Slugcatcher elbows out JR and points Hollywood to the Hague

Move over, the Ewings of Dallas!. If Hollywood is ever lost for an idea for a new mini-series will someone please tell the studios to take a close look at Royal Dutch Petroleum and Shell Transport and Trading, because between those twins of the oil patch there is enough material for a lifetime of drama, tragedy, pathos, and humour – not to mention war and peace.

The last time Slugcatcher looked at the “Shell” situation there was merger talk in the air, but as with anything Shell that was not all.

Management at the terrible twins is mounting an argument that the time has come for Royal Dutch and Shell to come together. The new business to be called, naturally, Royal Dutch Shell, will bring an end of a troublesome year, produce a better organised structure, generate higher profits, and produce a cleaner and more simplified balance sheet.

If true, it would be a wonderful thing.

But, the chances of it being true, and for a new-look business to emerge painlessly from the ruins of the old twin structure, are as likely as a snowfall in Kuwait.

Consider some of the issues being raised already, long before the marriage bans are read at the church door:

- In London, the Financial Services Authority is keeping its powder dry on the question of whether to prosecute anybody for the over-booked oil reserves scandal.

- In Holland, there is a brouhaha brewing (what else can it do?) over talk of massively increased management pay scales and bonus payments when/if the new company emerges.

- Back in London, there is a lawyer’s picnic underway as three big legal firms divide up the spoils for the work involved in merger a 100 billion euro firm.

- On both sides of the Atlantic there are mutterings about which audit firm knew what about the over-booked reserves. The Wall Street Journal claims one firm of auditors provided assurance that “Shell's own reserve auditor was competent and independent”.

- Inside Shell there is a debate about the proposed new single managing director role; and

- Somewhere in the Home Counties of England the former chief executive of Shell, Phil Watts, is said to be busy in his potting shed loading a double-barrelled brief which could blow the whole merger to bits as he works to clear his name, or see that the over-booking blame is more evenly apportioned.

Slugcatcher, who has spent a lifetime watching companies try to shrug off their past smells something very familiar at Shell.

He is not doubting for a minute that the plan will proceed, or that a single entity will evolve. Such a move screams commonsense, and has done for the past 50 years.

The odour Slugcatcher picks up is coming off item three in the list of evolving events – the lawyers picnic because it is here that the first signs of a feeding frenzy can be detected.

Slaughter and May, De Brauw Blackstone Westbroek, and Cravath, Swaine & Moore are the trio of top flight law firms which, according to the magazine, Legal Week, “have secured lead roles on Shell’s historic restructuring.”

The chaps at those firms are not cheap. Each has a flotilla of partners who require feeding by the shovel load. They all have a country house in Hampshire, plus an apartment in London, a couple of BMW 745s, a wife with a taste for Bermuda and St Moritz, plus a couple of daughters at Cheltenham Ladies College and/or filling in time at Oxbridge.

And that’s just the law firms.

What about the banks? Better get three of those as well for advice. The PR flunkies? Two should do. Someone to organise the road trips to Wall Street, Zurich, Frankfurt and Tokyo? Best hire a couple of Boeing Bizjets, and on we go.

By now, a casual reader will get the picture, and perhaps Hollywood will too.

Shell, and its history, is just one part of the story. The start of the merger process is another. The demonstrations of greed that the world is about to see as the cash flows freely from a firm basking in $US50-a-barrel oil price will be truly mind-numbing.