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Upstreamonline: Directors brought into the loop over claims in audit (“Finlayson… made false statements to the workforce and press)

By Upstream staff

SUSTAINED pressure on Shell’s directors finally paid dividends last year when Bill Campbell, by then an ex-employee but still a shareholder, finally managed to persuade the group to carry out an internal investigation into his audit claims, resulting in a meeting with company chief executive Jeroen Van der Veer, writes Christopher Hopson.

Campbell had in December 2004 written a letter to Malcolm Brinded, who by then had been promoted to Shell’s global head of exploration and production, outlining his concerns over the way Brinded, then oil director Chris Finlayson and the Brent managers had failed to act on his Platform Safety Management Review (PSMR) recommendations.

Following the reserves debacle in early 2004, Shell introduced a new set of internal controls so that any complaint against the conduct of one of its directors was immediately passed on to the internal audit department in The Hague, which then pursues an investigation.

So it was that an investigation was carried out last year, led by Shell International’s chief internal auditor Jakob Stausholm, together with Richard Sykes, a senior environmental adviser.

Their terms of reference were to investigate Campbell’s concerns as expressed in his 21 December 2004 letter to Brinded a copy of which has been seen by Upstream.

According to Campbell, the audit team, which spent three to four months interviewing about 100 people within Shell, backed him, finding no evidence that Shell had carried out any of the immediate actions recommended in Campbell’s 1999 PSMR audit to reduce the risks on Brent Bravo.

Campbell says they also discovered that only about 20% of the behavioural recommendations in his PSMR audit had been acted upon, while 80% of his recommendations still remained to be carried out “some five years after” he had submitted the findings to Shell Expro directors.

However, Shell tells Upstream that its audit investigations did not reveal this. “Shell responded vigorously and properly to the PSMR findings. As part of this follow up audit we interviewed all relevant people, including retired people, and did not find this.

“A follow up review of the PSMR report was published in February 2001. The review found that much had been improved. It did recognise that Business Units continued to find it difficult to close out actions targeted at behavioural change, which as we explained take longer. The review identified areas for further attention which were all followed up,” adds Shell.

Campbell says the investigation report claimed that Shell had now accepted that the risks on Brent were dangerously high in 1999. They also established that the Campbell-led PSMR had been handled well and in an open way that was in line with Shell International Exploration&Production guidelines.

Campbell claims Finlayson admitted to the investigators that at the time he had given false and misleading information to the workforce, to the press, and wider society.

In September 1999, the oil director had vigorously denied concerns raised by the OILC union that Shell Expro was operating in an unsafe manner by not carrying out maintenance on its safety critical equipment to cut costs, curtailing safety checks and overlooking design defects. At the time, Shell Expro, backed up by the oil industry body the UK Offshore Operators Association, had all rounded on the Oil Industry Liaison Committee (OILC), accusing the union of “scaremongering” tactics over its safety concerns.

Brinded was asked by the investigators why he had dismissed Campbell as head of the audit team in 1999. He answered that he did not think Northern Business Unit general manager Jorn Berget would have been receptive to Campbell carrying on and implementing the PSMR findings.

“It is hardly surprising that Berget would not be receptive to me carrying out my recommendations because one of them was that he should be sacked. The investigation could find no other explanation as to why Brinded had kept him on,” says Campbell.

Campbell finally met with Shell’s chief executive Jeroen Van der Veer to discuss the findings of the internal investigation during the evening of 25 July 2005 at its headquarters in The Hague. Also present at that meeting were Shell’s group legal counsel Bert Hess, plus Stausholm and Sykes.

“I pointed out that I believed Stausholm and Sykes had generally done as good a job as they could with their investigation because there were still people in the Shell organisation who believed they hadn’t done anything wrong in 1999,” Campbell says.

“Generally, I felt their findings supported my position, although there were some things I didn’t agree with. They confirmed the risks on Brent were high in 1999 and remained high in 2003 when two men were killed on Brent Bravo,” he adds.

He says he told Van der Veer that “even if you can’t say directly, I think there was a causal linkage between what happened in 1999 and 2003 which led to the deaths of those two individuals”. Hess allegedly said he could not accept there was a direct linkage, but accepted there were indirect linkages.

“What I said and Van der Veer seemed to agree to an extent was that if you create the conditions on an offshore installation where the risks are dangerously high and those risks exist for a prolonged period, then it becomes inevitable that over time you will have a major accident,” says Campbell.

According to Campbell, both Van der Veer and Hess seemed to accept that principle. However, while it would be difficult for Van der Veer to deny that the company operated unsafely in 1999, and even illegally in 2003 which is why it pleaded guilty in court to breaches of the law that caused the deaths of two men Campbell says Van der Veer would not accept that this should be laid at the door of the directors.

“I said in that case we are 180 degrees apart as it was the directors who took the decisions that created this state of affairs.

“We had an oil director in Finlayson who made false statements to the workforce and press; and Brinded, who now says he accepted the PSMR findings, but did nothing to act on its recommendations,” argues Campbell.

Van der Veer allegedly would not respond to that central point and the meeting was abruptly brought to an end. Campbell was not allowed to have a copy of the investigation findings, or to see the recommended action as, he was told, this was work still in progress, which Hess would complete and present to Van der Veer at a later juncture.

On subsequently following up on the issue some time later Campbell was told that Van der Veer had sent a letter to Brinded informing him that Shell Expro had been sailing very close to the wind in 1999.

Campbell remains deeply unhappy over such an outcome and maintains Shell’s directors should now take full responsibility for their actions.

 

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