Esso Italiana paid political parties for specific “corporate objectives” including oil instead of nuclear

In 1972, an Exxon internal audit disclosed that Esso Italiana, Exxon’s Italian subsidiary, had been making payments to Italian political parties that were tied by amount to specific corporate objectives. One of the objectives that was listed on documents seized by Italian authorities was halting nuclear energy development in Italy in favor of burning more oil in electrical power plants.

A subcommittee on multinational corporations of the US Senate Foreign Relations committee led by Senator Frank Church (D-ID) conducted hearings on the matter in the summer of 1975.

The scandal was discussed in at least two articles in the New York Times. The first article, published February 21, 1974, was titled Chill in Genoa Deepens Into Major Italian Oil Scandal. It appeared on page 45 with a continuation on page 55.

The second, published on July 17, 1975 was titled Exxon’s Italian Payments Tied to Specific Benefits. It was a front page article with about 5 column inches and a small headshot photo of an Exxon executive testifying in front of a congressional investigative subcommittee. The article headline appeared just above the fold; the article continued on pages 47 and 61.

Buried in each of the stories was a short section useful in confirming my frequently admitted bias. The articles might have never have been unearthed without the aid of modern history research tools and recent efforts to provide digital archives by major publications.

Here is a revealing quote from the February 1974 article’s continuation on page 55, which had a supplementary headline of Major Oil Scandal Brewing in Italy.

A court in Genoa has issued an arrest warrant against a leading Italian oilman and financier, Vincenzo Cazzaniga, who is in the United States at present. He is accused of criminal conspiracy and corruption.

Until recently, Mr. Cazzaniga was president of Exxon’s Italian subsidiary, Esso Italiana, and of the Italian oil industry’s powerful trade association. He is nominally still a member of a three-man committee that is to advise the Government on how to revamp Italy’s oil industry.

The charge against him is that on behalf of the oil lobby he paid out huge bribes to fix fuel prices and defeat plans for production of more nuclear energy. Greater development of nuclear power would damage the market for fuel oil.

(Emphasis added.)

Aside: One of the assertions often made by antinuclear activists like Amory Lovins is that nuclear energy does not compete with oil. When pressed with historical consumption statistics that refute the assertion, they often fall back to the position that the fuel oil burned in power plants has no relationship to the distillate products like diesel fuel and gasoline that power our transportation system.

Here is the weakness in that argument. Crude oil refining is a separation process that provides products like gasoline and diesel fuel by removing less desirable components. Those less desirable components, often contaminated with materials like sulfur, are still combustible and a useful heat source in large boilers, even if they would contaminate small engines.

When a location — like Italy — has a strong local refining industry, it is economically important to find a market for the materials removed from crude oil when producing jet fuel, gasoline and diesel fuel. Even if the sale is not terribly profitable, it is better to sell refining leftovers than to pay for its disposal as waste. End Aside.

Here is the section from the July 1975 article, with some additional context, that captured the attention of my search engine. It is worthwhile noting that this section was published at the very end of the article on page 47 of the newspaper.

The corporate objectives that are listed on the “special budget” maintained by Exxon’s affiliate, Esso Italiana, includes four items that have been reported to be part of a current Italian parliamentary investigation into payments by oil companies to political parties.

The four “projects” are identified as “deferred payment, Suez Extra charges reimbursement, Tax legislation and special fuel oil supply to power plants”

According to a subcommittee staff member, “deferred payment” refers to the oil companies being allowed to use interest-free for three months excise taxes that they collect from Italian motorists; “Suez extra charges reimbursement” refers to transportation charges incurred by the companies when the Suez Canal was closed; “tax legislation” may refer to a variety of benefits, including reductions in manufacturing and excise taxes, and “special fuel oil supply to power plants” refers to a Governmental decision to use oil rather than nuclear fuel for generating plants.

(Emphasis added.)

The payments in question were not small. According to the 1975 article, Exxon acknowledged that it specifically authorized $27 million over a ten-year period, but claimed that its Italian management has assured approvers that the payments were legal. There was also a mention that Esso might have funneled another $19-$22 million in its own cash to politicians without getting any higher approval.

In the 1974 article, there was a reasonably detailed explanation about why the scandal had not received too much attention. That explanation included the reluctance of leading politicians to look too hard into such a lucrative stream of money directed into their coffers and the fact that the oil interests held major ownership interests in a substantial portion of the Italian press.

Not surprisingly, the oil industry didn’t think it had done anything wrong.

“We haven’t corrupted anybody,” says an executive of a multinational oil company here. “The political forces have been levying tributes, and we have been paying up.”

Spokesmen for some of the four parties in the Government have publicly admitted that their organizations had received subsidies from the oil lobby, but they insisted that the money had not influenced their political decisions.

Some might ask why I’m bothering to dredge up a forty-year old story that was buried in the New York Times archives. It is simply an example of the kind of material that rarely sees the light of day. The two articles discovered made only brief mentions of probably illegal actions by a major oil interest that played a role in halting the nuclear development program of a major European economy. That action, in this case, was documented as asking the government to stop nuclear power development and burn more oil instead.

This is a clear smoking gun. I’d like to thank the people who continue to challenge me to provide additional evidence to support my theory that the effort to slow nuclear energy development included (and probably still includes) a major component of monetary and political support from people with interests in competitive energy sources.

API’s view of America’s Energy Future

On January 7, 2014 — one of the coldest days in the past 20 years in Washington DC — Jack N. Gerard, President and CEO of the American Petroleum Institute (API), provided his organization’s view of the State of American Energy 2014. He stressed the importance of American energy production to our national prosperity and security.

His speech also lays out the API’s plan to influence the mid term elections in 2014 to ensure that the voter choices made during those elections result in elected officials that will support policies considered vital to the oil and gas industry’s continued dominance of our energy supply options. As Mr. Gerard stated, the combination of hydraulic fracturing and horizontal drilling technology — often abbreviated as ‘fracking’ — is at the core of the recent growth in US oil and natural gas output, which Gerard referred to as “America’s Energy Renaissance.”

He described the importance of approving the Keystone XL pipeline, passing laws that remove restrictions on crude oil and natural gas exports, and preventing the passage of laws that will ensure that fracking is undertaken with the proper amount of care for its effects on the environment and local habitats — including the rural human habitat that is such an important asset to some communities.

Gerard’s speech lasted until the 30 minute point on the video. In his prepared remarks, I only heard Jack mention the word “nuclear” one time. It appeared in his list of “all of the above” energy options and fell after oil, gas, coal, wind, and solar, but before geothermal and biomass.

PS – Gerard mentioned several times that jobs in the oil and natural gas industry pay 7 times the minimum wage. I found it difficult to believe that average oil and gas employees make $105,560 per year. ($7.25/hr x 7 x 2080 hours per year for a full time worker).

As is often said, Google is my friend. According to an April 2014 Wall Street Journal article titled The U.S. Energy Boom Lifts Low-Income Workers Too, Gerard actually understated average oil and gas annual wage. It averages $107,000 per year.

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