focusing its operations in the United States, the Middle East and Latin America. Despite drastic oil price declines in 2001, Occidental Petroleum had its second-best annual earnings ever.

Annual sales: $14 billion
Annual net income: $1.2 billion
CEO and annual executive salary: Ray Irani, $24 million (six-year average); Forbes Magazine ranked Irani the second-worst among executives who gave shareholders the least return on their investment compared with their own pay. In 2001, Irani's compensation package included free financial planning, country club dues and a $2.6 million bonus.
Founded: 1920
Stock: Publicly traded (OXY) on the New York Stock Exchange
Corporate headquarters: Los Angeles
Employees: 8,235
Colombia operations: Occidental owns Caño Limón Field in the province of Aruaca, operates three exploration projects elsewhere in Colombia, and, in 1998, swapped its holdings in the Philippines and Malaysia for Shell Oil's interests in several producing blocks of Colombia.
Worldwide holdings: Russia, Pakistan, Saudi Arabia, Yemen, Qatar, Oman, Ecuador, the Gulf of Mexico, the United States (Texas, California and Alaska)
Worldwide reserves: 2.17 billion barrels of oil
Worldwide annual production: 461,000 barrels of oil per day
Colombia annual production: 34,000 barrels of oil per day in 2002, up 79 percent from the year before

Labor Conditions

In addition to sabotaging the physical structure of Occidental's Caño Limón Pipeline, Colombia's rebel groups have attacked, kidnapped and murdered company employees. Employees also have often been caught in the crossfire between the rebels and the military. Not unlike other multinationals in Colombia, Occidental makes it clear with its employees that it will not pay ransom in the event of their kidnapping. With few exceptions, the company hires Colombians from distant cities to work in the danger areas because they are less likely to be knowledgeable about military troop locations or security measures should they fall into the hands of guerrillas. Prospective contractors are rigorously screened by Occidental's psychologists to ferret out spies; workers must show identification cards at a half-dozen security checkpoints; and palm-reading devices restrict access to executive offices. Still, Colombia's rebels have succeeded in breaching the multinational's security on a number of occasions.

• In 1988, the rebel ELN (the National Liberation Army) exploded a car bomb outside Occidental's nine-story Colombian headquarters in Bogotá, badly damaging the building.
• In April 2001, rebels seized a bus filled with 100 Occidental oil workers and security contractors on their way to work. Most were released that night, but 30 were held for as long as four days and pumped for security information.
• A truck bomb in October 2000 narrowly missed a bus filled with 40 Occidental secretaries and other company employees.
Human Rights Record

Watchdog groups have ranked Occidental poorly on human rights after the company pursued a protested oil exploration project in Colombia's cloud forest, home to 5,000 members of the U'wa tribe. In 2000, three children were killed after Occidental called on the military to break up a nonviolent U'wa blockade of the road to the drill site. After years of public pressure protesting Occidental's exploration on ancestral lands, the company announced in May 2002 that it was canceling the project. The company blamed its withdrawal on technical and economic factors, but many believe Occidental caved to negative publicity.

Occidental's stand on human rights in Colombia was also tainted after a 1998 air raid of the village of Santo Domingo near the Caño Limón Pipeline. That year, three American pilots of AirScan (a Florida-based security firm that Occidental uses to protect its oil interests from rebel attacks) marked hostile targets for the Colombian military in an antiguerilla operation. The pilots' assistance mistakenly led to the killing of 18 civilians, including nine children. Survivors from the village said the aircraft (U.S.-donated) attacked them as they ran out of their homes to a nearby road with their hands in the air. The Colombian government is still investigating.

Occidental on Capitol Hill

Between 1996 and 2000, Occidental spent more than $8.6 million lobbying the U.S. government, including for U.S. military aid to Colombia. In the 2000 election cycle, the company gave hard and soft money totaling about $551,000, with about 60 percent going to Republican candidates and political action committees. The CEO of Occidental's chemical subsidiary, J. Roger Hirl, raised more than $100,000 in support of George W. Bush's bid for the presidency.

Occidental also has maintained links to the Democratic Party for many years, primarily through former Vice President Al Gore's father, the late Al Gore Sr., who after leaving the Senate took a $500,000-a-year job with an Occidental subsidiary, then served on the company board for 28 years.

When the younger Gore joined Clinton's ticket in 1992, Occidental loaned the Presidential Inauguration Committee $100,000 to help pay for the ceremony. And after Gore took office, the company gave nearly $500,000 in soft money to Democratic committees and causes. In late 1997, the former vice president championed a $3.65 billion sale to Occidental of the government's stake in Elk Hills Oil Field (California), representing the largest privatization of federal property in U.S. history. In 1998, when his father died, Gore inherited about $500,000 worth of Occidental stock.

Related Links

House Testimony
Read Congressional testimony by Lawrence P. Meriage, Occidental's vice president of Executive Services and Public Affairs, urging counternarcotic and other U.S. military aid to Colombia.

An Open Letter to Occidental's CEO
Human Rights Watch (HRW) wrote Occidental CEO Ray Irani urging the company to reconsider its security reliance on the Colombian military, an institution rated by HRW as one of the worst human rights violators in the hemisphere.

The Terror Campaign Against Occidental
Rebel groups have extorted local oil workers and engineers have been murdered, write Wall Street Journal reporters Alexei Barrionuevo and Thaddeus Herrick, in this report on threats against Occidental Petroleum, its workforce and the company's vulnerable fortress. (The Wall Street Journal, Feb. 6, 2002) (registration required)

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MORE ENERGY COMPANIES

Colombia's top revenue exports are oil, coffee and coal. With vast unexplored oil and coal reserves remaining in Colombia, the government is campaigning to attract more foreign investment, and multinational companies are indicating interest.

BP
While not U.S.-owned, one of Colombia's biggest foreign investors is Britain's BP, which controls Colombia's largest oil field, located in the northeastern province of Casanare.

Annual sales: $174 billion
Annual net income: $8 billion
CEO and annual executive salary: John Browne, $8.7 million
Founded: British Petroleum and Amoco merged in 1998 to form BP-Amoco. The company since added Arco to its conglomerate, and the oil giant is again branding itself as BP.
Corporate headquarters: London
Employees: 110,150
Colombia operations: BP operates Colombia's 1.5 billion-barrel Cusiana-Cupiagua Field and the 444-mile-long Ocensa Pipeline, which stretches to the Caribbean port of Coveñas. The company also has a 50 percent holding in the Piedmonte Block. The oil fields operated by BP account for half of Colombia's daily output of oil.
Human rights: Because it runs further underground than some of Colombia's other oil pipelines, the Ocensa Pipeline is less frequently attacked by rebel groups. Still, the pipeline was knocked out of operation for five days after a guerilla bomb attack in August 2002. In 1997, BP, prior to its merger with Amoco, came under strong criticism for indirectly funding right-wing Colombian paramilitary forces to protect its oil pipelines from rebel attack. The Guardian (U.K.) broke the story that one of BP's private security providers imported arms into the country and trained Colombian national police who had ties to paramilitary groups. BP has since developed a human rights policy for new contracts in Colombia.
Related link: BP and Mercenary Armies? Reporters Michael Gillard, Ignacio Gomez and Melissa Jones investigated BP's connections with Colombian paramilitary groups. (The Guardian, Oct. 17, 1998)

Exxon Mobil
Exxon Mobil helped develop and formerly operated El Cerrejón Zona Norte, Colombia's 30-mile-long and more than two-mile-wide coal mine near the Venezuelan border. When Exxon contracted in 1980 with the Colombian government to extract coal from one of the world's largest open pits, the deal became one of the biggest joint ventures in the history of Latin America. In February 2002, Exxon Mobil sold its 50 percent stake in El Cerrejón to a consortium of companies, including Anglo-American, BHP-Billiton and Glencore.

Annual sales: $187.5 billion
Annual income: $15.1 billion
CEO and annual executive salary: Lee R. Raymond, $14.7 million
Founded: In 1999, Exxon and Mobil merged to become the world's largest company.
Corporate headquarters: Irving, Texas
Employees: 98,800
Colombia operations: Exxon Mobil's Colombian subsidiary, International Colombia Resources Corporation, and its operation of El Cerrejón Zona Norte once accounted for more than half of the company's worldwide coal production. (The mine yields more than 15 million tons of coal every year.)
Human rights: During Exxon Mobil's control over the coal mine, operations expanded onto the indigenous lands of the Wayuu, who have lived in the region for more than 500 years. Wayuu cemeteries were moved in the construction of a 95-mile-long rail and road connection between the coal mine and the port of Uribia. Survival International included Exxon Mobil in its top ten list of corporate violators of Native rights. Mine expansion continues to threaten numerous towns and villages, and in 2001, the town of Tabaco was displaced and destroyed. One of the latest rebel attacks against foreign interests controlling the El Cerrejón occurred in May 2002, when the Revolutionary Armed Forces of Colombia (FARC) bombed and derailed a 20-car train transporting thousands of tons of coal to the Caribbean export terminal.

Drummond
A family-run, private coal mining business, Drummond expanded its U.S.-based operations to Colombia in 1994 after forecasts that its coal reserves in Alabama would soon be depleted. The company also has real estate development businesses in California and Florida.

Annual sales: $615 million
CEO: Garry Neil Drummond
Founded: 1935
Corporate headquarters: Birmingham, Ala.
Employees: 2,500
Colombia operations: Drummond operates Colombia's second-largest coal mine, in La Loma. In 2001, it marketed more than 12 million metric tons of Colombian coal to more than a dozen countries.
Human rights: Since operating in Colombia, Drummond has closed five mines in Alabama and fired more than 1,000 workers, triggering protests from U.S. labor unions, including the United Mine Workers of America. In March 2002, the Mining and Energy Industry Workers Union of Colombia and the families of three killed union leaders sued Drummond, claiming that after labor strikes the company's Colombian managers told paramilitary gunmen that they wanted the officials killed. The lawsuit is backed by the United Mine Workers of America, the United Steel Workers of America and the International Labor Rights Foundation. Drummond has faced about a dozen rebel attacks on its Colombian facilities in the last two years, and in 2000, the FARC kidnapped four Drummond workers for ransom, but eventually released them.

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BEVERAGES AND AGRICULTURAL PRODUCTS

Colombia generates $2 billion annually from its agricultural exports. It is the world's second-largest flower-exporter, after the Netherlands; the world's third-largest producer of coffee; and the world's third-largest exporter of bananas.

Dole Food Company, Inc.
Dole Food Company is the world's largest producer of fresh fruit and vegetables. It controls one-fifth of Colombia's banana and flower exports, dominating the banana trade and controlling 25 percent of all flower cultivation. Dole also is Colombia's largest employer.

Annual sales: $4.4 billion
Annual income: $150.4 million
CEO and annual executive salary: David H. Murdock, $ 1,700,000
Founded: 1851
Corporate headquarters: Westlake Village, Calif.
Employees: 59,000
Colombia operations: Dole is in flower cultivation, grape and banana growing and corrugated box plants. It owns approximately 2,200 acres for banana production and 1,900 acres for flower production. In 2001, Dole owned $66.9 million worth of assets in Colombia, including plants, property and equipment.
Human rights: Local unionists, labor organizations, and activist groups have harshly criticized Dole's labor practices in Colombia, particularly its treatment of banana workers. Dole has started to move banana production away from Colombia to Ecuador, where wages are cheaper and benefits are scarce.

Coca-Cola
The world's most recognized brand, Coca-Cola is also the largest soft-drink maker on the planet.

Annual sales: $20 billion
Annual income: $2.4 billion
CEO and annual executive salary: Douglas N. Daft, $5,000,000
Founded: 1891
Corporate headquarters: Atlanta, Ga.
Employees: 37,400
Colombia operations: Coca-Cola has been distributed in Colombia since 1940, and the company's Colombian subsidiary employs 15 workers and 25 contractors. It maintains bottler agreements with 20 independent bottling companies in the country, 17 of which are owned by Panamco. As of 2002, Coca-Cola owned a 25 percent equity interest in Panamco. Panamco has subsidiaries operating in most of Colombia and claims a 94 percent market share. The bottling companies employ approximately 10,000 people directly and an additional 50,000 indirectly.
Human rights: Coca-Cola's labor practices in Colombia have become the focus of a recent lawsuit. Filed last July in Florida, the suit alleges that the company was complicit in paramilitary executions of several union leaders organizing at Coca-Cola bottling plants. (Nearly 4,000 trade unionists have been murdered in Colombia since 1986, more than in any other place in the world.)

Philip Morris, Inc.
The world's largest cigarette maker, Philip Morris markets the most popular cigarette among Colombians: Marlboro. But according to the Colombian police, most of the company's cigarettes are smuggled into the country.

Annual sales: $89 billion
Annual income: $8.5 billion
CEO and annual executive pay: Louis C. Camilleri, $ 2,450,192
Founded: 1902
Corporate headquarters: New York City
Employees: 175,000
Colombia operations: Philip Morris exports cigarettes made in Venezuela to Colombia through its Colombian subsidiary, Philip Morris Colombia, SA, which opened in 1991. The Colombian customs and tax agencies recently filed lawsuits against Philip Morris alleging that the company has actively supported the illegal smuggling of its cigarettes into Colombia in order to evade import tariffs. Although Philip Morris now cooperates with the Colombian government to prevent illegal imports, the smuggling operation is estimated to have cost the Colombia Department of Treasury hundreds of millions of dollars that would otherwise have been used for social, health and education programs. It also undercut local tobacco growers, forcing many to turn to coca production in order sustain their farms. Philip Morris also owns a Colombian subsidiary called Landers y CIA, SA, which manufactures small household appliances. Annual sales of $20 million to $40 million.

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WEAPONS MANUFACTURERS AND MILITARY CONTRACTORS

American weapons-system and defense contractors have thriving businesses in Colombia. These companies play a central role in Colombia's warfare, from supplying the helicopters that patrol the skies above, to managing the defumigation of the coca fields below. And they've spent a lot of money lobbying Congress to allow them to do so. Between 1996 and 1998, two of the largest American helicopter manufacturers -- Bell and Sikorsky -- spent roughly $900,000 and $700,000 respectively to convince Congress to buy their aircraft for counterdrug operations in Colombia. In the end, they both won: Plan Colombia calls for purchasing 42 of Bell's helicopters and 30 of Sikorsky's.

Bell Helicopter
The Colombian national police are the world's largest user of Bell's Huey II helicopter. A privately held subsidiary of Textron Inc., Bell Helicopter is also the largest supplier of helicopters to the U.S. military.

Annual revenues: $1.5 billion in 2001
CEO: John R. Murphey
Founded: 1956
Corporate headquarters: Fort Worth, Texas
Employees: 8,000
Colombia operations: Under Plan Colombia, the U.S. military has provided the Colombian national police and the Colombian air force with more than 40 Huey II helicopters, at a cost of more than $130 million. Bell also does business with the Colombian government. Between 1998 and 2001, Textron's direct sales of helicopters and other military equipment to the Colombian military more than doubled, from $7.9 million to $18.7 million. Colombia has requested 12 additional helicopters to patrol Occidental Petroleum's Pipeline.

Sikorsky Aircraft Corporation
One of the world's largest manufacturers of commercial and military helicopters, Sikorsy is a privately held subsidiary of United Technologies Inc. It manufactures the Black Hawk helicopter used in counterdrug operations in Colombia.

Annual sales: $1.8 billion in 2001
President: Dean C. Borgman
Founded: 1923 (acquired by United Technologies in 1929)
Corporate headquarters: Stratford, Conn.
Employees: 9,000
Colombia operations: Under Plan Colombia, Sikorsky was awarded two contracts, totaling $235 million, to provide the Colombian air force, army and national police with 30 Black Hawk helicopters. In January 2002, the last 14 Black Hawks were delivered.

DynCorp
The largest private military contractor operating in Colombia, DynCorp is a private subcontractor of security and communications services to federal agencies, including the U.S. Departments of Defense, Energy, State and Justice. DynCorp is sometimes described by critics as being in the "mercenary" business.

Annual sales: $1.96 billion (96 percent to the U.S. government)
CEO and annual executive pay: Paul V. Lombardi $1,799,342
Founded: 1946
Corporate headquarters: Reston, Va.
Employees: 23,300.
Colombia operations: DynCorp was awarded a five-year $170 million contract in 1998 to conduct operations in Colombia. The company recruits pilots for counterdrug operations and for spraying toxic herbicides over coca fields. It maintains 335 employees in Colombia (about half are American), including crop dusters, helicopter pilots, mechanics and paramedics, in rotating shifts of 90 to 100. (Plan Colombia stipulates that no more than 300 private American military contractors can be in the country at the same time.)


David Montero is a freelance reporter living in San Francisco, California.

Kelly Whalen is a freelance writer and documentary producer based in Oakland, California.

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