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Anti-corruption speech by Richard Wiseman, Royal Dutch Shell Plc Chief Ethics & Compliance Officer

 BUSINESS ETHICS AND INTEGRITY 

CORPORATE RESPONSIBILITY IN SHELL 

Asia Anti-Corruption Conference 

Talking points for Mr. Richard Wiseman 

Chief Ethics and Compliance Officer 

June 10th, 2008 (3:30 to 4:30pm with 30 minutes QAs) 

The Business Case  

For Shell, our reputation and future success are critically dependent on compliance, not just with the law but also with  our own very high standards.

A reputation for integrity is a priceless asset which can vanish or be severely tarnished by a single error of judgment.

Shell Core Values: Honesty, Integrity and Respect for People underpin everything we do and are the foundation of our Shell General Business Principles.

We believe conducting our business according to the Business Principles helps us to be more successful.  These are fundamentally the same principles we adopted in 1976, brought up to date from time to time to reflect our stakeholders expectations.  It means setting the high standards of governance and behaviour.  It means valuing the people who work at Shell and contributing to the communities in which it operates.

And it means making profits because a failing, unprofitable company can by definition make no contribution to society.

To commit to ethics and compliance is not a distraction from Shell’s core business.

Nor does it in any way conflict with its promise and duty to deliver value to its shareholders.  In fact, just the reverse is true.  A commitment to the high business ethics standards, to follow a consistent set of global Code of Conduct can reduce business risk and allows Shell to create and grow a sustainable business.

This is true for the future of Shell as we are investing more in difficult areas of the world where our business partners and the host government are expecting us to lead by examples in maintaining high standards in our operations as well as our ethical performance.

As the second largest International Oil Company globally, Shell currently employs 104,000 people in more than 110 countries.

Our business covers every corner of the earth where there may be huge disparities of wealth and where social, economic and environmental dilemmas. Some of these countries are quite low on the Transparency International Corruption Perception Index, indicating the problem of corruption is very serious.

Shell’s commitment to responsible business is therefore a daily reality.

In these countries 95% of staff are locally recruited. Every day they are the ones who are facing difficult circumstances, attitudes and approaches towards the same age-old problem: bribery and corruption.   

And last, in the way we run our business, we always have a certain degree of influence over others  – for example, our influence over our contractors, our suppliers, the host governments and our customers.

Under these circumstances, Shell has no choice but to be a leading voice in the battle against corruption and champion a high set of business ethics and compliance standard and to lead by example.

This is at the heart of the way Shell does business and Shell believes that it underpins the long-term success of any organization.  Through committing to a consistent set of ethics and compliance standard in every country in which we operate, Shell is investing to secure the future of its business.

Shell addresses its commitment to ethics and compliance in the following ways:

? By assuring the application of the Shell General Business Principles and clarifying the standards we expect from our employees by the Code of Conduct  

? By ensuring transparency in our annual Sustainability Report

? By demonstrating leadership from the top

? By engaging with all stakeholders to tackle the issue collectively

Shell General Business Principles and Code of conduct

In Shell we have our “Shell General Business Principles”. The first issue was in 1976. Our business principles are in line with the UN global compact and the OECD guidelines for multinational enterprises. They set out our core values of honesty, integrity and respect for people and state our commitment to sustainable development.  They identify five sets of stakeholders – shareholders, customers, employees, those with whom we do business and general society.  We have duties to all of these.  We identify eight business principles.  These include economic principles, business integrity, health and safety and compliance with the law.

The business principles are alive in the organisation.  They are supported by a Code of Conduct of which everyone is given a copy and is required to know and to live by.  We have formal processes of training our employees on the various priority areas of the Code of Conduct including bribery and corruption, anti-trust behaviour, import and export controls and we report compliance against these principles annually to our Board of Directors.

For instance, in the Business Integrity section in the Code of Conduct, we have clear guidelines on the amount of gifts and hospitality that an employee can accept and to remind them that a gift must never influence an imminent (as per wording used in the Code) a business decision.  It includes, a section on how to avoid potential conflicts of interest between an employee’s private activities and their part in the conduct of Shell business. We never made any political payments nor political donations.

Our position is clear and unequivocal – we do not make or accept bribes or facilitation payments.

Transparency

That is not to say that we always get it right.  If you look at our sustainability report you will see that we still have to take action when we found 112 violations of bribery and fraud in 2007.

Our annual Sustainability Report, started in 1998, is designed around the Global Reporting Initiative (GRI) standards and is intended to tell stakeholders of our progress in improving performance across a whole range of indicators: from greenhouse gas emissions to incidents of bribery.  Some people say it makes us a hostage to fortune.  Maybe, but we’ve been stimulated by the challenge it presents and it acts as an important catalyst for change.  The report also includes commentaries from experts or community panels with whom we work to manage our issues.

As I have said, we do not always get it right but we do believe that we are transparent and when we make a mistake, we admit it and we correct it.

Leadership  

A lot of the world’s natural energy resources are in politically difficult and corrupt countries.  Working responsibly in such environments isn’t easy; we encounter corruption, poor economic policies, human rights abuses, low accounting and reporting standards, legal and regulatory and enforcement systems etc …. that leave a lot to be desired.

The importance of enforcement must not be underestimated.  While we have seen countries like Germany in the case of Siemens take proper action, by and large the impression is that it is only the US in its enforcement of the FCPA which consistently takes bribery and corruption by its corporate and individual citizens sufficiently seriously.

While the role of governments having jurisdiction over companies is reasonably clear, the enforcement role of governments of those countries where bribery is unfortunately common cannot be neglected.  Their cooperation is crucial if the fight is to be successful and the example Qatar itself has set is to be greatly admired.

For a company which adheres to high ethical standards, these present real challenges and dilemmas and can sometimes put us at a short term competitive disadvantage.  Experience has shown us that there is only one solution: you work by a set of principles, you declare them openly and you stick to them, and demonstrate senior leadership commitment, whatever the circumstances.  And that can mean making some tough choices.  At Shell, our policy is clear – if our business partners and contractors don’t act consistently with our Business Principles, we won’t work with them unless they are prepared to change.  Last year that meant terminating 35 contracts.

Senior management plays a key role in encouraging good practice.  This has the twofold effect of motivating staff and reassuring stakeholders that ethics and compliance is a top priority.  

It is of vital importance to create a top-down anti-corruption culture within the Group.  Senior Shell leaders such as the Country Chairs are encouraged avoid creating a blame culture: people must not be deterred from admitting mistakes and discussing possible ill-conceived actions and dilemmas they face in their working environment.  On the other hand, this must be balanced by the need to stand firm on obvious cases to give a clear signal: there is no room for staff who allow themselves to be corrupted or use corrupt methods.

External Engagement  

All this effort is more effective if the rest of the world is on board and this brings me to the final step in the fight against corruption: external engagement.  We have been co-operating closely with non-governmental organizations, industrial organizations and international bodies to tackle the problem of corruption collectively as well as taking an active role in the debate like this kind of conference, and in the development and signing up to various international agreements such as the Global Compact 10th Principle, Transparency International’s Business Principles on Countering Bribery.    Let me talk a little bit about an important international initiative that we support in the fight against corruption – the Extractive Industries Transparency Initiative (EITI).   

The economic contribution a business makes comes essentially through providing employment, investment and revenue to governments through taxes and royalties.  

For example, worldwide, Shell’s activities collected more than $78 billion in sales taxes and excise duties and paid over $15 billion in corporate taxes and $2 billion in royalties to the governments of the countries where we operated.  Regrettably, these substantial revenues are not always managed effectively by governments to the benefit of the wider community.  3.5 billion people live in countries rich in oil, gas and minerals. With good governance the exploitation of these resources can generate large revenues to foster growth and reduce poverty.   

Shell believes greater transparency from the side of the business as well as from the host governments can help tackle that problem so it supports the EITI. ThExtractive Industries Transparency Initiative (EITI) is led by the British Government and working with over 20 governments from the developed and developing world.  Under the EITI, we publish the payments we make to the various supporting governments. And there is a robust yet flexible methodology for monitoring and reconciling company payments versus government revenues.   

It aims to strengthen governance by improving transparency and accountability in the extractive sectors.  37 of the world’s largest oil, gas and mining companies support and actively participate in the process and Shell is currently the representative company among the International Oil Companies.

Conclusion  

So…vigilance and transparency is key.  We must continue to learn from our own mistakes, learn from the best practices of others, people like you, and to keep improving the system.  

?Ethical and legal integrity of a company is a key factor for an employee in choosing or staying with an employer 

?It helps to become and stay partner of choice for customers, suppliers, joint venture partners and host governments  

?Maintaining ethical and legal integrity simply makes good business sense.   

END 

Mr. Richard Wiseman, Chief Ethics & Compliance Officer, Shell Mr. Richard Wiseman qualified as a solicitor in England and Wales and as a solicitor and barrister in Australia. He has been working with Shell Group of Companies since 1975 in various capacities. In 2006 he was appointed as Shell’s General Counsel for Merger and Amalgamation and Project Finance. In 2008, he became Shell’s Chief Ethics and Compliance Officer.  

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