‘annus horribilis’ – a reoccurring Shell nightmare

By John Donovan

We recently decided to feature on our website news stories from 2004 – Shell’s so called ‘annus horribilis’ – the year of the reserves fraud which destroyed Shell’s reputation and cost hundreds of millions of dollars in fines and class action settlements.

It then struck us that Shell has an ‘annus horribilis’ on a regular basis bearing in mind that the same dramatic description was applied to Shell in reference to tubulent events in 1994 and 1998.

1994

The following are extracts from an article published in The Guardian newspaper.

On May 16 1994, on the advice of its brand managers, the world’s second-largest company changed its logo. Out went the old industrial background colours to Shell’s famous “pectel”, and in came warmer, brighter reds and yellows. It cost £350m and was designed as “a radical new presentation of Shell’s traditional brand values”.

In the week that Shell was rebranding itself in London, Ogoniland was in turmoil after a widespread peaceful uprising against the company. The Nigerian military had just ransacked several villages and Shell had withdrawn. Even as Shell’s general manager, David Pirret, was ex tolling his brand’s values of honesty, integrity and business professionalism, four Ogoni chieftains were assassinated. Then Ken Saro-Wiwa, the Ogoni leader and environmentalist, was arrested; he was later hanged by the Nigerian government. The world was horrified. Nigeria was thrown out of the Commonwealth and Shell faced its worst ever crisis. Its high-profile brand, which runs across petrol, chemicals, water, gas, car servicing, farming and hundreds of other products, was under threat.

This was Shell’s “annus horribilis”. Just a few months earlier, it had been accused of environmental insensitivity when it tried to ditch the redundant Brent Spar oil platform in the North Sea. But the Nigerian episode was recognised as potentially far worse.

For the full article go to…

http://www.guardian.co.uk/Archive/Article/0,4273,4218124,00.html

Extract from an article published by opendemocracy.net

“Annus horribilis for Shell: in the same year as allegations of complicity in the death of Ken Saro-Wiwa in Nigeria, Shell try to sink the disused Brent Spar oil platform into the North Sea but are stopped by Greenpeace direct action protests. Shell temporarily loses confidence of the public and investors. It is a defining moment: the trigger for an acceleration of civil society actions against corporations; and a signal to corporations that public relations and their reputations matter more than ever. Greenpeace later admit that Shell’s proposal to sink the platform would have been less costly to the environment than the solution it forced through – that the rig be pulled ashore and dismantled.”

 http://www.opendemocracy.net/theme_7-corporations/article_1035.jsp

1998

The Financial Times had this to say about the infamous “transformation” process initiated by Shell in the “late 1990’s”:

“It attempted to pull off a transformation from within in the late 1990s, trying to match what BP and Exxon achieved by takeovers. It went from an “annus horribilis” in 1998, as oil prices fell towards $10 a barrel.

http://royaldutchshellgroup.com/2004%20Documents/financial%20times/financial_times28aug2004.htm

The following are extracts from a leaflet we distributed at Shell HQ buildings in London and The Hague towards the end of December 1998.

An article in The Sunday Times published on 13th December mentioned that Mr Moody-Stuarts “onslaught on Shell’s bloated bureaucracy… will lead to more than 3,000 job losses”.  They described his plans as “a slash and burn culture at Shell”. It said that his ideas have put him at odds with Dutch colleagues. This was but one of the many press reports over recent days speculating on Shell’s current turbulent circumstances.

I have been drawing an analogy between Mr Moody-Stuart and the Captain of the Titanic for many months.  City pundits have apparently concluded that the analogy is appropriate. 

“An iceberg warning for the good ship Shell” was the headline of a Daily Telegraph article on 11th December. The piece commenced “Shell began moving the deckchairs yesterday…” and went on to report on the internal politics at the top of Shell. It speculated on the appointment of a group chief executive, but felt that “the old guard will not surrender the wheel lightly”.  It concluded with the ominous warning that “…the iceberg still looms and the weather is getting worse.  Do they really want a night to remember?”
A report on merger fever in The Times last Thursday featured a comment about Shell from an analyst saying: “They need to sort out their management before they take on somebody else”.  The latest rumour, this time of a merger between Shell and Chevron, was in line with my recent hint on the subject.

An article in The Independent on Sunday 13th December, reported that Shell’s profits fell 31% in the first nine months of 1998.  Analyst, Liz Butler, was reported as saying: “It’s getting bloody inside the organisation”.                                                                                                      

The “Market Report” column in The Express published on 10th  December said “Shell recently unveiled third quarter figures which were arguably the worst results in its history”.

So what does Mr Moody-Stuart make of the current situation?  Amazingly, according to an article in The Daily Telegraph on 11th December he was said to have been in “an ebullient mood” when he addressed senior executives the previous day, urging his audience to “let’s go out and get’em”. Perhaps he was urging them to throw more Shell employees on the scrap heap.

So, despite oil prices dropping below $10 a barrel; reports of thousands of Shell employees being made redundant; Shell HQ buildings being sold off; the worst financial results in Shell’s history; Shell’s share price plummeting by 20% this year; Exxon and BP’s market capitalisation soaring whilst Shell’s has fallen, he remains in good spirits. Next thing, he’ll be dancing the “Macarena” again.  I don’t know what he is on, but I would like to get the franchise to bottle and sell it.  If I were getting over £42,000 per week, perhaps I would retain a sunny disposition.

A Merry Christmas and a Prosperous New Year to all at Shell, with special thoughts for those being made redundant.

With regard to the job cuts, we could have used the same greetings line at the end of 2007 following the leak we received about Shell IT outsourcing which made global news. In this connection we understand from insider sources that the job cuts are likely to be wider ranging and substantial than has thus far been announced.  

Time will tell if 2008 will turn into another ‘annus horribilis’. The signs are not encouraging.