The Public and Private position of the AIOC senior management


From “Oil Nationalisation and Managerial Disclosure: The Case of Anglo-Iranian Oil Company, 1933-1951”

Chapter 3: Employee relations and Iranianisation

Author : Neveen Abdelrehim | The university of york

The AIOC British staff – Abadan, Iran 1950

Part of Fraser‟s strategy was to use financial reporting as a means of
communication to maintain employee confidence. In view of nationalisation and the associated uncertainties from the company‟s point of view, Fraser was under considerable pressure whilst he was preparing for the company‟s annual general meeting in 1951. This could be considered a normal response in view of the new law promulgated in Iran on 1st May 1951 in which the majority of the company‟s assets were detained by a foreign government. Fraser was attentive to the fact that without foreign technicians, oil fields could be kept going and the refinery could be run using Iranian personnel, even if at reduced efficiency[456]. Therefore, Fraser‟s personal position and control had been brought into question and he had to explain how far the company aligned its behaviour with Iranian interests. Fraser distorted some facts in his statement and did not reveal his negative attitude towards Iranians. Neither did he reveal his tactical methods and true reasons for not engaging the Iranians. For instance, he made announcements concerning the difficulties in reaching a settlement with Iran and said that “all efforts to reach a friendly settlement having proved abortive”[457]. Not only that, but he addressed the British Government indicating that communicating with the Iranian Government appeared conclusively “that no further negotiations with the present Iranian Government could produce any result, and that the negotiations, previously suspended, were to be considered broken off”[458]. Fraser was not presenting the truth but his insistence on the company‟s full control was the greatest obstacle to the solution of the Iranian problem and made him inclined to reject any of their proposals. It is important to note that Ernest Bevin, the Foreign Secretary, advised Fraser that the company‟s policy was not progressive and should “establish every possible relationship with the people in order to develop confidence between them and the company”[459]. By this, Bevin meant that Fraser had to do his utmost to develop a good relationship Iran and develop mutual confidence and assurance between them and the company. Consequently, Fraser used his statement as a piece of propaganda to portray the AIOC as fair and reasonable and to maintain the confidence among key AIOC stakeholder groups, including Iranian employees. Fraser adopted a tone of elusiveness in his statement to overcome the severity of the issues that confronted the AIOC with regard to Article (16) and with regard to the negative impacts of nationalisation facing the company. For example, in his statement in the annual reports for 1949 and 1950 (the years reflecting the oil crisis), Fraser could not avoid acknowledging his desire to maintain a relationship with the Iranians (see AIOC annual report, 1949, 1950). He announced an improvement in the company‟s social programme, saying: “The company carried out a vast expansion of the social services for its tens of thousands of employees in Iran, 94 percent Iranian nationals, whose numbers had been greatly increased”[460]. In another section of the main report, Fraser pointed out that the very large scale of the company‟s operations in Iran maintained a high standard by the company “in all matters concerning the welfare and working conditions of personnel”[461]. Also, Fraser communicated with the stakeholders and noted in his statement in 1951 that the AIOC “serves as a major national asset and fruitful source of revenue and employment”[462]. Furthermore, Fraser disclosed in his statement that “he carried out a vast expansion of the social services for its tens of thousands of employees in Iran”[463].

In fact, Fraser used distorted facts to maintain a flourishing and progressive
picture for the AIOC during nationalisation and as a result he disclosed in his statement more information than in previous years concerning the improvement in amenities and working conditions of the Iranian employees. His aim was to create the impression that the company was still performing well regardless of the crisis. It is worth noting that Fraser‟s statement in 1950 included more detailed references to employee welfare provisions made by the company compared to 1949. For example, he emphasized that the “the Company’s policy has always been to encourage the spirit of amity and partnership between members of the British and Iranian staff” and signalled that the company‟s strategy was to provide housing, leave and pension benefits, medical care and hospitalisation, club life and amenities to all employees irrespective of nationality[464]. Ernest Bevin, the Foreign Secretary, advised Fraser that the company‟s policy was
not progressive and the AIOC “should go out of their way to improve pay conditions”[465]. Consequently, Fraser started to express in his 1950 statement his agreement to maintain a good relationship with the Iranians and show them that the company was not discriminating between the British and Iranian employees. For instance, he asserted in 1951 that “I [Fraser] wish to pay tribute to the many Iranians, some occupying very senior posts, who have given long, loyal and devoted service to the company and, I feel, also, their country”[466]. Moreover, Fraser disclosed in his statement to the employees that “Iranians received the same pay as British Staff in similar posts”[467]. Here Fraser equates the interests of the AIOC with the interests of Iran, although as documented in the review of evidence above, it was the injustice and subordination of the Iranians that had helped bring about the rise of nationalisation and antagonism towards the AIOC. In relation to the above, it is useful to note that there was no information disclosed in the previous year (1949 annual report) about the treatment and payment to Iranians – an omission which could be seen as confirming his strategy to defend the company‟s existence and operations in Iran. Yet, consistent with the practice of discrimination, British employees entered into “staff” status straight away, whilst the company tended to disregard Iranians in this respect, referring to them as “employees”. For example, Fraser mentioned in his 1950 annual report “…tens of thousands of employees in Iran”, “…strikes occurred among our Iranian employees” and “…three members of our British staff were killed”[468]. The AIOC seems to have adopted an unconscious policy towards invisibility of the Iranians[469]. For more emphasis, using connotative word counts, Table (3) below reports the average frequency of occurrence of specific significant words by 500 unit word counts. The table contrasts keyword counts for the annual reports published in 1950 and 1951 which contrasts Fraser‟s use of different groups of words and vocabulary that are particularly relevant to an understanding of AIOC‟s self presentation. A software programme was used to analyse the semantic features of the text[470].

As shown in Table (3), the specific word counts illustrate that Fraser referred to
all the workers including the Iranians as “staff” in 1951 and this was not the case in prior years because they were always ignored, or referenced as “employees” and “personnel” as illustrated in 1950. Here the differences between British and Iranians highlights and provides an effective link between nationality and discrimination. The company was keen to present its British staff as superior to the Iranians for reasons of British prestige and this notion manifested itself from the start of their employment[472]. As a result, it was rare for Iranians to be referred to as “staff” at all because they scarcely appear in the few lists: representing a loss to the historical study of the Iranians activities and work lives[473]. Furthermore, Fraser increased the number of his references to the company‟s achievements in 1951 to maintain stakeholders‟ confidence during the crisis. For instance, he emphasised the improvements of the company and noted that “the Company’s annual production of oil in Iran rose over fourfold”[474] and “twenty-one new ships having been added since last year”[475] to cope with the rise in production. Meanwhile, using the counts of keywords for the annual reports published in 1950 and 1951, the word “company/company’s” has been mentioned 95 times during nationalisation (1951) instead of 10 times in (1950) and this indicates that Fraser referred to “the company” more than before nationalisation, in order to maintain stakeholders‟ confidence about the success of the company. Fraser was aware that Iranianisation had to take place because the Iranian workers felt inferior and had a sense of anti Iranian discrimination from the British. Moreover, he was aware that nationalism would be the only solution to protect Iranian rights. Therefore, he mentioned “nationalisation” 10 times in 1951 which was not previously mentioned in 1950. Meanwhile, it is enlightening to note Fraser‟s reference in 1951 to the word “Iran/Iranian”, which was mentioned 124 times, compared with only 11 references in 1950. It is interesting to contrast Fraser‟s public disclosures to his shareholders with his
private correspondence to various political diplomats. In private, Fraser was aware of the rights of Iranians‟ and the importance of Article 16 to the Iranians, and as a consequence he took a measured view of the parameters of the negotiating position. On the one hand he was aware that any attempt to revise this clause in favour of the company would fail and would “produce an acrimonious discussion on the question
of equality of treatment [of] Iranian and non-Iranian employees”[476]. Therefore, Fraser considered that any discussion of that nature could do a great deal of harm and was not likely to result in any changes in favour of the company[477]. As previously mentioned, the Iranian government was looking for better terms but Fraser was unwilling to adhere to any commitments with regard to Iranianisation. For instance, the Iranian government‟s contentions included an allegation towards the AIOC that clause 16 (iii) of the concession called for a plan of annual and progressive reduction of foreigners which was too specific to allow any ambiguity.[478] On the other hand, the argument of Fraser towards this conflict was different claiming that their Programme in the housing and amenity sphere was not a concessional obligation. We [company] undertook it willingly and with pride as an industrialist‟s contribution to the oil industry of Iran[479].
Fraser therefore appeared reluctant to implement Article 16 but he was bound by the extraordinary provision that progressive reduction of non-Persian employees is applicable in terms of percentages of the numbers of foreign staff at the beginning of 1934 up to the final suggested date of 1948[480].
His irritation and his unwillingness to implement Article (16) were reflected in his correspondence by asserting the following: The more application of strict periods of twelve months is
typical of the paper theory views held of the problem, and if any such percentages were acceptable they would clearly have to be applicable to the number of non-Persian staff at the beginning of each period in question, and not throughout the periods to the number of non-Persian staff originally serving. Furthermore, the higher one got in the graded employees the more difficult would it be to find efficient substitutes and if the principle even more acceptable common sense would call for a reduction in annual percentages, after some initial rise as a result of putting individuals through a course of training- which might or might not produce efficient men not merely failed B.A.‟s[481].
Obviously, Fraser was never prepared to engage Iranian employees in skilled and
first class jobs because of his negative attitude towards them, even if they were well educated and trained because he made it clear in his confidential correspondence that the company
Should at any time be prepared to engage only a very few
Iranians in the company‟s service. Courses of training, examinations passed, academic distinctions, are all very well, but they are not ends in themselves and are of use only so far as they produce a properly equipped man. That is one of the things which I [Fraser] fear have yet to be learned by some of the nations who attach an excessive importance to education[482].
Moreover, Fraser revealed in his correspondence his tactical excuses for not engaging the Iranians, by disclosing his view that the company should not promote learning or manual training to help the Iranians possess a sense of responsibility and initiative, in case it may perhaps endanger their lives[483]. However, this was not the case for Fraser was distorting facts and found reasons for not engaging the Iranians with the British staff, in order, one may presume, to maintain the class and ethnic separation.

Notes & References
456. Elm, Ibid, 119.

457. AIOC, Annual Report and Accounts, 1950, 16.

458. Ibid, 20.

459. FO371/52735, Minute by Bevin, July 20, 1946.

460. AIOC Annual Report and Accounts, 1950, 12.

461. Ibid, 22.

462. Ibid, 12.

463. Ibid.

464. Ibid, 22.

465. The National Archives, FO371/52735, Minute by Bevin, July 20, 1946.

466. AIOC, Annual Report and Accounts, 1950, 22.

467. Ibid.

468. Ibid, 28.

469. Johnson, British multinationals, culture and empire in the early Twentieth century, 70.

470. DICTION is a computer-aided content analysis programme, developed from linguistic research that analyses unique aspects of a text (Hart, DICTION 5.0).

471. Hart, DICTION 5.0: The Text-analysis Programme that analyses rhetoric and was used in this research as a computerized content analysis approach.

472. Johnson, British multinationals, culture and empire in the early Twentieth century, 129.

473. Ibid, 70. As Johnson suggests, “it is the very absence of evidence that is itself evidence of the lack of importance accorded to these workers”, 70.

474. AIOC, Annual Report and Accounts, 1950, 12.

475. Ibid, 26.

476. BP 101099, AIOC opinion on 20th June 1948, 15.

477. Ibid.

478. BP 126407, Report on visit to Tehran 31st August to 26th October 1948, 34.

479. Ibid, 35.

480. BP 070268, Fraser to Jacks on 16 November 1933, 5.

481. Ibid, 5.

482. Ibid, 1.

483. Ibid, 3.


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