Introduction



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1.5CSR 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 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 co-operation 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 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.
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.

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, 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.

The Times, 8 May, 1957.

Shell Annual Report and Accounts, 1950, 1951 and 1956.

Table 2: CONTENT ANALYSIS of BP ANNUAL REPORTS



Theme year/annual reports

Actions of foreign governments

UK tax rates

Foreign Taxes

Trade barriers and government interference

Justification of trade practices and profit levels

CSR policies of the firm (foreign employees)

1950

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)






1 page (Alarming effect of royalty payments to Iranian government)




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)

1951

2 ½ pages

(The Iranian government had disputed the jurisdiction of the International Court to deal with the British Government dispute).



¼ page

Tax rate is reduced in some countries in the Middle East (ex. Kuwait, Iraq)

2 pages (increasing trade barriers by the Iranian government and British government as they failed to reach a solution.

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

2 ½

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 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).

Anti-trust litigation in the U.S.A.
8 pages of photos and images to justify the company practices.

Neutral (few lines)

Tribute to staff



1953

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).



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).



2 pages of photos only

To justify the company practices.



Neutral (few lines)

Tribute to staff



1954

Neutral tone

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).






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



1955

Neutral tone




As regards Kuwait taxation, necessary adjustments of previous years’ profits have been credited to General Reserve.




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



1956

3 pages on

Suez crisis









4 pages


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


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.

½ page

Throughout the worldprovide good conditions, internationalisation..



1958










½ page Reasons for fall in oil prices this year

(The year 1959 began in).



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.

Neutral (few lines)

Tribute to staff



Table 3: CONTENT ANALYSIS of SHELL ANNUAL REPORTS

Theme year/

annual reports

Actions of foreign governments

UK tax rates

Foreign Taxes

Trade barriers and government interference

Justification of trade practices and profit levels

CSR policies of the firm (foreign employees)

1950

Neutral

2-3 pages

Tax rates damaging to the nation







Industry needs more freedom




¼ page (the chairman was mainly concerned about the relations between the group’s management and its staff throughout the world.

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





1 page


½ page (Extensive disclosure)


1952

Neutral tone

¼ page

(Damaging UK tax rate).




¼ page

Tax rate is damaging




1 page- Damage to world trade of increasing trade barriers


US government anti-trust case not relevant in Europe


Neutral (few lines)

Tribute to staff



1953

Neutral tone

1/2 page -Damaging UK tax rate.


1/4 page- Damaging tax rate but some are reducing


1/2 page

Damage to World trade of increasing trade barriers






Neutral (few lines)

Tribute to staff



1954

Neutral tone

1 1/2 pages

Tax rates damaging




Tax rates damaging


Increasing trade barriers


2 pages disclosing the progress of group activities.

Neutral (few lines)

Tribute to staff



1955

Neutral tone










2 pages about the general progress of the company

Neutral (few lines)

Tribute to staff



1956

Suez crisis

2-3 pages









2 pages


Extensive disclosure


½ page (Extensive disclosure)


1957

Suez crisis -Neutral tone







½ page


1 ½ page


Neutral (few lines)

Tribute to staff



1958

Soviet oil-neutral tone




Disapproval of Venezuelan tax rise


US import restrictions


1 ½ page


Neutral (few lines)




1 Walker, Accounting in crises, 5.

2

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