LETTER FROM JOHN DONOVAN TO SHELL CHAIRMAN, MARK MOODY-STUART, 14 APRIL 1998
My Ref: jad/a63
14 April 1998
Mr Mark Moody-Stuart
Chairman and Managing Director
The “Shell” Transport And Trading Company plc
Shell Centre
London SE1 7NA
4 Pages By Fax Only To:
0171 934 7987
Dear Mr Moody-Stuart
Thank you for your letter of 9th April. I wrote to you on 1st April with a straightforward question. I have received a straightforward response from you and Miss Munsiff. As a result, a small measure of progress has been achieved.
A considerable amount of unproductive correspondence would have been avoided if Shell UK had answered in the same straightforward way, the fundamental question we have put to them time and time again over the last year. If my company, Don Marketing, did not create the Smart multi-partner concept, who did? They maintain that the answer was given in their July 1997 Report. Royds Treadwell, Mary Vitoria QC, an independent expert, and DM, have all failed to find the answer within the Report (as it was not given).
It is amazing that after a year of trying to resolve these matters privately, you have allowed the situation to spiral out of control to the extent that a High Court Writ has now been issued. Further damage to Shell’s already battered reputation is now inevitable. I had thought, after reading the FT article on 9 August 1997, that you wished to rehabilitate the company’s reputation. It is evident from your response that this is not the case.
It is all so unnecessary in view of my proposal that the claim be referred to binding, confidential, ADR. The mediation cost would have been a pittance compared with normal litigation. If the claim was deemed by an independent adjudicator to be without merit, we would not have received a penny and no publicity would have arisen. Remarkably, contrary to the best interests of Shell shareholders, you chose to totally ignore the proposal. It was not even acknowledged. That left me with no option but to either abandon a legitimate claim, or issue proceedings. If your lawyers do not immediately apply to have the action struck out on the basis that the claim is without merit, it will be self evident that it was either a bluff or an error on their part to dismiss the claim out of hand.
I note that you have read the letter from Miss Munsiff. As a Shell shareholder (and founder of the Shell Shareholders Organisation) I am staggered at the response. We now have permission to circulate the relevant information to your fellow directors. This is despite the concerted efforts made by Shell’s lawyers (over a period of several months) initially to stop us providing you on a formal basis with information which you already had, and subsequently, to prevent the information being disclosed to your colleagues. Yet you are not prepared for the same information to be supplied, even on a confidential basis, to the people who actually own the company - your shareholders. Your decision to keep company members in the dark speaks absolute volumes. So much for the core principle of “openness”. When it comes to the crunch, covering-up a catalogue of misdeeds by Shell managers, despite incontrovertible evidence of flagrant breaches of the principles of honesty and integrity, apparently takes priority.
I also note from your letter that Mr Herkstroter is continuing to be kept informed about these matters. What prospect is there of compliance with Shell’s Statement of General Business Principles among the 100,000 individuals who work with the Royal Dutch/Shell Group of Companies, when you both fail to abide with or uphold those very principles? It is impossible to reconcile your actions with the numerous statements you have both made in speeches and in publications. If my experience in recent years is any guide, the fine words of the Statement are nothing more than a sham. Your fine words do not match with your deeds.
Let me give you an example. The following extracts are taken from your stirring reply to the article published in the Guardian under the headline: “Unlovable Shell – The Goddess of Oil”. You said: “…the Statement provides, for our employees to follow and for the outside world to judge us by, an ethical framework which is mandatory, not optional… just having those principles is not enough. In the past… an oil company could say ‘trust me’ and expect that to be enough. Today, people say, ‘tell me – listen to me – show me’. Trust has to be earned by transparency. That’s one of the most important lesson’s we’ve learned in Shell…” In view of the attempts to prevent important information being circulated within the ranks of Shell Transport Directors and members of the company, it appears that no such lesson has been learned. As stated, covering-up serious misdeeds apparently takes priority over transparency.
I see that you are now trying to distance yourself from these matters. Given your past involvement and your intimate knowledge of the entire saga, it is far too late for that. Hence, although you may not welcome direct correspondence from me, you must take ultimate responsibility for dealing with what has become a real crisis in regard to the reputation of the Royal Dutch/Shell Group and the reputation of its most senior management.
I am surprised at the threat you have made on behalf of Shell UK Limited. This provides further evidence of the active involvement by Directors of Shell Transport in the management of Shell UK (despite the fact that such involvement is directly at odds with what Miss Munsiff has previously stated in writing). I welcome such interventions provided they are made with the intention of upholding Shell’s Statement of General Business Principles, as was the case with your predecessor. But instead of intervening to put a stop to Shell UK’s antics of trying to defend the indefensible, you issue a warning on their behalf. That threat could rebound. Your shareholders will be able to draw their own conclusions if Shell fails to issue libel proceedings in respect of the allegations contained herein. Your problem is that you know that I can prove that what I have said is based on absolute fact.
Your action in issuing a threat effectively means that you condone the unscrupulous, deceptive, and ruthless conduct of the Shell manager who is the main culprit in these matters. You have seen incontrovertible evidence of his outright lies on behalf of Shell UK. You are also fully aware of the conclusions reached by a number of highly qualified professionals who have made an independent evaluation of these matters.
Your action in supporting him, despite your considerable knowledge of these matters, cannot possibly be reconciled with your speech on 6 October 1997 in which you stated: “The Statement of General Business Principles constitutes a set of basic core values – honesty, integrity and respect for people… We do not bend these Principles. They are non-contestable and non-negotiable. If an employee fails to uphold these values he or she no longer belongs with us.” Yet Mr Lazenby still works within the Shell Group.
Following receipt of your letter of 9th April, my Solicitors sent a brief to specialist Counsel to establish whether grounds exist to seek a legal declaration that you have acted in breach of your fiduciary duty and/or failed to act in the best interests of shareholders. Irrespective of the legal position, the stance you have adopted has, in my view, seriously undermined your credibility as being a promoter and upholder of high moral principles.
This letter will form part of the package being sent to a number of parties, including Shell shareholders, and 2,000 pension fund managers. The shareholders organisation will take the opportunity to conduct a survey among shareholders in relation to Shell’s current reputation, compared with the days when the public could be sure of Shell. Incidentally, the shareholders website is now fully operative at: www.shell-shareholders.org
The shareholders organisation is currently producing an open letter addressed to you. A copy of an initial draft is attached. The final draft, as approved by its lawyers, will be circulated to Shell staff at the Shell Centre and Shell-Mex House (hopefully on Friday). By then, the Don Marketing website will also be operational. DM is publishing this letter on its website, plus appropriately updated versions of all of the other information of which you are already aware. Later this week, I will begin faxing out information to other parties, starting with PIRC. As a courtesy, I will send you copies.
I do hope that you have had an opportunity over the Easter Holiday to scan through the Statement of Claim that was issued on 9th April (which is now in the public domain). Anyone reading the document on an impartial basis would quickly reach the conclusion that Shell’s best interests would have undoubtedly been better served by accepting the proposals for resolving the dispute privately.
Yours sincerely
John Donovan
Cc. Mr Herkstroter, Chairman, Royal Dutch Petroleum Co (Fax: 00 31 70 377 4142)
Miss Yyoti Munsiff, Company Secretary, Shell Transport (Fax: 0171 934 5153)
Dr Fay, Chairman and Chief Executive, Shell UK Ltd (Fax: 0171 257 3939)
Mr Richard Wiseman, Legal Director, Shell UK Limited (Fax: 0171 257 3303)
Mr Colin Joseph, D J Freeman Solicitors (Fax: 0171 556 4590)
Mr Richard Woodman, Royds Treadwell Solicitors (Fax: 0171 583 2034)