THE SUNDAY HERALD (SCOTLAND): Scandal Monger: Blood on the Boardroom Floor: “In a private speech helpfully revealed by the Financial Times the other day, Jeroen Van der Veer, the chief executive of the company, admitted…”: “He also admitted that middle managers had lost faith in the leadership – it was clearly a speech not meant for public consumption when you hear confessions like that.”: “But it is clearly an accurate description of the state of play at Shell. Instead of the shadow left over the company being driven away by the bold moves to change the company’s overwieldy twin board structure, the spectre still very much remains. How much it must have hurt when Brinded had to announce in October that more cuts would be needed.” (ShellNews.net) 19 Dec 04
Ken Symon
19 December 2004
Getting embroiled in scandal is one thing, but failing to fight your way out of it cleanly is quite another. It is often the second that lays top executives low or continues the bloodletting at the top of companies.
It helps at least if you are well aware of the fact, as is clearly the case with the executive layer at Royal Dutch/Shell. In a private speech helpfully revealed by the Financial Times the other day, Jeroen Van der Veer, the chief executive of the company, admitted that his “head is on the block” if he fails to get to grips with the continuing problem of the way the company books its oil and gas reserves.
He made it clear in the speech that the parlous state also extends to Malcolm Brinded, head of the exploration and production, an oil executive well-known to those involved in the North Sea oil scene.
It’s little wonder that Van der Veer admitted that he was “steaming inside” about the company’s tardy progress in changing its culture after the reserves scandal that led to the departure of three senior execs including Sir Philip Watts, the former chairman. He also admitted that middle managers had lost faith in the leadership – it was clearly a speech not meant for public consumption when you hear confessions like that.
But it is clearly an accurate description of the state of play at Shell. Instead of the shadow left over the company being driven away by the bold moves to change the company’s overwieldy twin board structure, the spectre still very much remains. How much it must have hurt when Brinded had to announce in October that more cuts would be needed.
Without that, as Van der Veer also said in the speech, the merger of the British and Dutch companies and the creation of a unified board “could have been our finest hour, without the new exposures on reserves”.
He also said he would “only sleep well” after he was convinced that the company is compliant on reserves. Scandalmonger wonders how many other executives are finding their sleep interrupted at this time of year, and not because they have overindulged at the office festivities.
It is always something worthy of note when a body which is a regular activist on corporate governance issues is itself the subject of questions over its operations. Such is the case with Hermes, the UK fund manager, which is to be the subject of a formal investigation by South Korea’s financial regulator. It will investigate speculation that Hermes manipulated Samsung Corp’s share price days before selling its entire holding in the trading arm of the Asian country’s largest conglomerate. The Financial Supervisory Service decided to investigate media speculation that the fund had tried to inflate the share price with public comments.
Meanwhile, the Parmalat scandal moved on with the decision by a judge in Parma recognising claims by creditors, including Bank of America and Citigroup. The ruling is good news for the banks, but a setback for government-appointed commissioner Enrico Bondi, who argued that the banks were complicit in the company’s crash and should not be regarded as creditors.
Speaking of Parmalat: In the Scandalmonger column on November 28, we made comment on information that had emerged on Alberto Ferraris, the former chief financial officer at Parmalat. Much of the material was based on reporting in an investigative article in Time magazine by Peter Gumbel and should have been credited as such. Sorry for the omission.
http://www.sundayherald.com/46716