Clean up the oil act

Last year Lundin Petroleum achieved its best operating results ever. Its successful operations in Norway have made Lundin into a major and important Nordic player. And particular demands are made of these.


For this reason, it is deeply regrettable that the company AGM yesterday voted no to a demand for an independent enquiry into the many unanswered questions about its activities in Sudan and Ethiopia.


Before the meeting several major Swedish shareholders – Folksam, Andra AP-fonden, Tredje AP-fonden, Swedbank among them – had asked for an enquiry of this kind. The demand was directed to the chair of the company, Ian Lundin, in a letter a month ago, but the board recommended shareholders to vote against. Unfortunately, not enough of them dared to defy this recommendation.


Former Director of Public Prosecutions Sven-Erik Alhem is among those who have argued against the demand for an enquiry. Alhem, who was engaged by Lundin, considers it would be "wholly unsuitable" to run a separate enquiry side-by-side with the preliminary criminal investigation being conducted by the international public prosecutor in Stockholm. But Alhem’s reasoning does not stand up.


It seems improbable that the preliminary investigation that is ongoing will really lead to a prosecution. If individuals on Lundin’s previous board, including Carl Bildt, are to be prosecuted for crimes against international law, then the prosecutor must show that there is a direct link to killing and the forcible removal of the local people.


It is undeniable that serious acts of cruelty were perpetrated against the civilian population in Sudan. It is also clear that, by going into a disputed area, Lundin contributed to an escalation in the bloody battles between the regime and the guerrillas. But prosecuting and arresting individuals for crimes under international law requires clear and concrete proof; everyone who has listened to the proceedings in the Hague knows this. And that’s how it has to be.


An independent enquiry into Lundin’s operations would not be a parallel legal enquiry. It would be considerably broader and not merely take up alleged crimes. Even if there is no formal prosecution, there are a large number of questions that require answers.


Lundin should account for what happened in Sudan between 1997 and 2003, and explain in detail what its agreements with the regime involved. The company must also provide clear information about its operations in Ogaden in Ethiopia. The prospecting rights have been sold to African Oil, but that company is also included in the sphere of interest of the Lundin family and therefore affects trust in Lundin Petroleum.


It is in the company’s own interests to institute an enquiry. Company management should, on its own initiative, have started an independent enquiry a long time ago. If there is any truth in the serious accusations, then the company has nothing to fear.


Obviously the result of such an enquiry is considered to be biased. This is unavoidable, but no reason not to initiate one.


It is possible that the accusations made against Lundin did not have to do merely with lawbreaking, but they do definitively touch on ethics and morals. A company operating in a dictatorship must be able to show that its business dealings do not contribute to greater oppression.


The Lundin management acts as if it were still running a family business. But the business is quoted on the stock exchange and has to take account of other people’s views if it is going to remain there. As the oil industry lacks any real pressure from consumers, shareholders have a particular responsibility to run the company in the right way.


The major Swedish shareholders who demanded an independent enquiry, but who were voted down at yesterday’s AGM, should therefore consider whether they should retain their holdings in Lundin Petroleum.