Oil and Middle East Politics: the Case of British Petroleum (BP) and Shell in the Suez crisis
Neveen Abdelrehim
Josephine Maltby
Steven Toms
1
Introduction
Walker explains crisis as “times of acute disturbance which may impact at the global, national,
organisational or personal level”1. Historians remain interested and enthusiastic in the search
for explanations for continuities and explanations for changes which occur over long periods to
help in identifying major vital turning points2. The Suez crisis of 1956-57 when the Egyptian
leader, Colonel Gamal Abdel Nasser, nationalised the Suez Canal remains a crucial event in
20th-century business and economic history. It presented a number of interesting issues
relating to UK relations with Egypt and with the USA which have been explored in previous
literature - but it also had an impact on oil companies which has attracted less attention and
which, we argue, deserves further exploration. This paper explores the impact of the crisis on 2
oil companies with a major British connection, BP and Shell, and draws a number of
comparisons between Suez and the earlier crisis of Iran's nationalisation of BP's Iranian site.
The study is of significant interest to academics and the business community alike, since
historical studies offer an opportunity to consider changes in the levels of disclosures in terms
of both quantity and quality through the analysis of reactions to social change and regulation.
The contextualization of the development of accounting by reference to major key points and
periods of crisis assist in the search for the origins of a debacle and try to arrive at conclusions
which generate historical evidence.
The objectives of this paper are to undertake a comparative study to examine the role of
narrative accounting disclosure for two major oil companies (BP and Shell) to examine and
compare the bargaining power of both companies in two important episodes (the oil
nationalisation crisis in Iran in 1951 and nationalisation of the Suez Canal in 1956). These were
in territories- Iran and Egypt- that were considered as of economic and strategic importance to
Britain because they were integral to the post-war imperial system. The paper addresses this
objective by analysing relevant narrative disclosures in major archival documents and publicly
available annual reports produced by BP3 and Shell. Our sources are examined to explain how the
company’s annual reports were used as part of a propaganda battle. We argue that crisis affects the
extent and quality of disclosures made by companies in their annual reports. Its analysis
1
Walker, Accounting in crises, 5.
Ibid.
3
In researching the nexus between the Iranian crisis and its impact on the development of the Suez Crisis, I relied
primarily on BP archives at Warwick Coventry (using the annual reports of the company, minutes of meetings and
correspondence between major political figures). The archival documents proved useful, as did the Times and
Economist newspapers.
2
2
theoretically informed by resource dependency theory4 as it particularly complements
stakeholder theory in coping with the increased complexities arising from a wider stakeholder
base5. We hypothesize that firms (BP and Shell) with a stakeholder orientation will have high
level of disclosures in their annual reports during crisis. Our study contributes to a greater
understanding of observed variations in disclosures among two different oil companies (BP and
Shell) to understand the differential pressures for disclosure in different periods. These
differences permit us to explore differences in managerial disclosures to provide support for a
stakeholder explanation for observed differences in reporting during the crisis. Our findings
based on a content analysis of 1950-1958 annual reports for BP and Shell in the oil industry lend
support to the stakeholder explanation for disclosure practices during crisis. In short, we argue
that the annual report disclosures are being used to enhance the bargaining position of the oil
companies.
The paper begins by outlining the prior literature and theory development and then goes to the
nature of the crisis to consider its reporting by the chosen companies, Shell and BP, in a review
of their reporting in financial reports and at AGMs over the period.
Prior Literature and theory development
The widespread use of annual reports plays an important role because they are the main form
of corporate communication which can be attributed to an increase in the control of
shareholders and may well reflect the company’s appreciation of a genuine responsibility to a
wider public than its own shareholders6. Annual reports are regarded as a medium for
communicating both quantitative and qualitative corporate information to different potential
users. They can also be seen as strategic documents as they reflect impressions about a firm’s
activities7. Annual reports are an important mediating document between various stakeholder
groups which include investors, creditors, employees and the government. Van der Laan Smith
et al. (2005, p. 127) suggest that success of the corporation requires the support of all its
stakeholders through disclosure and open communication between them and the management
of the corporation. The primary method for developing such a dialogue is through the
company’s annual reports. Gray et al. (1995) highlight that social disclosure is also seen an
important part in developing open communication between management and various
stakeholder groups. Stakeholder theory defines the constituency of a corporation as “a person
4
See for example, christopher., 2010, Van der Laan Smith et al., 2005; Pfeffer, 1972; Boyd, 1990)..
christopher., 2010
6
Penrose, The large International firm in developing countries, 29.
7
Buhr, Environmental performance, legislation and annual report disclosure: the case of acid rain and
Falconbridge.
5
3
or group that can affect or is affected by the achievement of the organisation’s objectives” 8. As
Mitchell et al. (1997, p.855) argued, the stakeholder concept aims to “broaden management’s
vision of its roles and responsibilities beyond the profit maximization functions to include
interests and claims of non-stockholding groups”. In similar vein, Preston et al. (1999, p.4)
emphasise that managers should communicate with their stakeholders about “their respective
concerns and contributions and about the risks that they assume because of their involvement
with the corporation”. This would require managers to be “equipped with the skills, knowledge
and expertise to be able to build effective external relationships and secure adequate resources
to address the interest of these multiple stakeholders and wider environmental impacts under
current operating conditions”9.
The underpinning theory that corporations can draw from to ensure effective governance and
effectiveness of the directors who make up the board is resource dependency theory. Toms and
Filatotchev (2004) addressed the managerial accountability in respect of governance in the
context of resource dependency theory. Christopher (2010) argued that the effect of resource
dependency theory is to reduce uncertainty and improve the overall efficiency of the
organisation and thus reducing costs. Pfeffer (1981) suggests that power accrues to those
parties who control resources required by the organisation, creating power differentials among
stakeholders. Pfeffer and Salancik (1978) characterized the managerial role as crucial in
enhancing the company reputation and in steering it in the right direction. Thus, managerial
disclosure can be viewed as a strategic plan to allocate limited resources of the firm and
manage stakeholder relations10. This in turn would be reflected in the managerial disclosure to
stakeholders through the level and type of disclosures during crises.
Significance of Suez
The Suez Canal Company was an Egyptian chartered company owned by French and British
investors with the British government acquiring 44 per cent of the voting shares. It held a
unique place “in both the mythology and practicalities of empire-its defence, imperial and
commonwealth trading links, and passenger routes and with the onset of Cold War, the artery
had acquired the status of a vital base against possible communist expansion of attack” 11.
Under nationalisation, Egypt took over all assets, rights and obligations of the company and
created an independent Egyptian agency to operate the Canal. Shareholders of the company
were to receive compensation on the basis of the last-quoted price for the shares payable when
8
Freeman, 1984, p.46.
Christopher, J. , 2010, p. 688.
10
Van der Laan Smith et al., 2005, p.128.
11
Onslow, S., p.22.
9
4
Egypt had received all the assets and property of the company12. Nasser aimed to secure for the
Egyptian government the rights to nationalise its resources and exclude foreign companies
from exploitation, challenging the Western world by standing in opposition to imperialism. The
Egyptian president believed that British imperialism had contributed insufficiently to Egypt’s
economic and social progress and was aware of the fact that the Egyptians were hired only for
unskilled positions. It has been argued (e.g. by Onslow that Musaddiq’s nationalisation of the
assets of BP (then the Anglo-Iranian Oil Company AIOC) in 1951 in Iran was a significant
contributory factor behind Nasser’s challenge to British interests which culminated in the Suez
crisis13. It can be argued that failure to respond to the Iranian crisis in 1951 led to disaster
elsewhere. As explained by Onslow, “the humiliating outcome of the withdrawal of British
personnel under duress from the Abadan refinery decided the battle lines within the party over
the future of the Suez Canal base”14. (For a consideration of the impact of the Iranian
nationalisation see Abdelrehim et al 2012 and 2011).
The Suez Canal and its importance to the British Empire had dramatic and enduring
consequences that had long been a major subject of study. As Bamberg argued “No event in
the post-war years exposed more starkly the decline in Britain’s power and Western Europe’s
growing dependence on Middle East oil than the Suez Canal crisis which broke out in 1956” 15.
In the next section the background to the Suez crisis is presented, together with a timeline of
key events for the Suez crisis in order to set the context for the subsequent analysis. The
subsequent section outlines the research methodology utilised explaining the content analysis
of relevant disclosures from the financial reports published by BP and Shell during the period
1951-1958. The final section draws conclusions.
Key events of the Suez crisis
After 1945, nationalisation appeared to be an approach in a number of Britain’s decolonising
territories16. Britain’s difficulties with the Iranian government in 1951 appeared directly to
encourage “Egyptian intransigence over Britain’s continued presence at the Suez Canal Zone
base. British power and prestige and her ability to maintain and protect her influence in the
Middle East an area in which she dominated since the end of the First World War was under
grave threat and required a robust response. Nothing less than Britain’s future as the premier
power-the basis of her great power status- was at stake”17. BP in Iran had long acted as an
12
13
14
Bowie, R., p. 1.
Onslow, S., p.2
Onslow, S., p.2
15
Bamberg, British Petroleum and global oil 1950-1975, p.75.
16
White, N., The business and the politics of decolonization: the British experience in the twentieth century, 551..
17
Onslow, S., p. 4.
5
agent of empire in blocking the predatory tendencies of other great powers 18. Therefore, the
nationalisation of BP by Musaddiq “raised the whole question of British influence in the Middle
East. If he was allowed to get away with it, followed almost automatically that someone (like
Nasser) want to nationalise the Suez Canal Company”19. As White highlighted, no imperial
business leader could have failed to observe the Iranian nationalisation in 1951 as an example
of worldwide failure of British governments to protect commercial interests from the predatory
instincts of determined post-war economic nationalists20.
Table 1 below illustrates that the years preceding the Suez nationalisation witnessed a series of
failed proposals on the one hand, and a succession of Egyptian government and institutional
changes on the other. Clearly, with the nationalisation of Suez Canal, the international economy
witnessed fundamental changes and the oil industry became a central issue on the political
agenda.
Table 1: Timeline of key events for Suez crisis, 1952-1957
Date
Event
1952
King Farouk was overthrown by Muhammad Naguib 21
13 Nov. 1954
Nasser takes over from Neguib as president. Signs agreement for
withdrawal of UK troops by June 1956
Nov 1955
Oil at this date= 2/3 of all traffic on Suez canal22
Jan 1956
US and UK pledge finance towards Aswan dam
13 June 1956
Britain withdraws from Suez Canal
23 June 1956
Nasser elected president
19 July 1956
US then UK withdraw offer of Aswan funding, World Bank follows suit.
26 July 1956
Nasser nationalises Suez Canal to obtain funding for Aswan
9 Sep 1956
Peace talks collapse
October 1956
France, Israel and UK pledge to attack Egypt/regain control of Canal
18
White, N., The business and the politics of decolonization: the British experience in the twentieth century, 545.
Onslow, S., p. 13.
20
White, N., The business and the politics of decolonization: the British experience in the twentieth century, 555.
21
Muhammad Naguib was the first President of Egypt, serving from the declaration of the Republic on 18
19
June 1953 to 14 November 1954
22
Yergin, 480
6
29 October 1956
Israeli attack on Mitla Pass (Sinai Peninsula)
5-6 Nov 1956
Successful Anglo-French assault halted by UN ceasefire
29 Nov 1956
Tripartite Invasion officially ended
Dec 1956
Petrol rationing in UK
24 Dec 1956
Anglo-French troops leave Egypt
Winter 1956-57
‘Oil lift’ and ‘sugar bowl’ pooling arrangements (Europe collectively,
Europe with US) are finally put into place to ensure emergency
supplies.
Delays to Oil Lift described by Eric Drake (BP) as ‘nothing less than a
calamity for Europe’23
28 Dec 1956
Operation starts to clear sunken ships from Canal
15 & 17 Jan 1957
UK and French banks in Egypt nationalised
15 March 1957
Nasser bans Israeli use of Canal
April 1957
Canal reopens, April 19 First British ship pays toll for Canal passage
Mid May 1957
End of petrol rationing in UK. ‘Suez crisis was really over’24
Source: Yergin
The Suez Canal was the main highway and the lifeline of the British Empire linking England to
India and the Far East. During 1950, Europe’s reliance on Middle East oil was growing with 90
percent of oil supplies derived from concessions in this region25. In 1955, the Americans in
conjunction with the British and the World Bank have considered a loan to Egypt to build a
huge Dam at Aswan on the Nile. However, on June 1956, opposition was rising in the United
States because of their fear that Egyptian cotton crop would then increase which would then
compete with the American exports on the World market. On 19 July 1956, the proposed
Aswan Dam loan was cancelled taking Nasser by surprise. Nasser was annoyed and as a
consequence on July 26th 1956, he announced his decision to nationalise the Suez Canal and use
the tolls from the canal in financing the Aswan Dam. As with the Iranian oil concession, most of
the Suez Canal’s earnings derived from tolls were going to European shareholders, including the
largest shareholder of all, the British government (Yergin, p. 463). Tolls were paid to the
company which in turn provided Egypt with a share of the profits. The total earnings of the
Canal constituted a formidable sum but the share of the Egyptian government in the profits was
23
Yergin 494, See also
http://news.google.com/newspapers?nid=888&dat=19570827&id=3u9RAAAAIBAJ&sjid=PnYDAAAAIBAJ&pg=7251,
5184368
24
Yergin, 495.
25
Kapstein, 103.
7
relatively small. Nasser explained that the oil producing countries received 50 per cent of the
profits from their oil but Egypt did not get 50 per cent of the profits from the Canal. Evidently,
the Canal Zone was left at the mercy of the British government under the terms of the 1936
Anglo-Egyptian treaty and Nasser wanted to take for the Egyptians the maximum profits from
their resources and make every effort to provide for the welfare of the disadvantaged elements
in their own population. Nasser stated that the Egyptian policy was to assure:
(a) The freedom of passage through the Suez Canal and its secure use without
discrimination;
(b) The development of the Suez Canal to meet the future requirements of navigation;
(c) The establishment of just and equitable tolls and charges; and
(d) Technical efficiency of the Suez Canal26.
Effects of nationalisation
Nasser seized a vital waterway that served as a public utility for the benefit of the trading of the
world. Furthermore, there was dislocation of supplies, particularly to Europe, while tankers
were being re-routed and supply sources re-arranged. These effects could be cushioned by
precautionary stock-piling, but storage facilities in Europe are limited and stockpiling could not
in any case proceed very quickly since it depends on supplies and shipping over and above
normal requirements. Much therefore depends on the speed with which supplementary
supplies of the kind required can be organised and lifted from the Western Hemisphere27.,
Many leading countries of the West feared to have their operations under Egypt’s control 28. For
instance, all BP shipments of the Middle East oil to BP had to be routed on the long haul via the
Cape. A key characteristic of BP in this period was its very high reliance on the Middle East,
compared with Shell. In its 1955 annual report BP disclosed an output of 46m tons, of which
45.5m came from Kuwait, Iraq and Iran. The Financial Times reported immediately post-Suez:
that BP had the largest stake in the Middle East of all British oil companies (99% of its
production vs 13% for Royal Dutch Shell's).29 For BP, Nasser’s nationalisation and the closure of
the Suez Canal would require almost twice as much tanker tonnage as it engaged on hauling
70m. tons of oil which moves by sea from the Persian Gulf to Europe (60 m. tons) and North
American (10 m. tons). In the absence of any large reserve of tankers, it would be necessary to
take the fullest possible advantage of the short haul from Western Hemisphere sources to
Europe.30 Billy Fraser, BP representative in USA, pointed out that “while the necessary shipping
tonnage can be made available this quantity, BP was in the unfortunate position of being forced
26
Bowie. R, p.16.
ARC 42541, 17 April 1956, p.5.
28
Petroleum press service, September 1956 from The British Petroleum Company Ltd, Information Branch.
29
The Financial Times, 8 May, 1957.
30
ARC 42541, 17 April 1956, p.4.
27
8
almost daily to route tankers back from North West Europe to the Persian Gulf in the absence
of foreseeable supplies in the Western Hemisphere these tankers d not present themselves
again in North West Europe for about two months and our ability to lift the above quantity in
January will therefore be reduced unless we know in the immediate future that the crude oil
can be made available for off take”31. BP was prevented, essentially by British exchange control
regulations, from sending their ships through the canal. Walter Smith, Director of the Central
Intelligence Agency (CIA), emphasised the possible effect on BP group supply position of the
closing of the Suez Canal to all traffic. He said that in the event of a complete blockage of the
Suez Canal, BP should be faced with a shortage of ships which would involve us in inability to
carry crude oil for our European refineries to an amount of some 520,000 tons per month
which would be increased in the event of the Eastern Mediterranean pipelines being closed to
some 740,000 tons per month. In broad lines this would mean that owing to shortage of
tankers, be unable to carry some 820,000 tons per month of the crude oil required on BP
European refineries32. The continuing difficulties over purchasing oil supplies from the Western
Hemisphere affected not only the company but also Western Europe as a whole. With the loss
of the canal, Europe faced an energy crisis with oil shortages of nearly 2 million barrels per
day33. As Odell argued, the closure of the canal has acted as a final consideration in persuading
the oil companies to switch their crude oil transport to Europe34.
Reaction in the West
Nationalisation of the Suez Canal was greeted with panic in Britain. Indeed, President Nasser’s
action has brought to the forefront, in an ugly and unexpected form in all Western European
countries, their great and growing dependence on Middle East oil, the assured supply of which
is again, as in 1951 at the time of the Persian oil dispute, brought into question 35. The British
Prime Minister Eden was concerned to keep the canal area safeguarded even by military action
as “failure to keep the canal international would inevitably lead to the loss one by one of
(British) interests and assets in the Middle East”36.
Senior officials in Britain and America assumed that the Egyptians would not be able to run the
canal by themselves. However, Egyptians were trained to be pilots and by the time of
nationalisation, Egyptians were ready to take the helm and the nationalised canal continued to
function more or less the same. The French saw Nasser as a threat to their position in North
31
32
ARC 53332, 19 November 1956.
ARC 59138, Emergency supply position, 2nd August 1956.
33
Kapstein, p.118..
Odell, p.107.
35
Petroleum press service, September 1956 from The British Petroleum Company Ltd, Information Branch
36
Bowie.R, p.21.
34
9
Africa and therefore were strongly motivated toward military intervention. Britain also did not
agree with Egypt to withdraw all forces by the summer of 1956. Thus, they had opened a
military dialogue with the Israelis who had similar interests for striking at Nasser. Meanwhile,
Eden believed that if force had to be used against Nasser, it was better to use it immediately
than later. Thus, Britain had exercised control over the Suez Canal first by outright invasion and
military occupation then by political and economic dominance over a succession of client
regimes. Following the military invasion, Nasser sequestered all remaining British, French, and
Jewish assets37.
It is worth highlighting that there were many differences between the nationalisation in Iran
and nationalisation of the Suez Canal which led the latter to be the most divisive crisis in postwar alliance relations. For instance, the closure of the Suez Canal resulted in severe oil supply
disruptions than those resulting from Iranian nationalisation. With the Suez crisis, “Britain’s
worst Middle East nightmare was finally realized”38. Britain had been left on its own to deal
with the Suez crisis so Eden, British prime minister, informed Eisenhower, President of the US,
that “the immediate threat is to the oil supplies of Western Europe…if the CanaL were closed
we should have to ask you to help us…”39. Eden wrote Eisenhower of his fear that “the seizure
of the Suez Canal is…the opening gambit in a planned campaign designed by Nasser to expel all
western influence and interests from Arab countries….it will be a matter of months before
revolution breaks out in the oil-bearing countries and the west is wholly deprived of Middle
East oil”40. But US was not planning to undermine its influence by lining up with the colonial
powers against Egypt. US restricted the use of force to situations where it could be realistically
expected to achieve reasonable ends41. US had different political and economic interests than
Europe in the Canal Zone. US proposed to provide assistance in oil supplies but this offer was
withheld until London and Paris withdraw their forces from the Suez Canal zone. Britain and
France favoured to use military force to gain control of the Canal. Not only that but President
Eisenhower refused to activate the oil emergency plan and placed severe economic sanctions
on its allies saying that “those who began this operation should be left to work out their own oil
problems –to boil in their own oil, so to speak”42. As Kapstein argued, the Suez crisis “divided
Britain more deeply than any other event since Munich”43.
Oil companies' reaction
37
White, N., The business and the politics of decolonization: the British experience in the twentieth century, 555.
Kapstein, p.103..
39
Quoted in Kapstein, p.105.
40
Quoted in Kapstein, p.112..
41
Smith, T., p. 100.
42
Quoted in Kapstein, p.116..
43
Quoted in Kapstein, p.117..
38
10
The nationalisation of the Suez Canal was sudden and had a major effect, which was felt
particularly by the companies which most depended on access to oil East of Suez. Shell at its
1956 AGM referred to the 'difficulties and embarrassments' of the loss of supply via Suez: an
article in the Observer in late 1956 pointed out that supplies in Western Europe were now
about 60 per cent of normal.44 These were not problems for the oil companies with resources
elsewhere, in particular the US companies with massive resources in Central and South
America. What was needed by the deprived companies was a scheme for obtaining support,
combined with the ability to maintain shareholder confidence in a period of tension.
Management needed to demonstrate its ability to surmount the crisis.
The following section of the paper considers evidence of the attempt by 2 major companies to
demonstrate their command of challenging situations. It covers a period running from the
Iranian nationalisation to the end of the Suez crisis, 1951-1958, for the 2 largest companies with
British connections, Shell and BP. Use is made of their reporting via financial statements where
available, plus press coverage of their AGMs. We aim to understand how they dealt with a
number of key themes - relations with government, taxation, profit and CSR during the period,
and to compare and contrast the 2 companies' behaviour.
Synopsis and analysis of relevant disclosures
This section traces changes in the focus of related disclosures for BP and Shell during 1951-1958
and analyses these changes to examine the companies’ behaviour during both crises. Tables 2
and 3 (appendix) provide a chronological summary of BP and Shell disclosures respectively
within each broad theme, thereby highlighting the following patterns of disclosure.
1.1
Politically related disclosure: Iran and Egypt
In 1950 and 1951 the BP chairman’s statement in the annual report contained a large section
about Iranian nationalisation of the company’s assets by Musaddiq revealing that BP’s status
and rights in Iran have been seriously affected. Despite the negative consequences of
nationalisation, the chairman statement in 1950 discussed the important developments by the
company following the loss of Iranian supplies to reassure stakeholders that there had been no
serious disruptions to oil supplies. Furthermore, the 1951 annual report displayed graphs and
photos for the first time (almost 2 pages) highlighting new agreements in the Middle East other
than Iran noting the continued operations of BP although the flow of supplies was disturbed by
the nationalisation event.
Disclosures noting actions of Iranian government and the impact of loss of Iranian supplies
continued to be made in BP and Shell chairman statements in 1952 and 1953. In 1952, it was
44
Times, 7 May 1957: The ABC of Oil, The Observer Dec 2, 1956;
11
disclosed that this was the first full year during which the company had no oil production from
Iran and the effect of this deprivation on the business, despite the greatly increased supplies
which the company obtained from other sources. On a similar theme, in Shell’s chairman
statement reference45 was made to the problems arising from the loss of supplies from Iran and
the difficulty of finding alternative. It is worth noting that in 1954 the tone of the chairman in
both companies was neutral noting the successful negotiations and the resumption of
diplomatic relations between the Iranian and British governments.
BP believed that the bulk of its oil requirements could be met by increased production in the
Western Hemisphere, which could be attained from the large amount of surplus capacity in
United States. Thus, “the company was seeking to have a proper settlement rather than
immediate use of the canal in the face of economic necessity. The improved supply position
also implies that a complete return to normal routings in the near future would almost certainly
mean considerable bunching of tankers at arrival ports and some delays awaiting discharge and
this might prompt us to maintain our large ships on the Cape route” 46.
In contrast, in 1956 and 1957 politically related disclosures in Shell chairman statement were
extensive but not as condemnatory as those dealing with the Iranian nationalisation which did
not involve Shell assets. The chairman referred to the Suez crisis in his statement in the year
1956 saying that it has been as important and also as striking as in any year since the end of the
war. The effects of them will be of long duration and will have fallen upon many far and wide
but there cannot be any industry which has been more intimately involved than the oil industry.
1.2
Arguments against taxation
UK and foreign tax rates were dramatically high and damaging to both companies and
continued to appear highly until 1954. For instance, 1952, 1953 and 1954 BP chairman’s
statement noted the damaging tax rate and claiming for relief from UK taxation in respect of
Kuwait taxation. Furthermore, the chairman argued that UK tax rate was damaging as for
example after providing £19,342,232 for taxation on profits, the amount available for reserves
and dividends is £24,382,850 compared with £25,165,966 for 1952. The chairman also noted
that the rate of taxation on motor fuel remained at a level so high often representing more
than half the price paid by the consumer.
The same trend applied to Shell chairman’s statements, where he noted in 1952, 1953 and
1954 that UK tax rate is damaging and that it militates against UK companies in a very
substantial degree-namely the treatment granted under the tax laws of UK for depletion of oil
reserves and in fact any other mineral reserves. Shell’s chairman also noted in his statement a
45
46
The Times, 5 June 1952.
ARC 42367, 15 April 1957.
12
growing realization that taxation of industrial profits can reach a point where, while meeting
immediate government needs it must have serious financial repercussions through the attrition
of capital resources.
In 1955, there was only one small disclosure in BP’s chairman statement related to foreign
(Kuwait) taxation, explaining that necessary adjustments of previous years’ profits have been
credited to General Reserve. In similar vein, there was limited disclosure in 1955 in Shell’s
chairman statement against the rationality of high taxes.
However, it is worth noting that there was absence of general taxation disclosures made by BP
and Shell in 1951, 1956 and 1957 thus drawing the attention to actions of both companies
which was in their financial interests. Literally, the above explains that both firms tend to
complain less in a crisis and this is illustrated from the analysis of BP and Shell where they were
relatively quiet on UK taxation during the Iranian nationalisation and Suez crises. The absence
of disclosures commenting on UK taxation highlights the periods in which both BP and Shell
were dependent on UK government support to discuss aspects of a helpful foreign policy.
1.3
Arguments against trade barriers and government interference
Disclosures against trade barriers and government interference increased during the Iranian
and Suez crises due to nationalistic economic policies in Iran and Egypt. For instance, in 1951
and 1952 BP chairman noted in his statements (2 pages disclosure) that there are increasing
trade barriers by the Iranian government and British government as they failed to reach a
solution. The international Bank for Reconstruction and Development approached the British
and Iranian governments and stated to assist in working out any practicable suggestion offering
a reasonable prospect of success.
With the Suez crisis, there were extensive disruptions in the company’s operations because of
governmental restrictions that had negative consequences on the performance of BP and Shell.
No singe group was more affected by closure of the Suez Canal and the “damage in Syria to the
pipeline system to the East Mediterranean than BP, with its big producing interests in the
Middle East and its large marketing interests in Europe”47. The Suez crisis led to a dramatic shift
in Europe’s oil sources and the US became a crucial emergency supplier. By the end of May
1957, the oil crisis had ended with the reopening of the canal and IPC pipelines. But as with
Iran, the Suez crisis had its economic repercussions. HMG’s policy during the Suez crisis was
that none of their ships will use the Canal during the crisis. And payment of canal dues by
British companies will be arranged according to circumstances. The HMG stated that the
Ministry of Fuel and power were taking steps to obtain powers to protect companies in UK
47
The Times, 8 May 1957.
13
from breach of contract in event of emergency48. Meanwhile, H.M.G has approached the U.S
government with a request of operational co-operation with the American oil companies to
overcome shortages of supplies which might otherwise arise. In this connection it was agreed
that Shell and BP would keep closely in touch with their French Associates on matters arising
from “their own refinery and supply committee and are considering detailed plans” 49. Mr.
Butler, chairman of Shell, expressed the view that it is essential for some assessment of the
dollar angle to be made by the H.M.G50. Neville Gass and Bill Snow met HMG officials including
John Maud of Fuel and Power to discuss the political situation and implications of the Suez
crisis. They all appreciated that the political situation in the Middle East had quite obviously
given good reason to enhance the oil companies desire to get the best treaty possible “to
secure their investments whilst on the other hand that very same deterioration in the political
situation obviously made a tough treaty much more difficult of attainment” 51.
Mr. Watson of the UK Foreign Office said that “the foreign office had been considering for some
time, in collaboration with the U.S. Government, the problems which might arise in the
maintenance of oil supplies to the Western World in the event of free passage through the Suez
Canal being interfered with”52. Mr. Watson made it clear that “they were fully aware of the
consideration that was being given to enlargement of the canal by the Suez Canal in
conjunction with representative shipping organisations but in the Foreign office’s view this only
represented one aspect of the problem. …..essentially what they wanted was for the oil
companies to consider the costs of transporting Middle East oil to the West by alternative
means compared with utilisation of the canal. ……The foreign office considered that the risk of
interference with canal traffic by Egypt was greater than the risk to pipelines by other Arab
States or serious interference with oil production itself. ….But it was left that Shell and
ourselves would think the problems over and in due course put forward our joint ideas to the
foreign office”53.
Disclosures against trade barriers and governmental restrictions illustrates how companies are
willing to maximize their wealth of capital and have power to control their operations without
interference. Having said that, several disclosures (4 pages) in 1956 and 1957 BP chairman
statements argued that the expansion in the BP group’s business in 1956 would have been at a
higher rate but for the retarding effects of the closure of the Suez Canal, and the damage in
Syria to the Iraq Petroleum Company’s pipeline system to Eastern Mediterranean, there was
about 1,000,000 tons less than in 1956.
48
ARC 42366, 2nd August 1956.
ARC 20548, 3 September, 1956, p.2.
50
ARC 20548, 27 August, 1956,.
51
ARC 59159, 20 September 1957, p.1.
52
ARC 53332, 27 April 1956.
53
Ibid.
49
14
Mr. Butler, chairman of Shell, reported that there had been some pressure from Shell’s and
BP’s associated companies in Europe to know “what was going on. Shell were advising their
companies, if approached by their governments not to overstress or dramatise the situation”54.
In a correspondence between Fraser and Drake, Fraser mentioned that “his present policy is to
hang as close to Shell’s coat tails as he can. Fraser was overplaying the need for co-operation
with them but fortunately it suits them as it means they appear as the leaders”55. Fraser
explained that he is getting increasingly worried over the complete inability here to get any kind
of co-ordination into this situation. He said “The lack of this co-ordination must in my view be
severely hurting our already virtually impossible task”56. Fraser emphasised that the situation
here regarding purchases and diversions could not in both BP and Shells view be more gloomy.
He said “our American business friends individually are sympathetic and would I am sure assist
if they could. They are however safeguarding their own positions”57. As a result of foregoing
attitude, Fraser anticipated from all the information available that BP is going to be able to
purchase or divert anything but small lots here and there and until the U.S. allowables are
increased and the small problem of using other than U.S. flagships for runs around this coast is
straightened. Fraser regretted that this cable has to be so pessimistic but he is convinced that
any change for the better can only come if they have something to play with other than money.
He suggested that “BP can sell at a low price Middle East Oil for future delivery over long
periods. He also suggested having a bartering shipping tonnage to provide more oil and be an
economy in shipping. Fraser also recommended utilising the under liftings of Jersey and Socony
under their long term contracts as a bargaining point to get something from them” 58 Fraser
emphasised that U.S.A. can be directly aiding Britain and France unless they seek to force their
political policies on Britain. By this means or seek to create a large vacuum in Middle East into
which U.S. interests can be sucked59.
1.4
Justification of trade practices and profit levels
Extensive disclosure was made by BP during both crises in justification of trade practices and
profit levels. BP justified its trade practices by producing from various areas to adjust
production and flow to regional differences in demand and competition. It is not that such a
contingency that arose in the second half of 1956 but this followed the 1951 closing down of
the Abadan refinery which involved coordination among other oil companies operating abroad.
In 1951 and 1952, BP chairman’s statement dealt with the Iranian crisis by displaying 2 pages of
54
ARC 20548, 7 September 1956. P.2.
ARC 53332, 7th December 1956, p.2.
56
ARC 59138, 12 November 1956.
57
ARC 59138, 3 November 1956.
58
ARC 53332, 7th December 1956, p.3.
59
ARC 59138, 26 November 1956.
55
15
photos for the first time addressing new agreements in the Middle East other than Iran and
disclosing information about BP continued operations although the flow of supplies was
disturbed by nationalisation event.
Several disclosures in 1956 and 1957 were also noted by BP chairman statement. For instance,
Gass, BP chairman, instead refers to prestige investment projects to allay concerns about
excessive profits in the disclosures. Gass used his statement to the public as part of a strategy
aimed at protecting and enhancing the political and economic control of the company at the
time of the crisis. For instance, Gass, explained in 1955 annual report that there had been a
'problem' with 'retarding effects in the last 2 months of 1956, ‘essentially’ a transport problem
on the long voyage round the Cape. However, Gass was aware that stockholder will be
concerned with the consequences of the Suez crisis on BP’s performance so he said that the
results of 1956 represent “a fabulous story of progress”60. The 1956 Annual report was
different from that of the previous year in a number of respects. For instance, Gass
“geographically dealt with it (the crisis) in words, figures, and photographs in the full report,
and accounts and the accompanying statement to stockholders”61. Meanwhile, he asked the
stockholders “to appreciate that the current half year’s results must inevitably be affected by
the changes in the flow of supplies and in the consumption of products brought about by last
year’s events”62. Gass disclosed that for the four months November 1956 until February 1957
“production in the Middle East where so many of BP’s interests lie, declined to a monthly
average of 10 million tons, against an average of nearly 15,500,000 tons a month in the
preceding four months. The early months of this year, in fact, have been a difficult period in
which the trade of the group has been reduced and consumption in the European area has
slowed down”63. The 1957 annual report was again longer, this time 48 pages, with 11
photographs. Like the previous years' reports, it included graphs for the annual crude oil
production, refinery throughput, tanker tonnage and sales, but this time these were combined
with maps of these activities. Furthermore, discussion of Suez was more explicit than that of
1956. Suez was no longer a 'problem' but a 'crisis' with 'adverse effects'64. Gass disclosed in
1957 annual report that the major investments were being made in facilities for production,
refinement, transport and delivery, but ‘a combination of various factors’ had resulted in a
slowing down of ‘the growth of consumption’, resulting in lower prices and ‘deteriorated
trading conditions.’ Moreover, Gass emphasised that although ‘difficult’ trading was likely to
60
1956 annual report.
The Times, 8 May 1957.
62
The Times, 8 May 1957.
63
The Times, 8 May 1957.
64
1957 annual report, p.17.
61
16
continue, this ‘should be regarded as a phase of adjustment’. Oil still had ‘important and
expanding’ contribution to make to energy supplies65.
Although it has been reported in the Times that BP has had more than its share of frustration of
the expansion of group’s business in recent years and stockholders should anticipate that
capital expenditure will continue at a high rate and that “retention in the business of a very
substantial proportion of earnings will need to be continued”66. But Gass was quite confident
(or said he was) looking “forward to an expanding business granted the stable conditions
requisite for the progressive development of Middle Eastern oil-production on which the
economic future of the producing countries in that area so largely depends on oil”67. Gass
declared that sea transport was one of the major issues in the future capital programme of BP
and consequently announced “that orders have been placed by the BP Tanker Company, which
already has a fleet of 143 ships of over two million dead weight tons for a further number of
new tankers including some of 65,000 dead-weight tons”68. Harold Snow, managing director of
BP, explained that BP could not maintain through December and January supplies at the rate of
70 per cent of normal. He was hoping that “there will progressively develop in the markets
measures for mutual aid or the pooling of supplies between distributing companies. He
emphasised that the most important issue that BP should adopt a policy of very strict control
over their deliveries with the object of doing their best for as many of their customers as the
can with, of course, particular reference to those with the most important requirements and of
protecting the company’s future goodwill as much as they can” 69. Thus, this shows that BP was
stimulated to diversify its production, refining and transportation using giant tankers to
undercut the cost of moving oil by pipelines without depending on the Suez Canal.
However, Shell seems to go through a series of denials about profiteering and anti-competitive
behaviour. For instance, in 1952, the chairman noted in his statement the Anti-trust litigation
in the U.S.A. For instance, Shell chairman argued that the Attorney General in office acted with
the consent of the president instituted a criminal investigation under the United States AntiTrust Laws into the conduct of the principal American oil companies operating in the foreign
aid. Also included in the proceedings was the (BP) and the intention was publicly expressed of
including the Royal Dutch Petroleum Company and the Shell Transport and Trading Company
Limited. Furthermore, in 1957, the chairman argued that the present period of uncertainty the
company is naturally adopting a cautious attitude towards capital expenditure. But although
adverse conditions will have some effect on the rate of expenditure in the immediate future, it
is his view that the prospectus for the industry remains good in the longer term and it is
65
1957 annual report, p.17.
The Times, 8 May 1957.
67
The Times, 8 May 1957.
68
The Times, 8 May 1957.
69
ARC 42366, Feb 1956.
66
17
primarily with this consideration in mind that he formulates plans for development…… as the
laying of pipelines take several years to complete and may not be working at optimum capacity
until a further period has elapsed after completion. These disclosures proceed to explain that
Shell went through government regulations and therefore the company aimed at protecting
their existence against any pressure.
1.5
CSR disclosures
The analysis shows that CSR disclosures for both firms are correlated with the two crises and
have a determined impact on society. The analysis also shows that the managerial aimed to
hide the true nature of the political situation defending itself in front of the main stakeholder
groups. In the Iranian and Egyptian crises, the chairman of BP used the annual reports as a
propaganda tool and succeeded in maintaining shareholders’ confidence. For instance, in 1950,
the chairman disclosed that (BP) carried out vast expansion of the social services for the foreign
employees including housing, school, and medical care. Also in 1956 and 1957, the chairman
noted in the section on Personnel that BP would 'spare no effort’ to ensure ‘a good standard of
life’ for employees ‘wherever they work’70 and that the company would continue to devote
particular attention to the training and advancement of nationals of the countries in which it
operates. Thus putting much emphasis on internationalising the training; “not only do many
British staff now have periods of training abroad but nationals of the countries in which we
operate are increasingly serving for periods in this country”71. As a means of alleviating the
rising tide of economic nationalism in 1951, BP embraced Egyptianization and supported
military evacuation of the Suez base. BP was endeavouring to obtain as quickly as possible
supplementary supplies from short haul sources because of the severe dislocation caused to BP
shipping programme “by the stoppage both of the transits through the Suez Canal and of
loadings of Iraq oil in the Eastern Mediterranean”72 made it impossible for the company to
maintain their supply at normal level. BP needed to impress and maintain stakeholders
confidence to maintain share price in order to attract new finance as and when needed (e.g. to
expand tanker fleet). Furthermore, BP needed to maintain its status because it was smaller and
less internationally known than Shell. Also, BP needed to demonstrate control despite
dependence on precarious Middle East oil supplies.
In 1950 and 1951, the chairman of Shell also used his statement as a propaganda tool where he
disclosed that he was mainly concerned about the relations between the group’s management
and its staff throughout the world and the team spirit is all the more important when he
considers the additional and ever growing handicaps confronting industry73. The chairman also
70
BP 1956 annual report.
BP 1957 annual report.
72
ARC 42367, 13 November 1951.
73
Shell 1950 annual report.
71
18
noted that “many nations are represented on our staff, and it is our considered policy as far as
possible to employ in our companies abroad the nationals of the countries in which we operate.
To that end staff training has been intensified and new training facilities are constantly being
added in order to ensure that this policy is implemented as soon and as fully as possible. We
are an international business and aim to further the cause of international goodwill wherever
we can”74. Not only that but Shell had a policy of engaging Egyptian staff similar to the
Iranianisation policy with BP and consequently there was extensive disclosure in its annual
reports during the Suez crisis in 1956. For instance, the chairman disclosed that Shell intends to
continue the practice which it has assiduously and successfully pursued in the past, of drawing
its personnel from every nation in which they operate and training each one individually so that
the “training and career development need not be bounded by any of one country and
increasing use is being made of that facility. In this way we shall remain well equipped to meet
the changes which are taking place in many parts of the wold in the political and technical
scenes, and at the same time we shall increase our effective communication between country
and country and between man and man on the exchange of progressive ideas”75. In short, the
patterns of related disclosures analyzed above provide evidence that both firms are using CSR
disclosures where they are useful in a bargaining situation with a host government. BP and Shell
are using their annual reports to show that their operations are important to social well-being
and standards of living to indicate that they are socially responsible, hence, protecting their
interests and maintaining stakeholders’ confidence.
Conclusion
The public image of BP and Shell was seen as a crucial ingredient of the managerial disclosures,
not least because a key objective of the management was to maintain the confidence of its own
stakeholders in the face of major threats and also to absolve itself of any blame for the
international crisis. Thus, annual reports were used as a means of communication and a part of
a wider propaganda battle.
The successful surmounting of the Suez crisis of 1956-57 was not a foregone conclusion. It
owed much to the availability of the oil supplies from Western Hemisphere, mainly Venezuela
and the USA whose oil exports increased greatly during the crisis. Notwithstanding the cooperation that was made through MEEC in allocating oil supplies in Western Europe, the US
governments was the major factor behind the government’s backing of oil industry in the
MEEC. MEEC removed the constraints on oil supplies by maintaining tanker movements for the
duration of the Suez crisis. There is no doubt that BP also played a major role in co-operation
74
75
Shell 1951 annual report.
Shell 1956 annual report.
19
with the other international oil companies which facilitated the relatively friction-less working
of the MEEC in maintaining Western Europe’s oil supplies.
BP had less influence in 1956 than in 1951 with the British government, because of differences
in the geo-political situation, but also because there was a divergence of objectives between BP
and the government (c/f 1951 where both favored direct intervention). BP’s position in the
network of oil firms was weak (dominance of US, information asymmetries), and subject to
some risk due to position of assets, but management were able to reassure shareholders and
maintain confidence due to good underlying performance on profit and investment, which the
annual reports emphasized. In the end the repercussions of the Suez crisis were less drastic
than they were at the time expected to be and the dislocation of oil supplies following a
military engagement may be an example of what may happen in the future.
Footnote references
Bamberg, J., 2000. British petroleum and global oil, 1950-1975. Cambridge: Cambridge
University Press.
Bostock, F. & Jones, G., 1989. British business in Iran, 1860s-1970s, in Davenport-Hines, R. and
Jones, G. eds., British Business in Asia since 1860, 31-67, Cambridge: Cambridge University
Press.
Boyd, B., 1990. Corporate linkages and organizational environment: a test of the resource
dependency model. Strategic Management Journal, 11, 419-430.
Bowie, R., 1974. Suez 1956. London: Oxford University Press
Brumberg, D. & Ahram, A.I., 2007. The National Iranian Oil Company in Iranian politics. Austin:
University of Texas Press.
Buhr, N., 1998. Environmental performance, legislation and annual report disclosure: the case
of acid rain and Falconbridge. Accounting, Auditing and Accountability Journal, 11(2), 163-190.
Christopher, J., 2010. Corporate governance, a multi-theoretical approach to recognizing the
wider influencing forces impacting on organizations. Critical perspectives on Accounting, 21,
683-695.
Freeman, R. 1984. Strategic management: A stakeholder approach. Boston, MA: Pittman.
20
Gray, R., Kouhy, R., Lavers, S., 1995. Corporate social and environmental reporting: A review of
the literature and a longitudinal study of UK disclosure. Accounting, Auditing and Accountability
Journal, 8(2), 47-77.
Kapstein, E., 1990. The insecure alliance: energy crises and western politics since 1944. New
York: Oxford University Press.
Littlewood, J., 1998. The Stock Market: 50 years of capitalism at work. London: Financial Times,
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Marsh, S., 2001. HMG, AIOC and the Anglo- Iranian Oil Crisis. Diplomacy & Statecraft, 12(4),
143-174.
Miitchell, R., Agle, B., Wood, D., 1997. Toward a theory of stakeholder identification and
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Odell, Peter R., 1968. The significance of oil. Journal of Contemporary History, 3(3), 93.
Onslow, S., 2003. Battlelines for Suez: The Abadan Crisis of 1951 and the formation of the Suez
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Penrose, E., 1968. The large International firm in developing countries: The International
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Pfeffer, J., 1972. Size and composition of corporate board of directors: the organization and its
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21
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Schuster.
Documentary sources
BP Annual Report and Accounts, 1955, 1956 , 1957 & 1958.
British Parliamentary Papers, House of Commons, vol.233, col.2047, 23 December 1929.
BP 20548, Sep 1956.
BP 20548, August 1956.
BP 42366, Feb 1956.
BP 42366, August 1956.
BP 42367, 15 April 1957.
BP 42541, 17 April 1956, p.5.
BP 53332, 19 November 1956.
BP 59138, Emergency supply position, 2nd August 1956.
BP 59159, 20 September 1957
BP 62906, 15 October 1956.
Petroleum press service, September 1956 from The British Petroleum Company Ltd,
Information Branch.
The Times, 5 June, 1952.
The Times, 7 May, 1957.
22
The Times, 8 May, 1957.
Shell Annual Report and Accounts, 1950, 1951 and 1956.
23
Table 2: CONTENT ANALYSIS of BP ANNUAL REPORTS
Theme
Actions of foreign
year/annu
governments
UK tax rates
Foreign Taxes
Trade barriers and
Justification of trade
CSR policies of the
government interference
practices and profit levels
firm (foreign
al reports
1950
1951
employees)
Extensive
(almost the whole
annual report is
discussing the Iranian
government
nationalisation of AIOC
assets revealing that
the company’s status
and rights in Iran have
been seriously
affected)
2 ½ pages
(The Iranian
government had
disputed the
jurisdiction of the
International Court to
deal with the British
Government dispute).
1 page
(Alarming
effect of
royalty
payments to
Iranian
government)
¼ page
Tax rate is
reduced in
some
countries in
the Middle
East (ex.
Kuwait, Iraq)
24
2 pages (increasing trade
barriers by the Iranian
government and British
government as they failed
to reach a solution.
1 ½ pages (. Profits have
been seriously affected by
the cessation of Iranian
supplies which completely
cut off AIOC income)
¾ page (The AIOC
carried out vast
expansion of the
social services for
the foreign
employees including
housing, school,
medical care)
2 pages (Display of graphs
and photos for the first time
addressing new agreements
in the Middle East other tan
Iran. Disclosures about AIOC
continued operations
although the flow of supplies
was disturbed by
nationalisation event).
Neutral (few lines)
Tribute to staff
1952
1953
2½
pages (Owing to the
continuance of the
dispute with the Iranian
government, no
operations of the
company or its
subsidiaries took place
in Iran during 1952). .
¼ page
(Damaging UK tax
rate). High level of
taxation on motor
fuel which affects all
users.
¼ page
Tax rate is
damaging
(a claim has
been made for
relief from UK
taxation in
respect of
Kuwait
taxation)
2 ½ pages
(The Iranian
government had
announced the
resumption of
diplomatic relations
and the two
governments would
proceed at the earliest
mutually agreed
moment to negotiate a
settlement of the oil
dispute which had
recently clouded
relations between
them).
1/2 page (Damaging
UK tax rate
Very high rates of
duty so frequently
imposed by
governments on
motor spirit, often
representing more
than half the price
paid by the consumer.
1/4 page
(The claim for
relief from UK
taxation in
respect of
Kuwait
taxation has
still not been
agreed by the
UK revenue
authorities).
25
2 pages (increasing trade
barriers as the Iranian
government entered into
negotiation with an
organisation of an
international character, in
which the company would
have participated for the
purchase of large
quantities of oil over a
period of years).
1 page
(There is coming more
into evidence the problem
of maintaining in the
Eastern Hemisphere the
necessary balance
between the proportions
in which the main refined
products are needed and
the proportions in which
they can be produced
from crude oil).
Anti-trust litigation in the
U.S.A.
Neutral (few lines)
Tribute to staff
8 pages of photos and images
to justify the company
practices.
2 pages of photos only
To justify the company
practices.
Neutral (few lines)
Tribute to staff
1954
Neutral tone
1955
Neutral tone
1956
3 pages on
Suez crisis
1/2 page
The rate of taxation
on motor fuel
remained at a level so
high as to constitute a
restriction on the
growth of road
transport.
1/4 page
(The claim for
relief from UK
taxation in
respect of
Kuwait
taxation is still
under
discussion
with Inland
Revenue
authorities).
As regards
Kuwait
taxation,
necessary
adjustments of
previous years’
profits have
been credited
to General
Reserve.
4 pages
26
2 pages of photos illustrating
the Queen’s visit to Kent oil
refinery and a refinery in
Western Australia.
Neutral (few lines)
Tribute to staff
2 pages of photos illustrating
BP group oil production,
refinery throughput, in going
tanker tonnage and BP group
sales of crude oil and refined
products.
Neutral (few lines)
Tribute to staff
14 pages of photos
illustrating maps of oil
movements, BP group
statistics, photos of drilling,
refineries and sea transport.
½ page
(Stress on effort to
improve employee
conditions)
1957
Suez crisis -Neutral
tone
1 page
1958
½ page Reasons for fall in
oil prices this year
(The year 1959 began in).
27
15 pages of photos
illustrating graphs of BP
group oil production, refinery
throughput, in going tanker
tonnage and BP group sales
of crude oil and refined
products. There are also
photos of drilling, refineries,
service stations, BP aviation
service and BP research
centre.
12 pages of photos
illustrating graphs and BP of
group oil production, refinery
throughput, in going tanker
tonnage and BP group sales
of crude oil and refined
products. There are also
photos of off-shore drilling,
refineries and service
stations.
½ page
Throughout the
worldprovide good
conditions,
internationalisation.
Neutral (few lines)
Tribute to staff
Table 3: CONTENT ANALYSIS of SHELL ANNUAL REPORTS
Theme
Actions of
year/
foreign
annual
governments
UK tax rates
Foreign
Trade barriers and
Justification of trade practices
CSR policies of the
Taxes
government
and profit levels
firm (foreign
interference
employees)
reports
1950
Neutral
2-3 pages
Tax rates damaging to the nation
Industry needs more
freedom
1951
1 ½ pages
Iran- warning to
governments
not to breech
contracts
1 1/2 pages – tax rates too high
Alarming
effect of
taxes on
national
prosperity
1952
Neutral tone
¼ page
(Damaging UK tax rate).
¼ page
Tax rate is
damaging
28
1 page
1 page- Damage to world US government anti-trust case
trade of increasing trade not relevant in Europe
barriers
¼ page (the
chairman was
mainly concerned
about the relations
between the
group’s
management and
its staff throughout
the world.
½ page (Extensive
disclosure)
Neutral (few lines)
Tribute to staff
1953
Neutral tone
1/2 page -Damaging UK tax rate.
1/4 pageDamaging tax
rate but
some are
reducing
1/2 page
Damage to World trade
of increasing trade
barriers
1954
Neutral tone
1 1/2 pages
Tax rates damaging
Tax rates
damaging
Increasing trade barriers
1955
Neutral tone
1956
Suez crisis
2-3 pages
1957
Suez crisis Neutral tone
Soviet oilneutral tone
1958
Disapproval
of
Venezuelan
tax rise
29
Neutral (few lines)
Tribute to staff
2 pages disclosing the progress
of group activities.
Neutral (few lines)
Tribute to staff
2 pages
2 pages about the general
progress of the company
Extensive disclosure
Neutral (few lines)
Tribute to staff
½ page (Extensive
disclosure)
½ page
1 ½ page
US import restrictions
1 ½ page
Neutral (few lines)
Tribute to staff
Neutral (few lines)