THE SUNDAY TIMES: Shell bosses live high life on oil profits: “Jeroen van der Veer, the chief executive, and fellow senior executives are understood to have bought three new Falcon aircraft for their boardroom fleet at a cost of nearly £60m.”: “The lavish arrangements for directors are partly a result of the company’s bulging coffers.”: “News of the luxury jets comes as the company begins to rebuild its reputation following a corporate scandal. Last year, it was accused of misleading the stock market by overestimating its oil reserves and had to pay £82m in fines.”: Sunday 21 August 2005
THE directors of Shell have cashed in some of the windfall from high oil prices to upgrade their fleet of corporate jets.
Jeroen van der Veer, the chief executive, and fellow senior executives are understood to have bought three new Falcon aircraft for their boardroom fleet at a cost of nearly £60m.
According to aviation experts, Shell replaced older Falcons, while a Gulfstream has been kept on, meaning there are now four jets in the fleet.
At a time when other multinational companies have been getting rid of their executive planes, Shell’s top directors have signed new contracts which spell out their right to use the company planes to fly them around the world.
The lavish arrangements for directors are partly a result of the company’s bulging coffers. Shell recently announced profits of £5.6 billion for the first half of this year, largely from the high price of oil, which last week reached $67 (£37) a barrel, up from $29 in February, 2004.
The price has been driven up by surging demand in China and a shortage of oil refineries and tankers.
The effect on British consumers has been petrol prices that for the first time have passed an average of 90p a litre. In February 2004, unleaded petrol at Shell stations cost an average of 76.16p per litre.
The cash bonanza for oil firms — which Lord Browne, the chief executive of BP, described as “staggering” — has also brought windfalls for executives.
It has now emerged that the week before the profits announcement Van der Veer, who has worked for the company since 1971, signed a new multi-million-pound contract that included a raft of special benefits, including use of the private jets.
Although Shell declines to comment on when it bought the jets, it is said to have recently acquired two Falcon 900EXs, made by the French company Dassault, manufacturers of the Mirage fighter.
The three-engined, 530mph Falcons can cross the Atlantic and each carry up to 15 passengers in large leather armchairs. The aircraft, which cost about £19.5m, are fitted with cocktail bars, thick carpets and hi-fi systems. The same jet has been used by Madonna and Eminem, the rap star. The Royal Bank of Scotland has attracted criticism for transporting its directors in a 900EX.
Apart from its Falcon 900s, Shell also has a smaller Falcon 2000 and an older Gulfstream IV. Three of the four jets are kept in London and Holland with another available in Houston, Texas.
A spokeswoman said they were “primarily” to serve board executives although other staff could use them for business trips. The luxury jets are separate from Shell’s in-house fleet of aircraft used to ferry workers to remote locations and oilfields around the world.
News of the luxury jets comes as the company begins to rebuild its reputation following a corporate scandal. Last year, it was accused of misleading the stock market by overestimating its oil reserves and had to pay £82m in fines.
Several senior executives — including Sir Philip Watts, the former chairman — left the company, and Van der Veer was promoted to re-establish the “credibility” of the firm’s leadership.
The largesse of oil companies — Shell’s profits could buy more than 125,000 Rolls-Royce cars every day — has led to calls for a windfall tax on their profits.
“Excessive profits made from rising oil prices shouldn’t be allowed to fatten the wallets of directors and shareholders,” said Tony Woodley, general secretary of the Transport and General Workers’ Union. “The government should announce a one-off windfall tax.”
Oil companies argue that billions of pounds will be returned to shareholders, ensuring benefits for millions of Britons with pension schemes.
According to oil industry calculations, Gordon Brown the chancellor, will receive a £10 billion tax windfall from North Sea oil if prices remain above $50 a barrel until the end of the year. This almost doubles revenues and comes on top of the £24.6 billion collected in petrol duty by the exchequer every year.
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