As every Chief Executive of a multi-billion dollar international corporation knows, the media, shareholders and the rest of the world take note of every word you say. Many cringe at the infamous blunders of the likes of Gerald Ratner, founder of Ratner’s Jewellery chain, who described a popular stock item as “total crap” in a public shareholder meeting; or Barclays Bank chief Matt Barratt who famously said, “I do not borrow on credit cards. I have four young children. I give them advice not to pile up debts on their credit cards,” when he was giving evidence at a government enquiry into the interest rates that contribute to Barclays’ massive profitability.
Perhaps one of the most ill-advised public statements of all came from BP Chief Executive Tony Hayward following the Deepwater Horizon oil-rig explosion that resulted in eleven deaths and the biggest environmental disaster in US history. “We’re sorry for the massive disruption it’s caused…” he said. “There’s no one who wants this over more than I do. I would like my life back.” The comment was just one of a string of gaffes made by Hayward in the months following the explosion, and he was forced to resign in September.
Why, then, would rival Royal Dutch Shell chief executive, Peter Voser make a series of very public comments damning BP’s performance in relation to the oil spill? “Shell clearly would have drilled this well in a different way and would have had more options to prevent the accident from happening,” he recently told delegates to the Oil and Money conference in London. Either he has learned nothing about the dangers of making public statements that may come back to haunt you, or he has an ulterior motive worthy of Machiavelli himself.
Swiss reserve
Peter Voser was born in Switzerland in 1958. A keen sportsman, he loved playing soccer and, by his own admission, was “almost born with skis on”. He graduated in business administration from the University of Applied Sciences, Zürich and joined Shell in 1982, working in a number of finance and business roles in Switzerland, the United Kingdom, Argentina and Chile.
When he returned from Chile in 1997, Voser became the Group Chief Internal Auditor and his rise to the top was fairly steady from that point. In 1999 he was appointed CFO of Shell Europe Oil Products and in 2001 became CFO of the Global Oil Products Business.
In 2002 his ambitions were thwarted by the appointment of rival contender Judy Boynton to the position of chief financial officer of the Royal Dutch/Shell Group of Companies. “The main driver for me [at that time] was to be CFO of a quoted company,” Voser has commented. “I wanted that experience. I was ready and impatient with myself, and I couldn’t see that happening fast enough at Shell.” Voser resigned and went to work for the Asea Brown Boveri (ABB) Group of Companies in Switzerland. A global engineering giant, ABB was teetering on the brink of collapse. Voser, alongside chief executive Jürgen Dormann, restructured and refocused the business, brought in around $4bn from asset disposals and successfully resolved an outstanding asbestos liability that had threatened the future of the company. By the first quarter of 2004 ABB turned in its first quarterly profit in two years.
Whether by happy accident or clever design, Voser’s departure from Shell meant that he was absent when, in 2003, the US Securities and Exchange Commission and the UK Financial Services Authority began a joint investigation into allegations of fraud by overstating proven hydrocarbon reserves by 4.5 billion barrels or 25 percent. Shell cooperated with the investigations and agreed a substantial settlement to close the case, which the following extract from the SEC ruling would suggest had its origins as far back as 1997.
“Indeed, Shell was warned on several occasions prior to the fall (autumn) of 2003 that reported proved reserves potentially were overstated and, in such critical operating areas as Nigeria and Oman, depended upon unrealistic production forecasts. In each case, Shell either rejected the warnings as immaterial or unduly pessimistic, or attempted to “manage” the potential exposure by, for example, delaying de-booking of improperly recorded proved reserves until new, offsetting proved reserves bookings materialised.”
Following the SEC investigation several senior people left Shell, including CFO, Judy Boynton. In October 2004, Peter Voser returned to take over the position. During the next four years, he saw Shell’s oil output decline steadily to the point that the company was overtaken as Europe’s biggest energy producer in terms of market value by rival BP, perhaps sowing the seeds for Voser’s current relish in BP’s public relations and financial woes.
From 2006 to April 2010 Peter Voser also served as a non-executive director of Swiss banking giant, UBS. His tenure on the board and as a member of the governance and nominating committee and of the strategy committee coincided with another SEC investigation, this time into UBS’s conduct in relation to services provided to US clients by Swiss-based client advisers between 2000 and 2007. In early 2009 the US Inland Revenue Service hit UBS with a lawsuit accusing the Swiss bank of abetting as many as 52,000 US taxpayers in tax evasion.
Rising to the top
In July 2009, although he says he did not court the position, Peter Voser was appointed Chief Executive of Royal Dutch Shell (RDS). Drawing on his twenty years inside the Shell organisation and his proven restructuring and cost-cutting experience with ABB, Voser hit the ground running. Even before he moved in to his new office, he circulated a memo outlining his plans for reinvigorating the business. The plans called for cutting costs, restructuring the organisation and changing from ‘a culture that debates the merits of management decisions to one that swiftly implements them’.
In an interview with CNN Money he explained: “I like to keep things simple and clear in the way I run the company… It’s about absolute clarity on strategy and what you want on operational performance. It’s about focus, speed, and accountability for delivery. Everyone needs to know what is expected of them. You need to measure performance, have resources to deal with the highest priorities, and leave behind anything that isn’t necessary to carry.”
What he has left behind already is over 5,000 jobs, many of which are in the middle management layers. “Vision is often bought into at the top, and by front-line staff,” he said, “but there is often passive resistance in the middle ranks to change, which you have to deal with.”
He has also been quietly refocusing the company’s oil production capacity away from Nigeria, where the company has been plagued with on-going disputes and accusations over environmental destruction, to Iran, Qatar and Malaysia. His strategy includes investing in alternative energy sources and talking up natural gas which he expects to make up more than half of Shell’s production by 2012.
But the Gulf of Mexico, site of the BP disaster and still off limits to further deep sea oil drilling, remains a key part of the RDS plans for the future. In an interview with Epoxy Oil in early 2009 Voser said: “Our deep-sea production is centred mainly in the Gulf of Mexico. Exploration activities there have been very successful over the past twelve months, and we recently made another large find. Our efforts are intensifying in deep-sea areas, but we do not need new deep-sea resources for a diversified portfolio of activities. This is also due to the fact that Shell has secured a considerable number of exploration rights in the Gulf of Mexico in recent years.”
So was his thinly veiled attack on BP earlier this year an attempt to grab the attention of the American regulators as they review the ban on drilling in the Gulf? “Peter Voser’s comments have to be seen in light of the fact that before the oil spill Shell had seen BP overtake it as Europe’s biggest energy producer in terms of market value,” says Jim Preen at Crisis Solutions, Europe’s leading crisis readiness company. “While the disaster was ongoing it would have looked unseemly for Shell to attack BP – now the gloves are off.”
Shell needs to be able to carry on with its own drilling and production activities in the Gulf of Mexico where it was once the dominant player. Of course, as the costs of the clean up and compensation to those whose livelihoods have been affected continue to escalate, BP may well be forced to sell off assets and Shell may well be interested in buying them. Some observers have gone further, speculating that Voser is softening up shareholders in preparation for a friendly takeover of BP.
Whatever his motives, Voser, who describes himself as having a down to earth mentality, not a big ego CEO type, must be praying each day that the company he leads can remain accident-free during the rest of his tenure as chief executive. If not, he will be joining Mr Hayward in the pages of textbooks defining what chief executives should not say in public. “There must be a lot of Shell workers and executives wondering whether it was wise of Voser to make these remarks, which would come back to haunt him if Shell were to suffer a similar disaster,” says Preen.