Norwegian oil company Statoil announced Wednesday that a member of its board of directors had resigned “with immediate effect” after “a recent change of circumstances.” That involved her recent marriage to the chairman of Statoil competitor BG Group, and a pending inquiry into whether that posed any conflicts of interest.
Catherine Hughes, a Canadian who has held several top jobs in the oil and oil services industry, joined Statoil’s board less than two years ago. Newspaper Dagens Næringsliv (DN) reported Wednesday that she informed the board and management at Statoil last summer that she had a personal relationship with Andrew Gould, the BG Group chairman who just a few months later recruited Statoil’s chief executive at the time, Helge Lund.
The relationship seems to have caused little if any concern, but after the Sunday Times of London reported that the couple had married in Calgary, some alarm bells began ringing in Oslo. Olaug Svarva, another Statoil director who heads its board’s nomination committee, told DN on Wednesday she would seek a legal evaluation of the marriage between the two senior oil industry players.
“I have known about the relationship for a while,” Svarva told DN. “Their marriage presents a new situation. We have now asked for a legal evaluation of what it can mean in terms of any conflicts of interest.”
The wedding between Gould and Hughes reportedly took place the day after Gould had negotiated the first draft of an agreement for BG Group to be taken over by Shell, an acquisition that represents one of the biggest ever in the oil business. It also has cut short the career of Statoil’s former CEO, Lund, at BG Group. He won’t be included in the newly merged management team at Shell after it takes over BG Group.
Øyvind Bøhren, a professor at the Norwegian Business School BI who’s considered an expert on ownership and corporate governance, hadn’t seen any major problems with the marriage between Hughes and Gould. “As long as they have informed about it and the companies think it’s okay, I have no comment on it,” he told DN. Aksel Mjøs, a professor at business school NHH in Bergen, told DN he didn’t think it was necessary for Hughes to resign. He described her resignation, assuming it was voluntary, as an indication that she wanted to avoid landing in any conflict of interest. “It commands respect that people make that sort of evaluation,” Mjøs told DN.
Hughes’ resignation came within hours of DN’s report on the legal evaluation of the marriage, and Statoil itself said it aimed “to avoid potential conflicts of interest following a recent change of circumstances.” Statoil spokesman Jannik Lindbæk Jr told DN that both the board and management of Statoil had been aware of the relationship between Gould, age 68, and Hughes, age 53, since June of last year, when Lund was still Statoil’s CEO.
Lindbæk wouldn’t say whether any specific conflicts of interest had already occurred. “But the board of Statoil has had the necessary basis for considering this in specific cases,” he told DN.
Gould is an oil industry veteran who rose through the ranks of oil service Schlumberger before becoming chairman of BG Group in 2011. He hired Statoil’s Lund last fall, but just a few weeks after Lund moved from Norway to the UK to start work at BG Group, he was confronted with the pending acquisition of the company by Shell. His career at BG Group thus ended almost before it began.
DN reported that Hughes is both a Canadian and French citizen who also sits on the board of oil services company Precision Drilling Corp. She was responsible for all of the now-Chinese-owned upstream oil and gas firm Nexen’s operations outside Canada, and before that worked for Husky Oil.
Svarva said her nomination committee of Statoil’s board will now launch a search for a new board member to replace Hughes.