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Shell Pension Fund Smoke & Mirrors

By John Donovan

As a result of “an embarrassing” blunder by Mr Jonathan Mort, legal advisor (and manager?) of the Shell South Africa Pension Fund, we have been given a revealing behind the scenes glimpse into the reality of a supposedly independently run Shell Pension Fund.

Mort has been in email correspondence with Ken Purchase, a former employee of Shell South Africa, who believes he and around 2,700 other potential beneficiaries in the Shell SA pension fund have been unfairly denied participation in a distribution of surplus funds. As will become apparent, the Shell SA pension fund has a track record of trying to grab surplus funds. 

On 25 March 2009 I sent a draft article about this matter  to Michiel Brandjes, Company Secretary and General Counsel Corporate of Royal Dutch Shell Plc. I also sent copies to other individuals including Mr Mort.

On 27 March I received a brief response from Richard Wiseman, Chief Ethics and Compliance Officer of Royal Dutch Shell Plc saying:

“Just to confirm, we have nothing to add to the replies already given to Mr Purchase.”

I also received an email from Mr Mort containing a substantive and vigourous response. 

EXTRACTS OF EMAIL FROM MR JONATHAN MORT TO JOHN DONOVAN DATED 30 MARCH 2009

First Extract

I refer to the draft article you intend publishing on your website http//royaldutchshellplc.com, as set forth in an email from yourself to Mr Brandjes on 25 March 2009 at 18h28. Thank you for giving me the opportunity of correcting some facts of which you may not have been aware.

The reader of the draft article will conclude that I am incompetent, negligent and worse because the thrust of your article is that:

·        There ought to be independence as between a pension fund (on the one hand) and the interested parties, including the employer (on the other).  This is entirely correct.

·        I appeared to act in conformity with the above principle, apparently acting on behalf of the Shell SA Pension Fund, while – in truth – being in “secret collaboration” with Shell SA, the employer.  I am accused of conspiracy with the employer, unethical conduct, and falsely claiming that the Shell SA Pension Fund is not controlled or influenced by the employer.  As you will see below, this is not true.

Second Extract

It is apparently my draft response (per the email of 15 February 2009) to Mr Purchase (on 18 February 2009) which has driven you to the conclusions of conspiracies, collaborations and unethical conduct so liberally sprinkled through your article. The truth is more mundane, entirely proper, and (sadly for your website) considerably less newsworthy than the spectacular claims made in your draft article.

Third Extract

When it came to responding to Mr Purchase’s email of 13 February 2009, I pressed the “Reply to all” prompt and substituted Ms Kirima for Mr Purchase.  In a bona fide error, I should have deleted, but erroneously did not, the other persons in the courtesy copy address list. My transmission of the draft response to these persons was an error, an  embarrassing one, and even though sent early on a Sunday morning, not excusable.

EXTRACTS END

THE COMPLETE UNEDITED EMAILS FROM JONATHAN MORT (RECOMMENDED)

Basically Ken Purchase claims that an inadequate attempt was made to contact pensioners potentially entitled to share in the surplus funds. He says Shell/Mort will not reveal how many people actually shared in the surplus (probably because the number is very small) and that Shell lost employee records (this is confirmed by Mort in his email to me).

Mort had claimed in the correspondence that Shell, as a company, has no control or influence over the Shell SA Pension Fund, supposedly run as a separate independent entity (a position he also maintains in his email to me). This claim was undermined after Mort blundered by sending to Ken Purchase a draft reply to Purchase that he was not meant to receive.

Mort sent the draft to a number of people, including Wanjiru Kirima and Thomas Wood, both of whom are senior Shell managers in addition to their involvement in the Shell SA Pension Fund. He sought their comments/instructions. It is notable that he did not send the draft to ANY of the four trustees elected by the members and pensioners of the fund.  

I also note that Wanjiru Kirima and Mort have shared billing on the South Africa pension fund seminar/forum circuit. It seems to be a rather small potentially incestuous world

Wanjiru Kirima is simultaneously a senior Shell manager within a division of Shell Central Finance and also Principal Officer, Shell Southern Africa Pension Fund. Being a Shell employee, she has a Shell email address.

Thomas Wood is simultaneously a senior Shell manager, (Human Resources Manager, Shell South Africa) and Chairman of Trustees of the Shell Southern Africa Pension Fund. Being a Shell employee, he has a Shell email address.

Any notion that these Shell managers are independent of Shell when wearing their pension fund hats is in my view utter nonsense. Their first master is Shell. The email containing false information about the claimed independence of the pension fund was sent after they had seen it and by implication approved the content. 

Mr Mort has been legal advisor to the Shell SA Pension Fund for 10 years. This is a prestigious and no doubt well-paid appointment that he could not continue to enjoy without the support of Shell management. Commonsense suggests that his first loyalty as legal advisor to the fund, is to Shell, which self-evidently controls the Pension Fund. 

Mort was mentioned in a related article published in 2008 about the Shell Southern Africa Pension Fund scandal: “Shell bid to grab R184m surplus stopped“. A tribunal ruled that Shell had improperly used monies from the pension fund.

Despite his vigorous attempt to argue otherwise, Mr Mort cannot change the fact that when the correspondence with Ken Purchase reached a pivotal point, he sought instructions from senior Shell managers, not from any of the four trustees elected by members and pensioners. That is now a historical fact. Both Shell managers were aware that the email containing the draft reply had not been sent to any of the four trustees elected by members and pensioners. Thus it could not be clearer who has ultimate control of the Shell SA Pension Fund. Having four trustees elected by members and pensioners appears to be a charade designed to create a false impression of independence from the employer when in fact Shell management is calling the shots. 

I noted in the email from Mr Mort he made reference to paying the legal costs of a party  – Peter Sutherland – who like Ken Purchase, had an issue over the pension fund. Perhaps the same offer can be made to Mr Purchase? Such a move might restore his faith in the ethical administration of the pension fund. 

Taken aback after receiving the draft reply not meant for his eyes, and bearing in mind his faith in Shell’s ethical code, Ken Purchase sought the intervention of Richard Wiseman (Chief Ethics & Compliance Officer, Royal Dutch Shell Plc).

As can be seen from the relevant correspondence, although Mr Purchase brought the draft email to his attention and specifically raised the issue about the claimed independence of Wanjiru Kirima “and others”, Wiseman supported the claim that the Pension Fund is run independent of Shell.  

It is evidence from the email Mort sent to me that he does not know all of the people to whom he sent the draft response. Mr Wiseman was apparently not sufficiently interested in the financial plight of Shell SA pensioners trying to survive in the most serious economic downturn in our lifetime to look into the issues raised by Ken Purchase, or even question the involvement of the mystery individuals.  In line with our experience of Mr Wiseman, he turned a convenient blind eye. A typical response from the man now laughingly responsible for upholding Royal Dutch Shell ethics and compliance.

Under the circumstances, we hope that the faith Ken Purchase has in Shell’s claimed commitment to The Shell General Business Principles and the U.N. Declaration of Human Rights does not prove to be misplaced.

Other former Shell employees such as Dr John Huong (Production Geologist), Bill Campbell (HSE Group Auditor, Shell International) and Paddy Briggs (a notable Shell executive) believe that Shell’s ethical code is a sham. Ray Fox, who claims radioactive contamination from an alleged nuclear facility buried by Shell beneath the former Shell terminal in Earley, Reading, poisoned him and his family, takes a similar view about Shell ethics. 

Mr Wiseman has indicated in correspondence over the years, that the principles were not created for use in the courts. He first stated this on 5 June 1997 and confirmed it again on 26 April 2004. If they have no legal standing in the courts, then like a bet placed with a bookmaker, they are binding in honour only. However, Mr Wiseman chose his words very carefully and it could be that although not created for use in the courts, they can in fact be used for that purpose.

I say this because they were a major feature in class action lawsuits brought against Shell in respect of the reserves fraud. Every Form 20 F Declaration submitted to the U.S. Securities and Exchange Commission contained reference to Shell’s business principles. This was designed to generate confidence in the reserves figures contained in the declarations (which happened to be false). Shell settled all of the fraud actions out of court at an estimated overall cost of $850 million, which means there was no determination over the legal standing of Shell’s General Business Principles.

Hence there is nothing new about Shell engaging in deception as per the reserves scandal, or indeed in relation to misleading advertising, known as Shell greenwash.

The difference is that in each of these instances, Shell was deceiving its shareholders and the public. In this latest matter, Shell is deceiving its own former loyal employees.

Mort’s extensive email to me confirms my opinion that claims by him and Richard Wiseman that the fund is not controlled by Shell management is a ridiculous pretence – just more Shell smoke and mirrors designed to fool the gullible. As to my allegations of incompetence and negligence, I leave readers to draw their own conclusion after reading the response I received from an embarrassed Mr Mort.

Richard Wiseman will know how he feels. He accidently send us a copy of an email from him to Jeroen van der Veer (CEO of Royal Dutch Shell Plc) and Malcolm Brinded (Chief Executive of Shell Exploration & Production) concerning our activities. More recently Wiseman accidently sent an email to Ray Fox, relating to Ray Fox, which Fox was not meant to receive. 

The electronic age of instant communication and instant cock-up, does at least occasionally provide the gift of a revealing glimpse  into the machinations of Shell and its agents.

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