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From one scandal to another way it's like -- -- lately some of the world's biggest oil companies are under fire for allegedly colluding to fix prices.
For at least ten years so far shell BP -- -- oil have been implicated by European regulators.
And so the price reporting agency -- they are all accused of rigging prices have created based products and biofuels and crude.
So that you and I have to -- pay more at the pump and everywhere else for that matter because crude oil isn't everything even brands diapers plastic you name it.
Here to drill down on all the -- -- -- President shell oil and Jon -- professor of corporate lie Yale University he is also the author of the death of corporate reputation.
That's -- Our thanks to both of you guys for coming on John -- my extra let me start with you so basically the way this work it sounds a lot like the Libor scandal.
They're saying that there are companies who report to flats at the end of the day.
What the price of these various products more and and that price that -- -- averages.
Becomes the benchmark for a lot of things out there a ton of things I mean just looking at the stats it is.
-- products that are out there 95%.
Of crude transactions are based.
On this last -- only 20%.
On the nymex and the ice in the CME which is what we all followed yours -- the vast majority of oil prices are based on this -- thing.
That they are saying was -- Do you believe it.
No I don't believe -- -- an aggregation.
There's an aggregation of numbers.
Those numbers would be independently.
Obtained from each company.
Platz it's is simply reporting numbers.
If we really wanted to go after price fixed thing we should go after the cartel called OPEC.
Which in fact it does withhold production in order to impact the price of oil.
You know I -- when I was president of Shell Oil I was dragged in front of congress at least half a dozen times.
I had letters of accusation from about 48 attorneys general.
Of having either withheld production are set price -- -- somehow to guarantee a higher profit.
Every investigation -- that was happening.
None of it came to anything because you know what when an executive takes on a job like that they know that the price fixing.
Is that jail mobile offense OK and nobody in their right mind wants to go to jail.
Over a price fixing.
Settings scheme that -- just.
It's argument let me ask Jon Macy and -- of that on the details a little bit here they're saying that the mechanism that was used at least in part from what -- -- Is that they prevented a big oil companies involved prevented others from participating in the price process.
Which distorted the publish price so they kept others out.
So that those who called -- it reported hate we sold this many barrels.
For this amount of money today they try to keep other guys out.
So that there were fewer there was just them and they would have more control is that believable if that's the extent -- -- we're looking at around a screen right now yeah I -- those that are accused of participating in the yeah I mean I absolutely.
Absolutely agree with John and his big point that OPEC is the real culprit here but.
That doesn't mean that these other folks are innocent and it does it mean that our jails are filled with people who have engaged in financial crime including.
Price fixing it if it's inconceivable that it occurs but it does occur.
Now let's let's take a little bit look at -- the weight class actually figures this stuff out the apps -- it's -- it's a bizarre system that makes the -- war.
System for figuring out adjustable rate mortgages.
A model of analytical rigor.
-- they they'd take a half hour window with a into the trading day and they look at business.
Not not actual trades bids and offers and some trades.
And they let people Lynn and and they count their numbers they don't let other people in their their company's -- -- Hungarian company.
Involved in the ethanol business -- -- -- -- they say look you know we we went to the EU because.
We've been giving these bands are prices were a lot cheaper they weren't accepted our -- -- if if they accepted -- -- would have.
You know brought the average down.
Now -- may be right there may be this may be all some great mystery but there are some facts that.
The right now from from a logical point of view the best available explanation appears to be.
Okay price fix it.
John talk -- let me ask you because you -- the former president of Shell Oil -- one of the names that we were looking out on the screen -- do you have a vested interest in defending this and saying that it wasn't the case.
Do I have a vested interest -- -- own shares of shell yes I have shares of shell.
But I also know that honesty integrity and respect for people are the core values of that company and -- -- -- -- so.
Welcoming and the investigators.
Is part of what -- -- apparently doing according to the report that I read.
So you know there's nothing to hide so open that up.
And and that's exactly what's happening.
Everybody can allege any thing about any one.
Is is a cheap way to keep government officials busy when they have nothing better to do.
-- and so item would stand on the values issue.
Jon -- real quick as a running out of time the way to -- this is to have a market clearing transparent mechanism right.
Well meaning it's not possible in this case.
It is possible you have market prices -- have been incredibly -- market why not use them.
And you know it the V if the question is why would companies like to know why or why all these companies going two -- You know the you and saying what's going on here what what's their motivation I -- -- every point.
Yeah I certainly think that you know that that that that there is you know something to.
You know something to look at that there's a big you know but the big profits to be made in moving these prices are manipulating these prices are very small amount -- -- it hasn't happened.
If I wish I still had -- rosy view of the world of everybody being honest -- I don't -- that we got to go thanks to both of you have so this is topic we're spent more time honors its just getting under way thanks time now.
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