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Federal Contractor Misconduct Database

About POGO’s Federal Contractor Misconduct Database (FCMD)

The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations.  In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data.  We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services.

Ranking: 64

Royal Dutch Shell PLC

Shell, best known for its service stations and for exploring and producing oil and gas on land and at sea, also delivers a wide range of energy solutions and petrochemicals to customers. These include transporting and trading oil and gas, marketing natural gas, producing and selling fuel for ships and planes, generating electricity and providing energy efficiency advice. The company has operations in over 140 countries and territories and employs approximately 109,000 people.

Federal Contract $: $1038.8m

Total Number of Instances: 33

Total Misconduct dollar amount: $1327.5m

Instances of Misconduct

1.  Underpayment of Royalties on Offshore Oil and Gas Leases

The Department of the Interior’s Office of Natural Resources Revenue (ONRR) collected $25 million from Shell Offshore Inc. in a settlement to resolve claims that the company underpaid royalties owed on oil and gas produced from federal leases. The settlement agreement covered both royalty-in-value and royalty-in-kind production from Shell deepwater leases in the Gulf of Mexico between 2000 and 2008….  more»

2.  Brazil Chemical Facility Contamination

The Brazilian units of BASF and Royal Dutch Shell were fined a total of 622 million reais (US$357 million) for contamination at a chemical plant in Brazil that allegedly caused workers to suffer health problems from the 1970s to 2002. The companies will also pay 64,500 reais (US$37,000) in damages to each worker and any child born during or after their service at the plant. The plant, in plant in Paulinia, Sao Paulo state, was built by Shell in the late 1970s and was sold in 1992 to Cyanamid, later acquired by BASF….  more»

3.  Panalpina Group Foreign Bribery: DOJ Investigation

Swiss shipping and logistics company Panalpina Group and several of its oil and gas service company customers, including Royal Dutch Shell, agreed to pay over $156 million in penalties to settle Foreign Corrupt Practices Act criminal charges filed by the U.S. Department of Justice (DOJ). Panalpina admitted that between 2002 and 2007, it paid thousands of bribes totaling at least $27 million to foreign officials in at least seven countries, including Angola, Azerbaijan, Brazil, Kazakhstan, Nigeria, Russia and Turkmenistan in order to circumvent local rules and regulations relating to the import of goods and materials. Shell’s Nigerian subsidiary, Shell Nigeria Exploration and Production Company Ltd. (SNEPCO), admitted that it approved of or condoned the payment of bribes on their behalf in Nigeria and falsely recorded the bribe payments as legitimate business expenses in their corporate records. To resolve the matter, the Department of Justice and Shell entered into a 3-year deferred prosecution agreement that required, among other things, SNEPCO to pay a $30 million criminal penalty. See related Royal Dutch Shell instance, “Panalpina Group Foreign Bribery: SEC Investigation.”…  more»

4.  Panalpina Group Foreign Bribery: SEC Investigation

Swiss shipping and logistics company Panalpina Group and several of its oil and gas service company customers, including Royal Dutch Shell, agreed to pay nearly $80 million to settle a Foreign Corrupt Practices Act civil enforcement action brought by the U.S. Securities and Exchange Commission (SEC). The SEC alleged that Shell and its indirect subsidiary Shell International Exploration and Production, Inc. (SIEP) violated the FCPA by using a customs broker to make payments from 2002 to 2005 to officials at the Nigerian Customs Service to obtain preferential customs treatment related to a project in Nigeria. Without admitting or denying the allegations, Shell and SIEP agreed to pay approximately $18.1 million in disgorgement of profits and prejudgment interest. See related Royal Dutch Shell instance, “Panalpina Group Foreign Bribery: DOJ Investigation.”…  more»

5.  Hebble et al. v. Shell (Oil and Gas Royalties)

Plaintiffs, successors in interest to an Oklahoma oil field lease, alleged that Royal Dutch Shell unit Shell Western E & P, Inc. owed them $750,000 in oil and gas royalties. In May 2008, a jury found in favor of plaintiffs’ claims of fraud and breach of fiduciary duty and awarded them $66.8 million in damages….  more»

6.  U.S. ex rel. Wright v. Chevron (Underpayment of Natural Gas Royalties)

Shell Oil Company and other Shell affiliates agreed to pay the United States $2.2 million to resolve claims that they violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases. The government alleged that Shell improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, and improperly reported processed gas as unprocessed gas to reduce royalty payments….  more»

7.  Explosion at Bacton Gas Terminal

Shell UK Ltd. was ordered by a British court to pay a total of £1,242,000 (approx. US$2 million) in fines and costs for the explosion and fire at its Bacton gas terminal in Norfolk, UK, in 2008. Shell also pleaded guilty to seven charges involving safety, environmental control, and pollution prevention failures at the plant which led to the explosion….  more»

8.  U.S. ex rel. Johnson v. Shell (Underpayment of Oil Royalties)

Shell Oil Company agreed to pay $110 million to resolve False Claims Act and administrative claims that it underpaid royalties due for oil produced on federal leases from 1980 to December 31, 1998….  more»

9.  Underpayment of Gas Royalties on Gulf of Mexico Leases

Shell Oil agreed to pay $56 million to resolve claims that it underpaid royalties owed on natural gas produced from federal leases. The government alleged that Shell systematically underreported the value of natural gas that it produced on federal leases in the Gulf of Mexico from August 1, 1986 to December 31, 1999 and paid less in royalties than it owed to the Minerals Management Service of the U.S. Department of the Interior….  more»

10.  Unauthorized Venting and Flaring of Gas in the Gulf of Mexico

Shell Oil Company agreed to pay $49 million to settle claims under the False Claims Act and various administrative provisions relating to unauthorized venting and flaring of gas in the Gulf of Mexico. The government alleged that Shell improperly vented and flared gas from various facilities in the Gulf of Mexico and failed to properly report, or pay royalties on, the vented and flared gas….  more»

11.  Environmental Violations at California Gas Stations

Shell Oil Co. paid $19.5 million in civil and administrative penalties and costs in California to resolve violations of rules governing the underground storage of fuel at gas stations. The state alleged that Shell committed hundreds of violations statewide, including failure to maintain leak detection monitoring systems and spill alarms….  more»

12.  Atallah vs. Equilon Enterprises (Fraud)

Elias Atallah claimed that Royal Dutch Shell subsidiary Equilon Enterprises LLC (doing business as Shell Oil Products, U.S.) had defrauded him while he was negotiating the purchase of a gas station from the company in Riverside County, California, in 2003. Atallah claimed that Equilon had intentionally concealed from him the fact that the county would force the station impose costly environmental remediation measures to prevent groundwater contamination. In 2006, a state jury found Equilon guilty of intentional fraud and concealment and awarded Atallah $1.65 million in compensatory damages. The jury also found that Equilon had acted with “oppression, malice or fraud” and was therefore liable for punitive damages. In March 2010, a jury awarded $50 million in punitive damages….  more»

13.  Shell Chemical/Shell Chemical Yabucoa Clean Air Act Settlements

Under two separate settlements with the U.S. Environmental Protection Agency (EPA), Shell Chemical L.P. and Shell Chemical Yabucoa, Inc., agreed to pay $3.5 million in penalties and spend an estimated $6 million to install pollution-reduction equipments at refineries in Louisiana, Alabama and Puerto Rico. The EPA alleged violations of Clean Air Act requirements covering emissions of sulfur dioxide, nitrogen oxides, volatile organic emissions and benzene at each of the facilities….  more»

14.  Violation of Clean Air Act Fuel Standards

The U.S. Environmental Protection Agency (EPA) reached settlements with BP Products North America, Inc. Motiva Enterprises, LLC and Equilon Enterprises, LLC, doing business as Shell Oil Products US for alleged violations of gasoline and diesel fuel standards under the Clean Air Act. The settlements resolve alleged violations occurring from 1999 through 2004 at retail outlets, terminals and refineries located throughout the United States. BP agreed to pay a civil penalty of $900,000 and Shell agreed to pay a civil penalty of $600,000. BP and Shell also pledged to perform extensive remedial efforts to correct the alleged violations and to prevent the recurrence of similar violations….  more»

15.  Employee Compensation Antitrust Litigation

Non-union managerial, professional and technical (MPT) employees of the major oil companies filed lawsuits under the Sherman Act (15 U.S.C. § 1–7) alleging that the companies, including Exxon, Royal Dutch Shell, BP and Chevron, illegally colluded to set the wages of MPT employees at artificially low levels by sharing salary, bonus and compensation data. Lawsuits filed by Former Exxon employee Roberta Todd and several other plaintiffs were reportedly settled in 2009 for an undisclosed sum with the defendants not admitting any liability or wrongdoing….  more»

16.  Employee Retirement Income Security Act (ERISA) Class Action

“The Royal Dutch / Shell Group of Companies reported today that a settlement has been reached in a class action and related litigation brought against certain Group companies on behalf of employees participating in certain United States employee savings plans that are subject to the Employee Retirement Income Security Act of 1974 (ERISA). The class action, which is pending in United States Federal Court in New Jersey, makes certain ERISA-based claims based upon Shell’s recategorisations of its proved oil and gas reserves. An order preliminarily approving the proposed settlement has been entered. If the settlement is finally approved by the court, Shell will pay $90 million which – after certain expenses (including court-approved attorneys’ fees) are deducted – will be distributed to eligible participants in the relevant employee savings plans. Shell also has agreed to pay up to $1 million of plaintiffs’ counsel’s out-of-pocket expenses and the costs of providing notice to class members… In addition, as part of the settlement agreement, Shell has agreed to adopt certain new procedures for monitoring and training individuals appointed to fiduciary positions in savings plans that are subject to ERISA.” See related Royal Dutch Shell misconduct instances “Shareholder Derivative Lawsuit Arising Out of 2004 Reserves Recategorization,” “Violations of Federal Securities Laws,” and “European Shareholder Lawsuit Arising Out of 2004 Reserves Recategorization.”…  more»

17.  Shareholder Derivative Lawsuit Arising Out of 2004 Reserves Recategorization

“The Shell Group (Shell) today announced that a settlement has been reached with the plaintiffs in shareholder derivative actions arising out of Shell’s 2004 reserves recategorisation… The cases sought corporate governance and structural changes as well as unspecified monetary damages from the current and former directors. Under the terms of the settlement, Royal Dutch Shell plc has agreed to adopt and implement certain corporate governance principles negotiated with counsel for the derivative plaintiffs and a corporate governance expert retained by plaintiffs’ counsel. The principles include policies and standards in the areas of Board composition and qualifications; membership and functions of Board committees; director and senior management compensation; financial reporting and controls; and corporate compliance and ethics. Terms of the settlement also include payment by Shell of $9.2 million in attorneys’ fees and expenses to counsel for the derivative plaintiffs.” See related Royal Dutch Shell misconduct instances “Employee Retirement Income Security Act Class Action,” “Violations of Federal Securities Laws,” and “European Shareholder Lawsuit Arising Out of 2004 Reserves Recategorization.”…  more»

18.  Harmful Exposure to Pesticides (Nicaragua)

“A $490 million judgment in favour of 466 plaintiffs in a consolidated matter that had once been nine individual cases was rendered in 2002 by a Nicaraguan court jointly against SOC [Shell Oil Company] and three other named defendants (not affiliated with SOC), based upon Nicaraguan Special Law 364 for claimed personal injuries resulting from alleged exposure to dibromochloropropane (DBCP), a pesticide manufactured by SOC prior to 1978. This special law imposes strict liability (in a predetermined amount) on international manufacturers of DBCP…SOC was not afforded the opportunity to present any defences in the Nicaraguan court, including that it was not subject to Nicaraguan jurisdiction because it had neither shipped nor sold DBCP to parties in Nicaragua. At this time, SOC has not completed the steps necessary to perfect an appeal in Nicaragua. As of December 31, 2005, we are aware of eight additional Nicaraguan judgments that have been entered in the collective amount of approximately $398.2 million in favour of 489 plaintiffs jointly against Shell Chemical Company and three other named defendants (not affiliated with Shell Chemical Company) under facts and circumstances almost identical to those relating to the judgment described above. Additional judgments are anticipated…SOC filed a declaratory judgment action seeking ultimate adjudication of the non-enforceability of the first Nicaraguan judgment in the United States District Court for the Central District of California. This district court granted summary judgment in favour of SOC, finding that the Nicaraguan court did not have jurisdiction to enter judgment against SOC and that the judgment is unenforceable in the US. The Nicaraguan plaintiffs did not appeal. It is the opinion of management of the Shell Group that Nicaraguan DBCP judgments are unenforceable in a US court.”…  more»

19.  Violations of Federal Securities Laws

“The United States Securities and Exchange Commission (SEC) and UK Financial Services Authority (FSA) issued formal orders of private investigation in relation to the reserves recategorisation which Royal Dutch and Shell Transport resolved by reaching agreements with the SEC and the FSA. In connection with the agreement with the SEC, Royal Dutch and Shell Transport consented, without admitting or denying the SEC’s findings or conclusions, to an administrative order finding that Royal Dutch and Shell Transport violated, and requiring Royal Dutch and Shell Transport to cease and desist from future violations of, the antifraud, reporting, recordkeeping and internal control provisions of the US Federal securities laws and related SEC rules, agreed to pay a $120 million civil penalty and undertook to spend an additional $5 million developing a comprehensive internal compliance program.” See related Royal Dutch Shell misconduct instances “Employee Retirement Income Security Act Class Action,” “Shareholder Derivative Lawsuit Arising Out of 2004 Reserves Recategorization,” and “European Shareholder Lawsuit Arising Out of 2004 Reserves Recategorization.”…  more»

20.  U.S./European Shareholder Lawsuits Arising Out of 2004 Reserves Recategorization

In April 2007, Royal Dutch Shell agreed to pay $352.6 million, plus administrative costs, to settle a securities fraud case with investors in the Netherlands, UK, Germany, France, Sweden, Denmark, Norway and Luxembourg. The case arose after Shell admitted in 2004 it had overstated its oil and gas reserves by over 20 percent from 1997 to 2003. In June 2008, it was announced that a settlement was reached with U.S. investors. The agreement includes a settlement of approximately $80 million, with Shell also paying various fees, expenses and costs. The participants in both the European and U.S. settlements will also receive an additional payment of $35 million. See related Royal Dutch Shell instances “Employee Retirement Income Security Act Class Action,” “Shareholder Derivative Lawsuit Arising Out of 2004 Reserves Recategorization,” and “Violations of Federal Securities Laws.”…  more»

21.  Human Rights Violations in Nigeria

The families of Ken Saro-Wiwa and other Ogoni human rights activists tortured or murdered in Nigeria filed several lawsuits in New York federal court against Royal Dutch Petroleum Company, various subsidiaries and several company executives. The plaintiffs want the defendants held accountable for their alleged complicity in human rights abuses committed by Nigeria’s military government. The cases were brought under various U.S. laws, including the Alien Tort Claims Act (ATCA), the Torture Victim Protection Act (TVPA), and the Racketeer Influenced and Corrupt Organizations Act (RICO). In June 2009, on the eve of trial, the parties agreed to settle the case for $15.5 million to compensate the 10 plaintiffs, establish a trust intended to benefit the Ogoni people, and cover a portion of plaintiffs’ legal fees and costs….  more»

22.  Breach of Lease Agreement in Nigeria

In May 2007, the high court in Port Harcourt, Rivers State, Nigeria ordered Royal Dutch Shell to pay six billion naira (US$147 million) in damages to three local communities for breaching a lease agreement on land on which it has staff residential quarters. The communities claimed Shell’s exploration activities have harmed the local environment. Shell filed an appeal for a stay of execution of the judgment….  more»

23.  Hoarding Diesel Fuel

The Argentine government fined Royal Dutch Shell and Petreleo Brasileiro (Petrobras) a total of $322,000 for failing to deliver sufficient supplies of diesel fuel to the country. The Domestic Trade Office imposed four separate fines on Shell and one on Petrobras due to shortfalls in the supply of diesel fuel at numerous service stations. The government fined the local unit of Shell $7.5 million in December 2006 over diesel shortages….  more»

24.  MTBE Cleanup Costs (Santa Monica, CA)

“Under the terms of a settlement filed…in federal court, several oil companies will pay $1.5 million to the Environmental Protection Agency for costs it incurred while directing the investigation and cleanup of methyl tertiary butyl ether (MTBE), a gasoline additive, from a groundwater basin formerly used for drinking water by the City of Santa Monica, California… The agreement between the EPA and the oil companies follows eight years of investigation and cleanup under the Federal Resource Conservation and Recovery Act and California’s Porter Cologne Act. The MTBE contamination in the vicinity of Santa Monica’s drinking water wells came from at least 25 possible sources, most of which were gas stations in the Charnock Sub-Basin.”…  more»

25.  MTBE Products Liability

Thirty-one oil and petroleum refiners and distributors were sued in California state court over the contamination of water wells near Lake Tahoe by the gas additive methyl tertiary butyl ether (MTBE). Twenty-five defendants settled with the South Tahoe Public Utility District before trial began in September 2001 for a total of $31 million in cleanup costs. In the ensuing trial, the jury found the remaining companies – Shell Oil Co., Shell Products Co., Equilon Enterprises LLC, Texaco Inc. and Tosco Corp. – liable for selling a defective product, namely gasoline containing MTBE. Those companies eventually settled for over $28 million….  more»

26.  Price Fixing in El Salvador

The government of El Salvador accused Esso Standard Oil (owned by Exxon Mobil) and Royal Dutch Shell’s local subsidiary of price fixing and fined each company $852,000. The government accused the companies of colluding to set artificially high gas prices….  more»

27.  Petrochemical Emissions at Deer Park Facility

Shell Chemical L.P., a unit of Royal Dutch Shell, paid $500,000 to Harris County, Texas, to settle five different air pollution events at its Deer Park refinery between April 2008 and March 2010. The county accused Shell Chemical of failing to notify officials about the toxic releases….  more»

28.  Houston Ship Channel Air Pollution

Environment Texas Citizen Lobby and the Sierra Club filed a federal lawsuit against Shell Oil on behalf of citizens who live near the company’s Deer Park, Texas oil refinery and chemical plant. Plaintiffs claim state and federal environmental officials failed to enforce the Clean Air Act at the facility, where Shell and its subsidiaries have released millions of pounds of excess air pollutants along the Houston Ship Channel over the past five years. In April 2009, the parties settled the lawsuit. Under the proposed settlement, Shell agreed to pay a $5.8-million civil penalty….  more»

29.  Nationwide MTBE Groundwater Contamination Litigation

A dozen oil companies, including BP America Inc., Chevron Corp., Shell Oil Co. and Valero Energy Corp., agreed to pay over $423 million to settle litigation with public water providers in 17 states over groundwater contamination from the gasoline additive methyl tertiary butyl ether (MTBE). The companies also agreed to pay cleanup costs that arise in the next 30 years. Defendant ExxonMobil refused to settle and faces numerous MTBE trials, scheduled to begin in September 2008….  more»

30.  Clean Air Act Violations (Bridgeport, CT)

Shell Oil Co. subsidiary Motiva Enterprises LLC agreed to pay a $75,000 fine and replace two storage tanks to settle charges that it violated the Clean Air Act. The Environmental Protection Agency alleged the storage tanks at a gasoline terminal in Bridgeport, Conn. were improperly maintained and leaked gasoline vapors, which contribute to ground-level ozone and smog….  more»

31.  Paraffin Wax Price Fixing

The European Commission imposed fines on nine companies for participating in a paraffin wax cartel in the European Economic Area (EEA) between 1992 and 2005 in violation of the EC Treaty’s ban on cartels and restrictive business practices. Royal Dutch Shell also participated in the cartel but was not fined because it revealed the existence of the cartel to the Commission. See related Exxon Mobil instance, “Paraffin Wax Price Fixing.”…  more»

32.  Cox vs. Shell Oil Company (Polybutylene Pipe)

A nationwide class-action lawsuit against Shell Oil Co. and Hoechst Celanese Corporation was filed on behalf of owners of houses, mobile homes and other structures with Polybutylene (PB) piping installed between Jan. 1, 1978 and July 31, 1995. Shell and Hoechst Celanese supplied raw materials used in the manufacture of the pipes, which plaintiffs claimed were defective and prone to leaking. The lawsuit was settled in November 1995. Under the settlement, the defendants committed over $1 billion to a settlement fund to compensate those who sustained property damages or repair costs as the result of using PB plumbing….  more»

33.  Clean Water Act Violations in Puerto Rico

Royal Dutch Shell subsidiary Shell Chemical Yabucoa, Inc. of Puerto Rico agreed to pay a $1,025,000 penalty and spend at least $273,800 enhancing its pollution controls and monitoring to remedy Clean Water Act violations. When Shell purchased the facility in 2001, it was not in compliance with its pollution discharge permit. The U.S. Environmental Protection Agency and Shell agreed on steps it had to take to bring the facility into compliance. The government alleged Shell failed to fulfill the agreement by discharging pollutants in excess of permit limits, discharging pollutants into Santiago Creek and the Caribbean Sea at unpermitted locations, failing to report certain discharge data, and lacking adequate operation and maintenance of a discharge pipe into the Caribbean Sea. As part of the consent decree, Shell also agreed to Install a 1.34 million gallon storage facility for contaminated stormwater if it restarts petrochemical activities at the facility….  more»

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