BP and Shell face new allegations
of rigging oil prices in US
lawsuit
Companies among five accused by
oil traders of repeatedly trying to rig spot price for Brent crude
Fiona Harvey, environment
correspondent
The Guardian, Wednesday 6 November
2013 16.26 EST
BP and Shell have been forced on the defensive
by new allegations of price-rigging made in a US lawsuit brought by four oil
traders.
The two companies, along with
others involved with the oil market, are alleged to have attempted to rig the
spot price for Brent crude oil on multiple occasions in the last decade. The
court documents list several alleged incidents in which the accusers claim the
market price could have been manipulated.
BP and Shell both said they had no
comment on the allegations.
One oil industry insider said
fixing the price of Brent crude, an important benchmark oil price based on North Sea production, was unlikely because of the
competitive nature of spot trading in the oil market. Other insiders dismissed
the claims as "four traders trying their luck" and as
"frivolous".
Though the cases are not linked,
the new suit may have been encouraged by the current European commission
investigation into alleged energy market price fixing, and by a whistleblower's
claims, in the Guardian, that price-fixing was rife in UK gas markets.
Other companies named in the US lawsuit include Morgan Stanley, the investment bank; the trader Vitol Group; and
Trafigura, the oil and metals trader that illegally exported toxic waste which
was then dumped by a contractor in Africa. All
three declined to comment.
David Kovel, a lawyer for the
traders bringing the case, told Bloomberg News, which uncovered the suit:
"It's a very obscure market. To outsiders, it can seem impenetrable.
Specialists and speciality traders in the market can take advantage of this
obscurity."
The suit, which was filed on 4
October in the Manhattan
federal court, details instances when the prices of Brent crude and other
crudes were at variance, when the traders allege that trades occurred that
under and oversold the benchmark.
However, industry people who could
not be named said that such instances could arise naturally in the normal run
of trading.
The energy industry has come under
severe pressure on pricing recently. Allegations of market-fixing in the UK
emerged late last year, and have yet to be fully resolved. Some UK energy suppliers have been forced to admit
mis-selling, and the price rises – in some cases of more than 10% – announced
in the past few weeks by the UK's
big six suppliers have prompted outrage.
The plaintiffs in the New York
suit are Kevin McDonnell, a former director of Nymex, the New York Mercantile Exchange; Anthony Insinga and Robert Michiels,
both independent floor traders; and John Devivo, a seat-holder on the exchange.
BP
DeAnne
Julius was a director at BP p.l.c.,
and the chief economist for Royal Dutch
Shell plc.
Note: Royal Dutch
Shell plc is a subsidiary of the Shell
Oil Company.
John D.
Hofmeister was the president for the Shell
Oil Company, and is the chairman for the National Urban League.
Vernon E. Jordan Jr. was the president
of the National Urban League, is a
senior counsel for Akin, Gump, Strauss,
Hauer & Feld, LLP, an honorary trustee at the Brookings Institution
(think tank), a life
trustee at the Urban Institute (think
tank), Valerie B. Jarrett’s
great uncle, a director at the American Friends of Bilderberg (think
tank), and a 2008 Bilderberg conference participant (think tank).
Akin,
Gump, Strauss, Hauer & Feld, LLP is the lobby firm for the Shell Oil Company.
Laura D'Andrea
Tyson was a trustee at the Brookings Institution (think tank), and
is a director at Morgan Stanley.
Klaus Kleinfeld is a trustee at the Brookings
Institution (think tank), a director at Morgan Stanley, a director at Bayer
AG, and a 2008 Bilderberg conference participant (think tank).
Sue
H. Rataj is a supervisory board member for Bayer AG, and the chief executive, petrochemicals for BP p.l.c.
Lee
H. Hamilton is an honorary trustee at the Brookings Institution (think
tank), and a director at BAE
Systems Inc.
BAE Systems plc
is a subsidiary of BAE Systems Inc.
Paul M. Anderson
is a director at BAE Systems plc,
and a director a BP p.l.c.
Jamie S. Gorelick
was an attorney for BP p.l.c., a
trustee at the Carnegie Endowment for
International Peace (think tank), and is a trustee at the Urban Institute (think tank).
Foundation
to Promote Open Society was a funder for the Brookings Institution
(think tank), the Urban Institute (think tank), the Carnegie Endowment for International Peace
(think tank), the Center for
American Progress, the Natural
Resources Defense Council, and the ClimateWorks
Foundation.
George
Soros is the chairman for the Foundation
to Promote Open Society, an advisory board member for the Earth Institute, and was a supporter
for the Center for American Progress.
Carl-Henric
Svanberg is an advisory board member for the Earth Institute, and the chairman for BP p.l.c.
Richard C. Leone
is a director at the Center for American
Progress, and was the president for the New York Mercantile Exchange.
Frances G.
Beinecke is the president for the Natural
Resources Defense Council, and was a member of the National Commission on the BP Deepwater Horizon Oil Spill.
William K. Reilly
is the chair for the ClimateWorks
Foundation, and was a co-chair for the National
Commission on the BP Deepwater Horizon Oil Spill.
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