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World Journal of Social Sciences Vol. 8. No. 1. March 2018. Pp. 54 72 Global Oil Corporation Business Ethics in Developing Economies: Case Studies of Nigeria and the Republic of Trinidad and Tobago John O. Kuforiji* and Barbara Lennard** In the business organizations’ pursue of profit maximization, they fail to promote the social interests and values of the society; and not committed to operating their businesses in ethical ways. This paper is a comparative analysis of the business ethical issues of the multinational oil corporations in the developing economies: Nigeria and the Republic of Trinidad and Tobago as case studies from 1990 to 2016. The rationale are that: both economies are the leading producers and exporters of hydrocarbon in two developing continents; the hydrocarbon industry is the engine of growth in both countries; corruption is rampant in both countries; both economies experienced the Dutch disease; and due to the economic, political, legal, and cultural situations in those economies some of the oil corporations’ actions were unethical. The terms “ethics” and “business” have no universal definitions and meanings. This paper defines “business” as a “legal entity; with dual- residencies and dual-citizenships of the country of operation and its home country; and that it must obey the laws, regulations, and accepted social values, beliefs, interests, behaviors, and practices of the country of operation and its home country.” Ethics is the accepted social “values, beliefs, interests, behaviors, and practices of a society and community.” Ethics is the accepted business, civil, legal, and moral principles of right or wrong that govern the actions, behaviors, and decisions of an organization in the country of operation, and where it is a legal citizen. The main conclusions of this paper are that: (a) the oil companies in the Republic of Trinidad and Tobago are more ethical than their Nigerian counterparts; and (b) more atrocities were committed in Nigeria than in the Republic of Trinidad and Tobago in the areas of human rights violations, environmental pollution, corruption, and other immoral practices of the oil-companies. JEL Codes: D7, F2, F5, L5, and M1 1. Introduction Ethical dilemmas arise in part because what is considered as ethical in one culture may be unethical in another culture. For example, “gift giving”, which is deemed ethical in many Asian cultures, is viewed in the Western world as a form of bribery, and is considered by westerners as unethical. The names of such gifts are presented in the ___________________ *Dr. John O. Kuforiji, Optimal Inc., USA. & College of Business Administration, Prince Mohammad Bin Fahd University, Saudi Arabia. Email: [email protected] **Dr. Barbara Lennard, College of Business Administration, Prince Mohammad Bin Fahd University, Saudi Arabia. Email: [email protected]

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World Journal of Social Sciences

Vol. 8. No. 1. March 2018. Pp. 54 – 72

Global Oil Corporation Business Ethics in Developing Economies: Case Studies of Nigeria and the Republic of

Trinidad and Tobago

John O. Kuforiji* and Barbara Lennard** In the business organizations’ pursue of profit maximization, they fail to promote the social interests and values of the society; and not committed to operating their businesses in ethical ways. This paper is a comparative analysis of the business ethical issues of the multinational oil corporations in the developing economies: Nigeria and the Republic of Trinidad and Tobago as case studies from 1990 to 2016. The rationale are that: both economies are the leading producers and exporters of hydrocarbon in two developing continents; the hydrocarbon industry is the engine of growth in both countries; corruption is rampant in both countries; both economies experienced the Dutch disease; and due to the economic, political, legal, and cultural situations in those economies some of the oil corporations’ actions were unethical. The terms “ethics” and “business” have no universal definitions and meanings. This paper defines “business” as a “legal entity; with dual-residencies and dual-citizenships of the country of operation and its home country; and that it must obey the laws, regulations, and accepted social values, beliefs, interests, behaviors, and practices of the country of operation and its home country.” Ethics is the accepted social “values, beliefs, interests, behaviors, and practices of a society and community.” Ethics is the accepted business, civil, legal, and moral principles of right or wrong that govern the actions, behaviors, and decisions of an organization in the country of operation, and where it is a legal citizen. The main conclusions of this paper are that: (a) the oil companies in the Republic of Trinidad and Tobago are more ethical than their Nigerian counterparts; and (b) more atrocities were committed in Nigeria than in the Republic of Trinidad and Tobago in the areas of human rights violations, environmental pollution, corruption, and other immoral practices of the oil-companies.

JEL Codes: D7, F2, F5, L5, and M1

1. Introduction Ethical dilemmas arise in part because what is considered as ethical in one culture may be unethical in another culture. For example, “gift giving”, which is deemed ethical in many Asian cultures, is viewed in the Western world as a form of bribery, and is considered by westerners as unethical. The names of such gifts are presented in the ___________________ *Dr. John O. Kuforiji, Optimal Inc., USA. & College of Business Administration, Prince Mohammad Bin Fahd University, Saudi Arabia. Email: [email protected]

**Dr. Barbara Lennard, College of Business Administration, Prince Mohammad Bin Fahd University, Saudi Arabia. Email: [email protected]

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subheading 2.3 of this paper. Similarly, ethical dilemmas often arise because in many cases, real-world decisions are based on many different and difficult circumstances with different consequences (Hill 2009). The roots of unethical behaviors are many; Hill (2009), in his contribution to the literature on the subject matter, indicated that ethical behavior is a function of five factors. These factors are: (1) business ethics that cannot be separated from personal ethics of an organization’s management; (2) business decision-making processes that are unethical; (3) organizational culture that emphasizes unethical behavior in businesses and reduces all decisions to pure economic profits; (4) the parent company’s pressure that requires meeting unrealistic performance goals through unethical means; and (5) the unethical behavior of the organization’s leaders. Energy is an important factor in the economic growth and development of a nation because it indirectly affects the welfare of the society. Energy is an important input in all the sectors of the economy, especially for the industrial sector of the economy. While some studies on Nigeria and the Republic of Trinidad and Tobago focused squarely on the impact of hydrocarbon revenues on economic growth, this paper focuses on the ethics of the global hydrocarbon multinational corporations’ practices in the developing economies with Nigeria and the Republic of Trinidad and Tobago as case studies between 1990 and 2016. Before this paper, limited attention was given to the roles and functions of the public officials who are the regulators of the oil industry in the developing economies. Furthermore, no author has done a comparative analysis on the business ethics of the multinational oil corporations operating in two different developing economies. This study takes a broader approach to looking at ethics of the multinational oil corporations in the two different continents of the world and makes benchmark policy recommendations which would add to the literature on the subject matter. The findings and recommendations of this paper are significant to both the academics and policy makers. The rationale for this paper includes the fact that the authors are interested in the comparative analysis of two leading hydrocarbon-producing economies that are in two different continents of the developing economies. Nigeria and the Republic of Trinidad and Tobago fit into this “framework.” Both economies are the leading producers and exporters of hydrocarbon in two developing continents of the world – Africa for Nigeria and the Caribbean for the Republic of Trinidad and Tobago. Nigeria is the 13th world producer and the 6th world exporter of oil, while the Republic of Trinidad and Tobago is the 46th largest producer of oil, and the 43rd largest exporter of oil. Secondly, the hydrocarbon industry is the engine of growth in Nigeria and the Republic of Trinidad and Tobago because hydrocarbon accounted for about 40% and 80% of the economies’ GDP and export earnings in both Nigeria and the Republic of Trinidad and Tobago, respectively. The third factor is that corruption is rampant in the countries that are being studied, and the operating global multinational oil corporations do not have a good reputation among the citizens of both countries, especially in the area of environmental pollution by the oil corporations. The fourth factor is that both countries can be analyzed using the resource-curse, the paradox of plenty, or the Dutch disease theory, like many other oil-

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exporting countries from developing economies, as a result of their overdependence on the hydrocarbon sector. The other developing economies with the Dutch disease include Colombia, Ecuador, Gabon, Mexico, and Venezuela. This Dutch disease should not occur in these countries. However, the oil discovery and its associated oil boom wealth led to adverse structural changes in their macro-economic performances because they neglected their agricultural sector and non-hydrocarbon industries. Other factors include resource mismanagement, official bribery and corruption, weak institutional structure and quality, and the diversion of resource funds into private pockets for personal use. This negligence resulted in the real exchange rate appreciation (Benjamin, Devarajan and Weiner 1989), as well as resource transfer and expenditure-switching effects (Nkusu 2004). The real exchange rate appreciation from the oil boom promoted contractions in the non-oil exportable sector (Benjamin, Devarajan and Weiner 1989). The resource transfer and expenditure-switching effects in the long-run led to high structural unemployment, inefficient use of production factors, and de-industrialization (Nkusu 2004).

The fifth factor is that the ownership and operations of the oil industry companies are in the hands of the public sector in the Republic of Trinidad and Tobago, while being in the private sector in Nigeria. The oil industry in the Republic of Trinidad and Tobago is state-owned and operated because the government nationalized all the foreign oil companies, except Amoco, in 1985, while in Nigeria, the hydrocarbon industry is in the hands of many foreign multinational oil corporations. Therefore, it would be interesting to analyze and compare the activities of public and privately owned and operated oil corporations in the two different developing economies. The research questions in this paper are: Did the oil companies behave ethically or unethically in both countries? Why did the global multinational oil corporations behave unethically in both countries? What are the governments doing, or what actions have been taken by both countries to make the oil corporations behave ethically in their economies? How effective are the governments’ policies to control and monitor the oil corporations and why? It is important to note that no other studies have ever addressed any of these research questions. In terms of research methodology, the paper relies on secondary data which are obtained from many sources such as Amnesty International, World Bank, IMF, OPEC, International Energy statistics, journals, reports, the Internet, and newspapers. The data collected are analyzed using the deductive reasoning and descriptive methods. Through these methods, the paper made logical deductions and sequential presentation of facts. Following this introduction, the paper covers the literature review and conceptual framework. Thereafter, case studies of the multinational atrocities in both countries are examined. The last section of the paper is devoted to the conclusion and policy recommendations for the governments of both countries.

2. Literature Review and Conceptual Framework With a view to providing answers to the above research questions; under this sub-section, the paper examines the business ethics definition dichotomies, ethical theories, and issues in international business, as well as provides comparative data on the real

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gross domestic products, crude oil production, oil-RGDP ratio, and corruption perception index scores for Nigeria and the Republic of Trinidad and Tobago from 1990 to 2016. Up front, this paper was not influenced by any other study. In fact, no author has done a comparative analysis on the business ethics of multinational oil corporations in two developing continents’ economies. However, the paper applies Hill’s (2009) five identified areas of ethical issues on the global oil corporations in two different developing economies. 2.1 Business Ethics’ Definition Dichotomies For this paper, “ethics” is defined as a “social science which focuses on the acceptable behavioral standards of the society’s actors – being individuals, groups, businesses and governments.” Although Dessler (2012) defined ethics as the principles of conduct governing an individual or a group, these principles then become the guiding standards for our conduct, actions, and decisions. Ethics involves practical decision making of all the actors in the society. Practical decision making and acceptable behavioral standards are not universal. For example, a legal behavior may or not be an ethical, or even a moral behavior. Thus, each actor’s practical decision making is based on each actor’s self-interest, and each actor tries to arbitrarily choose the behavior that he or she feels is an acceptable behavioral standard. DeNisi and Griffin (2008) define ethics as an individual’s beliefs about what is right and wrong as well as being what is good and bad. A person’s set of ethics depends on the societal context in which people and organizations function. In modern times, ethical behavior and ethical conduct of corporate business executives, managers and organizations have received increased attention. This new trend was in part fueled by global corporate scandals of companies such as Enron, WorldCom, Inclone, and Tyco International. In a real life situation, the government passes laws and regulations to control and dictate appropriate behavior and conduct of individuals and groups within a society. Ethics, on the other hand, serves the same purpose because its premise is about what is right or wrong within the society. Empirically, ethics and law do not always coincide. This is because a corporate executive might take certain business actions and decisions that are perfectly legal, but some observers might find such business actions and decisions to be unethical. For example, during the era of a recession, a business organization might institute major employee cutbacks which may lead to the termination of specific employees who are nearing their retirement age. However, many external people could consider such terminations as unethical, as well as being questionable for employees with a very long history of dedicated service to the organization. Therefore, the corporate business executives and organizations must take steps to ensure that their behaviors, actions, and decisions are both ethical and legal. All corporate business organizations need to develop codes of conduct, or ethical statements in an attempt to communicate their stance on ethics and ethical conduct publicly to their employees and the societies in which they operate.

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According to Hill (2009), if the term ethics implies accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization (Hill 2009); then, business ethics are the accepted principles of right or wrong that govern the conduct of the business people. Many of the ethical issues in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from one country to another country. Thus, what is considered a normal practice in one country may be considered unethical in another country. Because of these socio-economic and socio-political differences, corporate business executives of multinational firms need to be particularly sensitive to these differences. In global business settings, the areas of the most common ethical issues are employment practices, human rights, environmental regulations, corruption, and moral obligations of multinational corporations (Hill 2009). In view of Hill’s identified five areas of ethical issues, the authors of this paper elected to examine those five common ethical issues in relation to the oil industry in two different developing economies. If morals involve what is right and wrong, then, the term, ethics is a systematic statement of right and wrong together with a philosophical system that both justifies and necessitates the rules of conduct (Reed et al. 2010). In a real capitalistic world situation, private ownership of land and goods is highly valued, but it is both morally and legally wrong for a person to take something that belongs to someone else. Hence, the sixth Mosaic Law says, “Thou shall not steal”. Keeping this in mind, ethics involves a rational method for examining our moral lives, for recognizing what is right and wrong, as well as for understanding why we think that some actions and decisions are right or wrong. “The unexamined life is not worth living” says the Greek philosopher, Socrates (Reed et al. 2010). In other words, self-examination is a necessary condition for a meaningful life. The end result of ethical examination is what philosophers call “the good”, which is central to the study of morality (Reed et al. 2010). Morality is involved with our values of right and wrong. Ethics is a formal system for deciding what is right, wrong, and for justifying moral decisions. On the whole, and in this modern era, the terms, morality and ethics are often used interchangeably (Reed et al. 2010).

2.2 Theories of Ethics There are many theories on ethics, but this paper focuses on those relevant to its title. The profit maximization business ethics theory indicates that the principal objective of businesses is “profit maximization”. Thus, the only social responsibility of corporate business executives is to increase corporate business profits, as long as the corporate business organization stays within the limits of the rules of law, and without deception or fraud (Friedman 1970). However, the principles of profit maximization should be carried out with and along ethical behaviors for businesses because these businesses owe some moral obligation and social responsibility to the society in which they operate. The cultural relativism business ethic theory believes that ethics are nothing but the reflection of the society’s culture (Bowie 2001). This theory emphasizes that multinational corporations should make business decisions according to the culture of the host countries even if such decisions are unethical by Western standards. The

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position of the authors of this paper is that all multinational corporations should disassociate themselves from the cultural relativism theory and adopt the “zero-tolerance policy” of British Petroleum (BP). The righteous moralist business ethics theorists believe that multinational corporations should adopt the same ethical standards that are in their home countries when they are in foreign countries. While this theory is welcomed, some Western standards might be in conflict with some laws of the host countries. Thus, multinational corporations might need to exercise some caution in adopting this theory ‘to the letter’. The naïve immoralist business ethics theorists encourage a multinational corporation to ignore the host country’s ethical norms and follow the business practices of other multinational corporations operating in the host country. This is considered to be a “Keeping up with the Joneses’ theory” which is not universally acceptable to the society. The authors of this paper do not think that an action is rational and ethically justified simply because every multinational corporation in the host country is doing it. With regard to the utilitarian business ethics theory, Hills (2009) attributed this theory to the works of David Hume (1711-1776), Jeremy Bentham (1784-182) and John Stuart Mill (1806-1873). This theory holds that the moral worth of actions or practices is a function of their consequences (Beauchamp and Bowie 2001). In summary, this theory indirectly asks the multinational corporations to allow the “social benefits of their actions to be greater than the social costs of their actions” in the host countries, if they plan to survive in those environments for a long time. The problem with this theory is that it is very difficult to accurately measure the social benefits, social costs, and social risks of all the business actions, anywhere in the world. The Kantian business ethics theory is based on the works of Immanuel Kant (1724-1804). His theory asserts that people should be treated with respect and never as machines (Hill 2009) with a view to not violating the ethics of the society. The human rights business ethics theories developed in the 20th century led to the rights theories. These are fundamental rights documented by the United Nations Universal Declaration of Human Rights, and ratified by most countries of the world. Articles 1, 23, and 29 of this Declaration categorically state the rights of individuals, and now form the basis by which all multinational corporations must do their businesses worldwide (United Nations 2007). Anything less of what Articles 1, 23, and 29 say is considered unethical. The justice business ethics theory is based on the works of Rawls (1999). He argued for the equitable distribution of the society’s economic goods and services except when an unequitable distribution would work to everyone’s advantage (Hill 2009). However, if a “veil of ignorance” exists, then, each person in the society should be allowed to maximize the amount of basic liberty compatible with a similar liberty for others. Thereafter, inequality in basic social goods should be allowed only if such inequalities would benefit everyone (Hill 2009).

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2.3 Ethical Issues in International Business For this paper, a multinational corporation is assumed to be a “legal entity as well as being legal residents and citizens of the countries where it is operating.” Given this assumption, multinational corporations are under both legal and moral obligations to behave ethically in the countries of their operations. In their own interests, the multinational corporations need to introduce moral and ethical content to their managerial decision-making processes (Ola 1998) with a view to avoiding the negative effects of their unethical behaviors (Adewunmi 1998). By Western standards, it was unethical for Nike to use sweatshop labor to produce fashion accessories for consumers of the developed world (The New York Times 1997, Seattle Times 1997, Jones 1996). Contributing to the literature on the subject matter, Hill (2009) hinted that most unethical issues of multinational corporations involve employment practices, human rights, environmental regulations, corruption, and moral obligation of the multinational corporations. In the area of employment practices, because conditions in the host countries are inferior to Western standards, multinational corporations often subject their workers to 12-hour workdays, extremely low pay, and expose their workers to toxic chemicals; as executed by Nike and Levi Strauss (Hill 2009, Donaldson 1996). With regard to human rights in developing countries, especially where multinational corporations are transacting businesses, nothing good can be mentioned about this topic. When governments are repressive, investments by multinational corporations in such countries cannot, and must not be considered as ethical. Thus, the multinational corporations operating in such countries are indirectly funding, promoting and supporting repressive and apartheid regimes in the developing countries. If the “Sullivan principles” and economic sanctions were not adopted and imposed on South African minority rule by some “civilized governments”, the South Africa’s white minority rule and apartheid would not have ended in 1994. Another notable human rights’ violation was a case involving the military dictatorship of Myanmar, and Unocal - an Oil and Gas Company in California, USA. In an attempt to build a gas pipeline from Myanmar to Thailand in 1995, the Myanmar army forcefully relocated villagers from their homes as well as ordered them to work on the pipeline in “slave-labor conditions” and the villagers who refused to work in the “slave-labor conditions” were dealt with summarily (Hill 2009, Carlton 2003, Evelyn 1995). With regard to environment pollution, the inferior environmental regulations in developing countries have encouraged the multinational corporations to pollute their host countries’ atmosphere in their pursuance of an economic advantage. The strategy of these corporations is to move their plants to countries where they can freely pump pollutants into the air, or dump them into nearby waters. These corporations execute these atrocities by the emission of pollutants, and by dumping the toxic chemicals in their host countries’ environment with immunity. This is considered unethical on the part of these corporations because they are unable to do the same in their “home countries.” Global corruption is another area where less developed countries have been victims of the unethical behavior of multinational corporations. These corporations bribe local

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officials just to gain some economic advantage over their competitors. The Lockheed bribery of Japanese agents and government officials in the 1970s led to the 1977 U.S. Foreign Corrupt Practices Act. In 1997, the Organization for Economic Cooperation and Development (OECD) introduced the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. However, both initiatives still allow “facilitating payments” or “speed money” or “grease payments” or “standard treatment payments” (Hill 2009). In the opinions of the authors of this paper, all these types of illegal and approved payments amount to “bribery and corruption”, and are therefore considered unethical. The authors of this paper want to urge all the multinational corporations to adopt the British Petroleum’s policy of a “zero-tolerance approach towards such illegal and unethical payments to foreign agents and officials” (Hill 2009). In terms of moral obligation, empirically, many of the multinational corporations acquired their economic power from their host countries. Thus, it is morally and ethically right to reciprocate to those host nations that made their economic powers possible. Some multinational corporations have morally supported the social welfare of their host countries. However, what we have often seen, heard, and learned are the abuse of powers by some of those multinational corporations in the host nations. Some of these corporations were involved in the local politics as well as funded a military change of government in the host countries just for their economic interest and power. It is immoral and unethical for multinational corporations to be involved in the local politics of host countries. Contributing to the debate in this sub-section, Litvin (2003) in his “Empires of Profit”, illustrates how News Corporation and Star TV perform their business of “curry favor with the Chinese government” (Hill 2009) by publishing materials that made the Chinese leadership happy from 1994 to 2001.

2.4 Real Gross Domestic Product (RGDP), Oil production, Oil-RGDP Ratio, and

Corruption Perceptions Index (CPI) Scores for Nigeria and the Republic of Trinidad and Tobago (1990 – 2016)

Nigeria and the Republic of Trinidad and Tobago are the wealthiest countries in their continents – Africa and Caribbean, respectively. Empirically, both countries were agriculture-based economies before the discovery of hydrocarbon in the 20th century, after which oil and oil-related exports dominated both economies. Prior to the oil discovery, the Republic of Trinidad and Tobago was a sugar-based economy while cocoa, ground nuts, rubber, and palm products are the main agricultural products of Nigeria. The Republic of Trinidad and Tobago has been involved in the hydrocarbon industry for over 100 years (Kaiser 2010). Its first oil drill was in 1858 while its commercial production started in 1908. By 2013, the country was the world’s largest exporter of ammonia and second in the export of methanol. Reference table 1, by 2016, hydrocarbon accounts for about 5.5% of the Republic of Trinidad and Tobago’s gross domestic product (GDP) in contrast to an annual average of 25% in the period 1985-1994; while the service sector accounted for 48.7% of the GDP; and the manufacturing and agriculture sectors accounted for the remaining 6.3% of the GDP.

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The current contribution of oil to the Republic of Trinidad and Tobago’s gross domestic product is rather low due to the fall in oil prices in the international market. Prior to this time, between 1990 and 2014, the average annual oil-GDP ratio for the Republic of Trinidad and Tobago stood at about 20% (Table 1 refers). In terms of the average GDP growth rates before 1990, the petroleum, services and manufacturing and agriculture contributed 65%, 28.5%, and 6.5%, respectively (Artana et al. 2007). In spite of the oil price crisis, hydrocarbon is still the engine of growth for the Republic of Trinidad and Tobago. In terms of the corruption perceptions index (CPI), the Republic of Trinidad and Tobago has no data until 2001 (Table 1 refers). From 2001 to 2003, the Republic of Trinidad and Tobago’s public sector was perceived to be not endemically corrupt. However, from 2004 to 2014, the Republic of Trinidad and Tobago’s public sector was perceived to be fairly endemically corrupt because its CPI was just few points below the trench-hole point of 43% (Reference table 1).

Table 1: Real Gross Domestic Product (RGDP), Oil-RGDP Ratio and Corruption Perceptions Index (CPI) Scores for Nigeria and The Republic of Trinidad and Tobago – (1990-2016)

Nigeria The Republic of Trinidad and Tobago

Year RGDP1 billion $US

Oil2 billion $US

Oil as % of RGDP

CPI3 Score

Year RGDP billion $US

Oil billion $US

Oil as % of RGDP

CPI Score

1990 61.57 14.71 23.89 N.A.4 1990 4.54 1.22 26.88 N.A. 1991 52.29 12.86 24.60 N.A. 1991 5.09 1.05 20.64 N.A. 1992 28.77 13.08 45.47 N.A. 1992 5.08 0.96 18.91 N.A. 1993 24.42 11.68 47.82 N.A. 1993 4.18 0.84 20.08 N.A. 1994 34.44 10.95 31.79 N.A. 1994 4.46 0.78 17.49 N.A. 1995 35.69 12.26 34.35 N.A. 1995 4.98 0.86 17.26 N.A. 1996 122.62 14.82 12.09 6.9 1996 5.63 1.02 18.13 N.A. 1997 170.99 14.68 8.59 17.6 1997 5.47 0.91 16.63 N.A. 1998 188.73 9.65 5.11 19.0 1998 5.64 0.58 10.28 N.A. 1999 53.48 13.56 25.36 16.0 1999 6.60 0.89 13.49 N.A. 2000 63.05 21.81 34.59 12.0 2000 7.87 1.42 18.03 N.A. 2001 59.21 19.04 32.16 10.0 2001 8.27 1.13 13.66 53.0

2002 81.78 18.83 23.03 16.0 2002 8.64 1.29 14.93 49.0

2003 88.49 23.33 26.36 14.0 2003 10.85 1.66 15.30 46.0

2004 110.76 30.65 27.67 16.0 2004 12.48 2.00 16.03 42.0

2005 139.07 48.51 34.88 19.0 2005 14.88 3.16 21.24 38.0

2006 204.98 54.33 26.51 22.0 2006 16.93 3.96 23.39 32.0

2007 249.09 59.22 23.77 22.0 2007 19.87 3.96 19.93 34.0

2008 290.66 74.36 25.58 27.0 2008 24.55 5.39 21.95 36.0

2009 261.80 49.05 18.74 25.0 2009 17.86 3.40 19.04 36.0

2010 317.43 69.42 21.87 24.0 2010 19.76 4.10 20.75 36.0

2011 368.55 99.00 26.86 24.0 2011 24.13 5.41 22.42 32.0

2012 405.68 100.15 24.69 27.0 2012 23.39 4.75 20.31 39.0

2013 468.65 91.08 19.43 25.0 2013 25.08 4.56 18.18 38.0

2014 523.02 84.25 16.11 27.0 2014 24.63 4.08 16.57 38.0

2015 449.39 40.03 8.91 26.0 2015 22.42 2.01 8.97 39.0

2016 341.04 26.89 7.88 28.0 2016 20.37 1.05 5.15 36.0

GDP at current price level source: IMF World Economic Outlook, April 2017 Inflation data source: World Bank

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Oil production source: International Energy Statistics, Monthly Update Oil price source: OPEC CPI source: Transparency International. 1. The real gross domestic product (RGDP) was calculated by deflating the GDP at current prices by the consumer price indices in each country. 2. The oil production figures are estimated by multiplying the average barrels of oil produced per day with the average OPEC crude oil price per barrel. 3. The CPI shows the scores of countries based on how corrupt a nation’s public sector is perceived. The score’s scale is from 0 (meaning highly corrupt) to 100 (meaning very clean). Any CPI score below 43% implies that there is a presence of endemic corruption in that country’s public sector. 4. N.A. implies not available. Unlike the Republic of Trinidad and Tobago, Nigeria is currently an emerging mixed market economy with a highly developed financial service sector. Before commercial oil was discovered in 1958, Nigeria was an agrarian economy with its major export products being cocoa, ground nuts, rubber, and palm products. However, by the late 1960s, hydrocarbon replaced those agrarian products to become the biggest foreign exchange earner for Nigeria. The 1970s oil boom led to the neglect of agriculture and manufacturing sectors of the Nigerian economy because oil accounted for 90% of Nigeria’s gross export earnings. Between 1970 and 1988, hydrocarbon accounted for 87% of the country’s export revenue and 77% of the Federal Government revenue. In 2000, hydrocarbon accounted for 98% of Nigeria’s export earnings and 83% of Federal Government of Nigeria’s revenue. The aftermath of the oil boom is that Nigeria, which used to be an exporter of food to the world, has now become an importer of food to sustain itself. However, Nigeria experienced a turn-around with the birth of democratic rule in the mid-2000s. Reference table 1, in 2012, the economic sectors’ contributions to the Nigerian GDP were 29%, 30%, 15% and 25% for the agriculture, service, manufacturing, and oil sectors, respectively. By 2016, sectoral distribution was 30%, 33%, 29%, and 7.88%, for agriculture, industry, services, and oil sectors, respectively. The current contribution of oil to Nigeria’s gross domestic product is rather low due to the fall in oil prices in the international market. Prior to this time, between 1990 and 2014, the average annual oil-GRP ratio for Nigeria stood at over 25%. Thus, it can be concluded that hydrocarbon is still the engine of growth in Nigeria. In terms of the corruption perceptions index (CPI), Nigeria has no data until 1996 (Table 1 refers). Evidently, from 1996 to 2016, the Nigerian public sector was perceived to be more endemically corrupt. This is because Nigeria’s CPI’s scores were between 6.9% in 1996 to 28% in 2016; and these scores have never been closed to the trench-hole point of 43% within the period under review (Reference to table 1).

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3. Results of the Comparative Study Analysis of Ethical Problems in Both Countries 3.1 Human Rights Violations The human rights of any country may serve as the base for actions of the multinational corporations (MNCs) in their host countries. Human Rights practices in the Republic of Trinidad and Tobago are not as severe in comparison to that of Nigeria. The reasons for this assertion include the following facts: The Government of the Republic of Trinidad and Tobago did not kill its people and destroy its villages and their livelihoods because of the MNCs, in contrast to what occurred in Nigeria during its Military regime. Also, the MNCs in the Republic of Trinidad and Tobago do not use armed police and soldiers to kill the citizens of that country, in contrast to what occurred in Nigeria during the military era with the Shell and Chevron companies. Given these two facts, it is deemed appropriate to say that the "human rights violations" were not very severe in the Republic of Trinidad and Tobago in comparison to the atrocities committed by the Nigerian Military Government, Shell, and Chevron; in the Delta Region of Nigeria. The major human rights’ violations in the Republic of Trinidad and Tobago include arbitrary and unlawful deprivation of life by the police, excessive use of force by prison officers, pretrial detention of up to 10 years, and corruption of the government officials, as well as in the police and immigration services. However, there were no cases of political prisoners or detainees, restrictions on academic freedom and cultural events, and human rights violations by the oil corporations in the Republic of Trinidad and Tobago (U.S. State Department 2014). With regard to Nigeria, human rights violations are in the areas of vigilante killings, prolonged pretrial detention of over 10 years, denial of fair public trial, executive influence on the judiciary and bribery of judges, privacy rights, freedom of speech, press, assembly, religion, movement, massive and widespread official corruption with impunity, and police and security forces committing arbitrary killings and operating with impunity (U.S. State Department 2013). During the military era in Nigeria, the military’s “iron-hands” did not have a good reputation on its human rights’ actions, decisions and activities. Since the 1970s to mid-2000s, the Nigerian Military Government fueled the death of its own citizens, and forced its citizens to abandon their lands for oil companies without any consultation, negotiation, and with negligible and unilateral compensation. In the 1990s, resistance movements from the native people turned violent and oil production was threatened. The Nigerian Military Government declared that the “destruction of production of the oil corporations by the people was an act of treason”, which was punishable by death (Hynes 2011). In the 1990s, Royal Dutch/Shell “aided and abetted” violations of human rights in Nigeria. When many local ethnic groups in the oil-producing areas of Nigeria protested against foreign oil companies for causing widespread pollution and the destruction of their community livelihood, they were met with guns and bullets from the Nigerian military dictators. For example, the 1990 protests against Shell by the people of Umuechem Village resulted in the Nigerian Mobile Police Force killing at least 80 people and destroying 495 homes. Responding to the 1993 Ogoni region against the new Shell

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pipeline by the Nigerian Mobile Police Force who raided the area resulted in 27 villages being razed, 80,000 Ogoni people being displaced, and 2,000 people being killed (Rowell 1995). Chevron had a military base at its Escravos facility in Delta State, Nigeria. This base housed over 100 soldiers, and these soldiers attacked many villages in the area. In 1999, when leaders of the Ikiyan people tried to negotiate with Chevron; these leaders were shot at, and 62 of the leaders, (including a 7-year old girl) were killed by the soldiers. The soldiers then proceeded further to set the villages ablaze, kill their livestock, and destroy their fishing equipment (Hynes 2011). Can these atrocities happen in Shell’s and Chevron’s home countries? Never and never! Why did Nigerian Military Government have to “massacre” its own citizens and destroy people’s homes for Shell and Chevron? Oh, what a tragedy and shame to Chevron, Shell Corporation and the Nigerian Military Government! Given the amount of human rights’ violations in Nigeria, it would be very difficult to blame the multinational oil corporations for “human rights misbehavior” in Nigeria.

3.2 Environmental Pollution Oil pollution is not as rampant in the Republic of Trinidad and Tobago. This is partly because the oil corporations in the Republic of Trinidad and Tobago are state-owned and operated, and because the country has an effective National Oil Spill Contingency Plan (Trinidad and Tobago ministry of energy oil spill plan 2013). However, as of December 17th, 2013, Trinidadian state-owned oil company, Petrotrin (formally called Texaco), admitted the 11th oil spill in the Gulf of Paria in ten days (Nosowitz 2014, Douglas 2013). These oil spills amounted to 236,250 gallons. It became the country’s worst oil spill. Petrotrin took responsibility for nine of the eleven spills and blamed the other two on saboteurs. These spillages earned Petrotrin a fine of $20 million from the country’s Environmental Management Authority as well as Petrotrin’s reimbursement of $2.6 million dollars to the Cedros fishermen for their loss due to the spillage in the area. Oil pollution in Nigeria is perhaps the worst in the whole world. This is because many of the Nigerian agencies, laws and legislations that were supposed to safeguard the environment with regards to oil pollution were never implemented, and oil companies were also not monitored. These laws and legislations include the Oil Pollution Act, National Oil Spill Contingency Plan, National Oil Spill Detection and Response Agency, Niger Delta Development Commission, Nigeria National Petroleum Corporation Act, Nigerian Port Authority, Nigerian Security and Civil Defense Corps Act, Nigerian Maritime Administration and Safety Agency, Petroleum Act, Oil in Navigable Water Act, Merchant Shipping Act, and Nigerian Meteorological Agency (Kadafa, Mohamad and Othman 2012). In fact, the 1992 environmental report on the activities of the Nigerian oil companies in Niger Delta region documented that:- “Apart from air pollution from the oil industry’s emissions and flares day and night producing poisonous gases that are silently and systematically wiping out vulnerable airborne biota and endangering the life of plants, game, and man himself, we have wide-spread water pollution and soil / land pollution that result in the death of most aquatic eggs and juvenile stages of the life of fin fish and shell fish on the one hand, whilst, on the

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other hand, agricultural land contaminated with oil spills becomes dangerous for farming, even where they continue to produce significant yields.” (Hill 2009, Rowell 1995). In 1958, Royal Dutch Shell, plc (Shell) began oil exploration in Nigeria and started with the production of 6,000 barrels of oil per day. Shell, which was founded by Marcus Samuel in 1886 in England and later merged with the Royal Dutch Petroleum Company in 1907; currently have its headquarters in the Netherlands (Yusuf 2015). By today, it has created much environmental devastation to the Niger Delta’s natural resources. On November 10, 1995, in an effort to appease Shell, the Nigerian Military Government executed nine Ogoni leaders based on false accusations and trial by a military tribunal. The executed leaders are Ken Saro-Wiwa, John Kpuinen, Dr. Barinem Kiobel, Saturday Doobee, Nordu Eawo, Daniel Gbokoo, Paul Levera, Felix Nuate, and Baribor Bena (CCRjustice.org website). By 2006, 11 oil corporations operated 159 oil fields and 1481 wells in Niger Delta of Nigeria (The Guardian 2006). Today, over 1.5 million tons of oil had been spilled into the Niger Delta ecosystem. The Italian oil giant, ENI had 474, 500, and 349 oil spills in 2012, 2013, and 2014, respectively; while Shell admitted to 204 oil spillages in Niger Delta in 2014 according to Amnesty International analysis (Gaughran 2015). Additionally, in November 2014, during a legal action in the UK, Shell admitted wrongdoing in the Niger Delta of Nigeria and agreed to pay 55 million British pounds to the Bodo Community in the Niger Delta of Nigeria (Gaughran 2015). 3.3 Corruption Like ethics, what is meant by "corruption" is subject to the accepted social "values, beliefs, interests, behaviors, and practices of a society or community." Thus, "corruption" has no universal definition and meaning. What is deemed to be corruption in one culture may not be seen as corruption in another culture. The corruption perception index (CPI) for The Republic of Trinidad and Tobago public sector’s CPI from 2001 to 2016 was between 53% in 2001 and 32% in 2011 out of 100%. This implies that the country is perceived as relatively corrupt. This is because its annual average CPI is about 40% which is just about 3% below the trench-hole point of 43%. Corrupt officials were able to smuggle their ill-gotten assets into safe havens through offshore companies with absolute impunity (Lucie-Smith 2006). In the country, payments made by the multinational corporations to governments to exploit resources remain secret. Bribery and embezzlement go unchecked. Because stolen oil and gas income benefits only a few elites, Victor Hart, the chairman of the country’s extractive industries transparency initiative steering committee warned that, “if the scourge of corruption is not successfully tackled, the country could be destroyed” (Raphael 2015). Most of the proceeds from the Nigerian oil wealth, on the other hand, end up in the pockets of a few Nigerian leaders (Dona, Mgbame and Ogbeide 2015). Also, unaccounted oil products in the Nigerian oil and gas sector end up in the hands of high-level officials in the Nigerian petroleum sector, with the collaboration of multinational oil corporations (Okeke and Aniche 2013). According to the Corruption Perception Index (CPI) reports of 1996 to 2016, the Nigerian public sector is perhaps one of the most corrupt public sectors in the world. The Nigerian public sector’s CPI from 1996 to 2016

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is between 6.9% in 1996 and 28% in 2016 out of 100%. Its annual average CPI is about 21% which is just about 22% below the trench-hole point of 43%. The corruption risk areas in the Nigerian oil and gas industry are in:- the awarding of licenses, the awarding of contracts, bottlenecks and inefficiency, the role of bunkering, and the exploration of crude and importing refined products (Gillies 2009). In the area of bribery, Halliburton’s bribery scandal involved nearly most of the Nigerian leaders, including two presidents and one vice president of the country as at the time the crime was committed. Halliburton gave almost US $180 million in bribes to the top Nigerian Government officials to secure four contracts, which were worth over US $8 billion, to build liquefied natural gas (LNG) facilities in Nigeria from 1994 to 2002. Kellogg Brown & Root, (a subsidiary of Halliburton), was a part of a four-firm consortium that built a series of liquefied natural gas (LNG) plants in Nigeria valued over US $8 billion in 2004. The roots of the Halliburton bribery scandal in Nigeria dated back to 1994 when Kellogg and its consortium tried to win the LNG contracts. In early 1995, Nigeria’s military dictator replaced the oil minister. Thereafter, the consortium and the new oil minister were not getting along; so the consortium quickly hired a British lawyer, Jeffery Tesler, for $60 million to handle their relationship with the Nigerian government officials. By December 1995, the consortium won the contract; and money started flowing from Halliburton into the hands and banks accounts of sixteen top Nigerian leaders; including the two presidents and one vice president of the country from 1995 to 2002. The Halliburton bribery activities continued into the 2000s (Elombah.com 2015, Newswatch 2010, Hill 2009). 3.4 Employment Practices The facts at our disposal indicated that in both countries, the oil corporations contributed to the human capital development of the host countries. In clear terms, they provided an environment that is free of any form of discrimination in all their human resources policies. They both have strict substance abuse laws, and conform to all legal and government regulations. They both have strict rules on their employees’ acceptance of gifts or favors; while they are very notorious for bribery through their host governments’ officials. However, they need to prevent their employees from faulty equipment as well as provide adequate training for their employees, because Shell was fined $109,600 for inadequate training of employees in 2008 (Yusuf 2015, Seattletimes.com 2009). 3.5 Unethical Moral Practices Oil companies in the Republic of Trinidad and Tobago seem to be more ethical than their Nigerian counterparts. This is because none of the oil corporations in the Republic of Trinidad and Tobago was ever named as one of the world worst corporation evildoers. Also, Trinidad’s oil corporations were never reported to have been involved in bribery and corruption; nor used armed personnel to attack people who expressed negative public opinions about them. On the contrary, out of the 11 oil companies in Nigeria; Chevron and Shell have been listed among the 14 worst corporation evildoers (laborrights.org 2005). Chevron was responsible for the violent repression of peaceful opposition to its oil extraction in the Niger Delta of Nigeria. Chevron hired private military

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personnel, who gunned down peaceful demonstrators that opposed Chevron’s oil extraction in the Delta area of Nigeria in 1999 (laborrights.org 2005). Empirically, Shell seems to be the worst oil corporation in Nigeria. Shell does not conform to competition and legislation laws of host countries. It bribes its way out. For example, in a business ethics survey conducted by Shell, 75% of Shell’s participated retailers said that “Shell’s management was very unethical, corrupt, greedy, and incompetent” (Yusuf 2015, royaldutchshell.com 2013). In fact, Shell confessed to the provision of false information as well as corruption and bribery malpractices in Angola, Brazil, and Nigeria in 2004 (Yusuf 2015, corp-research.org 2004). Shell practiced double environmental standards, by operating with advance and cleaner facilities in developed countries compared to what it does in developing countries. For example, Shell releases on the average about 19 tons of Sulphur dioxide into the Ogoni and Bodo communities in Nigeria’s Niger Delta on a daily basis, and it will not do so in the UK, USA or the Netherlands (FOF.co.uk 2006). Shell’s continuous oil spillage and pollution led to environmental and ecological degradation of the Delta region of Nigeria (FOF.co.uk 2006). Shell’s unethical behavior violates the Human Right Acts. Shell bribed witnesses to testify against Ken Saro Wiwa; and had him executed by the Nigerian Military Government along with eight others, and was also responsible for the death of over 750 people in Ogoni Land of Nigeria (Ccr-ny.org). Shell’s operations were unfair or unethical in the marketing area. This made the Advertising Standard Authority to disapprove Shell’s advertisement by saying that it was misleading (Yusuf 2015, The Guardian 2008). Shell’s financial statements do not actually reflect the true financial position and assets of its business (Frc.org.uk, bbc.com 2004, sec.gov 2004). Shell is irresponsible and unethical for avoiding the payment of taxes to governments despite being one of the most profitable oil corporations in the world (Yusuf 2015).

4. Conclusions and Strategic Policy Recommendations 4.1 Conclusions To be ethical in international business decisions and practices, multinational corporations must: (a) ensure that their hiring and promotion practices be grounded in personal ethics, (b) have an organizational culture that values ethical behavior, (c) have leaders that exhibit ethical behavior for their subordinates to follow, (d) implement decision-making processes that are ethical and, (e) develop and promote moral courage. Viewing the subject matter in the above contexts, this paper concludes that oil companies in the Republic of Trinidad and Tobago seem to be more ethical than their Nigerian counterparts. The logical reasons why oil companies in The Republic of Trinidad and Tobago performed better in terms of pollution, bribery, corruption and human right violations, include the fact those companies are mostly state-owned and operated, and their executives viewed themselves as co-owners of those corporations. The state-ownership made the oil executives to be more patriotic to the success of their oil corporations. Furthermore, the Republic of Trinidad and Tobago had oil executives who had good environmental records to be involved in their environmental decisions, and this resulted

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in less oil pollution in the country. Thus, all these, in part, made the companies’ executives hold a strong allegiance, and be more loyal to the success and image of those companies in the country. Conversely, in Nigeria, the oil industry is dominated by foreign oil companies and their executives were merely concerned about the “profit maximization of the investors’ wealth”, and thereby developed “carefree, careless, and lackadaisical attitudes about the destruction of the environments of where we are operating in Nigeria.” 4.2 Research Findings Related to the Research Questions The findings from our research questions can be summarized as follows. In terms of what the oil companies have done wrong, this paper discovered that more atrocities were committed in Nigeria than in The Republic of Trinidad and Tobago in the areas of human right violations, environmental pollution, corruption and other immoral practices of the oil companies. With regard to why the multinational oil corporations behaved unethically in both countries, the answer was found in the levels of official corruption of each country. Since Nigeria is more corrupt than the Republic of Trinidad and Tobago, the paper concluded that those foreign oil corporations were able to commit more atrocities in Nigeria, (with the noble assistance of the Nigerian Military Government), than they did in the Republic of Trinidad and Tobago. On the issue of government efforts to make the multinational oil corporations behave more ethically, it was ascertained that The Republic of Trinidad and Tobago had a more effective National Oil Spill Contingency Plan than Nigeria. Nigeria has more than ten legislations to safeguard its environment from the multinational oil companies, but these legislations were neither applied nor enforced, and the oil corporations were not monitored for compliance. 4.3 Policy Recommendations All the above listed Nigerian “Mushroom Laws and regulations” need to be reviewed, revised, and compressed into one specific Act. Also, there are too many Nigerian Government agencies managing the petroleum sector. These agencies need to be harmonized into one agency. Furthermore, multinational oil corporations in Nigeria are not adequately monitored due to lack of skilled manpower and widespread official corruption at the top. Thus, Nigeria needs to “clean its house” on official corruption if it wants to be a great country. Nigerian Government should provide good governance, leadership and be more proactive. The government should increase its monitoring efforts, require more periodical and mandatory reports from the oil corporations, as well as, make its monitoring and regulatory agencies to be more autonomous. Nigerian government needs to tighten up security on the high seas with a view to preventing the smuggling of crude oil products. The best approaches to advance anti-corruption reform in the oil sector of Nigeria and the Republic of Trinidad and Tobago should include: the legal and regulatory framework, open and competitive award procedures, process and revenue transparency, investigation and prosecution of corruption; and oversight and accountability measures (Gillies 2009). Chevron, Shell, ENI and the other eight oil

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