By John Donovan
Introduction: The article below was supplied to Royal Dutch Shell Plc on 10 April 2008 on the basis that before publication we would delete anything stated by Shell as being categorically untrue. The text of the actual email sent is printed at the foot of the article. Because he is named in the article, a copy was sent to Jon Chadwick, Executive VP Shell Gas & Power Asia. Shell did not take up the invitation: there was no reply.
THE ARTICLE: Shell’s shocking track record of unethical trading in USA
This article is the result of research carried out in relation to Coral Energy, a U.S. subsidiary of Royal Dutch Shell. It sets out a record of misdeeds stemming back several years to when Jon Chadwick was Chairman of Coral Energy. Despite dishonest conduct within the company which took place partly during his tenure at the top of Coral Energy, which resulted in huge fines, one for $30 million, Mr Chadwick was subsequently appointed Country Chair of Shell Malaysia.
His actions at Shell Malaysia upset several hundred Shell employees and the consequential High Court litigation is still in progress. He also played a key role in the draconian litigation brought collectively by EIGHT companies in the Royal Dutch Shell Group against another employee of Shell Malaysia, the geologist, Dr John Huong.
The litigation involving former employees of Shell Malaysia has generated negative publicity against Shell on an international basis over a number of years.
Mr Chadwick was also a senior director of a number of companies within the Royal Dutch Shell Group. He is currently Executive Vice President – Shell Gas & Power Asia.
EVENTS AT CORAL ENERGY
On 30 July 2004, The New York Times published an article under the headline: “Shell to Pay $150 Million In Settlement On Reserves”. This was in relation to the Royal Dutch Shell securities fraud that has cost Shell around $850 million. The sum is made up of fines imposed by the financial regulatory authorities, settlements of class action litigation and associated legal costs.
The last paragraph turned to a different subject.
“Separately, the Commodity Futures Trading Commission said on Thursday that Shell’s energy trading unit, Coral Energy Resources, had agreed to pay $30 million to settle accusations that it submitted false price data to publishers. The case is part of the commission’s industrywide investigation into suspected manipulation of the energy markets.”
The previous day, 29 July 2004, the U.S. Commodity Futures Trading Commission released a related press statement headlined:
“CORAL ENERGY PAYS $30 MILLION TO SETTLE U.S. COMMODITY FUTURES TRADING COMMISSION CHARGES OF ATTEMPTED MANIPULATION AND FALSE REPORTING”.
The opening paragraph said:
“The U.S. Commodity Futures Trading Commission (CFTC) announced today the issuance of an administrative order (order) initiating and simultaneously settling charges of false reporting and attempted manipulation of natural gas transactions by Coral Energy Resources, L.P. (Coral).” The findings in the order included “from at least January 2000 through September 2002, Coral reported false, misleading or knowingly inaccurate natural gas trading information, including price and volume information, to certain price reporting firms such as Inside FERC’s Gas Market Report, and Natural Gas Intelligence” and that “Coral attempted to manipulate natural gas prices by delivering trade information to the price reporting firms with the intent to affect the market price of natural gas. The order finds that Coral reported information about trades that never occurred, altered price and volume information for certain trades, and failed to report some actual trades, all with the intent to affect the market price of natural gas.”
In November 2007, Bloomberg news reported:
“Five current and former traders from Coral Energy Resources, a unit of Royal Dutch Shell Plc, agreed to pay $1 million to settle U.S. allegations that they reported false information on natural-gas trades to manipulate prices.” According to the Bloomberg article, Shell confirmed that three of the people named in the settlement were employed by the company.
Bloomberg quoted a Shell spokeswoman Rebecca Elliott as stating in an e-mail:
“In settling this civil case, the individuals neither admitted nor denied the allegations of the complaint”.
“Since this matter was between the CFTC and the individuals, it is not appropriate for us to comment further on the matter.”
On 15 January 2008, the CFTC issued an enforcement press release under the headline “CFTC Obtains Verdict Against Former Coral Energy Trader Anthony Dizona for Attempted Manipulation”. The sub-headline stated “Jury Finds Defendant Violated the Commodity Exchange Act by Attempting to Manipulate the Natural Gas Market Eight Times”
In a summary entitled “ENERGY MARKETS ENFORCEMENT RESULTS” issued on 17 March 2008, the U.S. Commodity Futures Trading Commission revealed a fine of $300,000 imposed on Shell Trading US Company and Shell International Trading and Shipping Company in respect of “fictitious sales & noncompetitive trades and prearranged trading”. At the time of the offenses “Dizona was an employee of Shell Trading Gas and Power Company which provided services for Shell subsidiary Coral Energy Resources, L.P.”
The above information shows that association with incompetence and serious misdeeds is apparently no barrier to promotion at Shell given Jon Chadwick’s subsequent climb towards the top echelons of the Royal Dutch Shell Group.
EMAIL SENT 10 APRIL 2008 TO MR MICHIEL BRANDJES, COMPANY SECRETARY & GENERAL COUNSEL CORPORATE, ROYAL DUTCH SHELL PLC: COPIED TO CEO JEROEN VAN DER VEER AND JON CHADWICK, EXECUTIVE VICE PRESIDENT, SHELL GAS & POWER ASIA
Dear Mr Brandjes
Printed below is the draft of an article we intend to publish tomorrow. We will publish unedited any comments Shell or Mr Jon Chadwick might wish to make. If you need more time on this matter you only have to ask. If you indicate that anything stated in categorically untrue, that information will be deleted. If we hear nothing from you by noon tomorrow, we will publish on the basis that Shell accepts the accuracy of the information and comments in the article.