The Trusty Servant

Well, it is time for the cynicism to stop. Right now! Many people seem to think the world’s great corporations are just greedy, self-interested and evil, doing whatever they think they can get away with in pursuit of profit.

Trafigura proves them wrong. It has just given away half its annual profit of £270M as a charitable donation. Moreover, to stop any possible suggestion of corporate advertising, it has been issuing injunctions left, right and centre to stop anyone publicising its wonderful, public-spirited, altruistic behaviour. Not many multinationals dispense largesse on this scale.

But such a heart-warming tale should be more widely appreciated. So here are a few of the details.

Fortunately, Christmas fell on a Sunday in 2005. Key executives in Trafigura were at their desks early on the following Tuesday trying to nail down the details of a deal with Pemex, the Mexican state oil company. Pemex had been producing gasoline at a coker plant in Mexico. Because of a lack of suitable equipment on site they were unable to remove excess sulphur from the product. Starting at the beginning of 2003, the sulphurous gasoline was stored in tanks. Two and a half years later, Pemex had still not figured out how to complete the processing of the product and was running out of storage space, so it decided to ship the product to Brownsville, Texas for sale. It was an unusual product which was not particularly easy to sell.

Trafigura is the world’s third largest independent oil trader with turnover of $73 billion in 2008. Its London-based traders saw an opportunity. As James McNicol explained: “This is as cheap as anyone can imagine and should make serious dollars.” But that was only true if they could remove the sulphur cheaply.

That was not hard to figure out. The cheapest way was to “wash” it with caustic soda. Indeed that process had been common in refineries in days of yore. As one expert put it after the story broke:

Refineries used to wash with caustic soda back in the bad old days but it’s really a dirty old-fashioned process. Today, only a limited number of facilities can responsibly handle the resulting sulphurous waste, and proper disposal is expensive.

But Trafigura was not giving up easily. After all, not everyone applied absurdly high health and safety standards. Emails were flying back and forth on Tuesday to find a suitable location for the caustic wash.

By 7:30pm it had become apparent that this was not as easy as it looked. As Naeem Ahmed, one of their technical boffins, explained “We have already spoken to all the main storage companies, US/Singapore and European terminals no longer allow the use of caustic soda washes since local environmental agencies do not allow the disposal of the toxic caustic after treatment”.

Pressed further by his colleagues, he reported at 10:42pm “I am checking in the US/Estonia and Tunisia, the Caustic supplier disposes of the slurry in Fujairah (not sure if in a legal way!)”

James McNichol could see the numbers if they could just keep the processing cost down. The following morning he was pressing Naeem Ahmed that “Claude owns a waste disposal company and wants us to be creative … Me and Leon want it cos each cargo should make 7m!!” [Leon was his boss, the head of gasoline trading in London; 7m = $7 million.]

It took a month or two but eventually the traders figured that they might as well carry out the caustic washing on the tanker, preferably an ageing bucket or even one scheduled for scrapping, then no one would care about any damage to the tanker.

The initial solution was to moor the tanker at La Skhirra in Tunisia, wash the cargo onboard, and then unload both cargo and “slops” (the sulphur-laden caustic soda). This did not work too well because as a subsequent report noted “The odour problem occurred on 13th March [during caustic washing] and caused great distress to the local workers and population. An investigation was undertaken to try to determine the cause and prevent a recurrence.” The authorities were not persuaded and banned future shipments.

So the next step was apparently to wash in transit, discharge the cargo at La Skhirra (using a different tanker this time), but keep the slops on board, pending finding somewhere else to discharge them. The Master of the current “bucket”, Probo Koala, was informed on 15 April 2006: “PLS ENSURE THAT ANY REMAININGS OF CAUSTIC SODA IN THE TANKS’ INTERFACE ARE PUMPED INTO THE SLOP TANK TO THE BEST OF YOUR ABILITY AND KINDLY DO NOT, REPEAT DO NOT DISCLOSE THE PRESENCE OF THE MATERIAL TO ANYONE AT LASHKIRA AND MERELY DECLARE IT AS TANK WASHINGS”.

By now the traders were putting “PMI shit” as the subject line on some of their emails brainstorming about where to dump the stuff. It wasn’t made any easier by the fact that the gasoline was proving to have substantially more sulphur than Pemex had claimed. They eventually opted to offload it in Amsterdam. The Dutch diligently tested the slops after offloading and reported on 3 July “approx 250 cbm slops were discharged last night. Analysis of this slops resulted in a c.o.d content of 500.000. Therefore the slopdisposal cost are extremely higher than offered viz euro 1000, -/cbm”

That did not suit Trafigura, so the slops were put back on the Probo Koala, which left port with the traders frantically trying to find an alternative, and the Dutch police demanding documentation to show its proper disposal.

The final details are somewhat murky. The slops were apparently offloaded in Abidjan and ended up on the surface of the ground where hydrogen sulphide apparently bubbled out and injured 30,000 locals, some of whom died. Trafigura eventually paid the Ivory Coast government £100 million for clean-up operations, without admitting liability. Meanwhile, the victims and their families sued and the case was due to reach the High Court this month. It was settled on the court steps for £30 million, again without any admission of liability.

Trafigura took an extremely tough line throughout, flatly denying that anyone was injured, that if they were it was nothing to do with the slops, that if it was it was not foreseeable, and in any case had happened without their knowledge and against their instructions. The cache of emails released earlier this year by the Guardian, who presumably obtained them from some mole within Trafigura, make this implausible, but do not disprove it. There is no smoking gun. The judge apparently thought the settlement was fair, and both he and the plaintiff’s own lawyers apparently thought that extensive investigations had failed to demonstrate any conclusive link between the injuries and the slops. There is also a good deal of dispute about what the injuries were. There were certainly relatives claiming 16 deaths and a small number of alleged victims claiming serious injuries, but most of the injured appear to have suffered temporary flu-like symptoms.

So there the matter might rest. You can take your pick. Clearly, Trafigura’s internal emails do not display any overriding concern for health and safety issues. But have they managed to cover up a huge disaster and settle it for a derisory figure? Or did they settle a relatively minor disaster generously to avoid damaging, if unfair, publicity? After all, it is not exactly unknown for victims in poor countries to over-egg their case when substantial damages are in prospect. I confess to being fairly unclear.

But the tale ended with a truly bizarre twist. A Labour MP, Paul Farrelly, put down a parliamentary question for this week:

To ask the Secretary of State for Justice what assessment he has made of the effectiveness of legislation to protect (a) whistleblowers and (b) press freedom following the injunctions obtained in the High Court by (i) Barclays and Freshfields solicitors on 19 March 2009 on the publication of internal Barclays reports documenting alleged tax avoidance schemes and (ii) Trafigura and Carter-Ruck solicitors on 11 September 2009 on the publication of the Minton report on the alleged dumping of toxic waste in the Ivory Coast, commissioned by Trafigura.

The PQ appeared in the usual way on yesterday’s Commons’ order paper, but this morning the Guardian announced that it had been banned from reporting anything about this question, except that under the terms of the injunction it was banned from saying which question or indeed anything further about the injunction except that Carter-Ruck were the solicitors acting for the gaggers. In other words, it was one of the new breed of “super injunctions”, pioneered by Carter-Ruck and others to protect the undeserving rich and powerful, which require that the injunction itself be kept secret.

This was curious for many reasons. The first was that such an injunction should plainly not have been granted in this case. The second is that it is a clear breach of the rights of parliament. The third is that it was inept, because all anyone had to do was scan through the published list of PQs to identify the relevant question (which helpfully included Carter-Ruck’s name – no doubt why the Guardian made that comment). After an ocean of comment on the internet, Carter-Ruck waived the order.

So the final question is what is the Minton Report. That was apparently a short 8 page report dated September 2006 commissioned by a law firm acting for Trafigura and signed by John Minton of Minton, Treharne & Davies Ltd, a scientific consultancy. It is widely available as a .pdf download. I followed a link on WikiLeaks.

Again the conclusions are not really a smoking gun:

The slops produced during the caustic washing of three cargoes of Coker Naptha, totalling 500 m3, were identified as a mixture of [various chemicals]. Appropriate disposal methods for such material include separation and treatment … The compounds listed above are capable of causing severe human health effects through inhalation and ingestion. These include headaches, breathing difficulties, nausea, eye irritation, skin ulceration, unconsciousness and death. There would also be a strong and unpleasant odour over a large area. All of these effects were reported in this incident … disposal of this waste onto landfill sites would be forbidden in a European member state.

but they do perhaps explain why Trafigura was keen to settle. It knew of serious potential consequences within a month of the discharge.