Chevron’s Marxist Angola Connection Raises Some Eyebrows at Home

When oil giant Chevron Corp. bought Gulf Corp. in 1984 for $13.2 billion, it acquired 1.8 billion barrels of oil, 3.8 trillion cubic feet of natural gas, 42,000 employees and a political headache.

Included in Gulf’s assets were rights to promising oil fields in the African nation of Angola. Gulf first discovered oil in Angola 20 years ago, and the nation is considered one of Africa’s key non-OPEC suppliers.

In partnership with the state oil company, Sonangol, Gulf was operating oil fields accounting for two-thirds of Angola’s 300,000-barrel-a-day oil production, most of which is shipped to the United States or Europe. Chevron took over those operations, and its 49% share of the partnership with Sonangol currently accounts for 98,000 barrels of oil a day, roughly 8% of Chevron’s total production.

But Angola is ruled by a Marxist government, and Chevron has found itself under fire from political conservatives in the United States. They charge that by continuing to do business in Angola, the San Francisco-based company is aiding and abetting the communist government and, in turn, Cuba, whose troops are in Angola helping to defend the government in a civil war against rebels backed by the United States. Reportedly, Cuban troops are guarding Chevron’s facilities in Angola against guerrilla actions; Chevron has said it does not know whether the guards are Cubans.

Although Chevron has heatedly defended its position on Angola, some officials of the company privately are beginning to express worry about whether they can protect their Angolan interests.

Chevron has argued that in Angola, as in the other 80 or so nations in which it operates, it is taking no political stance. “Our presence in any country does not necessarily imply an endorsement of its particular form of government,” the company has said.

Chevron says its relationship with Angola is purely a commercial one and that it is doing business with the Angolan national oil company--not the government--under a contract that predates the 1976 takeover of Angola by the communists. And Chevron says that if it was not operating the Angolan oil fields, a foreign oil company would be--thus not affecting Angola’s revenues from its petroleum resources.

‘Lived Up to Deal’

“Realistically, it’s a Marxist government that we’re dealing with, but it’s a commercial relationship with Sonangol, their government company,” Chevron Chairman George Keller said in a recent interview. “It’s kind of strange to hear the arguments that, ‘Well, you shouldn’t be there.’ The government is all set up--we know this, they’ve told us, no question about it--with a contract to take over our operation (if Chevron pulls out). The government’s revenue would go up.”

And, Keller said, “I think our Angolan operation is one that’s very important to the U.S. . . . it’s a remarkable commercial relationship. It’s one where both parties have lived up to the deal.”

Doubtless, Chevron’s position is not completely altruistic: based on current oil prices, the company’s revenue from its Angolan operation amounts to more than $600 million a year.

The pressure on Chevron has increased sharply in recent weeks. Sen. Jesse Helms (R-N.C.), under the auspices of the Conservative Caucus, a group long opposed to Gulf and Chevron’s involvement in Angola, wrote to Chevron shareholders in late April to protest the company’s holdings. A Conservative Caucus-backed resolution demanding that Chevron withdraw from Angola was introduced at the company’s annual meeting earlier this month, and received votes from 4% of the shareholders.

Cort Kirkwood, project director for the Conservative Caucus, which is based in Vienna, Va., said the group hopes to put additional heat on Chevron in coming months. “We’re going to be continuing the effort,” he said.

Chevron also is facing pressure from Congress. Senate Minority Leader Robert Dole (R-Kan.) recently introduced legislation to stiffen the restrictions on U.S. trade with Cuba that included a trade embargo against Angola. Chevron officials say that would cripple their operations there by blocking the export of Angolan oil to the United States and the importation of oil drilling and production supplies.

Impeded Chevron

Dole’s proposal--co-sponsored by Ernest Hollings (D-S.C.) and Lawton Chiles (D-Fla.)--comes on the heels of legislation passed by Congress last year that impeded Chevron and other U.S. companies in Angola by ending the deductibility of corporate taxes paid to Angola, blocking loans to the country backed by the Export-Import Bank and preventing the Department of Defense from buying products--such as fuel--made from raw materials imported from Angola.

Chevron also has run into occasional flak from the Reagan Administration, which otherwise generally has not interfered with American companies’ involvement in Angola.

In early 1986, the State Department strongly suggested that U.S. companies in Angola were indirectly aiding the communists and should pull out. But the Administration backed down, and a few months ago it repeated earlier statements that it would not object to U.S. companies doing business in Angola, although it said they were taking physical and political risks in doing so.

Chevron is not the only American company with Angolan interests--dozens of U.S. firms do business there. But it is the biggest, and thus has become the lightning rod for the conservative protests.

The criticism of Chevron’s position in Angola is unusual in that the company is under fire from the political right, which usually is sympathetic to business interests.

The controversy in some ways mirrors the pressure being put on American companies to pull out of South Africa to protest that nation’s apartheid policies. Chevron also is a major player in South Africa, and just as adamantly has refused to end its operations there, because it believes it can do more good for South African blacks by staying.

Conservative Caucus

Much of the opposition to Chevron’s Angolan role has been led by the Conservative Caucus, which calls the company a “useful idiot” for Soviet interests in Africa by pumping money into the Angolan economy that allegedly is used to pay Cuban troops. “It’s very obvious that the Chevron oil facility plays a role in making sure the Cubans get paid to stay there,” Kirkwood said. “The Angolans are paying the Cubans with something. You have to deduce that a lot of that comes from the revenues paid by Chevron to the Angolan government.”

In addition to speaking out frequently against Chevron, the Conservative Caucus has led picketing and other protests against the company at such events as Chevron’s annual meeting and a recent conservation awards program in the District of Columbia sponsored by the company, and even has complained to the SEC that Chevron has misrepresented its Angolan position in public statements.

The caucus also sponsored Helms’ letter, which was sent to about 30,000 of Chevron’s 220,000 stockholders. In the letter, Helms said, “Chevron’s activities in Angola’s Cabinda province--under the watchful eyes of the Cuban occupation troops stationed there--generate hundreds of millions of dollars in hard currency to help pay for the Soviet military equipment and the Cuban troops.

“Without the hard currency generated by Chevron, the cost of conquest would be much steeper for the Kremlin--and America’s interests would be more secure,” Helms wrote. “I know that Chevron employees and stockholders are patriotic citizens, who will want to do what’s best for America. Once you have considered the facts, I believe you’ll agree with me and the Conservative Caucus Foundation that the Soviet Union’s imperialist design in southern Africa will suffer a severe setback when Chevron decides to leave.”

Equal Rhetoric

Chevron has used equally strong rhetoric in defending its Angolan interests. It has described the Conservative Caucus’ actions as “an irresponsible crusade against us that is based on their rather twisted and biased version of reality.”

The company fought unsuccessfully to prevent the caucus from getting a court order to obtain Chevron’s shareholder list for the Helms mailing. A spokeswoman said the letter prompted complaints to the company from shareholders who support Chevron.

Chevron also has said, in explaining its opposition to the stockholder resolution, “The abandonment or forced sale of Chevron’s assets in Angola would not injure Angola. It would simply penalize Chevron and its stockholders and, in times of crisis, put in jeopardy an important source of energy for the U.S. with no foreign policy benefits to the United States.”

So far, Chevron appears to have weathered the protests, and says it has no plans to pull out of Angola. But privately, its executives express concern that Dole’s interest in the situation could lead to additional pressure on the company by spreading the opposition to Chevron from the political right more toward the center.

Although these officials say they doubt the entire package of Cuban trade legislation proposed by Dole will be passed, they worry that parts of the legislation pertaining to Angola could be tacked onto other trade bills.

“I don’t know what our chances are of surviving (if that happens). We really don’t like this kind of fight,” one Chevron executive said recently. “We’re cautiously optimistic that we can survive the civil war (in Angola), but we’re not so optimistic that we can survive the political battle in this country.”