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Shell’s report says it has ‘zero tolerance’ on bribery and corruption

Greg Russell: 13 June 2017

OIL giant Shell paid out more than $15 billion last year to the governments of countries where it or its subsidiaries are involved in upstream operations, sometimes known as the exploration and production (E&P) sector.

A report published in The Hague yesterday detailed payments in 31 countries totalling $15,064,478,257 (£11,814,987,258) – down from $21,840,825,287 (£17,132,492,852) in previous years.

It was Shell’s second report under UK Government regulations covering oil and gas, mining and logging of primary forest activities. It lists only payments made by the company and not those made by entities over which it has no control.

Shell says it is proud of its “culture of transparency” and its stance on corruption.

“At Shell, we have a zero tolerance policy on corruption and bribery,” the report says. “They disrupt societies, they disrupt the level playing field among companies, and they threaten the viability of the long-term investments that characterise our industry. We do not tolerate the direct or indirect offer, payment, solicitation or acceptance of bribes in any form. Facilitation payments are prohibited.”

Shell’s code of conduct includes specific instructions to staff and mandatory training “especially with respect to potential conflicts of interest and the offer or acceptance of gifts and hospitality”.

“Our anti-bribery commitment is an integral part of the Shell General BusinessPrinciples, first published in 1976.

“So is our stance against political donations, which precludes Shell from making payments to political parties, organisations or their representatives.”

The payments to governments include production entitlements, which are the host government’s share of production derived from projects operated by Shell; taxes paid on income, profits or production; royalties for the rights to extract oil and gas resources; and dividend payments other than those paid to a government as an ordinary shareholder of an entity.

Also listed are bonuses, usually paid on signing an agreement or contract; licence fees, rental fees, entry fees and other considerations for licences and/or concessions; and infrastructure improvement payments, which relate to roads, bridges or railways which are not “substantially dedicated” for the use in extractive activities.

The main beneficiaries of Shell’s payments last year were Nigeria with $3.638bn (£2.854bn), Malaysia with $2.672bn (£2.096bn) followed closely by Norway with $2.531bn (£1.98bn).

It says transparency is only really effective if all parties follow the same standards of disclosure. Shell is a founder member of the Extractive Industries Transparency Initiative (EITI).

The report continues: “Consistent with the EITI requirements, we continue to advocate mandatory country-by-country global reporting, as most tax payments are made at the corporate level to national governments. We support unified revenue reporting rules and standards applicable to all multinationals, irrespective of their ownership or place of business.”

Shell’s chief financial officer, Jessica Uhl said: “Shell believes that transparency is an essential tool in building trust in tax systems. Society expects clarity on the revenues that extractive industries pay to governments and at the same time expects governments to be open about the revenues they receive and how they use these funds.”

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