Economic subjects | Economic policy » Abdelrehim-Maltby-Toms - Oil and Middle East Politics, The Case of British Petroleum and Shell in the Suez Crisis

Source: http://www.doksinet Oil and Middle East Politics: the Case of British Petroleum (BP) and Shell in the Suez crisis Neveen Abdelrehim Josephine Maltby Steven Toms 1 Source: http://www.doksinet 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 points 2. 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 Irans nationalisation of BPs 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 BP 3 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 Source: http://www.doksinet theoretically informed by resource dependency theory 4 as it particularly complements stakeholder theory in coping with the increased complexities arising from a wider stakeholder base 5. 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 shareholders 6. 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 activities 7. 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 Source: http://www.doksinet or group that can affect or is affected by the achievement of the organisation’s objectives” 8. As Mitchell et al. (1997, p855) 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, p4) 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 relations 10. 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, p128 11 Onslow, S., p22 9 4 Source: http://www.doksinet Egypt had

received all the assets and property of the company 12. 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 (eg 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 crisis 13. 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 territories 16. 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 15 Bowie, R., p 1 Onslow, S., p2 Onslow, S., p2 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 Source: http://www.doksinet 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 nationalists 20. 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 canal 22 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 Source: http://www.doksinet 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 region 25. 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.googlecom/newspapers?nid=888&dat=19570827&id=3u9RAAAAIBAJ&sjid=PnYDAAAAIBAJ&pg=7251, 5184368 24 Yergin, 495. 25 Kapstein, 103. 7 Source: http://www.doksinet 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 Canal 26. 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 Hemisphere 27., 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 Shells). 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, p16 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 Source: http://www.doksinet 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 refineries 32. 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 day 33. 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 Europe 34. 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, p21 34 9 Source: http://www.doksinet 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 assets 37. 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 Europeif 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 isthe 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 ends 41. 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 Source: http://www.doksinet 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 Source: http://www.doksinet 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 reference 45 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 Source: http://www.doksinet 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 Source: http://www.doksinet from breach of contract in event of emergency 48. Meanwhile, HMG has approached the US 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.MG 50 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 Source: http://www.doksinet 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.SA 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 sucked 59 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. P2 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 Source: http://www.doksinet 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 Source: http://www.doksinet continue, this ‘should be regarded as a phase of adjustment’. Oil still had ‘important and expanding’ contribution to make to energy supplies 65. 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.SA 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 Source: http://www.doksinet 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 industry 73. 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 Source: http://www.doksinet 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 Source: http://www.doksinet 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, AI, 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 Source: http://www.doksinet 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, Pitman Publishing. 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 salience: Defining the principle of who and what really counts. Academy of management Review, 22(4), 853-886. 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 Group. Contemporary British History Journal, 17(2), 1-28 Penrose, E., 1968 The large International firm in developing countries: The International Petroleum Industry. London:

George Allen & Unwin Pfeffer, J., 1972 Size and composition of corporate board of directors: the organization and its environment. Administrative Science Quarterly, 18, 349-364 Pfeffer, J., 1981 Power in organizations: A critical essay Random House, New York Pfeffer, J. & Salancik, G, 1978 The external control of organizations: a resource dependence perspective. New York: Harper and Row Preston, L., Donaldson, T, Brooks, L, 1999 Principles of stakeholder management In: principles of stakeholder management. The Clarkson Centre for business Ethics, Toronto, Canada. Smith, T., 1978 A comparative study of French and British decolonization Comparative studies in society and history, 20 (1), 70-102. Toms, S. & Filatotchev, I, 2004 Corporate governance, business strategy, and the dynamics of networks: a theoretical model and application to the British cotton industry, 1830-1980. Organisational studies, 25 (4), 629-651. 21 Source: http://www.doksinet Van der Lann Smith, J.;

Adhikari, A and Tondkar, R, 2005 Exploring differences in social disclosures internationally: A stakeholder perspective. Journal of Accounting and Public Policy, 24, 123-151. Walker, S. P, 2000 Accounting in crises Accounting History, 5(2), 5-12 White, N., J 2000 The Business and the politics of decolonization: the British experience in the Twentieth century. The Economic History Review, New series, 53 (3), 544-564 Yergin, D. 1991 The Prize: The Epic Quest for Oil, Money, & Power New York: Simon and Schuster. Documentary sources BP Annual Report and Accounts, 1955, 1956 , 1957 & 1958. British Parliamentary Papers, House of Commons, vol.233, col2047, 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 Source: http://www.doksinet The Times, 8 May, 1957. Shell Annual Report and Accounts, 1950, 1951 and 1956. 23 Source: http://www.doksinet 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 Source: http://www.doksinet 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.SA 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 Source: http://www.doksinet 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. 26 4 pages 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) Source: http://www.doksinet 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 Source: http://www.doksinet 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 Source: http://www.doksinet 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)