Royal Dutch Shell Plc  .com Rotating Header Image

A Shell Game: When Reality Meets Bribery

9/21/2012 @ 4:03PM

When I used to train employees on how not to bribe, I always added a caveat.  If your health or safety is at issue, I used to say, get yourself out of the situation.  Contact me immediately when you get to a safe zone, but do what you have to do.

I thought of this while reading the Dorsey & Whitney monthly anti-corruption digest.

Let me digress for a moment.  Lots of firms put out FCPA marketing materials.  Very, very few are actually worth reading.  Shearman & Sterling’s yearly FCPA digest is the FCPA-world’s absolute must-read.  But that’s once a year (maybe twice…I think they put out a mid-year update).  Chadbourne & Parke comes out with a quarterly FCPA thing.  It’s different in that it generally addresses a few issues more in depth.  Very helpful, and the folks at Chadbourne do a great job (although, now that Scott Peeler went to Stroz Friedberg, I worry—my only comfort being that Ollie Armas from Chadbourne is as smart as they come).

Dorsey & Whitney’s monthly Anti-Corruption Digest is one of the ones you should read. It’s one of those that list out what cases have been brought, etc., but it does a better job on the international side than anything else I’ve seen, bar none.

Anyway, I was reading their Digest this month, and I saw an entry in the UK section about Shell.  Shell, it turns out, is accused of paying protection money in the Niger Delta to warlords and militants who have been attacking Shell’s pipeline.

I immediately thought about the Chiquita Banana case.  I felt bad for them, too.  Chiquita Banana was accused of—and paid a fine for—paying off Columbian terrorists.  It’s not like they were funding Al Queda: the Colombians sat them down and said “you have some really nice banana fields there, I would hate for something to happen to them.”  It was no different from any other protection racket, Tony Soprano would have felt right at home.

It seems that that’s what we have here with Shell.  From Dorsey’s Digest:

It is reported that Shell battles against oil theft and the threat of kidnapping every day.  In order to resolve the security situation the Company has allegedly been forced to go to great lengths.

Granted that paying off any protection racket is a bad thing.  But can you really gainsay them?  The threat is real: those banana fields, like Shell’s oil pipeline, would have been severely damaged, if not destroyed.  I’m not in the oil industry—my experience is in Finance and Tech—but I suspect having a pipeline cut in several places is a bad thing.  And I might love bananas flambé, and I’m no chef, but I don’t think burning the field is how you make it.

Chiquita had to pay $25 million back in 2007.  I can’t bring myself to any indignation over these payments, and I hope Shell gets off lightly.

Companies who bribe put themselves in the jackpot voluntarily.  That’s not this.  This, in my opinion, is an SEC issue, not a DOJ issue.  I see it as analogous to the safety issue I always raise at training.  The threats these “warlords and militants” make are real.  Let’s just pause for a moment and sympathize with companies trying to do business in areas of the world controlled by people accurately described as “warlord.”  It’s a disclosure question, in my opinion.  I have a hard time equating Shell’s conduct with, say, Alcatel Lucent’s.  Nor, in my opinion, should OFAC butt its nose in.  I know the temptation over at Treasury is to say, “paying a terrorist is paying a terrorist.”  I don’t know whether these warlords engage in international terrorism or not, but really, let’s be a little sympathetic.

Tell me the difference between this and a Sudanese “police officer” with one hand on his handcuffs—or pistol—and another hand outstretched.  I can’t tell the difference.  And my answer is the same: make the payment.  I’m not saying you don’t need to disclose it.  I think you do.  But having an “extorted payments” account isn’t an internal controls weakness.

SOURCE and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “A Shell Game: When Reality Meets Bribery”

Leave a Comment

%d bloggers like this: