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SHELL DEFAMATION CASE HAS PROFOUND IMPLICATIONS

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In 2009, Shell Oil Co. was facing allegations of international bribery in Nigeria. It told federal prosecutors that one of its employees approved and facilitated the bribes and then lied about his role to company lawyers. In 2010, the case took an unexpected turn. The employee, senior petroleum engineer Robert Writt, sued for defamation. He claimed that the energy giant’s allegations were lies that slandered his good reputation.

By John Donovan

Shell has attracted a huge amount of unwelcome attention to its company culture of  corruption as a result of making defamatory comments about a former employee, Robert Writt. Basically it ruthlessly tried to make him a  scapegoat.

Mr Writt contacted my late father, Alfred Donovan, in August 2009. Many people, including former Shell employees mistreated by Shell, make contact with us.

Shell destroyed his reputation in an attempt to cover-up the truth and minimise financial consequences to Shell. A penalty imposed on Shell was cut by half, from $60 million to $30 million.

The fine was part of the settlement of Foreign Corrupt Practices Act charges with the US Department of Justice and US ­Securities and Exchange Commission following an ­investigation launched in early 2007.

Shell failed to anticipate that Mr Writt would follow in our footsteps and have the courage as an individual to sue the mighty corporation Shell for defamation. We did so twice and Shell settled on both occasions. Our libel actions stemmed from reckless statements issued and/or published by Shell. On 23 September 1998, in an unprecedented move, we were the sole topic of posters put on public display by Shell at the Shell Centre in London.

The lawyers acting for Mr Writt might want to obtain, if they do not yet have a copy, an article published by “The Lawyer” on 18 March 2011. It contains interesting comments on the case attributed to the then Chief Ethics and Compliance Officer of Royal Dutch Shell Plc, Mr Richard Wisenman.

The latest development in the Robert Writt case, published this weekend, has implications for Shell in any country were it has engaged in Corrupt practices, including Ireland. This is as a consequence of the US Foreign Corrupt Practices Act.

THE LATEST NEWS ON THE ROBERT WRITT vs SHELL LITIGATION

Shell defamation lawsuit could set legal precedent in federal corruption cases

By JANET ELLIOTT [email protected]
The Texas Lawbook

Published: 06 December 2014 05:40 PM
Updated: 06 December 2014 05:40 PM

In 2009, Shell Oil Co. was facing allegations of international bribery in Nigeria. It told federal prosecutors that one of its employees approved and facilitated the bribes and then lied about his role to company lawyers.

The company did what dozens of others have done when facing such charges. It conducted an internal investigation, identified problems, assigned blame and begged law enforcement for mercy.

In 2010, the case took an unexpected turn. The employee, senior petroleum engineer Robert Writt, sued for defamation. He claimed that the energy giant’s allegations were lies that slandered his good reputation.

Legal experts and business groups say the defamation case could significantly affect future investigations into potential violations of the Foreign Corrupt Practices Act.

Corporations won’t cooperate with Department of Justice or Securities and Exchange Commission investigations into global corruption if they can later be sued by the individuals they name.

Businesses want the court to grant immunity from the information they provide in corruption investigations, even if the employees named claim the allegations are false.

There’s immunity for testimony given under oath but not for information voluntarily provided to federal investigators.

Six former U.S. attorneys general also filed a legal brief with the state’s highest court arguing that a ruling against Shell could impede investigations.

A decision against Shell could make Texas “a magnet for fishing-expedition suits” from employees of companies with operations in the state, said Dallas appellate lawyer James Ho, who represents major business groups in the case.

Bribery claims

In 2007, the Justice Department started investigating claims that Shell and a contractor had schemed to bribe Nigerian customs officials in a deal to drill offshore.

Shell officials volunteered to conduct an internal investigation and give the findings to authorities. Companies routinely use this maneuver to try to get charges or penalties reduced.

In a 129-page report, Shell officials said that Writt approved and facilitated the bribes, violated the company’s ethics policies and then lied about his role in interviews with Shell lawyers. The company fired Writt.

In 2010, the Justice Department hit Shell’s parent company, Royal Dutch Shell, with a $30 million penalty, about half the amount that could have been levied.

Writt, who lives in Houston, filed suit. He contends that he raised initial concerns with Shell senior managers about suspect invoices being paid to contractors working with Nigerian officials. He said he recommended that the company halt the practice.

Shell officials followed his recommendation. But Writt claims Shell superiors reversed their decision when Nigerian officials retaliated. Writt was ordered to resume the payments.

Writt was never charged.

Immunity’s risks

Shell argued in court that its report to Justice was covered by immunity as part of the government’s official investigation. A Houston trial judge agreed and rejected Writt’s case.

But the court of appeals in Houston reversed it, saying Shell issued the report voluntarily and, as a result, did not qualify for absolute privilege or immunity.

In oral arguments before the Texas Supreme Court three weeks ago, Justice Eva Guzman asked whether granting absolute immunity would encourage companies to falsely shift blame to an employee.

That could happen, said Macey Reasoner Stokes, a partner at Baker Botts representing Shell. But she said the risk is “greatly outweighed” by the benefits of encouraging free and full disclosure from participants in the process.

Ho, representing the U.S. Chamber of Commerce, National Association of Manufacturers and American Petroleum Institute, adds: “If left intact, the [lower court] decision may force employers to make the difficult decision not to disclose all of the details in relation to potential FCPA violations as soon as they are aware of them.”

Robert Dubose, who represents Writt in the case, said 10 states have declared all communications with law enforcement to be privileged, but Texas is not among them.

“We have to be concerned about protecting people’s reputation as well as encouraging communication,” he said.

The Texas Supreme Court is not expected to announce its decision for several months.

For a longer version of this article, visit TexasLawbook.net.

ARTICLE ENDS

RELATED SHELL CORRUPTION ARTICLES

Investigation into Nigerian corruption involves Halliburton, Shell, the U.S. Securities & Exchange Commission, the U.S. Department of Justice and the UK Serious Fraud Office: 22 April 2008 (Extracts from Halliburton’s filing with the U.S. Securities & Exchange Commission filing date 25 April 2008)

Halliburton implicates Shell in Nigerian bribes probe: 26 April 2008 (THE CALGARY HERALD)

U.S. Cracks Down on Corporate Bribes: 26 May 2009 (THE WALL STREET JOURNAL)

Royal Dutch Shell bribery and corruption in Nigeria: 16 October 2010 (THE WALL STREET JOURNAL)

Shell to pay $48m Nigerian bribe fine: THE TELEGRAPH: 4 November 2010

Extract

Royal Dutch Shell has been ordered to pay $48m (£29.4m) in civil and criminal fines over its contractor’s involvement in bribing Nigerian customs officials.

These companies, including Shell, admitted they “approved of or condoned the payment of bribes on their behalf in Nigeria and falsely recorded the bribe payments made on their behalf as legitimate business expenses in their corporate books, records and accounts”.

Shell Bribes Among ‘Culture of Corruption’: 5 November 2010 (BLOOMBERG BUSINESSWEEK)

SHELL IN BRIBERY FINE: DAILY EXPRESS: 6 November 2010

Extract

Shell must pay a $30million “criminal penalty” over charges it paid $2million to a sub-contractor “with the knowledge that some or all of the money” would be used to bribe Nigerian officials to allow equipment into the country without paying duty. Shell, which has not admitted guilt, must pay a further $18million to repay profits and interests.

U.S. Securities & Exchange Commission Cease and Desist Order: Shell Corruption in Nigeria

Bribery/Anti-corruption: Shell: published 18 March 2011: The Lawyer (Article access subject to subscription)

Federal Contractor Misconduct Database: 9 June 2012

Foreign Firms Most Affected by a U.S. Law Barring Bribes: 4 Sept 2012 (THE NEW YORK TIMES)

Shell and ENI’s billion dollar payment for Nigerian oil project could fall foul of anti-corruption laws: 12 November 2012 (GLOBAL WITNESS)

Royal Dutch Shell and Chevron illicit payments: 29 May 2014 (EXTRACTS FROM A REUTERS ARTICLE)

Texas Appeals Court Revives Shell FCPA Defamation Suit: 25 June 2013 (Law360)

Robert Writt vs. Shell Oil Co: 28 June 2013

United States: Defamation Claims Increase Costs of Cooperation with Government Investigations: 28 July 2013 (MONDAQ)

Robert Writt vs. Shell Oil Company – Update: 23 August 2014

Shell Defamation Suit: 11 November 2014

SHELL DEFAMATION CASE HAS PROFOUND IMPLICATIONS ON FEDERAL CORRUPTION INVESTIGATION: 11 November 2014

Danger to Shell from Class Action Lawsuits Arising from Bribery: 5 December 2014

Graft work: 6 December 2014 (THE ECONOMIST – ARTICLE DOES NOT DIRECTLY RELATE TO SHELL)

Extract

GONE are the days when multinationals could book bribes paid in far-flung countries as a tax-deductible expense. These days would-be palm-greasers have to contend with ever-tougher enforcement of old laws, such as America’s Foreign Corrupt Practices Act of 1977, and a raft of new ones in countries from Britain to Brazil.

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