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ShellNews.net: Example of corrupt practices at Shell ignored by Malcolm Brinded

ARTICLE: ALARM BELLS RING OVER TENDERING FOR ROYAL DUTCH SHELL CONTRACTS:

First published Monday 29 August 2005: 03.0 ET (UPDATED 5 SEPT 2010)

By Alfred Donovan

Shell Petroleum Development Company of Nigeria has a double page spread advertisement in the current edition of The Economist magazine (August 27th -September 2nd) inviting tenders for a major contract in Nigeria. There is a volume of small print setting out the tender terms, which includes a provision that Shell will not enter into correspondence on why a company has been short-listed or not short-listed. Basically applicants for “pre-qualification” have to jump through various hoops and submit the required information on a confidential basis. Only companies that pass the pre-qualification evaluation will be eligible to be invited by Shell to “competitively” tender.

Companies wishing to participate have to invest a great deal of TIME and MONEY in the expectation that the tender process will be conducted on an  ethical basis whereby all participants are treated fairly and honestly.

I am in possession of evidence in the form of Shell internal and external correspondence, Shell internal notes, plus witness statements and court transcripts which suggest that companies should be extremely cautious in pitching for a Shell contract such as the one currently advertised. My son John and I obtained all of this remarkable evidence during the process of one of our many High Court Actions against Shell.

This warning is given because the evidence conclusively proves that Shell managers engaged in a deliberate carefully planned and executed conspiracy involving deception and fraud, designed to obtain without charge to Shell, commercially valuable information and to prevent companies in the tender process from approaching other oil companies. Although this happened some years ago, some of the members of the Shell senior management who endorsed the dishonest behaviour remain at the helm of the Royal Dutch Shell Group including the Chief Executive Officer of Royal Dutch Shell PLC JEROEN VAN DER VEER.

This deeply ingrained corporate culture of deceit, whereby Shell claims in its Statement of General Business Principles an ethical code of honesty, integrity and transparency in all of its dealings, but in reality engages in deception and cover-up, was of course also responsible for the reserves scandal which destroyed Shell’s reputation.

The evidence in our hands relates to a Shell plan called PROJECT HERCULES which involved the introduction of a smart card based Shell loyalty card scheme in the UK.

Thirty five prospective suppliers were initially involved in the tender for what eventually became the Shell SMART promotion. The tender process was run by a Shell national manager, Mr Andrew Lazenby. A copy of a note listing potential suppliers/agencies involved at a later stage in the tendering process contained hand-written notes made in his handwriting in which he used “X’s” and circles on the listed numbers to create a shortlist. The companies marked with “X’s” were subsequently expelled from the pitch process. Another hand-written note by Andrew Lazenby listed the companies he had short-listed. Mr Lazenby then asked a Shell legal adviser to prepare a confidentiality agreement for completion by each of the remaining short-listed companies. The agreement required that they would not offer their services or products to any other oil company during the continuing tender process.

In due course Mr Lazenby decided to reduce this shortlist to two UK companies, Geoff Howe & Associates and Senior King Limited. In other words, he had decided to reject the other companies on the shortlist, which included a company called Concept Systems. However, he did not want to release the “rejects” from the agreement because they might approach other oil companies. He therefore decided to “Keep rejects holding as long as poss.” as per his incriminating handwritten note that he sent to his colleagues, including his line manager, Mr David Watson.

Andrew Lazenby wrote to the rejects including McCorquodale; Concept Systems; AT & T Istel and Sheard Thomson Harris, falsely stating that they were still in contention, using the words “please bear with us we will revert to you when we have made any further progress”. He also requested further extensive information as part of his excuse for keeping them waiting and to obtain information from them under false presences. This resulted in the relevant companies investing even more time and resources on a speculative basis in what was actually already a lost cause. Copies of his letters, all marked “CONFIDENTIAL” were supplied at the time to his Shell colleague Mr Tim Hannagan, who like Mr Watson, was aware of the plan and therefore part of the commercially motivated conspiracy.

As previously indicated, all of the rejects had, at Mr Lazenby’s behest, previously been required to sign confidentiality agreements with Shell, which prevented them from offering goods and services to other oil companies whilst the “tendering process” was still in progress.

Eventually even the two remaining companies – Geoff Howe & Associates and Senior King Limited – were ejected from the tender process.

Miraculously the contract was awarded to a company that had never even been in the tendering process: Option One.

Mr Lazenby happened to have a personal relationship with directors of Option One – we have documentary evidence that he went out with their Directors to the theatre and restaurants and entertained them at his own home. For some reason Mr Lazenby had an offshore bank account. Mr Lazenby funnelled every project of which we are aware into Option One – his favoured contractor – irrespective of the contractual or moral niceties.

The documents also showed that Mr Lazenby had passed on to Option One information obtained from the SMART tender companies under the false pretence that they were still participating in the tender process.

There is further documentary evidence of his extraordinary conduct on behalf of Shell.

An email from Lazenby to his colleagues stated his willingness to engage in “illegal” activity despite the prospect that it could be discovered. The email circulated to senior Shell managers in relation to the SMART scheme contained the following comment: “My note of 25/10 expressed a personal and pragmatic view of how to handle the problem, it is in fact illegal and is certainly unofficial, and if we were discovered then we will enforce the official position”. The email exposed the immoral mentality of this Shell executive who had recorded in his diary his intention to set up his own business inside Shell and make enough money to be able to retire at 35.

Irrefutable documentary evidence of the SMART tender conspiracy which proves how the plan was conceived and ruthlessly carried out by Mr Lazenby and his fellow Shell managers was supplied at the time to senior Shell executives including the aforementioned Malcolm Brinded and his fellow Royal Dutch Shell Plc directors, Maarten van den Bergh (then President of Royal Dutch Petroleum Company) and Royal Dutch Shell Plc Chief Executive Officer, Jeroen van der VeerWe received letters from Malcolm Brinded and Maarten van den Bergh confirming correspondence.

Instead of sacking the individuals involved, Mr Lazenby was able to claim in his Witness Statement “unreserved support” for his actions that “he has received from Shell management to the highest levels”. My son John and I invited senior Shell management including Mr Brinded, to disassociate themselves from the claimed endorsement of the unscrupulous conduct which was totally at odds with Shell’s Ethical Code- the aforementioned Statement of General Business Principles. No such retraction was forthcoming.

(This is when the penny finally dropped in relation to our own dealings with Shell. We realised that Shell was rotten at the core and warned far and wide that this was the case; we wrote to every director of Shell Transport, Shell UK Limited, Royal Dutch Petroleum Company, UK Government ministers, Tony Blair, institutional Shell shareholders, even the Dutch royal family – reportedly the largest investors in Shell. Unfortunately our well founded warnings were ignored and the reserves scandal which followed has been openly described on BBC TV in terms of being the biggest investor fraud in history.)

The companies involved in the SMART tender had been deliberately deceived and cheated by Shell. Some were small companies which suffered financially because of the premeditated  deceit perpetrated on them. Some individuals lost their jobs. Some companies went out of business.

The following is an en extract from a cross examination by criminal law barrister Geoffrey Cox of a senior Shell manager, Mr Frank Leggatt (now retired from Shell) who had no involvement in the SMART tender. The questions were put by Mr Cox (now Geoffrey Cox MP QC) and the answers given by Mr Leggatt.

EXTRACTS:

Q: Tell me, Mr Leggatt, if somebody enters a pitch, a tender process, and is rejected, would you think it proper not to inform them that they had been rejected, but to allow them to carry out significant further work without being told?

A: Would I think that were proper?

Q: Yes.

A: No.

Q: It is not proper, is it, to effectively deceive other potential contractors who have entered a tender and not tell them that you have actually rejected them, but then gone on to require from them further work, knowing all along you have rejected them? That is just not proper, is it?

A: No, it is not proper

END OF EXTRACT

Mr Lazenby remained employed by Shell for some time.

For all of the above reasons, I caution all companies, organizations and individuals who have dealings with Shell to be on their guard, particularly when investing time and/or money in an effort to win Shell business (or whenever trust, legality or moral issues are at stake).

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