Global energy major Shell is investigating claims of unethical dealings including charges of corruption in its tanker chartering team in Singapore and at least one employee has been asked to take leave pending further investigation, sources familiar with the developments have told S&P Global Platts.
It all started a few weeks ago when one member of the chartering team, acting as a whistleblower, made a complaint against a colleague for allegedly channeling a large part of the chartering business through a specific brokerage for pecuniary gains, sources said.
This triggered an investigation to review the entire chartering business and processes, they said.
The employee in question is on indefinite leave, a company source said. The employee did not return several calls to his handphone. Owners and charterers who deal with the employee on a regular basis said they have also been informed that he is on indefinite leave.
“It would not be appropriate to comment on personnel matters,” a Shell spokesperson told Platts.
Shell is one of the largest oil and gas trading companies in the world and at any point of time, there are several ships moving cargoes belonging to the company across the globe.
The company has dozens of tankers either on time charter or taken for spot voyages. When the tankers on time charter are not required to carry Shell’s own cargo, they are relet to other companies. This is done for the purpose of optimal utilization and reduces vessel idle time to a minimum. Shell employs freight traders for the juggling of this vast fleet, including both chartering and the relet of ships.
“All Shell employees are required to comply with our Code of Conduct and to uphold the highest standards of ethical behaviour,” the Shell spokesperson said in an email response to Platts’ queries.
“It will be unfair to comment on his dealings when he has left,” one source tracking the episode said. “Unless charges are proven, he cannot be pronounced guilty,” he added.
“We investigate allegations of breaches of the Code of Conduct. Breaches are not tolerated and carry serious consequences,” the Shell spokesperson said in the same email.
ABC OF SHIPPING TRADE
Several brokers, owners and charterers interviewed by Platts noted the entire global shipping trade was governed by the Anti Bribery Clause, better known by its acronym ABC, which is an integral part of most Charter Party Agreements, or CPAs.
Under this clause, owners and charterers are required to comply with laws including, but not limited to, the United Kingdom Bribery Act, the US Foreign Corrupt Practices Act and laws in other applicable jurisdictions relating to combating bribery and money laundering.
They have to transact business in such a way that they are not subject to penalties under such laws, and are barred from making any payments or gifts that violate these laws.
Such is the emphasis paid to these laws that either owner or charterer may terminate a CPA at any time upon written notice to the other if in their reasonable judgment, supported by credible evidence, the other party is in breach of this clause or such a breach is imminent.
Chartering executives in both shipowning and chartering companies are also required to inform the other party if any such demand for payment and gift is made. Both parties have the right to audit each other’s records in relation to the Charter within seven years of the termination of the charter. The long period is provided to investigate such allegations because they may not always come to light at the time of agreement, sources said.
However, market participants argue the CPA is between an owner and a charterer, while brokers who may be the kingpin of any corrupt activity are not directly governed by the ABC. It is the brokers who could theoretically break the law to boost their own earnings and their role should be explicitly mentioned in the CPAs, said a source with a tanker owner.
Others counter this point, saying that owners and charterers are covered under CPAs both directly and through any of their affiliates and agents, and therefore the brokers are covered as well.
Whenever such incidents emerge in the public domain, internal compliance teams at various companies tighten controls over chartering executives and this in turn slows down the business process, the same owner source said.
According to sources familiar with the Shell episode, the role of one particular brokerage house has come into question because it was being allegedly favored by the employee in question without following due procedures.
“We don’t share commercial information about our trading and operations activities,” the Shell spokesperson told Platts in response to a query on whether a tanker brokerage has been blacklisted by Shell.
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Source: Platts
