Shell Admits Guilt, agrees to pay $15.5 million to Families of Saro-Wiwa and Ogoni Eight

Ken Saro-Wiwa in 1993. Photograph: Greenpeace/AFP

The oil giant Shell has agreed to pay $15.5m (£9.6m) in settlement of a legal action in which it was accused of having collaborated in the execution of the writer Ken Saro-Wiwa and eight other leaders of the Ogoni tribe of southern Nigeria.

The settlement, reached on the eve of the trial in a federal court in New York, was one of the largest payouts agreed by a multinational corporation charged with human rights violations.

The scale of the payment was being seen by experts in human rights law as a step towards international businesses being made accountable for their environmental and social actions.

Jennie Green, a lawyer with the Centre for Constitutional Rights who initiated the lawsuit in 1996, said: "This was one of the first cases to charge a multinational corporation with human rights violations, and this settlement confirms that multinational corporations can no longer act with the impunity they once enjoyed."

The deal follows three weeks of intensive negotiation between the 10 plaintiffs, mainly drawn from relatives of the executed Ogoni nine, and Shell. The oil giant, and its Nigerian subsidiary Shell Petroleum Development Company, continue to dismiss all the claims made against them, saying they played no part in the violence that swept southern Nigeria in the 1990s.

The company said it was making the payment in recognition of the tragic turn of events in Ogoni land. "While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people," Malcolm Brinded, a Shell director, said.

The settlement marks the end of a 14-year personal journey for Ken Wiwa Jr, son of the executed leader.

Among the other plaintiffs was Karalolo Kogbara, who lost an arm after she was shot by Nigerian troops when she protested against the bulldozing of her village in 1993 to make way for a Shell pipeline.

Out of the $15.5m settlement, $5m will be used to set up a trust called Kiisi – meaning "progress" in the Ogoni Gokana language – to support educational and other initiatives in the Niger delta.

In the lawsuit, the families of the Ogoni nine alleged Shell conspired with the military government to capture and hang the men. Shell was also accused of a series of other alleged human rights violations, including working with the army to bring about killings and torture of Ogoni ­protesters.

The company was alleged to have provided the Nigerian army with vehicles, patrol boats and ammunition, and to have helped plan raids and terror campaigns against villages.

Supporters of the legal action said the fact that Shell had walked away from the trial suggested the company had been anxious about the evidence that would have been presented had it gone ahead. Stephen Kretzmann, director of Oil Change International, said Shell "knew the case was overwhelming against them, so they bought their way out of a trial".

Among the documents lodged with the New York court was a 1994 letter from Shell in which it agreed to pay a unit of the Nigerian army for services rendered. The unit had retrieved one of the company's fire trucks from the village of Korokoro – an action that according to reports at the time left one Ogoni man dead and two wounded. Shell wrote it was making the payment "as a show of gratitude and motivation for a sustained favourable disposition in future assignments".

Shell's involvement in the oil-rich Niger Delta extends back to 1958. It remains the largest oil business in Nigeria, owning some 90 oil fields across the country. The Ogoni people began non-violent agitation against Shell in the early 1990s under the leadership of Ken Saro-Wiwa and his organisation Movement for the Survival of the Ogoni People. Mosop complained that the oil giant was responsible for devastating the ecosystem of the delta.

Human rights experts believe the settlement will have a substantial impact on other multi-national corporations. Anthony DiCaprio, a lead lawyer representing the Ogoni side, predicted it would "encourage companies to seriously consider the social and environmental impact their operations may have on a community or face the possibility of a suit".Shell reiterated its view that the executions of the Ogoni nine had been "tragic events". It said that it had "attempted to persuade the government of the day to grant clemency"