Oct 01 2008

State witness Shell walks away scot free

Published by at 7:56 pm under Companies

The information is flowing thick and fast, in the wake of the Sasol fine shock. Handelsblatt, the German financial weekly, just reported that Shell walked away scot free, because it had earlier turned state witness. 

In another interesting turn of events, it was revealed that the 92-year old Hamburg-based “super-richie” Hans-Otto Schümann, was behind the whole price-fixing affair. Yesterday he was conveniently “travelling in Switzerland”, where he “could not be found for comment”, reported Handelsblatt.

He is (or was?) an absolute celebrity in his hometown Hamburg.  

According to the magazine, Schümann built the cartel for price-fixing and market-sharing in 1992. In 2003 Sasol took over his company called Hans-Otto Schümann, but Schümann stayed on until 2005. When he retired in 2005, the price-fixing also came to an abrupt end.

Shell bought a German company called Deutsche Erdöl AG (DEA) from RWE (one of the ten in the wax cartel) in 2003 and noticed in 2005 that all was not well at DEA. Then Shell reported what appeared to be price-fixing activity (among others regular meetings in the Blue Saloon of an upmarket hotel in Hamburg) to the authorities.

That explains why Shell walked scot free today (read my two stories below this one) and answers my question about Merkur (Shell and Sasol operated a joint venture called Merkur until January this year). The answer is: The price-fixing stopped in 2005, so Shell didn’t benefit from “illegal activity” at the joint venture between 2005 and January this year.

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