MNC JOINT VENTURE RESPONSIBILITIES
During the life of the joint venture, over 1 billion barrels of crude oil were extracted from the land. Great Oklahoma left Ecuador in 1992 and turned over all assets and responsibilities for the project to Petroecuador, as was In the early 1960s the great Oklahoma Oil Company entered into a joint venture agreement with the government of Ecuador to explore, and potentially develop, an area of land in the eastern part of the country that was believed to possess significant oil reserves. The agreement called for an equal partnership between Great Oklahoma and Petroecuador, the government-owned oil monopoly. Great Oklahoma was to provide technical expertise and capital, while Petroecuador was to provide rights to the land.
Petroecuador had very limited experience in the oil business and relied heavily on Great Oklahoma to provide advice. In effect Great Oklahoma was to make all decisions in the partnership, manage the day-to-day operations, and then simply provide the government of Ecuador with a source of revenue.
A large oil deposit was discovered in the El Oriente region of Ecuador, an environmentally sensitive region of the rainforest. The government of Ecuador officially held title to this land; however, it was generally accepted that the indigenous people of the region, the Ecuadorian Indians, owned the land. They had occupied the land even before the government of Ecuador was established. In order to gain their cooperation, Great Oklahoma and Petroecuador provided small incentives for these people, such as the use of electricity and the construction of sporting facilities. On the advice of Petroecuador, no monetary compensation was ever paid by Great Oklahoma to the Indians.
During the life of the joint venture over 1 billion barrels of crude oil were extracted from the land. Great Oklahoma left Ecuador in 1992 and turned over all assets and responsibilities for the project to Petroecuador, as was originally agreed to in the joint venture contract. Since that time, significant concerns have been raised about the techniques used by Great Oklahoma in its operations in Ecuador. It has been alleged that the company did not use the same standards in Ecuador that it used in the United States to prevent environmental harm and that significant problems now exist in the region as a result.
A lawsuit has been filed in New York on behalf of the Ecuadorian
Indians against Great Oklahoma, seeking $1 billion dollars in damages for environmental destruction and related health problems. It has been alleged that over 17 million barrels of oil were dumped in the jungle and that the water system of the area is now extremely polluted and hazardous. An independent team of researchers from the United States concluded that the wildlife population of the El Oriente region has been greatly reduced by the pollution, and that the increasing rates of cancer found among the local people can be traced back to the techniques of oil extraction and careless handling of oil byproducts.
Great Oklahoma defends its position by stating that it abided by the terms of the joint venture agreement and that the company is no longer involved in the project. The company insists that it followed typical standards in the industry for environmental safety and that the lawsuit is simply an attempt by a few American lawyers to exploit the situation for their own financial gain. Great Oklahoma points out that the Ecuadorian government does not support the Indians' lawsuit, and that the case was, in fact, thrown out of an Ecuadorian court.
The joint venture was very important to the government of Ecuador. During its existence, over half the Ecuadorian budget came from revenues from this project. The oil revenue was used to build roads, schools, and hospitals in the area. Great Oklahoma argues that the Ecuadorian Indians are better off because of the project and that the lawsuit in the United States should be
dismissed. The company feels that the case has no standing in an American court, and that if another trial is to be held, it should be held in Ecuador, since
it is essentially an Ecuadorian matter. Any alleged illegal activity was conducted in Ecuador and the injured parties are Ecuadorian. Furthermore, if the case is allowed to proceed in the United States, a dangerous precedent will be set in which American corporate activities all over the world will be subject to legal action in U.S. courts. Large judgments will encourage foreigners to sue in American courts in the hopes of winning unreasonably high awards.
Although Great Oklahoma concedes that the environmental landscape of the region needs attention, including the removal of the hundreds of open oil pits scattered throughout the area, the company asserts that the responsibility for these problems rests with its partner, Petroecuador. Great Oklahoma upheld its part of the agreement and followed all applicable laws while in Ecuador.
1. Find the English equivalents for the following words and expressions:
имущество, источник доходов, обязательства, денежная компенсация, финансовая выгода, равное партнерство, разрушение окружающей среды, побочные продукты, безопасность окружающей среды, пострадавшая сторона, государственная монополия, стимул;
сократить популяцию (животных), создать прецедент, соблюдать условия соглашения, соблюдать стандарты, осуществлять деятельность, соблюдать законы, участвовать в проекте, предотвращать разрушение окружающей среды.
2. Translate into Russian:
to abide by the terms of the agreement, to be involved in the project, to follow standards, to conduct activity, to follow laws; to prevent environmental harm; to reduce population, to set a precedent;
equal partnership, source of revenue, incentive, monetary compensation, assets, environmental destruction, financial gain, injured party, responsibilities, by-products, environmental safety, government-owned monopoly;
3. Match the following:
1. environmental a. gain
2. significant b. rates
3. injured c. action
4. financial d. partnership
5. equal e. problems
6. illegal f. party
7. increasing g. safety
4. Say whether these statements are true or false:
1. The agreement between the Great Oklahoma and Petroecuador provided for an exchange of specialists.
2. It was Petroecuador and not the Great Oklahoma that was to make all decisions in the partnership as it had great experience in the oil business.
3. Oil reserves had been nearly depleted in Ecuador and that is why the Great Oklahoma saw no point in entering into a joint venture agreement with the Government of Ecuador.
4. The techniques of oil extraction used by the Great Oklahoma caused environmental destruction and related health problems according to the Ecuadorian Indians.
5. The joint venture played a major role in raising the living standards of the Indians.
5. Discuss the following questions:
1. What are the responsibilities of a multinational corporation that operates in a less-developed country? Did the Great Oklahoma Oil Company fulfill these responsibilities?
2. Are the duties of a MNC different in an agreement with a company that is less knowledgeable or experienced?
3. Do you agree with Great Oklahoma that it is not responsible for any environmental damages since it fulfilled its part of the agreement?
4. What could have been done to avoid this problem?