1.
Crisis Management and
Reputational Risks
The Shell-Ogoni Affair as Case-Study
By Bolaji Okusaga

2.
Outline 1
PART 1: Situation Analysis
PART 2: Agitations from Oil-Producing Communities
and the Oil Industry Reality
PART 3: Communications Challenges:
PART 4:– Crisis Management: The Shell/Ogoni Affair
as a Case-Study
PART 5:– Tracking Reputation
PART 6:– Managing Stakeholders
Strategy Leadership Governance

3.
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PART 1:
Situation Analysis

4.
Oil revenues provide 95% of
Nigeria’s foreign exchange
earnings
The activities of large oil
corporations such as Shell, have
come under great threat as a
result of restiveness in the
Niger-Delta over environmental
and developmental concerns.
Agitation for resource control
and a greater say in the activities
of Oil companies by local
communities have led to series
of violence and hostage taking
directed at the industry
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Operating Environment

5.
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Prevailing Issues
Gas Flaring and Other
Environmental Issues
Shell Nigeria is alleged•
to have contributed
more greenhouse gas
emissions than all other
operators in the industry
industry thereby
degrading the
environment. Aside
from this, there is also
the issue of Oil spillage
and its effect on rivers
and farm-lands
Ogoni Crisis
• The Nigerian
government’s June 4,
2008 decision to replace
the Shell Petroleum
Development Company
(SPDC) as operator of oil
concessions in Ogoni
areas came after fifteen
years of crisis in Ogoni
land leading to the
withdrawal of the
Company from Ogoni
land
Niger-Delta Hostage
Taking and Illegal
Bunkering
• Hostage taking has
become very rampant in
the Niger-Delta. The
demands of the hostage
takers include more
local control of Nigeria's
massive oil wealth -- the
proceeds of which
typically end up in the
pockets of crooked
leaders

6.
Friction with Communities
Over the years, Shell has come
under fire from oil producing
communities for issues ranging
from oil spillage, gas flaring, the
absence of development in local
communities and helping to fuel
Crisiss.
In the atomsphere of distrust,
suprious allegations thrive. One
such case is that of the Odimidi
community, which claims that
Shell pipelines are causing
tremours in their community.
Perhaps the most malignant
issue is the Ogoni crisis which led
to the death of activist, Ken Saro
Wiwa and awoke a spirit of self-
determination in the Niger-Delta.
Today, fifteen years after, Shell is
still not positively perceived by
the Ogoni people and by
extension the whole of the Niger
Delta.
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7.
Historical Context
Oil was first discovered in Nigeria in 1958 at Oloibiri in the present day
Bayelsa State.
Nigeria gained Independence in 1960 and with Independence came
the active rivalry of the Regions and political actors leading to
political turmoil and subsequently, a Coup’dtat.
With the Coup came Military rule followed by the declaration of a
Civil war.
At the end of the war, an era of active prospecting began leading to
the Oil boom of the 1970’s.
With the Oil boom came prosperity and the development of mega-
cities such as Lagos, Port-Harcourt and Abuja.
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8.
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PART 2:
Agitations from Oil-Producing
Communities and the Oil
Industry Reality
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9.
Background of the Crisis
With the discovery of Oil, came the
licensing of Multi-National Oil
Corporations, the allocation of On and
Off-Shore Oil Blocks and a Joint Venture
Partnership Agreement which spells out a
revenue sharing ratio without a sound
legislative platform which looks at
environmental pollution, community
relations and business continuity.
Oil was dubbed the Black-Gold and with
this gold came the Udoji Salary award
which created a bogus bureaucracy and
led to an era of crass-materialism and
corruption.
While all these were going on, trouble
was brewing in the Niger-Delta…
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10.
Catalyst of the Crisis
Environmental Pollution
Community Relations
Business Continuity
Oil exploration activities led to the flaring of dangerous
gases unchecked and Oil spills which led to the pollution of
farm-lands and water-ways, which affected the People’s
source of livelihood.
There was a dearth of Community Relations in the local
community where these Oil Companies operated as they
restricted their activities to mega cities such as Lagos and
Port-Harcourt where they had Corporate Offices and
carried on purely technical services in their host
communities while honouring their joint venture
agreements and paying their taxes to the authorities as at
when due
Government, more or less, abandoned the oil producing
communities as Oil was placed on the Exclusive legislative
list with very little allocation made in honour of the
principle of derivation. The down-stream sector was
undeveloped as Government paid lip-service to private-
sector led development of refineries and petro-chemical
plants which would have generated more employment and
help reduce tension.
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11.
Crisis Situations Emerge
Isaac Adaka Boro’s Peoples
Liberation Army
Ken Saro-Wiwa’s Movement for the
Survival of Ogoni People
Ansari Dokubo’s Niger Delta
Liberation Front
A failed cessation bid in the late sixties. This was an
early warning signal
An Anti-Environmental Degradation movement
which got to the attention of the world, led to the
withdrawal of Shell from Ogoni Land in 1993 and
eventually caused the death of the protagonist
A militant Resource Control Movement which
started after Government’s bombardment of Odi
and has crystallized into an organised movement
which regularly captures and holds expatriate oil
workers hostage
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12.
PART 3:
Communication Challenges:

13.
Understanding the Dynamics of the Crisis
CAUSE
Neglect of Ogoni Community in
affairs which affect their
environment and source of
livelihood
Environmental
degradation
Crisis
Environmental Damage:
Social and environmental costs of oil
production have been extensive.
They include destruction of wildlife
and biodiversity, loss of fertile soil,
pollution of air and drinking water,
degradation of farmland and damage
to aquatic ecosystems.
Community
Attempts at
Collective Action
CONSEQUENCE
Local uprising:
With protagonists (Ogoni 9) and Antagonists
(Ogoni 4) within the local community
Shell and Government sided with the
Antagonists who did not have popular
support within the local community
Shell was unable to carry on
business within Ogoniland and
had to abandon their facility.
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14.
OGONI CRISIS – CRITICAL TIMELINES…
1993 1994
January 4: 300,000 Ogoni protest against Shell Oil activities and the
environmental destruction of Ogoni land.
January 2: Mr. Saro-Wiwa is placed under
house arrest.
February 15-16: Shell International advisors meet with the Shell
Petroleum Development Company (SPDC) in London and the
Hague to consider strategies for countering the "possibility that
internationally organized protest could develop" over Shell's
activities in Ogoni.
January 4: Dr. Owen Wiwa and Mr. Ledum
are released and Mr. Saro- Wiwa's house
arrest is lifted.
April 18: Ken Saro-Wiwa, chairman of the resistance group
"Movement for the Survival of the Ogoni People (MOSOP)," is held
by the Nigerian State Security Service at Port Harcourt Airport for
16 hours without charges, is released, but then arrested 5 days
later.
January 11: A seven member Commission
of Inquiry is installed by the Rivers State
government to investigate Ogoni-Okirika
clashes, and starts public sittings in Port
Harcourt.
December 28: Probably to prevent the start of the Ogoni Week,
MOSOP leaders Dr. Owen Wiwa and Ledum Mitee, a lawyer, are
arrested without being charged. The Ogoni Assembly is dispersed
by Nigerian soldiers. Lt. Col. Komo states that Ogoni Week was
aborted because MOSOP didn't apply for a permit
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15.
PR and a Changing Business Landscape
One of the most fascinating Crisis
management case studies is the Shell-
Ogoni affair.
This affair led to the emergence of "PR
ploy," "PR Ploy" and "PR effort" - the
demeaning labels used to describe the
way the situation was handled, as it tested
the Crisis Management frame-work of a
big Trans-national Corporation like Shell.
In order to ride the challenges occasioned
by the rapidly changing operating
environment, Shell initially had
uncoordinated approaches to dealing with
issues arising from the activities of Human
Rights / Green Movements around the
world.
This was largely due to the fact that the
operating environment was unexpectedly
distorted by the Ogoni affair and in the
absence of a structure to deal with it,
Shell’s image continued to dip with the
unrelenting degeneration of relations with
its host communities and the boycott of its
products and services across the globe.
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16.
Advocacy in a Crisis Situation
At the height of the Crisis,
the PR professionals
working for Shell became
Propagandists, taking
controversial positions on
issues of Human Rights,
Environmental Pollution
and Resource Control,
which were essentially
the factors responsible
for the Crisis .
But you know what? They
had every right to do so.
After-all, Strategic
Communications is an
advocacy profession.
The objective of every PR
activity is to influence
public opinion.
The ultimate goal is to
get people to take
positive action on behalf
of client, organization or
cause. And that in itself is
controversial.
Strategy Leadership Governance

17.
An Advocate for Good or Bad?
PR holds a powerful position and because of this power, PR activities
are often called to question by the public, the Shell/Ogoni Affair
tested PR’s power on the following issues:
• Misleading Information: There were allegations by MOSOP, Amnesty International
and a host of Green movements that Shell was peddling false or incorrect information
designed to lead policy-makers, consumers and interested Public astray.
• Influence of Policies and Government’s Action: Where Shell had the ear of Policy-
makers, how Shell exerted its PR power became a cause for concern.
• Discrimination: It was alleged that Shell had discriminated against their host
Communities in their employment policy.
• Destruction: It was also claimed that Shell deployed PR to soften its destruction of the
Environment and aquatic life in the Communities where they operate.
• Casualisation and Pay Inequities: Casualisation and Pay inequalities between
Expatriates and Nigerians became an issue.
• Gain at Expense of Others: It was claimed that Shell was making money at the
expense of the ill-fortunes of their host communities.
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18.
PART 4:
Crisis Management:
The Shell/Ogoni Affair as a Case-Study

19.
What is Crisis Management?
Crisis Management
basically refers to the
management of the
reality of a Crisis .
It involves identifying a
Crisis , planning a
response to the Crisis
and confronting and
resolving the Crisis .
Crisis Management is
applicable to any field of
endeavour.
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20.
Manifestation of Crisis
• Crisis create conditions that make it difficult
for Managers to make good decisions and
communicate well.
SITUATION
• Crisiss place Organisations experiencing
them in public spotlight and calls
management competence into question.
IMPACT
Crisis impose a need for• organisations to
communicate quickly, accurately and skillfully
skillfully with a number of important groups.
DEMAND
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21.
Dimensions of a Crisis
A Crisis usually has several
critical dimensions which if
poorly handled can disrupt or
destroy best efforts at managing
them.
Failure to respond and
communicate in ways that meet
community standards and
expectation will result in a series
of negative consequences.
The following are some of the
critical dimensions of a Crisis :
• - Operations
• - Victims
• - Trust / Credibility
• - Behaviour
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22.
In a Crisis Situation: Thing Go Wrong
At the height of the Crisis generated by the Shell/Ogoni
affair, the following went wrong:
Operational
response broke
down.
There were huge
losses to Shell
based on
reduction in daily
production of
Crude Oil and
colossal damage
to Oil wells by
the aggrieved
Community.
Stakeholders
(both internal
and external) did
not initially know
what was
happening and
were angry and
negatively
reactive.
Rumours thrived
as to the
activities of Shell
and real
intensions of the
leaders of
MOSOP.
Shell was
perceived as
inept and
criminally
negligent.
Strategy Leadership Governance

23.
PR and Crisis Management
Strategic Communications is
an anticipatory practice which
attempt to foresee events,
trends and issues which may
develop to disrupt important
relationships.
Crisis precipitate a break-
down in relationship because
it disrupts the normal flow of
interaction between an
institution and its
stakeholders.
Since Strategic
Communications manages the
expectations of the crucial
stakeholders of an institution,
it is thus a veritable tool in
Crisis Management.
Strategy Leadership Governance

24.
Media
Bias
Media bias against Shell is largely
attributable to the following:
Pressure from
Environment and
Conservation
Groups as well as
Green Movements
Bias of the
publishers and
senior editors, and
quest for relevance.
For some others, it
is a case of swinging
temperament. They
are torn between
Shell’s corporate
clout and pressures
from anti-Shell
groups. They
basically swing to
where the news is.
Strategy Leadership Governance

25.
Challenges
Apathy and Antipathy at the local
community level
Mistrust and antagonism towards shell
by the media and special interest groups
Niger-Delta militancy and self-
determination
Litigation issues
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26.
The Role of Communication
Communication is
not just passing
information, but
has a vital role to
play in Crisis
Management:
• Reducing Uncertainty
• Managing expectations
• Demonstrating concerns
• Promoting Shell / Ogoni Community Harmony
• Building new networks
• Building trust and commitment
• Encouraging involvement through feedback and two-
way communication
• Prompting behaviour or ‘walking the talk’
• Learning
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27.
Shell’s Mistakes
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Shell initially pretended as if nothing was happening1.
They reacted to the Crisis situation after it had gone public.2.
They relied on the goodwill they had built with the Government and local3.
Chiefs.
They distance themselves from the media.4.
They were reactive to the information MOSOP was releasing and not proactive.5.
Shell spoke above their audience by speaking only with the Policy makers and not6.
the aggrieved Community.
They assume that truth always conquer lies.7.
They ignore the feelings of their host Community and address issues only.8.
They avoided the crowd and use third parties and written statements only.9.
Shell did the same things again and again and expected positive results.10.

28.
What Shell Should Have Done
Establish
Communication
s Protocol.
Identify the
most crucial
Stakeholders.
Decide on
Communication
methods.
Anticipate
issues likely to
arise from
Crisis .
Assess the
Crisis situation
Develop
holding
statements.
Identify key
messages
Deploy strategy
Obtain feed-
back
Be open to
criticism
Fine-tune
strategy based
on feed-back
and criticism
Where Crisis
emanated from a
dispute, be ready
to negotiate
Act to resolve
the issues
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29.
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5. Tracking Reputation

30.
The Need for Reputation Tracking
THREAT Given the threat
posed by the Ogoni
Affair to Shell
Operations in Nigeria
- tracking reputation
in order to mitigate
risks come to the
fore.
MITIGANT
The need for an alert
scrutiny of social
changes and outside
forces - from current
scenario analysis to
wish-list planning - in
order to find an
appropriate way to
monitor external
environment and
proffer better
solutions to
identified issues that
might snowball into a
Crisis and hurt or
destroy reputation
PROCESS
A need to institute a
periodic
environmental scan
and issues audit that
is institution-specific
and more likely to
result in swift
decisions and
constructive changes
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31.
Auditing Reputation and Tracking Reputational Risks
Reputational Desires
Vs Reputational Risks
The Environment
The Organisation
Expectations by
Internal and External
Stakeholders
Scarcity and
Opportunities
Actions and Initiatives
Actions and Initiatives
Building Networks
Obtaining Feedback
and Aligning
Communication with
Expectations

32.
Why A Reputation Audit?
OBJECTIVE
• How do we move
Achieve Our Goals?
• The main goal of the
reputation audit is the
development of quality
improvement strategy.
CONCERNS
Finding out the base•
line issues
Visibility and Profile•
Brand Appeal•
Overall perception•
DIRECTION
• Searching for the
missing links
• Audit is conducted in the
form of complex all
round research of the
inside and outside the
environment in order to
identify reputation risks
and proffer solutions

33.
Mitigating Crisis…
Stakeholder Management in the Development
Environment

34.
Understanding Stakeholder Dynamics
Dormant
Stakeholders
Apathetic
Stakeholders
Advocate
Stakeholders
Adversarial
Stakeholders
INACTIVE
ACTIVE
NON-SUPPORTIVE SUPPORTIVE
Source: Brad Rawlins, Brigham Young University

35.
Creating Harmony
Enabling Dialogue
Timely and
purposeful
communication
Which connects
with critical
stakeholders
And builds
positive
perception
While
managing
expectations.

36.
Need for Stakeholder Dialogue Sessions
To serve as a platform to dialogue with host
Communities on development issues
To enhance transparency
To assist in facilitating positive developments
within host communities, through action-
oriented programmes

37.
Managing Stakeholders
Stakeholder Management Process
Strategy Managing Expectations Action Plan
Stakeholder Analysis
Allies Assets / Constraints Opponents
Problem Identification
Affects Objectives / Goals Information Gathering

38.
Reputation as Strategic Asset
Reputation is a critical corporate asset which must be built
in a strategic manner
Reputation as a
Strategic Business
Asset
Corporate organizations such as Enron, Anderson
Consulting and Worldcom became extinct as a result of the
erosion of their reputation
Loss of Reputation
= Death of
Business
Beyond the brand concept, organisations build and sustain
their reputation through strategic interventions
Social Relevance as
route to building
Reputation

39.
Opportunity
Capturing
Imagination
Connect
with Internal
Audience
Deepen
engagement
Increase
local
relevance
Impact
Community
Consolidate
leadership

40.
Direction
Information
on Operations
Impact
Assessment
Opportunity
for questions
Community
Advisory
Networking
opportunities

41.
Aligning Communications with Development Needs
STRATEGIC
COMMUNICATION
• Send a clear and
consistent message on
our Development Goals
and Strategic Initiatives.
• Share Best Practice
across critical markets
and stakeholder groups.
COMMUNITY
ALIGNMENT
• Understand Cultural
Nuances
• Use Key Community
Spokespersons as faces
and voices of the
Development Project

42.
Platforms
Use of Third Party
Advocates to
surreptitiously endorse
actions
Obtain support of
Advocates and media
through contextual and
proactive communication

43.
Thank You