Shell bosses cash in on oil windfall.
The Sunday Times - Britain
Robert Winnett
August 21, 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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