TimesOnline: Agenda: William Lewis: And so farewell then dour, plump, bald bloke...

SOME months ago my colleague Lucinda Kemeny and I were granted an audience with Sir Philip Watts, then chairman of Shell.

April 25, 2004

Posted 26 April 04 

This was a most exciting event. Watts was an all- powerful oil executive, akin to prime ministers and presidents in his ability to affect people’s lives round the world.

Naturally we turned up early for our 3pm meeting at Shell’s imposing headquarters near London’s Waterloo station, unfortunately me bursting for the loo. Can’t meet Sir Phil with my legs crossed, I thought, so I asked to be directed to the lav. There’s no lavatory here, I was told by the receptionist. But there must be, I implored. Thousands of people work here; don’t tell me they all have to use the Thames.

If you want the lavatory, you’ll have to walk to the other part of the Shell Centre, the officious lady said. That’s where the bathrooms are for visitors. The ones here are for Shell staff only. So off I tramped, through the rain, to the other reception area, signed in again, found the loo, then scuttled back to find one of Sir Phil’s aides waiting impatiently for me.

Sorry about that, I said. Desperate for the loo, I was. And sorry about my appearance. I got a bit drenched running there and back. No comment from him, perhaps a little grunt. Indeed, there was no real chat in the lift on the way up to Shell’s inner sanctum. The aide looked so nervous, we felt it was better to keep quiet.

I remember fiddling quite a lot with my wedding ring, thinking maybe it was all true what they say about Shell: pointless and endless bureaucracy, lavatory facilities according to status, hierarchy ahead of efficiency.

Out of the lift, through a long corridor with office doors closed all the way, either side. Eventually we were ushered into Sir Phil’s anteroom, nodded to the bank of ladies attending to his needs, and then finally, we had made it: into Sir Phil’s office to shake his hand.

Er, Phil Watts? Nice to meet you, strange, dour, plump, bald bloke. Of course, I didn’t say that, but that’s what I thought. There followed some inane conversation about the view from Sir Phil’s window (the London Eye is right in front of you), a cup of tea, and then it began. The patronising.

Let me educate you about the oil industry, he said. I’ve been doing it for years, and know lots about it. No thanks, Sir Phil. We want to ask you why your company’s share price performance is so far behind Exxon Mobil and BP. Oh yes, and what are you doing about getting into Russia? BP is miles ahead of you there. Doesn’t that worry you? My dear boy, you don’t understand this business, let me explain. We’ve got our own deals on the go there, and we do things differently here at Shell.

Thanks for the education, Sir Phil, but really there are some rather big issues to talk about.

The little charm that there had been quickly evaporated. Dour, plump, bald bloke got shirty. It turned into a terrible meeting and I remember getting really rather hot under the collar. No wonder shareholders think Watts and Shell are so ghastly, Lucinda and I agreed on the way out. Why does he have to be like that? Months on and Sir Phil is still a dour, plump, bald bloke but he also has another issue to deal with: he is out of work. And now it is obvious why he was like he was when in work: he had something to hide. Something very big to hide.

Watts appears doubly culpable in the Shell crisis: he resisted disclosure of the “true” amount of oil reserves; and he was also responsible for the over-aggressive booking of reserves in the first place, when he ran the exploration and production (E&P) business.

His former colleagues on the board and their representatives have spent the past few days arguing that Watts and Walter van de Vijver, who replaced Watts as head of E&P, were the reasons why Shell lied to its investors about how much oil it had in its reserves. It was two individuals wot done it.

That may or may not be the case. But there is a bigger horror emerging at Shell.

What if Watts was not unusual? What if there are hundreds, perhaps thousands, of executives exactly in the Watts mould at Shell?

It would mean that vague promises to examine the company’s complex corporate structure will remain exactly that — vague promises. It would mean that pledges to become better communicators, to tell the truth in a timely manner to the people who own the business, are unlikely ever to be fulfilled.

It would mean suggestions that strong-minded outsiders are going to be recruited to help ensure that rigorous new procedures and processes are put in place will turn out to be false. The inward-looking arrogance that so defines Shell’s culture will remain. The lying and cheating will continue.

That has to be the real worry. And nothing that has been said so far by the company makes me confident that they get it. Indeed, Lord Oxburgh, chairman of the UK bit of the group, said last week that the two-year concealment of the shortfall of reserves did not have “significance for the culture of the company as a whole”.

Shell is a disreputable company in need of a strong injection of ethics. One or two of the dour, plump, weird- looking folk may have left, but those left behind show no signs of giving up. Expect bad news to follow bad news for months ahead.

http://business.timesonline.co.uk/article/0,,9072-1088622,00.html