ShellNews.net: Shell finishing school for corporate crooks: 2 August 2006

 

By Alfred Donovan

 

Sir David Varney is another graduate of the Shell management finishing school for corporate crooks, some of whom have already been publicly exposed as fraudsters as a result of the Shell reserves scandal. The name of Sir Philip Watts springs to mind.

 

(The majority of current directors of Royal Dutch Shell Plc including its Chief Executive Officer, Jeroen van der Veer, are defendants in a global class action lawsuit involving allegations of fraud. Shell has already agreed to settle another similar law suit brought against named Shell directors including Van der Veer, Maarten van den Bergh and Malcolm Brinded, the incompetent Chief Executive of Shell Exploration and Production responsible for a number of Shell white elephant projects. Shell has set aside over $600 million to settle the class action lawsuits arising from the reserves fraud and has paid $150 million in fines imposed by the financial regulators. The U.S. Justice Department is still investigating bringing criminal charges).

 

Last weekend an article was published in the Sunday Telegraph about irregularities in the awarding of major contracts by Her Majesty’s Revenue and Customs (HMRC) involving a company called Coven Consultants.  The integrity of Sir David, who is the Chairman of HMRC and a former Managing Director of Shell U.K. Limited (known as “Napoleon” because of his small stature and big ego) has been brought into question in the article.  It does not take an Einstein to read between the lines and fathom out what is being implied.  

 

Varney announced that he was leaving the HMRC the day after a critical report was published by the UK National Audit Office about the dubious basis on which some HMRC contracts were awarded in breach of public procurement rules.  The Sunday Telegraph article is reprinted below.  

 

Once again we are not in the least surprised at what is being said and implied about a former senior Shell executive.  My son John and I had dealings with Varney while he was still at Shell and found his behaviour to be completely at odds with the core principles of Shell’s Statement of General Business Principles (the SGBP), which pledge honesty, integrity and transparency in all of Shell's dealings.

 

As a direct consequence, we have been engaged for over a decade in bouts of litigation with the Royal Dutch Shell Group. Currently Shell lawyers have issued proceedings demanding my presence in a High Court in Malaysia for cross examination in their draconian defamation action against a Shell whistleblower, Dr John Huong, a geologist who worked for Shell for over 29 years. Being a man of the highest integrity, he insisted on working within the boundaries of Shell's SGBP.  This clashed with the deeply ingrained corporate culture of Shell management, founded on cover-up and deception. 

 

Last year Shell issued proceedings against me in respect of the domain name royaldutchshellplc.com. Because they own a $223 BILLION dollar multinational company called ROYAL DUTCH SHELL PLC Shell management thought that Shell was automatically entitled to the corresponding dotcom domain name. In a blaze of global publicity Shell served proceedings on me in the USA and the UK, but ended up humiliated and embarrassed after losing the action. The decision in my favour was made by an impartial panel of experts appointed by the World Intellectual Property Organisation who were self-evidently not swayed by the immense wealth, power and sometimes corrupting influence of Shell.   

 

By way of further background information and to put events in historical context, I had a trading relationship with Shell stretching back to 1957. The relationship became even closer when a company which I co-founded with my son acted as consultants to Royal Dutch Shell for over a decade and successfully managed several multimillion dollar Shell projects in a number of countries.

 

We had a great relationship with Shell until we encountered a ruthless thoroughly dishonest Shell national manager who was a serial poacher of  intellectual property belonging to firms and individuals who like us, disclosed ideas to him on a confidential basis, believing they could be sure of Shell.  It was the activities of this manager, who I will identify for the purposes of this article as "AJL", that we brought to the attention of Varney. We asked him to investigate our allegations because we obviously did not want to resort to litigation against Shell, an important client.  We naturally wanted, if at all possible, to maintain the long term mutually beneficial relationship which had been established.

 

It is interesting to note, in the light of the Telegraph story, that within a mountain of discovery documents once supplied to us by Shell, presumably in the hope of burying evidence in the legal case then underway, we discovered a conspiracy involving AJL and other Shell managers in relation to a tender process for a major contract.  I mentioned this in my recent article entitled “the ethical malaise at the top of Shell”.  Basically a Shell contract was awarded in the most dubious circumstances to a company which did not even participate in the tender which was being conducted by AJL - the same Shell manager who had stolen our ideas.  Companies which did participate in the tender were deliberately deceived and cheated by AJL on behalf of Shell.  We still have ALL of the documentary evidence detailing the cunning plan which was carried out to perfection by thoroughly dishonest Shell managers. This all occurred while Varney was Managing Director of Shell UK Limited. The contract was awarded by AJL to the same company to whom all of our ideas were channelled by him. The company in question had a close personal relationship with AJL, who operated an offshore bank account.

 

Returning to our letter to Varney seeking his intervention, he replied claiming he had personally investigated the matter and had concluded that AJL  had not acted improperly. It later became apparent that the account of events set out in his letter was fundamentally false. He had made categorical statements which were simply untrue and deliberately misleading.

 

We subsequently discovered that in fact Varney had not carried out a personal investigation. AJL had actually been involved (along with his line manager) in drafting the cover-up letter sent under Varney's signature. The response letter was designed to deceive us by using the prestige and authority of Varney.  Unfortunately for Shell, the plan came unstuck. We still have the correspondence with Varney and contemporaneous taped telephone conversations with Shell managers, including AJL, proving that what we say is true. Varney could have put matters right, but instead chose to support a dishonest Shell manager, AJL. This is why our websites have, for several years, been littered with our warnings about Varney's lack of business ethics. To be fair to Varney, once he discovered that we had proof of a cover-up as a result of the taped conversations with his staff, he did not attempt to argue otherwise. Shell lawyers have typed transcripts of the relevant conversations along with copies of the corresponding audio tapes.

 

If Varney had intervened in our case, established the facts as he falsely claimed to have done, and then acted in accordance with the SGBP, the course of our history with Shell following our appeal to him would have been different. Instead, Varney’s key role in the cover-up had long lasting disastrous consequences for Shell.  His mendacity cost Shell shareholders several hundred thousand pounds in damages and over a £1 million in legal costs. The damage to Shell's reputation has been long term and incalculable. The www.royaldutchshellplc.com website which receives over 1.5 million hits per month would not exist if Varney had sacked AJL in accordance with Shell’s Statement of General Business Principles, thereby putting an end to his misdeeds.

 

My family would have been spared the monumental challenge of repeatedly taking on one of the worlds most powerful and ruthless multinationals and we would not have become targets of sinister undercover activity involving outright deception and trickery on Shell's behalf – “activities” which Shell General Counsel Richard Wiseman has admitted in writing were carried out at the behest of Shell.

 

While Varney was still Managing Director of Shell UK Limited and aware that he had been caught being economical with the truth, his Media Relations Department issued an astonishing press statement about my son and me.  I doubt if Shell has ever, in its entire history, been so venomous in a personal attack.  It accused us of making “false claims” – this was a comment about two High Court actions we had launched.  I sued Shell for libel in respect of the extraordinary press statement.  In our experience it is standard practice for Shell lawyers to accuse litigation opponents of submitting false claims.

 

After our experience at the hands of Varney we felt justified in bringing all guns to bear on Shell management and as a result, they made an amazing cease fire offer. In view of the terms which were agreed it could even be described as a part surrender. A proposal was put to us by a Shell Chairman, Dr Chris Fay, during a surreal discussion at Shell-Mex House in which tea was served by his butler.  

 

The meeting resulted in a bizarre contract which would have made Shell shareholders eyes pop out if they had known about the unprecedented terms. The Confidentiality Agreement which became known as the "Funding Deed" was signed on behalf of Shell UK Ltd by David Varney and another Shell director, Richard Wiseman (currently General Counsel of Shell International). As can be seen by reading the deed, its primary purpose was to stop our campaigning activities and impose confidentiality. Shell management did not want its shareholders to know what Shell management had signed up to: in other words, a cover-up.  

 

Sir Mark Moody-Stuart was in the loop in agreeing the deal which, to the best of our knowledge, is unique in the history of litigation involving a publicly owned corporation. Basically Shell paid our legal fees for us to sue them in the High Court in respect of two marketing ideas we had put to Shell in strictest confidence; yes Shell paid us to sue them! And yes, these were the same two claims earlier described by Shell as being "false".

 

Both ideas had been secretly developed and subsequently launched by AJL without any payment or credit to our company. In return for the “funding” worth £125,000 (approximately $225,000 US dollars), we undertook to drop the libel action against Shell arising from the press statement and cease our campaigning activities which included running a pressure group we had founded. The full terms can be seen in the agreement. Shell eventually paid us £200,000 plus costs to settle the so called “false” claims. We also received an unsolicited letter of apology from Dr Fay in his then capacity as Chairman and Chief Executive of Shell U.K. Limited.

 

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“Funding Deed” signed by Shell Managing Director David Varney: an agreement designed to hide information from Shell shareholders

 

Jyoti Munsiff, now Chief Compliance and Ethics Officer of Royal Dutch Shell Plc (what a joke), subsequently sent us a threatening letter in her then capacity as Company Secretary of The “Shell” Transport and Trading Company Plc in an effort to stop details of the Funding Deed from being given to Shell shareholders – the owners of Shell. This happened after Shell reneged on the Funding Deed – in our experience a routine practice by a Shell management so arrogant that it believes that the terms of an agreement only apply to the other parties, not Shell.

 

Links to related correspondence involving Jyoti Munsiff and her boss, Mark Moody-Stuart.

 

Letter to Shell Transport Chairman Mark Moody-Stuart 1 April 1998

 

Reply letter from Shell Transport Company Secretary, Jyoti Munsiff dated 6 April 1998 (then Company Secretary of Shell Transport And Trading Company p.l.c.)

 

Reply letter from Shell Transport Chairman Mark Moody-Stuart dated 9 April 1998 (a threatening letter from the Chairman of Shell)

 

Letter to Mark Moody-Stuart dated 14 April 1998 (attention is drawn in particular to paragraph five)

 

The letter to Mr Moody-Stuart refers to newspaper article: The Guardian: "Unloveable Shell, the goddess of oil": “in its wake, says Andrew Rowell, lies a trail of corruption, despoliation and death”

 

THE SUNDAY TELEGRAPH ARTICLE: 30 July 2006 (http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/07/30/ntax30.xml)

 

Sunday Telegraph: Revenue awarded consultants £4m worth of contracts without tendering

 

By Chris Hastings and Patrick Hennessy

 

(Filed: 30/07/2006)

 

The Inland Revenue has been accused of wasting taxpayers' money after it admitted breaching rules over Government contracts.

 

An investigation by The Sunday Telegraph has discovered that Her Majesty's Revenue and Customs (HMRC) has awarded consultancy contracts worth £4 million without first putting them out to tender.

 

The revelation that HMRC, the body charged with ensuring financial propriety, has itself broken the rules will heap embarrassment on the organisation, which was recently criticised by the National Audit Office (NAO) for paying hefty incentives to software suppliers.

 

The watchdog found £75 million had been handed out to encourage suppliers to bid against the company that implemented the disastrous tax credits system.

 

A day after the NAO report was released, Sir David Varney, chairman of HMRC, announced he was leaving to take on a permanent secretary job at the Treasury.

 

The revelation that a number of firms have been given work outside the tendering process will only heighten concerns that HMRC is not delivering value for money. Documents released under the Freedom of Information Act reveal the organisation has "uncovered issues with the procurement of consultancy services".

 

The body's annual report, released a fortnight ago, also refers to the failings. One section refers to "non-adherence to public procurement rules" in relation to the use of consultants and says HMRC is now trying to ensure fully compliant contracts are in place by this autumn.

 

It also reveals HMRC is reviewing invoices to ensure "future spending on consultancy is made using these contracts".

 

The report does not identify any of the individual contracts that breached the rules, but documents seen by this newspaper show that in June 2004 Corven Consulting received work worth more than £120,000 without going through competitive tendering.

 

HMRC admits Corven began work on this assignment even before a contract had been drawn up because of "tight deadlines".

 

Corven has since won additional HMRC contracts worth £2.8 million, some at the behest of senior members of HMRC's executive committee.

 

In the past year Corven has provided coaching and support to senior members of the executive committee as well as general support and advice to Sir David Varney. HMRC refused to say whether Sir David, 60, had personally suggested Corven for any of the work.

 

Prior to joining HMRC, Sir David worked for some of Britain's biggest companies, including British Gas, MMO2 and Shell. Corven lists all three companies as clients on its website.

 

Crispin Ellison, a director of Corven responsible for the revenue contract, insisted that the company had won work on the basis of its good reputation in the field. He said he was personally unaware of problems because the awarding of contracts was a matter for HMRC.

 

"I have no idea why we were chosen for the contract," he said. "We tend to focus on large scale transformations in the public and private sector."

 

Mr Ellison confirmed that the firm had worked with Sir David while he was chairman of MMO2 but said this collaboration was totally unconnected with any work it was now carrying out for HMRC.

 

An HMRC spokeswoman said: "Our own internal checks highlighted some issues in connection with the procurement of consultancy services. These issues have now been addressed."

 

Related Telegraph article: "Varney quits Revenue to take advisory role with Chancellor":

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/07/20/cnvarney20.xml

 

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