Oil party with consequences

Swedish Lundin is a hero in Norway following giant discoveries in the North Sea. At home, members of the wealthy oil family are accused of having contributed to war crimes in Sudan. The scandal includes Foreign Minister Carl Bildt.

“Many small children drowned in the river while trying to escape from the riders ... men drove people to the river and shot them while they fought to get across together with small children and old people ... Two young women, Nylaluak Riek and Nyanhialdiu, were near their pregnancy due date, but the riders shot them as they fled."

The story is told by a woman who lost ten of her relatives during an attack on the Nhialdiu village in the southern part of the former Sudan. The country's authorities have killed 3,000 of the village's 10,000 residents in total. The village was raised to the ground - apparently to make way for an oil well.

The woman's story is taken from the "Unpaid Debt" report, which 50 human rights and aid organisations (ECOS - European Coalition on Oil in Sudan) published in June 2010. The report accused oil companies Lundin from Sweden, Malaysian Petronas, and Austrian OMV of complicity in war crimes and crimes against humanity in Sudan during the 1997-2003 period.

One July day in 2011, a helicopter landed at Stavanger Sola Airport, western Norway. Three Lundin family generations emerged - a grandmother, two sons, and three grandchildren. They travelled from the US to the "Bredford Dolphin" drilling rig in the North Sea on the way to their summer house in the Swedish archipelago. They smile and laugh - all indications are that oil exploration under the auspices of the Norwegian arm of Lundin has paid off.

A month later, it becomes publicly-known that the oil discovery is related to a nearby discovery Statoil made. An elephant is discovered - a giant that was the largest in the world that year and the largest-ever made on the Norwegian Continental Shelf for perhaps as many as 20 years.

What does that mean? In the weeks and months to come, the value was estimated at a staggering NOK 1,500 billion. All of Norway cheers, Norwegian Petroleum Directorate geologists extend the oil age on the Norwegian Continental Shelf. Moreover, a new oil boom is happening in Norway while the rest of Europe is struggling in a deep economic crisis.

The day the huge dimensions of the discovery become clear – which was later named Johan Sverdrup – is the most important in its history, according to the CEO of parent company Swedish Lundin Petroleum, Ashley Heppenstall:

“We found the key that opened the doors to the jewels,” he said in a statement.

He certainly needs the good news, however. Because Lundin has been under investigation in Sweden since the summer of 2010 for having exploited the bloody civil war in Sudan to make money on oil.

Where do these accusations come from? Part of the answer is found at a peace conference in the town of Juba in southern Sudan in November 2006. The country’s future is to be discussed after 22 years of continuous civil war. A delegation of Sudanese civilians asks European organisations for help to secure peace by ensuring justice and reparation for the victims of the war, which also was about oil wealth.

The result is ECOS’ "Unpaid Debt" report. It states that authorities in the oil companies’ nations Sweden, Austria and Malaysia must investigate possible violations of international law, account for not intervening and stopping the attacks, and ensure that victims receive compensation from the oil companies for the suffering inflicted upon them. A compensation payment is estimated at USD 300 million - or NOK 16.6 billion.

“It’s the oil companies' duty - since they left Sudan with considerable profits - to pay compensation to the victims. Lundin and the other oil companies didn’t carry out the attacks on the civilian population, but they should have understood that oil production exacerbated the war. Such a process would provide justice to the victims and promote reconciliation and forgiveness. Lundin is rich enough to pay. The matter would then be over,” ECOS leader Egbert G. Ch. Wesselink tells Aftenbladet.

“Our report is extremely grave, and we think Swedish prosecutors are preparing to travel to Sudan. The investigation includes those who took the decisions at Lundin. This means it’s likely brothers Ian and Lukas Lundin, CEO Ashley Heppenstall, and former board member Carl Bildt will be included, amongst others,” says Mr Wesselink.

Founder Adolf Lundin (1932-2006) began his career as an employee at Royal Dutch Shell. He found himself in conversation with a businessman at an airport in the early 1970s. The contact resulted in Lundin contributing to finding the world's largest gas discovery in Qatar in 1976.

Various parts of the Lundin Consortium have been in over 40 countries over 30 years, many of them dictatorships. Lundin has never been afraid to do business in countries with war and unrest and has drilled for oil in Gadaffis Libya, Assad's Syria, Hussain's Iraq. When Adolf Lundin was criticised for gold mining in South Africa under the apartheid regime, he apparently stated that:


"I don’t understand the Swedish rage towards this beautiful country."

In August 1996, Adolf Lundin worked in Zaire (now D.R. Congo) to secure ownership of the Tenke Fungurume copper and cobalt mine. According to newspaper Le Monde Diplomatique, this happens by contacting the country's notorious dictator Mobutu: The agreement appears as though it goes down the drain, but Lundin convinces former US President George Bush sr. to call Mobuto. Stakes in the mine are assigned to one of Lundin’s companies a short time afterwards. The UN later criticised Lundin for being one of the companies plundering the country's natural resources. To this day, the Lundin family retains a large stake in the mine.

"We work without regard to political risk," Adolf Lundin has said, according to the French newspaper. "It’s so difficult to make large oil and gas discoveries if you should limit yourself to countries that are politically safe, you don’t have chance. It's like starting a marathon with a broken leg. "

Adolf Lundin used to own everything personally, but ownership was reorganised via various tax havens after he became seriously ill with leukaemia in 2003. There are allegations that ownership is organised so as to avoid paying inheritance and property taxes, while the Lundin family saw the advantage of avoiding a harrowing battle over ownership among the heirs, meaning the four children (Ian, Luke, Mona Hamilton and Nicola Mordasini), and widow Eva.

The family is known to tend contact with the non-socialist government of Sweden. They are also currently living in Switzerland, Canada and the US.

Today, Adolf’s sons Ian and Luke sit on the board of Lundin Petroleum. The family controls over 31 percent of the shares through Lorito, Landor Participations Inc., and Zebra Holdings and Investment (Guernsey) Ltd.

The core of the dispute in Sudan was the lucrative oil field 5A in the south to which then Lundin Oil (acquired by Talisman in 2001, subsequently creating Lundin Petroleum), Petronas, and OMV had secured the rights to a deal with the government in the north - this while the Civil War was raging . But government soldiers from the north had full control over the area. Civilians became targets in the war between government troops and armed groups from the south. Houses and villages were looted and set on fire. Civilians were raped, tortured, and killed by the thousands, children abused, and hundreds of thousands displaced from their homes. An estimated 12,000 people were killed and 160,000 displaced in this area between 1997 and 2003, according to "Unpaid Debt".

The report is so shocking that on 21 June 2010, 13 days after the contents of the report are made public, Swedish prosecutors decided to launch an investigation that hits central figures connected with Lundin during the period of the oil company’s controversial involvement in Sudan.

"The purpose of this study is to identify whether there are individuals with ties to Sweden who are suspected of being involved in crimes," writes prosecutor Magnus Elving in a brief statement.

The fighting in Sudan has since been under scrutiny by criminal police investigators and analysts from the War Crimes Commission. Large amounts of documents are obtained, and a number of people are to be questioned. Prosecutors will then ultimately answer whether someone can be prosecuted for complicity in human rights violations and war crimes.

Elving receives many questions about the case, but writes to Aftenbladet that the investigation is classified. He would not be interviewed, and it is very difficult to say when the investigation will be complete. But it will take time. Elving estimates it will be one to two years.

But several human rights and relief organisations already warned of the horrors associated with the oil industry several years prior to ECOS submitting its report:

In March 2001, Mark Curtis, chairman of the British Church Aid, is on the phone directly with the board of the Swedish oil company.

“Lundin has funded infrastructure, including roads and an airstrip. This has made it easier for the government and the military to move troops and weapons to depopulate the oil area. The airstrip is used by bombers,” he claims.

“We also possess information that Lundin employed a former member of a militia until 1999 accused of killing and raping civilians and burning their homes,” he told the board.

Curtis asks Lundin stop their operations in Sudan immediately. Board member Carl Bildt is not present on the aforementioned board meeting, according to documents from British Church Aid.

"The constellation of oil companies led by Lundin should, taking into consideration the overwhelming reports at the time, have been aware of the armed groups’, who ensured their safety, assault/misuse. But they continued cooperation with the Sudanese government, their companies, and the Army, "writes ECOS since.

In recent years, the scandal in Sweden remained and simmered. Sometimes the pyre flared up.

On 1 July 2011 in Ethiopia, Swedish journalist Martin Schibbye and photographer Johan Persson are arrested. They have entered the African country illegally. They are shot and wounded in the Ethiopian region of Ogaden. The country’s government accuses them of terrorism. The Swedish journalist and photographer say they are working to document abuses against the local population from the oil companies that Lundin has interests in.

While Norwegian newspapers state that Lundin's oil discovery in Norway is one of the largest ever, an Ethiopian court determines that the Swedish journalists be kept in custody on suspicion of collaboration with terrorists in Ethiopia.

Swedish Foreign Minister Carl Bildt is accused of having a dual role because of his former capacity as board member. Criticism is not mitigated by the fact that he was travelling when the sentence of 11 years imprisonment against the two journalists fell.

Criticism builds in the coming weeks. People demonstrate in the streets. Bildt was asked to resign later in the New Year in 2012, including by the press. He does not. Both Swedish journalists are subsequently pardoned and can return home. This must have occurred following prolonged diplomatic activities between Ethiopia and Sweden.

There is also commotion in connection with the Lundin Petroleum’s AGM in May 2012. The debate becomes very heated after Swedish insurance giant Folksam and ECOS suggest that those present should decide for an independent investigation of the company.

Carina Lundberg Markow, head of Folksam’s responsible investment division, told Aftenbladet:

“Swedish prosecutors are investigating the individual board members' responsibilities, such as Carl Bildt’s.”

“We believe that Lundin must open its records, protocols and show their actions to an external investigator. Lundin have said they are completely innocent. A separate investigation is a good way to get to the bottom of these allegations,” she adds.

The Lundin family, which controls over 31 percent of the shares, votes against the idea. Folksam's proposal has the support of 22 percent of shareholders and falls. Folksam then sells itself out of the company.

But how was it that Lundin has become a giant on the Norwegian Continental Shelf? When Lundin sells itself out of Sudan, the company in Sweden is left with a tidy sum. Subsidiary Lundin Norway is created in 2003.

In its quarterly report this year, Lundin in Sweden confirms it has used profits from activities in Sudan to buy oil company DNO's Norwegian assets. "As a result we will be able to finance the acquisition of DNO's values." This is how Lundin gained a foothold on the Norwegian Continental Shelf.

Norwegian authorities are rapidly allocating Lundin a number of licenses to extract oil and gas. Lundin has gradually become a major player, between 70 and 80 percent of Lundin's operations are currently Norwegian. Developments for about NOK 24 billion are largely financed with loans from the parent company in Sweden.

ECOS leader Egbert Wesselink believes Lundin's entry onto the Norwegian Continental Shelf is due to a mistake by the Norwegian government and Statoil.

“This is blood money. Lundin was given the green light in Norway because the company's background was only studied regarding the environment and economy. Statoil doesn’t go into partnership with companies elsewhere in the world without first examining human rights, ethics, and social responsibility,” he says.

Directors who are under investigation for serious crimes should not make decisions for the company's future. Their personal interests are in conflict with the company, ECOS thinks.

Lundin Norway's chief executive, Torstein Sanness, said that questions about Lundin’s Sudan activities should be directed to the parent company in Sweden.

“The Sudan discussions are not so easy for us to comment on. This is a relationship from before Lundin established itself in Norway. We’re also concerned about it, but don’t have much to add. I’ve personally talked with the people at the parent company that who have been in Sudan. I'm reasonably certain that Swedish prosecutors will complete their work. I don’t think there’s a problem getting this on the table,” Mr Sanness says.

Statoil states that the company will not comment on Lundin’s involvement in other countries, and that Norwegian authorities determine the composition of partners regarding licenses on the Norwegian Continental Shelf.

“We’ve got a good cooperation with Lundin on the licenses where we both have interests,” said press spokesperson Ola Anders Skauby.

Throughout his life, Adolf has been looking for an elephant, meaning an oil discovery of over 1 billion barrels of oil reserves. He did not succeed in finding some elephants, despite the fact his stocks in his company group Lundin Petroleum were considered to have a value of SEK 80 billion when he died in 2006. This is why the discovery on the Norwegian Continental Shelf is historic. Lundin has finally succeeded with its first elephant.