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Corporate immunity for oiling repression? Talisman in Sudan

Summary & Comment: Human Rights in Sudan brief for the year 1999, for the Canadian Government, and human rights partners in Sudan, Africa, and Canada. JK

Author: Gary Kenny Date Written: 1 February 2000
Primary Category: Sudan and South Sudan Document Origin: ICCAF Human Rights Brief on Sudan for 1999
Secondary Category: Human Rights Source URL:
Key Words: Sudan, economic rights, oil, Talisman, scorched earth,

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ICCAF Human Rights Brief on Sudan

February 2000

  Corporate Immunity for Oiling Repression? Talisman in Sudan


Oil development in Sudan is causing an escalation in the country’s 17-year civil war and an increase in human rights abuses associated with the war. This conclusion was drawn in an April 1999 report by Leonardo Franco, the U.N.’s special rapporteur for Sudan, and again in January 2000 in a report by John Harker, leader of a Canadian fact-finding mission that visited Sudan in December, 1999. As a result of oil exploration, drilling and pipeline construction, government air and ground attacks on civilians have increased significantly, and are part of a strategy to clear the oil fields of populations perceived to pose a threat to the security of oil fields operations. Civilians also have become caught in the midst of fighting for control of the oil fields by groups aligned with the government and armed opposition factions. As both the Franco and Harker reports detail, many deaths and massive human displacement have occurred as a result.

A Canadian company, Talisman Energy Inc., is deeply involved in Sudan’s oil development projects, and has been accused of indirectly helping to exacerbate the war and of being complicit in human rights abuses and crimes against humanity. Talisman, however, appears unmoved by the weight of the evidence which, along with the Franco and Harker reports, includes compelling testimony from human rights groups, humanitarian aid organizations and foreign journalists. The company continues to deny that its operations in Sudan are having a detrimental effect on human security. The Government of Canada, for which Talisman’s continued presence in Sudan has become a major source of embarrassment, appears unable or unwilling to mitigate the situation. In Canada and around the world, the case of Talisman in Sudan has become extremely controversial both in terms of the immediate human rights and security consequences for the people of Sudan, and as a particularly stark example of corporate immunity in a situation of deadly armed conflict.


In March 1997, a small Canadian oil company, Arakis, concluded a significant oil agreement with the government of Sudan, currently in the midst of an enduring civil war with ethnic opposition groups in that country’s southern, central and eastern regions.1 Subsequently, in 1998, a senior member of Canada's oil sector, Talisman Energy of Calgary, acquired Arakis and its Sudanese operations. At present, Talisman has a 25% stake in what is known as the Greater Nile Oil Project Company (GNOPC), an initiative located in south-central Sudan, about 700 kilometres south-west of Khartoum. Talisman's partners in the project are the national petroleum company of China (40%), the national oil company of Malaysia (30%), and the national petroleum company of Sudan (5%).

This relationship has enraged rebel leaders, who accuse Talisman of complicity with the dictatorship2. In North America, Talisman's presence in Sudan has prompted concerted criticism of the company, a shareholder divestment campaign, a federal government pledge to consider sanctions (recently abandoned), significant fluctuation in Talisman’s share price, and recent acceptance by Talisman of a code of conduct. At the heart of the controversy are concerns that Talisman's presence is, in net, detrimental to human rights and human security. Specifically, Talisman's operations are said to be prolonging the civil war, both by contributing to conflict over oil fields and by generating, for the Sudanese regime, revenue used to bankroll the war.

War in the oil fields

Talisman has told its shareholders that "[i]n five years of operation, staff... have not seen any evidence of forced displacement or relocation in our area of operations... We have diligently investigated these allegations and have found them to have no basis in fact."3 A November 1999 report from the U.N. Special Rapporteur on Sudan suggests, however, that the Sudanese regime has used its military to "clear a 100-kilometre area around the oilfields" operated by Talisman4. More recently, the Canadian government-sponsored , "Harker mission" to Sudan concluded that "there has been, and probably still is, major displacement of civilian populations related to oil extraction ... Sudan is a place of extraordinary 

Reuter, "Arakis oil deal in Sudan rapped," The Toronto Star (March 5, 1997) at C3. Claudia Cattaneo, "Talisman drawn into Sudanese conflict: Sudanese rebels say Calgary company’s properties, people are targets," National Post (May 5, 1999) at C1,C2. Letter from Talisman CEO Buckee to shareholders, Nov. 23, 1999. See discussion in Steven Edwards, Claudia Cattaneo and Sheldon Alberts, "Calgary firm tied to Sudan 'atrocities'" National Post (November 17, 1999).

suffering and continuing human rights violations, even though some forward progress can be recorded, and the oil operations in which a Canadian company is involved add more suffering."5

Human Security in Sudan: The Report of a Canadian Assessment Mission at 15, available on the internet at http://www.dfait-maeci.gc.ca/foreignp/menu-e.asp The oil concession is in an active conflict zone and, while Arakis was involved in the project, depended "for its security on the protective cordon of troops operating from a military base beside the oil camp."6  A 1997 report in the Toronto Star indicated that "[t]he relationship between [the company] and its Sudanese hosts is self-evidently symbiotic. The oil camp opens its hospital doors to military men as well as nomads. [The company] services broken military trucks, provides electricity lines to their barracks and even pipes water to the army camps."7

The Harker mission discovered that nothing has changed since Talisman moved in. Amongst other things, security for the oil operation is provided by "serving or former army, police, or security service officers [who] maintain the closest collaboration with the Sudanese Army garrison in Heglig, right next to which is a small compound described to us as the base for the local detachment of Sudan Security."8 Further, the mission found that airfields and roads built, used and sometimes operated by the oil company have been employed by the Sudanese military in attacks against civilian populations.

 In this regard, Harker reported that "On 9 May 1999, a new offensive was launched [by the government]... Roads built by the oil companies enabled [armoured personnel carriers] to reach their destinations more easily than before... We have... been told that the contractual obligation under which Talisman labours more or less provides that the oilfield facilities can be used for military purposes..."9  "[F]lights clearly linked to the oil war have been a regular feature of life at the Heglig airstrip, which is... operated by the [oil] consortium".10

In defending its presence in Sudan, Talisman has urged, in communiqués to shareholders, that it "is not taking sides in the country’s complex politics and our presence will be an asset to Sudanese society." "[C]ontinued investment and international involvement will provide a catalyst to economic and social development... To date, Talisman and our partners have directly: provided jobs for over 2,000 Sudanese of all ethnic backgrounds; funded medical treatments...; built a 60-bed hospital".11

For its part, the Harker mission concluded that "there seem to be few, if any, Nuer or Dinka at work at Heglig [oil region]... It was reported to us... that in August 1999, 8 Nuer went to Heglig to seek work from the oil consortium, and 

Martin Cohn, "Oil gushes amid slavery, hunger," The Toronto Star (June 17, 1998) at A22. Martin Cohn, "Oiling the wheels of revolution," The Toronto Star (April 20, 1997) at F1. Ibid at 62. Ibid at 48. Ibid. at 64. Buckee letter to shareholders, supra.

were killed for their troubles." With respect to hospitals, Harker found that "Heglig hospital is severely restricted. In fact, there is a suspicion in many quarters that only Arab patients are welcomed at the hospital, and that Dinka and Nuer are kept out of Heglig as far as possible."12

In sum, Talisman is, at best, a pawn in a brutal conflict. At worst, the company is complicit in serious breaches of human rights and human security. In this last regard, the actions of the Government of Sudan in attacking and displacing civilian populations represent clear breaches of international law. Such actions are barred, not only by the body of norms and principles that comprise "customary international law", but also by such treaties as the Additional Protocol to the Geneva Conventions, 1949, the Convention on the Rights of the Child, and the International Covenant on Civil and Political Rights, to name just a few.

Within the Canadian context, the acts of the Government of Sudan clearly amount to "crimes against humanity" as defined by the Canadian Criminal Code. Under the Code, and under the proposed Crimes Against Humanity Act, presently before Parliament, Canada may try the perpetrators of crimes against humanity, irrespective of where these crimes are perpetrated. Notably, under the Criminal Code (but not, unfortunately, under the proposed Crimes Against Humanity Act), "attempting or conspiring to commit, counselling any person to commit, aiding or abetting any person in the commission of, or being an accessory after the fact in relation to" a crime against humanity, is also a crime. It remains an open question as to whether Talisman and its directors and employees have run afoul of these provisions.

Revenue Ibid at 62, 72.

The chief executive officer of Talisman has repeatedly assured shareholders that government revenues generated by the project will "be used for the benefit of the country’s population, including building roads, schools and health facilities."13  However, Sudanese government officials have been reported "as saying that the development of the oil fields is key to stepping up its program of forced Islamization of Christian and animist regions of Southern Sudan." 14 Further, a former employee of Arakis has "warned that when oil profits start flowing into government hands, Christians in the south of Sudan will be largely eliminated within two years."15  In particular, it is feared that oil will generate revenues used in the purchase of weapons.

See discussion in Steven Edwards, Claudia Cattaneo and Sheldon Alberts, "Calgary firm tied to Sudan 'atrocities'" National Post (November 17, 1999). Jennifer Ditchburn, "Codes of conduct needed in deals with Sudan: Axworthy," Canadian Press (March 17, 1999). Linda Slobodian, "Oilfields or killing fields?" British Columbia Report (November 30, 1998) at 49. Indeed, in 1998, Human Rights Watch reported that "China is said to have sold the government of Sudan SCUD missiles at the end of 1996 in a deal underwritten by a $200 million Malaysian government loan against future oil extraction."

It was also reported to Human Rights Watch that "[a]rms deals agreed upon have been shipped by sea in the name of the Malaysian National Petroleum Company and that of the Chinese National Petroleum Company, under the guise of petroleum exploration equipment according to an agreement concluded between the government in Khartoum and these companies in Kuala Lumpur under which they provide weaponry and military equipment in exchange for being given concessions for oil explorations."16 In February 2000, the London Independent reported that "[b]y the end of last year there was also evidence that Khartoum had been 'military shopping' - for 20 second-hand Polish tanks and for unspecified equipment in China,"17 possibly on the promise of new revenue from the oil fields.

For his part, Harker concluded that "[I]t is difficult to imagine a cease-fire while oil extraction continues, and almost impossible to do so if revenues keep flowing to the GNPOC partners and the [Government of Sudan] as currently arranged." Harker recommended that "[t]he "trust fund" proposal [advocated by several Canadian NGOs] warrants careful consideration, and Canada should engage the parties in South Sudan in discussions of the conditions necessary for them to consider the proposal. Talisman should make it clear that it acknowledges the destructive impact of oil extraction and will work towards a trust fund arrangement acceptable to the southern parties." Under this trust fund arrangement, oil revenues earmarked for the Sudanese government would be paid into trust until resolution of the conflict.

The Canadian Government Response

In press release #232 (October 26, 1999), the Department of Foreign Affairs and International Trade indicated that "[i]f it becomes evident that oil extraction is exacerbating the conflict in Sudan, or resulting in violations of human rights or humanitarian law, the Government of Canada may consider, if required, economic and trade restrictions such as are authorized by the Export and Import Permits Act, the Special Economic Measures Act, or other instruments."

However, upon the release of the Harker report, the Government announced a series of measures that, while some are important in their own right, fail to follow many of the Harker recommendations and do little to address problems caused by Talisman's presence in Sudan. On the latter issue, the 

Human Rights Watch, Sudan: Global Trade, Local Impact, (August 1998). Alex Duval Smith, "Pipeline Offers Sudan Veneer of Respectability," The Independent, February 3, 2000.

Minister indicated merely that "Canada does not encourage private sector activity in Sudan. I expect Talisman, which has chosen to operate in this difficult environment, to nonetheless live up to the fundamental values of Canadians in conducting its business activities... Talisman must work with the NGO community in Canada and Sudan for the development of an effective mechanism for human rights monitoring, to ensure that their operations do not lead to an increase in tensions or otherwise contribute to the conflict."18 Unfortunately, it is unclear what steps, if any, the Government of Canada will take should Talisman fail to respond to the Minister's urgings.

Accordingly, there is a pressing need for the Government of Canada to articulate a strong policy on how it will deal not only with Talisman, but with Canadian corporate involvement in conflicts. For the last several years, confronted by calls for Government action in the face of problematic Canadian corporate relations with repressive regimes in several countries, the Government has pleaded legal incapacity. Such an excuse for inaction, repeated over the span of several years, lacks credibility. If the Government lacks legal instruments, then it should create such devices.


In the case of Talisman in Sudan, ICCAF recommends the following:

1. The Canadian government must revisit the issue of whether the Special Economic Measures Act can apply to the circumstances existing in Sudan. Removal of the Act from the discourse on Talisman has left the government with little leverage to influence the behaviour of the company in terms of human rights standards. The government must have a legal instrument able to bar or restrict investment activities by Canadian firms like Talisman in circumstances where the company’s presence is fuelling human rights abuse, but where there is no international conflict and no international call for sanctions.

The Government should either publicly acknowledge that the Act, as presently drafted, allows unilateral Canadian action in the absence of an international conflict, or it should move quickly to amend the Act to clarify that such action is permissible.

Transcript of press conference given by Minister Axworthy, Feb. 14, 2000.

2. In his February 14 statement in response to the Harker report, Lloyd Axworthy said that Canada would make Sudan a priority for its presidency of the U.N. Security Council in April 2000 "to ensure that the Security Council exerts its influence to support... regional mediation efforts." 19 Since oil development is contributing to an intensification of the war in Sudan, and is therefore an obstacle in mediation efforts to achieve peace, Canada should seek to place the issue of oil development in Sudan on the Security Council’s agenda. Options for action by the Security Council could include discussion of the possibility of a multilateral resolution calling for economic sanctions against Sudan20, and the establishment of a working group to further consider the implications of oil development in Sudan and issues of corporate involvement in zones of conflict more generally.

3. Working through the IGAD Partners Forum, and the office of Canada’s envoy to the peace process on Sudan, Canada should encourage the IGAD countries to establish a technical committee on the subject of oil development and peace in Sudan. Such a committee, comprised of experts on such subjects as the political history of oil development in Sudan, Sudan’s war economy, and militarized commerce would be a useful adjunct to existing technical committees and would better inform the IGAD mediation process.

DFAIT news release, "Axworthy outlines new initiatives to further peace in Sudan," February 14, 2000. Canadian government officials have stated on many occasions that the lack of a multilateral resolution prevents Canada’s use of the Special Economic Measures Act, an assertion which has been challenged by human rights lawyers.

With respect to the issue of corporate immunity more broadly, a number of options open to the Government have been canvassed in two papers prepared by the Canadian Lawyers Associaton for International Human Rights at the behest of the Inter-Church Coalition on Africa, Sudan Inter-Agency Reference Group21, and Canadian Friends of Burma22. These options include the following and are herewith submitted as recommendations:

4. Unilateral tax forgiveness for income tax paid to repressive regimes should be eliminated. At present, there is no bar on companies obtaining a Canadian taxpayer funded-tax subsidy for operations that amount to complicity with human rights abuses. The Government should also bar business expense deductions in the calculation of corporate income taxes where those deductions are made for foreign projects raising serious human rights or human security issues. This power of disallowance should be introduced either as a separate amendment to the Income Tax Act or as an additional power possessed by Cabinet under a revamped Special Economic Measures Act.

5. The Export and Import Permits Act should be used judiciously to regulate the export of equipment to controversial projects run by Canadian companies in countries with repressive regimes. However, the Government should take into account the limited effectiveness of this Act in dealing with

The Sudan Inter-Agency Reference Group is a forum of 20 Canadian churches and NGOs and is hosted by the Inter-Church Coalition on Africa. CLAIHR, Legislative Proposal: Making the Special Economic Measures Act a tool that may be used to respond to Canadian corporate complicity with grave breaches of human rights and human security, and Backgrounder: Options available to the Government of Canada in responding to Canadian corporate complicity with human rights abuses.

 instances of corporate complicity with human rights abuses and should clarify the scope of other legal instruments, such as the Special Economic Measures Act.

6. The government must revisit the issue of whether the Special Economic Measures Act can apply to circumstances such as those existing in Sudan. More specifically, the government must have a legal instrument able to bar or restrict investment activities by Canadian firms in circumstances where the Canadian company’s presence is fuelling human rights abuse, but where there is no international conflict and no international call for sanctions.

The Government should either publicly acknowledge that the Act, as presently drafted, allows unilateral Canadian action in the absence of an international conflict, or it should amend the Act to clarify that such action is permissible. Critically, the absence of credible Canadian sanctions law removes much of the leverage the Government would otherwise have in negotiations with companies as to an appropriate standard of human rights behaviour.

7. To stop companies complicit in human rights abuses from hindering shareholder criticism and action -- as was the case last year with Talisman --paragraph 137(5)(b) of the Canada Business Corporations Act "should be revised so as to unambiguously recognize the right and responsibility of shareholders to communicate proposals regarding the social responsibility of the corporation through publication and circulation in the company’s proxy circular."23

8. The government should explore the possibility that Canadian companies complicit in human rights abuses are in violation of the Criminal Code provisions concerning crimes against humanity, or those set out in Bill C-19 (Crimes Against Humanity Act), once enacted. To enhance the prospect of "complicity" being captured under Bill C-19, once enacted, the Government should include in the Bill the language found in present s-s.7(3.77) of the Criminal Code. This language indicates that "attempting or conspiring to commit, counselling any person to commit, aiding or abetting any person in the commission of, or being an accessory after the fact in relation to" a crime against humanity is also a crime.

Taskforce on the Churches and Corporate Responsibility, "Submission from TCCR to the Minister of Consumer and Corporate Affairs regarding the Canada Business Corporations Act, July 27, 1987.   
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