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The Hans Bouman, Malcolm Brinded connection

By John Donovan

In view of the comments about Shell EP Chief Executive Malcolm Brinded attributed to Hans Bouman, a retired senior Shell manager, in a Dow Jones article published today, it seems timely to republish a blunt email from Bouman to Brinded in 2004.

MorningStar.com: FOCUS: Brinded, Cook, Voser Lead Shell Insiders For Top Job

Hans Bouman emails are considered as collector items by Shell insiders because of their highly outspoken, prophetic and eloquent content, often on controversial subjects. Some have fortunately fallen into our hands. As can be seen, his email to Brinded during the dark days following the Shell reserves scandal fully meets this description. His quoted comments about Brinded in the article published today, which focuses on the three principle candidates for the top job at Shell, are more constrained. Perhaps he has mellowed.

This website will incidentally be campaigning against Malcolm Brinded for the top job on the grounds that he is tainted by a number of scandals at Shell. Specifically the reserves fraud, the Brent Bravo scandal in which he has the blood of Shell employees on his hands, the Sakhalin-II debacle and a cover-up of corrupt practices at Shell UK Limited. Mr Brinded apparently prefers to put production and profits before principles. If he takes issue with this assessment, the libel courts are available to him. We have witnesses, including former Shell Group Auditor Mr Bill Campbell, who would welcome the opportunity to testify. We also have a considerable volume of documentary evidence.

The Hans Bouman Email to Malcolm Brinded.

—–Original Message—–
From: M.G.J. (Hans) Bouman
Sent: Monday, 14 June, 2004 11:57
To: Malcolm Brinded

Subject: Letter from a concerned shareholder

Hello Malcolm

The last few months I have been following the state of affairs in Shell. You are now running EP and from the great many emails and telecons I receive from frustrated Shell staff that are too scared to speak up internally, here is what you should do:

1 Get the house in order and get rid of a large % of the top echelons. They all knew about the sick state of EP the last few years, they knew of the impossible external promises of Watts, they received excessive rewards and they did nothing other than align themselves with the boss since this always is a safe behaviour. They promised and did not deliver. The CMD has surrounded itself with many sycophants, yes-men and people with only self interest in mind. Gone are the sober days of van Wachem when performance counted and fair reward was the norm. Now there is excessive reward for promise. Suddenly issuing ‘reprimandes’ to seniors when they have not delivered may look good on paper, it will not turn the tide.

2 I hear you and your team are preparing for yet another ‘aspirational’ storyline that we have to grow to around 6 mln boe/d by 2013 if we want to keep up with XOM and BP. If you pursue this dream, which is impossible with the current team, you will go down in history as the man who prepared Shell after more than 100 successful years for a takeover. Politicians deal with very long cycles so they are hardly ever accountable and can fool whole countries with nice spin stories. Shell is a business that will be checked by real auditors and is genuinely accountable to shareholders. There is no hiding place in the end.

3 Creating large teams that will do the internal  reserves coordination and external reserves auditing may look good to the lawyers and auditors of the SEC and endear you with the MBAs of McKinsey et all, I am telling you that this will create a bureaucratic beast beyond belief and the scarce resources we have now in the Geo and RE disciplines will be used to make the figures tally rather than create new and more value.

4 Wherever you look in the Central Offices (or are they now called Head Offices?), you see more rooms with more people thinking up more processes to solve all problems. This is not how we grew and were successful. You simply create enormous bureaucracies that feed on themselves. More civil servants lead to more rules which need more people to implement and check. Chris Fay had the right ideas in 1995  but Shell did not let him.

5 Most of your time for the next 2 years or so will be spent on handling the SEC audits and subsequent courtcases from the major investors. This means you have less time to run and grow the business. You better get people who you can genuinely trust to run the business. I wish you a lot of success and wisdom for the General Shareholders Meeting next week and hope to meet you there. I may even ask a question.

Kind regards

Hans

=========================================
M.G.J.(Hans) Bouman
Holsteinslaan 12
9752VR Haren                       tel +31 (0) 50 535 1499
The Netherlands                    GSM +31 (0) 645 534 946

EMAIL ENDS

Hans Bouman was right. The legal repercussions of the reserves fraud continue to this day costing Shell hundreds of millions of dollars in settlements and legal fees.

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