Shailesh Parekh is one of the most high-profile of the former Esso licensees involved in the trial, and has become something of an unofficial spokesman for the group. He’s not afraid to speak his mind, as he has demonstrated in the various public protests he has been involved in, his many contributions to Forecourt Trader, and his appearance on Channel 4’s consumer programme Joe Public. He is absolutely furious about the outcome of the trial so far, and from his Midlands-based Texaco site that he now operates, he has no doubt that the retailers were right to take on Esso in court.
“Most normal human beings don’t pick a fight with the world’s largest corporation,” he says calmly. “And when I did so it must have been that I felt so wronged. But taking into consideration the size of the adversary against the degree of its wrongdoing to myself and my fellow colleagues, we still went ahead.”
He is particularly angry about the fact that prior to the trial Mr Justice Moore-Bick had ruled that all the separate actions that were taking place up and down the country should all be brought together into the commercial court, and a once-and-for-all decision would be made.
“He also said he would decide on the principal issues, but not the quantum,” says Shailesh. “On this he would provide a formula. He clearly has not done so. The retailers and Esso have achieved absolutely nothing as a result of this trial. The situation – with the exception of the ‘hot fuel’ argument – is still unresolved. Retailers have been invited back to the county courts on the Tiger Tokens and Partnership Licence issues, which is exactly the same situation as before. “The only choice for retailers is to pay up their proportion of the costs or go to appeal. Not much of an option.”
The fact Shailesh is in this situation at all is by a curious twist of fate. His ancestral trade is jewellery – he has a BSc in mineral processing and metallurgy; and he used to have a factory that made copper, silver and brassware. Then he emigrated to England from Africa during the recession of the early ‘90s and couldn’t get a job as an engineer, or even as a jeweller. He was really desperate to work and took a job on a Texaco service station. After eight months, the area manager offered him his own site. Two years later and, ironically, it was problems at Texaco that led him to Esso. Management changes meant the arrival of Louise Nemanich who quickly gained a reputation for her ruthless destruction of the Texaco network: “When she came along I could see the writing on the wall,” says Shailesh. “So I went from the frying pan into the fire – I went to Esso!”
He signed up for a three-year Esso licence on Ablewell Service Station in Walsall, West Midlands, in December 1994. However 18 months into the contract (when Nemanich went back to America from where she came) Texaco contacted him to take his former site back – “which I did because I had seen the writing on the wall with Esso…”.
“I’ve been with Texaco ever since and had no problems with the company – it’s all very straightforward.
“I did stick with the Esso business through the contract, but the problem was there was no money in it. I had borrowed money from my dad to finance that business and Esso took it away. I didn’t even earn enough to live, so that’s how I ended up having the Texaco site as well.”
When Shailesh took over the Ablewell site he said he had never worked harder in his life – doing nine years’ work in three years. His shop and fuel sales grew by 50 per cent yet his income reduced; while Esso expected him to grow the business and operate with a wage cost he had when he first took over the site. The squeezing continued and included the introduction of new operating procedures under the heading Business Process Redesign (BPR) and an effective rent increase of £14,000 per annum. He was also debited thousands of pounds for the winding up of the Tiger Token scheme (he owes £16,000). Then he began to fight back.
FIVE YEAR BATTLE
It’s been a long, five-year battle, and he believes that justice has still not been served: “Most of us had tried to reason with Esso. Perhaps they were experimenting with the new BPR regime and we were just the guinea pigs. After I left the site, I discovered that the effective rental increase that I had had to endure was reduced for the new operator of the site, and that just proves my point – that I was being made to perform an impossible task. That means Esso’s experiment failed. It means what the company did was unreasonable, and yet I had entered into a three-year contract to which was appended a code of practice in which it said it would be fair and reasonable. Esso wanted the rest of the chain to achieve what the top quartile of the chain achieved. It cherry-picked costs from various sites and got all the lowest costs together and told retailers what they should achieve without taking into consideration other higher costs that those sites might actually have. So the whole thing was a farce.
“In most cases the rent was increased by almost as much as the retailers were earning. Where did it say in my contract that Esso could increase my rent by a perceived increase in business and that it could increase the rent by the sum of money I would have saved by cutting costs? When Esso recruited me it didn’t give me a warning that ‘you enter this petrol station at your own risk. Your rent today is £5,000 and tomorrow it might be £500,000 and you may have to sell your house to perform this contract’.”
In terms of the Tiger Token promotion Shailesh says the problem from the outset was that Esso didn’t clearly state what the costs would be.
“Esso wrote everyone a letter to say that it would maintain the costs on average at 0.6ppg, but it is the use of the word ‘average’ that is the crucial word here. This made people feel that it wouldn’t cost them anything more than 0.6ppg.
“When I had run the Texaco site the set-up had been very clear. Texaco retained a specified amount of my margin to cover the cost of the promotion. It was not an ‘average’ or a vague sum of money. Esso’s promotion was prolonged from a temporary one of six months to 10 years, and it was quite clear that Esso didn’t take any steps to curtail the costs of the promotion to its licensees.
“Morally we don’t owe this money to Esso because it just wants more than the business is worth out of us. We have done nothing wrong. That is why we have no choice but to appeal and we will appeal because justice has not been served.”
So disillusioned is Shailesh with the fuel industry that he is planning other ventures outside it – including a role as MP: “If I ever become an MP I should thank Louise Nemanich, because if I hadn’t had this Esso experience I wouldn’t have found my MP – Caroline Spellman, who has sponsored me to become an MP!”
The third issue of hot fuel has much wider implications for the petrol retailing industry. Colin Dingwall from Wavertree in Liverpool was just one ex-licensee concerned with this part of the case. He was with Esso for more than 20 years, starting off as a tenant of one site and then a tenant of two sites before becoming a licensee. He was forced to leave the petrol retailing industry in May 1999.
“My relationship with Esso had always been quite good up until about 10 years ago,” he says. “That’s when it appeared that Esso was not interested in licensees anymore, and the road ahead was through agents. But they had a problem in how to remove licensees, and we gathered that they would have done it the cheapest way they could.”
In 1993, Colin’s debilitating stock loss problem began, and from that point, his business relationship with Esso took a nosedive.
“We were losing money through fuel stock losses so we pulled in Esso area managers who in all the conversations I had with them would not admit that hot fuel was getting delivered, or that it was a problem,” recalls Colin. “They kept suggesting to me that I should check my gauges, pumps and tanks, which incurred great expense to me because I did it umpteen times. But I found that we had lost fuel on both my sites, so it wasn’t just one tank, it wasn’t just one site, it was across the board. Since then it’s obviously become general knowledge that anybody receiving fuel from Shell Stanlow was losing a considerable amount of money.”
It wasn’t until about 1994 or 1995 that Colin discovered his fuel was not coming from Esso’s Trafford Park terminal anymore but from Shell in Stanlow.
“Esso failed to inform me that the product had changed, and was therefore breaching its contract,” Colin claims. “We were increasingly getting more loads from Stanlow, and from ‘96 to ‘99, virtually all were from the Shell terminal.
“They failed to pay me compensation, they failed to offer me arbitration, and when I approached them for arbitration over hot fuel, they said they didn’t recognise hot fuel. Within one month of applying for arbitration, they gave me notice.
“After I was forced to quit the service station losing a 20-year-old business with a tremendous amount of goodwill and good turnover, we contacted our legal advisors and they advised us to pursue the matter in the courts. It didn’t go to trial until we got involved with Ferdinand Kelly, when my case got sucked in with the Petrol Retailers Association.”
The verdict has left Colin with a mass of unanswered questions.
“One thing I’d like to ask is this: it was mentioned in the court case that the oil companies operated on two sets of books – one for the retail division and one for the government; well, when I paid the VAT on my delivery ticket, did that VAT get paid to Customs & Excise?
“What actually happens is, when you get a delivery ticket, it shows the quantity ordered, the price sold to you, and the VAT on that price. But that is not the VAT that the oil companies pay. They adjust the temperature down on the delivery ticket for the temperature at ambient temperature, and then pay the VAT at that rate. I would pay the full VAT but there would be a variance between the amount on the delivery ticket and the quantity declared on Esso’s bill of lading. Basically Esso would not be paying the full VAT. Would we have been treated with such leniency by the court if we had done the same?
“I think the case is too political because we only had Esso in court, but all the oil companies were in breach of the regulations.”
Before Colin got involved with Ferdinand Kelly he had a counsel called Mr Oughton who thought no judge would accept that Esso would have a flexible litre, meaning that the litre the oil company supplied the retailers and the litre it declared to the government were two different figures.
“We knew that what I was getting delivered was different to what I ordered, and if that was the case the flexible litre was used by the oil companies to benefit themselves,” explains Colin. “But this isn’t mentioned in the judgement at all. For the oil companies to pay us compensation [allowances] for hot fuel, they knew that the hot fuel made a major difference to the profitability of a licensee.
“Judge Moore-Bick also mentions that in view of the size of the industry, the amount of licensees bringing the case to court was small,” adds Colin. “He again misjudged the situation because since ‘92 there have been many thousands of licensees who have left the industry penniless and unable to financially pursue cases against the oil companies.
“Although the judgement has gone against us, Esso has admitted liability for delivering hot fuel knowing that the hot fuel would create shortages by paying a wetstock allowance from the Shell terminal deliveries.
“What should happen is each petrol tanker delivering fuel to any service station around the UK should have a measuring meter on each delivery pot. And that measure must tie up with the bill of lading. That is the only way the retailer will get justice and the right quantities on delivery.
“In the evidence, this was put to Moore-Bick, but the oil companies said that to implement anything to do with hot fuel would be too expensive.
“Now, these are big companies, and I know small companies who deliver fuel and have meters on their petrol tankers. I used to get delivery of petrol from a firm called Caldo Oils in St Helens. They used to deliver paraffin to me in a tanker, and the paraffin was always metered out. If they can do it...
“This case could have been an opportunity for Moore-Bick to say to the oil companies that there are regulations here, why aren’t you applying them?
“I’m a small businessman taking on an international company – we’re not on par. The financial side is mega, and basically justice can only be achieved with a bottomless pit of money.
“At the end of the day, here we have a company that knows the regulations within the industry, knows that what it is delivering is incorrect, knows that it is charging people for incorrect quantities, and then not paying the
“Because all the oil companies were ignoring the regulations, it becomes acceptable. It’s not acceptable at all. As a small businessman, if they bring in rules and regulations, you can’t ignore those rules and regulations, you’ve got to deal with them.”
Colin may not be a retailer anymore, but the verdict has fired him up to such an extent that he is not prepared to take it lying down.
“I’m not after financial compensation anymore – that is out now,” he explains. “What I want is for the industry to pull itself into a proper legitimate business where everybody gets a fair opportunity to make a living.
“Personally I think there’s got to be an appeal because losing this case is probably the biggest disaster that has ever happened to the oil industry.
“And my life has changed drastically. It’s put a lot of strain financially and mentally on me. I’ve got no income as such – I’m living off Dingwall Autos, which I share with my brother and it’s very restrictive really. I’m managing to make a modest income just to survive. It’s affected my home life as well because I’m going through a divorce after 33 years, so it is pretty grim all round.
“All I’ve ever wanted to do was get on with life and make a living,” Colin adds. “I didn’t want to get involved with fighting a major international oil company. But I honestly thought our case was so obvious. Now I just really want it out of the way so I can get my life back together again.”