10 July 2007
The world’s biggest energy project of its kind, the $22 billion Sakhalin-2 project in Russia, has been damaged by devastating leaks and allegations over the past two years made to a non-commercial website www.royaldutchshellplc.com recently described by the Financial Times as being anti-Shell.
Shell was the majority shareholder in the company set up to manage the Sakhalin-2 project: Sakhalin Energy Investment Company (SEIC).
The so called “Kremlin attack dog”, Oleg Mitvol – the deputy head of the Russian environmental agency Rosprirodnadzor – confirmed that his threatened $30 billion lawsuit against Shell for alleged environmental violations rested on evidence provided by the website owner, John Donovan, who received leaked documents from Sakhalin-2 insiders. Shell surrendered and was forced to allow the Russian energy company Gazprom to take a majority stake in SEIC.
As a result, Shell had to cut its reserves by 400,000 million barrels at a staggering cost of $30 billion dollars (if calculated at an oil price of $75 per barrel).
In June 2007 leaks to the website generated further humiliation for Shell. Donovan passed on to the Financial Times a copy of a motivational memo to Shell employees sent by the Deputy Chief Executive of SEIC, Mr David Greer. It was plain from the content that Greer considered the Sakhalin-2 work force to be demoralised and defeatist, presumably as a result of the Russian takeover. The memo was striking because of the gung-ho military tone, so much so that the Financial Times published it as a front page story and conducted an online poll on its website asking the question: “Is this the worst motivational memo ever?”
That was bad enough for Mr Greer. Worse was to follow. A keen eyed reader spotted that all of the inspiring passages had been stolen from a speech given by the famous U.S. General – George S. Patton – on the eve of the D-Day landings in France on 6 June 1944. General Greer, as he is now known, was exposed as a blatant plagiarist. More FT articles followed. He was also the subject of a front page story in The Moscow Times which ridiculed Greer by comparing him with the David Brent character in the hit UK TV comedy: The Office.
On 22 June 2007 information was leaked to the website that David Greer had resigned after a 27 year career at Shell. Jim Niven of SEIC subsequently confirmed to John Donovan that Greer had indeed resigned. The news was reported by many news organisations around the globe.
The damaging leaks which have plagued the project with ominous warnings of potentially catastrophic construction design errors, increased budget costs (the budget has already more than doubled) and construction delays, continue to this day.
Shell security has been unsuccessful in attempts to stem the flow of leaks. However, because of fears of reprisal, insiders often use false names when posting allegations on the websites “Live Chat” facility.
The most recent posting was made on 7 July under the name of “Jim McGuire” who confirmed information given earlier by other SEIC insiders. “McGuire” claimed that Shell has attempted to silence him. He named Shell senior officials and executives allegedly involved in making threats against him.
The following invitation was sent to Shell and Sakhalin Energy by Donovan on 9 July 2007:
Email to Mr. Jim Niven at Sakhalin Energy copied to Jeroen an der Veer, Jorma Ollila, Malcolm Brinded and Michiel Brandjes.
Hello Mr Niven
You will have already received a copy of my email to Mr. Ruddock sent earlier this morning (printed below). I have received an automated response advising that he is on leave. Under the circumstances I would be grateful if you would deal with this matter and respond on behalf of the named individuals “Craig, Ruddock and Finlayson” by close of business today if you wish to do so.
Dear Mr. Ruddock
The following comment was posted on our www.royaldutchshellplc.com website on Saturday by “Jim McGuire”. This may be a false name.
“I can confirm the views of Simon and Lucio. I was kicked out of SEIC and have since been the victim of uninterrupted personal threats and attacks by Craig, Ruddock and Finlayson’s police in an attempt to silence me from telling you the whole truth about Sakhalin 2 budget and schedule. It is only the fear of losing my freedom and livelihood that prevents me from telling you more”.
As you will be aware, we have received a number of leaks from Sakhalin-2 insiders, not all of whom have given us their true names. Nonetheless, in general terms the information received has proven to be correct. Even in the case of the person who used the name of David Greer, it transpired that the leaked internal email later supplied was 100% authentic.
Since you are personally named in this latest posting, it seems only fair to invite your response. If you are able to categorically state that the allegations are unfounded and that you have had no involvement in trying to prevent information reaching us concerning the Sakhalin-2 project, we will delete the comment.
If there is no denial or no response to this email, then we will use the information in an article being prepared for external publication as well as publication on our own website. As usual you are in any event very welcome to see the draft article before publication and we would publish unedited any rebuttal you wished to supply.
In case you are unaware of the “views of Simon and Lucio”, the posting was as follows: –
July 1st, 2007 10:43
Now, at last, the realest truth is coming out. Bring back Marshall Greer and his coleague Troost now. Without them, Sak Energy and the Ph II Project has lost its spine, guts, muscle and will to deliver.
As a result, the proj schedule and (US$20 billion) budget will be blown sky high for sure. Mark our words, Masters Donovans, soon the real cost and schedule of Sakhalin 2 will be revealed and all hell will break loose soon. You and Gazprom and Shell will be shocked.
We are all doomed on Sakhalin under Craig’s and Visser’s school boy ” leadership”.
What a horror movie this is for the few good peoples left here on island.
Lots of poeple are about to leave this Comapny and more will leave this Company soon for sure as long as present ” leaders” prevail.
Simon and Lucio the Wolf
If there is no response by close of business today, I will assume that you will not be responding.
No response was forthcoming from Shell or SEIC. Readers can draw their own conclusions from the lack of a response, but should bear in mind that Shell has, on occasion, taken up invitations and issued denials when it felt able to do so.
The website has humiliated and caused billions in damages to Shell and its reputation not only in relation to Sakhalin-2, but also on other matters. For example it generated witnesses, evidence and a class action representative in the multi-billion dollar global lawsuit against Shell arising from the 2004 reserves fraud for which Shell has already paid $150 million in fines imposed by the financial regulators. Shell has already put aside $500 million towards settling the litigation.
In 2005, Shell attempted to seize the domain name for the website in proceedings via the World Intellectual Property Organisation. The move backfired because the action against the co-owner of the website, Alfred Donovan, an 88 year old war veteran (now 90 years old) generated news stories around the globe, including a major article in The Wall Street Journal. More adverse publicity followed when Shell lost the case. In June 2007, Shell attempted to have the Donovan site closed down by making threats to the North American companies hosting the website.
The website and the insider leaks which feed its astonishing popularity with people interested in Shell – it received over 4.5 million hits in June – continues unabated, as does the consequences for Shell and its reputation.