Serious questions over Shell Oil’s alleged involvement in human rights abuses in Nigeria emerged last night after confidential internal documents and court statements revealed how the energy giant enlisted the help of the country’s brutal former military government to deal with protesters.

The documents, seen by the IoS, support allegations that Shell helped to provide Nigerian police and military with logistical support, and aided security sweeps of the oil-rich Niger Delta. Earlier this month Shell agreed to pay $15.5m (£9.6m) in a “humanitarian settlement” on the eve of a highly embarrassing US lawsuit.

One of the allegations was that Shell was complicit in the regime’s execution of civilians. The Anglo-Dutch firm denies any wrongdoing and said it settled to help “reconciliation”. But the documents contain detailed allegations of the extent to which Shell is said to have co-opted the Nigerian military to protect its interests.

The legal settlement came 14 years after the Abacha government hanged nine protesters, including Ken Saro-Wiwa, the environmentalist and writer, after a charade of a trial in 1995. Saro-Wiwa led a successful campaign against Shell in his Niger Delta homeland, even forcing the company to quit Ogoniland in 1993. The campaign focused on environmental devastation and demanded a greater share of oil revenues for his community. As the campaign grew, the Ogoni suffered a brutal backlash that left an estimated 2,000 dead and 30,000 homeless. The documents claim there was systematic collusion with the military and Mobile Police Force (MPF), known as the “Kill and Go”. Shell has always denied this but is believed to have settled in court as a result of the embarrassing contents.

In one document written in May 1993, the oil company wrote to the local governor asking for the “usual assistance” as the Ogoni expanded their campaign. There was a stand-off between the Ogoni and the US contractor Willbros, which was laying a pipeline. Nigerian military were called in, resulting in at least one death.

Days later, Shell met the director general of the state security services to “reiterate our request for support from the army and police”. In a confidential note Shell suggested: “We will have to encourage follow-through into real action preferably on an industry rather than just Shell basis”. The Nigerian regime responded by sending in the Internal Security Task Force, a military unit led by Colonel Paul Okuntimo, a brutal soldier, widely condemned by human rights groups, whose men allegedly raped pregnant women and girls and who tortured at will. Okuntimo boasted of knowing more than 200 ways to kill a person.

In October 1993, Okuntimo was sent into Ogoni with Shell personnel to inspect equipment. The stand-off that followed left at least one Ogoni protester dead. A hand-written Shell note talked of “entertaining 26 armed forces personnel for lunch” and preparing “normal special duty allowances” for the soldiers. Shell is also accused of involvement with the MPF, which worked with Okuntimo. One witness, Eebu Jackson Nwiyon, claimed they were paid and fed by Shell. Nwiyon also recalls being told by Okuntimo to “leave nobody untouched”. When asked what was meant by this, Nwiyon replied: “He meant shoot, kill.”

One former Shell employee, Kloppenburg Ruud, head of group security in the mid-1990s told lawyers that the deployment of Nigerian security forces at two Shell jetties in the delta was at the company’s request.

Since the settlement, Malcolm Brinded, Shell’s executive director, said: “We wanted to prove our innocence and we were ready to go to court. We knew the charges against us were not true.” He added: “I am aware that the settlement may – to some – suggest Shell is guilty and trying to escape justice,” but said this was not the case.

Shell ‘lobbied’ Guardian to soften its Nigeria stance

Confidential internal documents reveal how the oil giant lobbied The Guardian newspaper to reduce its support for Saro-Wiwa.

In an assessment of the political and security situation, a Shell executive noted: “The Guardian newspaper ran a much more balanced article on the Ogoni issue, with their position moving from apparent support for Saro-Wiwa to the middle ground. There is a slight possibility that this may have been influenced by the meeting we had with The Guardian’s editor the week before.”

Peter Preston, The Guardian’s editor from 1975 to 1995, said yesterday that he could not remember a meeting with Shell. “I have absolutely no memory of one. And Nigerian politics was never one of my interests.”

Matthew Bell

Hot on the heels of the surprise resignation of top executive Linda Cook, Shell’s in-coming chief executive Peter Voser announced major restructuring plans yesterday that could cut thousands of rank-and-file jobs.

Some 24,000 staff at the Anglo-Dutch oil giant will be affected by the changes, with job losses expected to be in the thousands. Up to a third of senior management are believed to be under threat.

There are three major structural changes. The company’s three upstream businesses – exploration and production (EP), gas and power (GP) and oil sands – will be combined into two, new regional units: Upstream Americas and Upstream International. Mr Voser is also creating an entirely new “Projects & Technology” division which will manage everything from R&D to project delivery to contracting and procurement. Finally, some parts of Shell corporate are to be absorbed into specific business units, while the rest is streamlined under a single combined human resources (HR) corporate director role.

The measures are intended to simplify the structure of the company, speed up implementation and cut costs. Mr Voser – who takes over from out-going chief executive Jeroen van der Veer at the start of July – said: “This new structure will increase accountability in the company, and improve Shell’s performance on delivering new projects and developing new technologies. These changes will increase our focus, accelerate our plans to reduce complexity, corporate overheads and costs, and result in faster decision-making and delivery.”

At the top level, the changes mean a significant re-balancing of Shell’s eight-strong executive committee. The company says the new structure allows greater representation from business units and less for internal functions.

The new regime appears to confirm rumours that the resignation of Ms Cook, who was head of the gas and power group, stemmed from differences with Mr Voser. With Ms Cook gone, there is space for the head of the new Projects & Technology unit, Matthias Bichsel, currently at Shell’s EP technology division. He will be joined by Marvin Odum – now executive vice-president of Americas EP business – as the new director of the Upstream Americas business. Malcolm Brinded, the executive director of EP, will take on the Upstream International job.

The changes at Shell HQ will claim the scalp of Ms Cook’s only other female colleague on the executive committee. Under the new structure, the committee will have only three members from Shell headquarters – from finance, legal, and the newly combined human resources and corporate director – as opposed to four. The HR and corporate role will go to the current HR director Hugh Mitchell, while Roxanne Decyk, current head of corporate affairs, will stand down from the committee to take a role leading a new government relations department in Washington, DC.

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The execution of Ken Saro-Wiwa and his colleagues in 1995 dragged Shell and Nigeria’s leadership into a controversy from which they find it difficult to extricate themselves. Fourteen years on, the actions of both are still seen through the prism of the showdown with the Ogonis. Ogoniland has remained in limbo: no oil has been pumped since 1993, there has been little development, and mediation efforts collapsed without one meeting between Shell and the Movement for the Survival of the Ogoni People.

The situation in the rest of the Niger Delta has evolved dramatically. The non-violent approach championed by Ken Saro-Wiwa and the Ogoni leaders has given way to an increasingly complicated conflict over the region’s oil resources. Oil production has fallen from a capacity of more than 2.7 million barrels per day to about 1.6 million (less than Angola). In the past week clashes have broken out which have nudged up global oil prices and are threatening to drive production lower still. Shell’s own oil production in the Delta has taken an even greater pounding – its own headline figures describe a crash from about 1.2 million barrels per day to as low as 300,000.

The burning of gas while producing oil is another example of how times change. Little was thought in official circles in 1990 of the failures to deal with a wasteful process that was a source of constant environmental complaints. The gas flares have been extinguished but the debate has intensified. Even today Nigerian official figures estimate 22 billion cubic metres per year are burnt off – the equivalent of 30 per cent of North Sea gas production.

A great deal of this was predicted – in Ken Saro-Wiwa’s own speeches and even in corporate risk reports produced for Shell as early as 2003. Today it faces great difficulty operating at all. Amidst a massive surge in profits declared last year it quietly wrote off $750m from its Nigeria operation.

While Ogoni is a public relations nightmare for Shell and the Nigerian government, it also offers some hope. The announcement by President Yar’Adua last year that Shell’s licence to operate in Ogoni would be withdrawn brought an instant end to the noisy claims by militants that non-violent campaigns could not succeed in Nigeria.

Ogoni now hangs in limbo. A divorce from Shell seems inevitable; a new oil operator with a more just arrangement would set a precedent that would reverberate across the region. On the other hand a new operator without the capacity and will to deal with complex issues could precipitate even worse conflict.

Chris Newsom is an adviser to Stakeholder Democracy Network

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The fury about Shell came as the Royal Bank of Scotland, now majority owned by the UK taxpayer, revealed that four senior staff are eligible for share windfalls of £5m, including a package of £2.4m for Ellen Alemany, the head of the bank’s US business. Alan Dickinson and Chris Sullivan, heads of corporate banking division are also in line for large bonuses.

RBS, bruised by the high-profile fights over former chief executive Sir Fred Goodwin’s £700,000 per year pension, emphasised that the rewards were subject to stringent targets. Such targets were, according to major shareholders, missed at Shell, where more than 59 per cent of shareholders voted against the remuneration report at the transnational’s AGM last week.

This is itself a highly unusual event, but the company’s management immediately raised the stakes by responding that it would merely take the vote into account.

That is not good enough for some. Abigail Herron, speaking for Co-operative Asset management commented: “Legally, Shell can do what it wants on this one, but on moral grounds, the bonuses should be paid back to shareholders.”

Alan MacDougall, managing director of investor activist group Piric, added: “Jobs was chairman of the committee that decided to use its discretion toaward these bonuses, so he must carry the can? Shell is another example of how executive pay and performance are so often misaligned.” A number of fund mangers said Sir Peter should quit.

Shell said after last week’s AGM vote that it would “reflect carefully” on the result and had “introduced additional performance measures for future awards”. The recession has embittered along-running debate on executive pay, especially at larger corporates and those in financial services.

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Outlook 

With all the focus on the excesses of bankers, other corporations must have thought it possible to get away with big pay packages to senior executives largely unnoticed. Yesterday’s protest vote by shareholders in Royal Dutch Shell provides a timely reminder that executive excess remains an issue wherever it lurks. Shareholders have rightly given their board a bloody nose. It is outrageous that such sums should be paid for doing little more than riding the boom in oil prices while so many are being asked to make sacrifices.

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Investors in Royal Dutch Shell turned on the oil company’s management yesterday, with almost 60 per cent voting against planned remuneration packages for executives. However, the group said it intended to award the payouts anyway.

The board of directors faced angry shareholders at the group’s annual general meeting in the Hague yesterday, which was also beamed live to British investors who gathered at the Barbican Centre in London.

Shareholders are furious that Shell plans to award bonuses this year, even though the company missed its self-imposed performance targets. In an electronic ballot yesterday, 59.42 per cent of shareholders voted against the remuneration report. In a similar move a month ago, a third of BP shareholders voted against their board’s proposed remuneration package.

Guy Jubb, the head of corporate governance at Standard Life Investments, criticised Shell, saying his company was “not impressed by the remuneration committee’s decision to exercise its discretion for the second year in a row to reward its executives for below average performance.”

The committee can use discretion when targets are “narrowly missed, as in this case,” according to a Shell spokeswoman.

After the chastening vote, Shell’s chairman, Jorma Ollilia, said: “We take the outcome of this vote very seriously and we will reflect carefully upon it.” However, the bonuses will be paid as planned because the vote is only advisory. It is not the first time shareholders have criticised management about the group’s pay structure. Shell said it had already strengthened its performance measures for future pay awards.

The Co-operative Asset Management welcomed the defeat, saying it was the third year it had voted against the report. Abigail Herron, a corporate governance analyst at the group, said: “It is time that the company listened to its shareholders.”

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