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Employees move to block Shell exit from Kenya

A Shell Petrol Station along Nyerere Avenue, Mombasa. Photo/ ABDULRAHMAN SHERIFF


Sunday June 20, 2010
Posted Saturday, June 19 2010 at 19:51

Shell’s intended exit from 21 African countries appears headed into headwinds in Kenya where employees are plotting to block the departure in court.

The Sunday Nation learnt that behind-the-scene consultations between two law firms representing both parties failed to satisfy the employees who accuse Shell Kenya of “glossing over” the matter.

The staff, numbering about 190 or what their lawyers say is 95 per cent of the employees, are seeking full settlement of their dues and the option of not having their contracts bought out by the new owner. They want the talks over their welfare held parallel to those of a buy-out.

Oil Libya Holding Company (Oilibya) is widely reported to have made an offer of Sh160 billion for the downstream African operations of the Anglo-Dutch transnational. The ambitious Libyan firm has in the past bought out Shell in other African jurisdictions.

People familiar with the consultations between law firms Okoth & Kiplagat representing the employees and Hamilton Harrison & Mathews for Shell believe fear of a settlement being replicated elsewhere in Africa is at the heart of the discomfort by Shell. The firm is reported to be negotiating with two other industry operators from Libya and Switzerland.

Demand letter

In a demand letter, Dr Kenneth Kiplagat says the law firm had instructions to move to Industrial Court to block divestiture if it does not accommodate workers’ wishes. A seven-day ultimatum to Shell yielded nothing, paving way for court action. “We have instructions to move to court to protect our clients’ rights. All future communication in this matter should be directed through our office,” said the letter to Kenya Shell last month.

The letter we obtained was also copied to employees of the firm. However, the company is yet to release the names of its clients to Shell, which had demanded their identities. A number of senior managers have previously left quietly under terms that are yet to be made public. Interestingly, Shell says it wants to sell the shares in the Kenyan outfit, meaning the employees’ contracts are theoretically intact.

It has, however, said in correspondence by its lawyers that any employees who do not have roles under the new shareholders will be paid off according to company rules. Shell has also made it clear that it does not wish to talk to its employees through law firms and prefers direct talks.

Shell’s country chairman Jimmy Mugerwa could not be reached for comment about workers’ concerns by the time of going to press as he was reported to be outside Kenya. It is clearly Oilibya the workers have in mind while seeking a settlement. According to Faisal Werfelli, Shell’s legal adviser in Tunisia, Libya Oil Holding Ltd (TAHL) has offered $2 billion for some of Royal Dutch Shell Plc’s downstream business in Africa. Libya Oil was previously known as Tamoil Africa.

Mr Werfelli this month in an interview with Bloomberg News said Alrahila Oil Services of Libya and Vitol Group had also expressed interest in Shell’s assets. TAHL owns Oilibya, which made its debut in Kenya in December 2006 after buying Mobil assets. Shell’s assets have also attracted the attention of Essar of India and Engen of South Africa who are already trading locally.

“Early indications suggest there are a number of potential buyers interested in acquiring the businesses as going concerns, and we will now enter into a round of negotiations,” Shell’s Executive Vice President Xavier le Mintier said in April this year. According to Okoth and Kiplagat Advocates, employees ought to receive reasonable compensation for their contribution to Kenya Shell’s wealth, value and goodwill created over the years.

Dr Kiplagat said the staff recognise and accept Shell is at liberty to sell its local business on a going concern basis, but the transaction would result in rationalisation and redundancies. “The intended divestiture amounts to constructive redundancies (stealth redundancies) by Shell, entitling our clients to activate the necessary and applicable statutory safeguards,” he said.

Affords them

Shell’s employees want an exit offer That affords them an option to transit to the new owner or a buy-out of employment contracts. It is based on the argument that workers had not contemplated their continued future employment could be with another party. It is thought a protracted legal tussle could erupt if the issue between Shell and its employees is not amicably solved.

The workers fear values and attributes of the party would be different from those of Shell. But it is not only employees who are jittery. Retailers, who asked not be named, said they are concerned about impending divestiture as fuel supply is at times not adequate, leading to stock-outs. Transporters are also unable to plan future investment.

The employees may as well rain on Shell’s parade here and not inconceivably elsewhere though. Multinationals that have previously left Kenya include Caltex, BP, Esso, Agip and Mobil.



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