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Bribery and Corruption at Shell

On Friday 13 January 2006 we received the following comment from a Shell insider in response to a Dow Jones article concerning an alleged attempt to bribe the Mayor of Sakhalin.
The Dow Jones report about the $50,000 reminds me of a comment that I heard within Shell – something to the effect that Shell were under increasing financial pressure from the Russian “mafia” – it's not exactly unusual for cash to change hands in Russian deals, but this example (while perhaps better documented than others) may be little more than the tip of the iceberg.

We did receive further information later in the day from another Shell insider regarding the question of bribery and corruption at Shell, but agreed with the source that it was not sufficiently substantiated to warrant publication. 

Shell has however admitted in Annual CRS Reports that some of its employees have engaged in such activity.

The following is an extract from “The Shell Report 2004”: “In 2004, we provide the number of proven incidents of bribery and fraud gathered by our internal audit system and reported to the Group Audit Committee – 16 bribery incidents and 123 fraud cases were reported, resulting in the dismissal or resignation of 203 staff and contractors. We will continue to improve our detection and data quality.”

The following is an extract from “Meeting the Energy Challenge: The Shell Report 2003” (page 39): “Bribery, by its nature, is difficult to detect and prove. Many accusations prove unfounded. Our businesses run control systems based on the risks they are facing. Globally, we require businesses to report incidents of bribery and corruption to the Group Audit Committee. Annually, Country Chairs report proven incidents of bribery through our annual assurance process. Internal audit runs an internal incident reporting process. We suspect that we still detect only a fraction of the actual incidents that occur. We continue to report this information (see data tables) to be transparent and to signal our seriousness in stamping out these practises. We will be looking for ways to improve our detection and reporting processes in 2003.” These reports were written and published under the Shell management responsible for the reserves fraud.

The following extract is from page 13 of the “2003 PEOPLE AND THE ENVIRONMENT ANNUAL REPORT” published by The Shell Petroleum Development Company of Nigeria Limited. Whistle-Blowing: During the year, Tell Shell made ground in fostering the habit of promptly reporting wrongdoings in order to maintain the ethical fibre of our operations. In 2003, 174 reported cases led to the release of 29 career and contract staff (apart from monetary penalties) and the de—registration of 16 contractors. At present, one in eight reported cases results in action being taken against individuals -justifying the whistle-blowing process as a significant, confidential means of correcting inappropriate behaviour.” Although there is no indication of what the “cases” were about, the preceding section of the same page was headed “Tackling Corruption”.

There is of course also the leaked Shell report prepared by WAC Global Services – “PEACE AND SECURITY IN THE NIGER DELTA” – which concluded that: “corporate behaviour of Royal Dutch/Shell in Nigeria feeds a vicious cycle of violence and corruption”.

Shell’s own admissions about corruption and bribery speak for themselves. 

Permanent location of this story: Bribery and Corruption at Shell: Saturday 14 January 2006: READ

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