How is it possible that companies which promote themselves as the pillars of the corporate world, and who lecture others, can get it so horribly wrong?
Worse still, are we simply seeing the tip of the iceberg? Do the sins being admitted mask even worse wrongdoings?
What really sticks in The Slug’s craw is the continued lack of leadership from big oil in exploration for fresh reserves, and the fact that big oil seems content these days to bank its cheques, return capital, and pay dividends rather than get on with the business of discovery.
There’s a lot to digest in that little rant, so best that we stick to the facts – as we know them.
Back in 2004 it was Shell which disgraced itself by prematurely “booking” oil and gas reserves, a trick which artificially boosted its reserves, and artificially boosted its balance sheet by about 20%.
The fact that one of the world’s biggest companies eventually had to admit that it had erroneously added 3.9 billion barrels of oil to its books was a shock felt throughout the oil world, leading to wholesale management changes at the Anglo/Dutch company.
Last week it was the turn of BP, Europe’s second biggest oil company, to admit its misdeeds. Not only had it been caught with leaking oil pipes in Alaska, and dud safety procedures at a Texas oil refinery, but it had committed frauds in energy trading.
Said quickly, and after writing out a cheque for $US380 million in fines, and it all seems so perfectly innocent.
Just a few of the chaps making a few silly little mistakes seems to be the excuse. Things that anyone could have done, old boy.
No, it’s not.
There’s a pattern emerging which is deeply disturbing and it goes to the heart of the way big oil conducts itself.
The Slug, who has never been trusted by big oil, reckons he can identify a stench emanating from the highest levels of the industry, a place where people seem to believe that because they ran a big company they can get away with anything.
He’s not alone.
Judge Peter D Keisler, acting US attorney general of the can also smell rat. If not, why did he say when announcing on-going monitoring of BP in the US that, “We are not confident that without that kind of intervention we would be happy with things going forward.”
Translated into English, Keisler is saying that he doesn’t trust BP to get its own house in order.
If the acting attorney general of the US doesn’t trust BP, and corporate regulators have said much the same about Shell, why should The Slug trust them – or why would investors, or customers?
These are not easy questions for big oil to answer. In fact, the top end of the industry might not have an answer to what seems to be systematic mismanagement.
What Slugcatcher would like to see now is a far deeper inquiry into how big oil operates, particularly addressing the question of: “in who’s interest does it operate?”
The obvious answer is that some big oil players operate solely to boost the financial returns of today’s shareholders and has lost sight of its role in society, or its obligation to invest for the future.
