August 6, 2021

Shell Wins 3 Pollution Suits Filed by Nigerians

In a legal dispute that had been closely watched by multinational companies and environmental organizations, a Dutch court Wednesday dismissed most of the claims brought by Nigerian farmers seeking to hold Royal Dutch Shell accountable for damage by oil spilled from its pipelines.

The decision, by the District Court of the Hague, was unusual in that it was brought in a Dutch jurisdiction against a Dutch company for activities overseas by a foreign subsidiary.

Shell, which has its headquarters in the Hague and its registered offices in London, acclaimed the decision as a vindication.

The company had argued that the oil spills were not its fault, but the result of criminal tampering.

“This ruling will enable more people to understand what is happening on the ground in Nigeria,” Jonathan French, a Shell spokesman, said. “We have this rampant problem of criminal activities: oil theft, sabotage, and illegal refining. That is the real tragedy of the Niger Delta.”

The company, which obtains 12 percent of its oil and gas from Nigeria, has long been dogged by accusations that its activities there cause serious environmental problems and human rights abuses.

In 2009 it agreed to pay $15.5 million to end a lawsuit brought under the U.S. Alien Tort Claims Act arising from the 1995 execution of the author Ken Saro-Wiwa, a critic of the company and the Nigerian government’s actions in the Niger Delta.

That U.S. law has been interpreted as having broad jurisdiction, even over foreign multinationals.

Shell denied that it bore any responsibility for Mr. Saro-Wiwa’s death, but said it wanted to end the litigation and move on.

In the case decided Wednesday, which was filed in 2008, four Nigerian farmers and fishermen, working with the environmentalist group Friends of the Earth, claimed that their livelihoods had been ruined by oil that spilled from Shell pipelines in their villages.

While the pollution damage itself was not in dispute, Shell argued that the spills had been caused by so-called bunkering — oil theft from the pipelines — as well as outright sabotage.

The court agreed with Shell in most of those spills, around the villages of Goi and Oruma.

But it held that in one spill, near the village of Ikot Ada Udo, the local subsidiary, Shell Petroleum Development Co. of Nigeria, was liable for damages — as yet unspecified — to one farmer.

In that case, the court said, “sabotage was committed in a very simple way in 2006 and 2007 by opening the overground valves with a monkey wrench,” something that “Shell Nigeria could and should have prevented.”

“I am not surprised at the decision because there was divine intervention in the court,” Reuters quoted the farmer, Friday Akpan, as saying. “The spill damaged 47 fishing ponds, killed all the fish and rendered the ponds useless.”

Joel Trachtman, a professor of international law at the Fletcher School of Law and Diplomacy in Medford, Massachusetts, said that, in theory, the court’s finding in favor of Mr. Akpan meant that “multinational companies could find their foreign subsidiaries held to a higher standard, higher even than locally owned companies.”

That, he said, “conceivably could deter foreign investment in Nigeria.”

But Mr. Trachtman noted that the court also rejected any liability for the parent company. That limited the implications of the ruling. Mr. Trachtman said that facet of the decision was in keeping with global legal principles. “Usually courts around the world accept the separate existence of a subsidiary corporation,” he said. “They don’t pierce the veil to hold the parent responsible.”

Evert Hassink, a spokesman for the Dutch chapter of Friends of the Earth, described the court ruling as “mixed.” The court’s refusal to assign any responsibility to the parent company was disappointing, he said. But “we’ve succeeded in establishing the principle of going to court in the Netherlands or Europe because of what happened in another country,” he said.

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Salesforce, a Leader in Cloud Computing, Draws Big Rivals

But recently Salesforce has won the sincerest form of flattery known in tech: its competitors are spending billions of dollars to acquire firms that do the sort of thing it does, which is to offer business software as a kind of rental service using a cloud of computers inside the Internet.

Last Thursday, I.B.M. announced it would buy DemandTec, a cloud-based vendor of data analysis software for retailers, for $440 million. A week before that, SAP of Germany, one of the largest providers of traditional enterprise software, said it was paying $3.4 billion for SuccessFactors, which sells human resource software via the cloud. In October, the giant of traditional business software companies, Oracle, said it would acquire for about $1.5 billion RightNow Technologies, which uses cloud software for product research and customer service.

Mr. Benioff, the chief executive of Salesforce, is characteristically pleased with himself. “It’s great that Oracle and SAP are buying cloud companies,” he said, asking, “Do you think it will transform them?”

For Mr. Benioff, who co-founded Salesforce in 1999, the acquisitions are a vindication of his strategy. “Amazon Web Services is making over $1 billion in revenues with cloud software,” he said. “Google Apps is close to that. We’re on track for revenues of $3 billion in 2012. That is $5 billion, and that is what has them worried. Where are SAP, Microsoft, Oracle? Why haven’t they taken our customers?”

Much of the enterprise software industry, it’s true, has had a stagnant decade, and is looking for something new. Cloud is the new thing, but for many it means a big change in profits and how business is done.

Global spending on enterprise technology, forecast at $2.7 trillion for 2012, has been long dominated by corporate sales and use of personal computers tied to proprietary servers. The servers run software from SAP, Oracle and others that is sold to the companies as a licensed product, typically with large gross profit margins, then serviced for an even more profitable annual fee.

Cloud software is rented over the Internet at lower costs and margins. It is used by tablets and smartphones as well as PCs. The old giants, which arose by destroying the previous generation of mainframe and minicomputer companies, now face their own fight for relevance.

SAP, which in 2010 had $16.7 billion in revenue, plans to buy and acquire its way into the cloud business. “There is a lot of good marketing Benioff has done” for cloud computing, said Sanjay J. Poonen, president of global solutions for SAP. “Now that he has energized it, you’ll find bigger companies coming in.”

Besides the personnel software of SuccessFactors, he says, SAP will most likely offer cloud-based travel and expense management, accounting and collaboration software. In the old technology world, the German company is better known for its mastery of manufacturing and resource allocation software.

Oracle, with $35.6 billion in revenue, ousted Mr. Benioff from a planned keynote speech at its user conference in October amid mutual criticism by the two companies.

Lawrence J. Ellison, Oracle’s chief executive and a onetime mentor to Mr. Benioff, has compared Salesforce to a “roach motel” of products, and says Oracle’s cloud products will more easily work with software from other vendors. “Everyone’s got a cloud, we need a cloud,” Mr. Ellison said during the October conference. “Ours is a little different,” he added, “it supports full interoperability.”

The transition from one form of corporate software to another is hard, says John Wookey, who worked for both SAP and Oracle and recently joined Salesforce to run advanced products. “Ninety-nine percent of their business is still traditional,” he said. “The economics are different, but what is really different is the relationship with the consumer. We issue a new version of the product every four months. If the customer doesn’t like it, he stops paying.”

New versions of packaged software usually come out every few years, and it can be difficult to get out of a license when company data depends on it. “The hardest thing is to be successful again when you’ve been successful in the old world,” said Mr. Wookey.

Mr. Benioff said his response to the sudden attention paid to cloud companies is to keep moving ahead of the competition. Salesforce is building more business software that works like Facebook. Chatter, an internal communications product introduced in 2010, is intended to get people to share and collaborate more openly, aiming to create a faster-moving and less formal workplace.

Mr. Benioff takes this social stuff seriously. He put cameras in his own office and broadcasts meetings with his top executives to anyone in the company. “Our employees used to think this was an Illuminati meeting,” he said. Salesforce, he proclaimed, “might have been born in the cloud, but it was reborn social.”

So far companies seem more interested in looking hip to their customers than in changing the way they work. Salesforce has sold Chatter to Toyota as a way that employees can talk informally with each other and their customers, and customers can get messages from their cars for things like battery recharging. Burberry uses it as a means to ensure a consistent customer experience over different online devices.

This time Mr. Benioff does not have such a long lead. In May, VMware, which is majority owned by old-line data storage company EMC, bought a corporate social software business called Socialcast. I.B.M. has done internal work around applying Twitter-like feeds to corporate life. Mr. Poonen of SAP says SuccessFactors will provide a means to build a social network within its customers.

Mr. Benioff appears unworried. “I have a $10 billion vision for Salesforce,” he said. “It consists of customer success.”

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DealBook: Arch Coal to Buy International Coal for $3.4 Billion

6:40 p.m. | Updated
Arch Coal said on Monday that it would buy the International Coal Group for $3.4 billion in cash, creating one of the world’s largest coal producers.

The deal is largely a bet on steel: the combined company would be the second-biggest producer of metallurgical coal in the United States at a time when prices for such steel-making coal are rising thanks to demand from China and India. The biggest producer of steel-making coal is Alpha Natural Resources, which outbid Arch Coal earlier this year to acquire Massey Energy for $7.1 billion in cash and stock.

The deal is also something of a vindication for Wilbur L. Ross Jr., who founded International Coal. The investor, known for his willingness to plunge into distressed industries, acquired assets out of bankruptcy from the mining company Horizon Natural Resources in 2004. From that, he cobbled together International Coal from a series of acquisitions. The company went public in December 2005 at $11 a share. Mr. Ross holds a 6 percent of the company, having halved his stake late last year.

Arch is offering $14.60 for every International Coal share, a premium of 32 percent to I.C.G.’s closing stock price on Friday.

Shares of International Coal surged 30.7 percent on Monday, closing at $14.42. Arch Coal fell 2.2 percent, to $33.53.

International Coal’s stock price had been rising after Alpha Natural’s deal for Massey spurred speculation that it would be next.

“International Coal had been the subject of much speculation in the coal industry trade press of whether it would be the next M. A. target, with Arch typically featured as a likely suitor,” analysts at Stifel Nicolaus said in a note on Monday.
The combined Arch-International Coal would have annual revenue of $4.3 billion on shipments of 179 million tons of coal — both thermal and steel-producing varieties — and employ about 7,400 people.

Steven F. Leer, chairman of Arch, said the transaction would “extend our operating portfolio into every major U.S. coal-producing basin, and solidify our position as one of the industry’s lowest-cost producers.”

Both boards have approved the tender offer, which is set to commence in mid-May, and 17 percent of International Coal shares are already committed to the deal.

Arch has obtained a bridge loan from Morgan Stanley and PNC, and plans to raise permanent financing by issuing debt and equity.

Arch was advised by Morgan Stanley and the law firm Simpson Thacher Bartlett, while International Coal was advised by UBS and the Jones Day law firm.

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