Now we have further confirmation that Shell was trying to dodge a multimillion tax bill. This time confirmation comes from the findings of an investigation by the Coast Guard division of US Homeland Security. There are going to be more Royal Dutch Shell executives looking for alternative employment… And Marvin Odum, Shell’s boss in the USA, should be top of the list.
By John Donovan
After Shell’s Arctic ambitions hit the rocks at the end of December 2012, Shell initially conceded that the ill-fated Kulluk drilling rig had left port under tow to avoid taxes.
Shell then backtracked. Shell’s chief executive Peter Voser rejected accusations that tax issues were a factor in the move.
We subsequently had confirmation from one of the honest people at Shell, Sean Churchfield, its operations manager in Alaska, that the first admission was correct. The Kulluk had indeed left port in order to avoid “millions” in annual state taxes.
Peter Voser spent too much time castigating BP for the Gulf of Mexico disaster and not enough making sure that Royal Dutch Shell did not itself also come spectacular unstuck in US waters. In view of his self-serving comments about BP, he must now be viewed, in my humble opinion, as a hypercritical incompetent.
The high visibility of the series of serious mishaps in Alaska severely damaged the credibility and reputation of Shell and no doubt contributed to the decision by Voser to prudently take early retirement, as did the original fall guy for the Alaskan fiasco, David Lawrence of Alaska.
Now we have further confirmation that Shell was trying to dodge a multimillion tax bill. This time confirmation comes from the findings of an investigation by the Coast Guard division of US Homeland Security.
Having read the relevant Coast Guard report quickly, there were a lot of short cuts taken – needless to say, nobody wants to admit responsibility when things go wrong, so all that the Coast Guard can say is that standards and procedures were not complied with/adhered to. This is usually referred to in court as gross or wilful negligence.
There are going to be more Royal Dutch Shell executives looking for alternative employment… And Marvin Odum, Shell’s boss in the USA, should be top of the list.
It is relevant to recall that Shell reserved its position in respect of an analysis by retired Shell International Group HSE Auditor, Bill Campbell, of the fall out from the Arctic shambles. We published it on this website. See “Shell Misadventures in the Arctic Region in Alaskan waters”
Some readers may have heard of the concept of a “licence to operate” – this is the largely intangible qualification by which oil companies are authorised by host governments to undertake very complex and inherently hazardous operations, and is justified on the basis of the companies’ experience and historical track records for safe operations. The only tangible aspects of a “licence to operate” are the companies’ standards and procedures, which in this case were clearly ignored.
Shell’s “licence to operate” in Alaska should be revoked.
Comment posted on Shell Blog by an Old EP hand on Apr 4th, 2014
John, you say Odum should resign. I disagree completely. He should be fired. Gross incompetence of a smooth talker. And how much of the billions that Shell USA wasted on the shalegas and cock-ups in Alaska flowed into the pockets of his friends? I have no proof at all, but in my humble opinion it all stinks to high heaven!
Extract from a comment posted on Shell Blog by shellwaarbenjijnu on Apr 6th, 2014
@Old EP Hand – you are absolutely spot on in respect of Odum. Of course he should be fired. He is the “captain” of the Titanic that is the Shell operation in the Americas and is therefor 100% accountable for all that goes right and WRONG on his ship. There are smooth talkers and smooth talkers but none come as close to Odum (although the likes of Botts and Hoffmeister came close). You says it stinks to heaven but that is the problem in the US. It is indeed a “heaven connection”. All these guys at the top have their Southern Baptist, Mormon, etc closed shops and they will protect themselves as they hold hands, close their eyes and “praise the lord”.
@Tyler – your point on China is similar. The “good ole boy” politics and “clappy handy” church connections do not make for clarity on accountability & responsibility and hence excellence in business results (and ethics). Let us hope (and pray??) that van Beurden puts a stop to this poison which has weakened Royal Dutch Shell since the late 1990′s. In the FT interview of April 1 van Beurden talked of the necessity of taking tough choices. He has a number to take but firing incompetent, smooth talking, power point pilots from the US should be one of the easy ones for him to take.
Extracts: Shell ignored safety warnings by towing the Kulluk drilling rig through tempestuous Arctic waters in a bid to save itself a multi-million-pound tax bill, the US Coastguard has claimed. The rig ran aground on New Year’s Eve 2012 after a nightmarish journey, in an accident that the Coastguard hinted could see Shell slapped with penalties. The accusations leave Shell’s plans to exploit the Arctic in tatters and further diminish the standing of British oil companies in America, after BP’s Gulf of Mexico spill in 2010.
Upstreamonline.com article: Shell ‘failings’ in Alaska grounding
Extract: “The Anglo-Dutch supermajor has come in for scathing criticism in the USCG’s investigation report on the incident released on Thursday in which it blames the company for failings that led to the grounding of the cylindrical unit Kulluk in late 2012.”
Extract: “Today’s report again shows that Shell did not appreciate or plan for the risks of operating in Alaskan waters, prioritised financial considerations ahead of safety and precaution and simply disregarded important legal protections,” said conservation group Oceana staff lawyer Mike LeVine.
Extract: During the USCG’s 9-day investigative hearing in 2013, Shell’s Alaska operations manager testified that the Kulluk was moved due to “financial considerations,” contradicting previous claims that fair weather had prompted the move. If Shell had not moved the drilling unit, it would have been liable for $6 million in taxes.
National Geographic: Coast Guard Blames Shell Risk-Taking in Kulluk Rig Accident
Extract: The company headed into rough winter waters to avoid Alaska tax liability, authorities conclude.
Extract: “If the vessel was still in Alaskan waters, Shell estimated that the tax liability would be in the millions of dollars,” the Coast Guard’s report said.