Jim Ratcliffe: billionaire boss of INEOS
Earlier this year, in what seems like a different era, Corporate Watch produced a profile on Jim Ratcliffe as part of the European Network of Corporate Observatories’ ‘Know your Billionaires!‘ project: shedding light on Europe’s richest, how they built their wealth and how they use it. You can read it below.
First, a few words on how Corona has affected Ratlcliffe and his riches. According to the Sunday Times rich list, Ratcliffe was richest person in UK in 2018. He’s now lost this position to James Dyson who managed to increase his already vast fortune by £3.6bn in a year. Ratcliffe dropped to 5th richest after his net worth reduced by £6bn (boo hoo).
As the gravity of the Corona crisis became apparent, perhaps anticipating outrage over societal inequality and greater scrutiny of their enormous wealth, many billionaires are keen to show they are doing their part. Ratcliffe is no exception, using his chemical giant Ineos to set up several hand sanitiser factories in Europe and the US. However, the recent slump in oil prices has hit his part-owned refinery venture, Petroineos, particularly hard.
Now Ratcliffe, notorious for his tax evasion (see below), is seeking an emergency loan of hundreds of millions to rescue it. He has also been criticised for exploiting the government’s furlough scheme for staff at his co-owned The Pig hotel chain. The world’s wealthiest will be watching closely as Corona’s impact on markets, economies and capitalism unfolds. Perhaps increasingly uncomfortably as the call for ‘no more billionaires’ resounds louder than ever.
Jim Ratcifliffe: billionaire boss of INEOS
Read a typical biography of Jim Ratcliffe and you will come across the rags to riches story of how a council estate boy from Manchester worked hard and showed a bit of savvy to become the wealthiest man in Britain. It’s the classic tale of capitalist meritocracy: if we all just worked hard enough we too could be billionaires.
In reality, his enormous wealth has been built on a combination of aggressive lobbying, high risk investments, highly polluting industries, tax dodging and union-busting.
INEOS, the chemicals company Ratcliffe owns and controls, has been criticised for causing air and water pollution, dangerous leaks, fires and explosions, as well as creating vast amounts of plastic waste and carbon emissions. It is notorious for its aggressive stance against unions and workers rights and for lobbying against environmental regulations.
It has been leading the charge to open the UK to fracking, though that has currently been stalled by nation-wide campaigns and determined local opposition.
Ratcliffe and INEOS
Ratcliffe is the founder, chairman and majority shareholder of the chemicals giant INEOS, holding 60% of the company’s shares. The Sunday Times newspaper reckons Ratcliffe is the third richest person in the UK, worth £18bn. The vast majority of that is based on the estimated value of his INEOS shares (the paper added another £150 million on top of the INEOS shares for “two superyachts, hotels, and the Swiss football club Lausanne-Sport” and also said he is “building a £6m beach house on the Solent in the New Forest national park”) .
Ratcliffe’s story is also the story of INEOS. He initially worked at Esso before going to the London Business School. He then moved into venture capital, co-founding a company called Inspec to buy up BP’s chemicals division in 1992, renaming the business INEOS six years later.
INEOS grew by borrowing money to buy large chemical and energy companies’ unwanted operations. Ratcliffe then forced through extreme cost cutting measures to improve their financial performance. Between 1998 and 2008, INEOS acquired 22 companies, most notably buying Innovene for $9 billion in 2005. A BP subsidiary, Innovene owned the Grangemouth oil refinery in Scotland.
In 2014 INEOS announced a £640m investment in shale gas exploration in the UK, intending to use gas extracted through fracking as a raw material for it’s chemicals plants. In 2018 Ineos released plans to create six new oil and gas business units, following its acquisition of Dong Energy’s oil and gas business for $1.05bn and North Sea interests such as BP’s Forties pipeline. Although several high profile investors had pulled out of Saudi Arabia following the murder of journalist Jamal Khashoggi, in June 2019 INEOS announced a £1.6 billion investment in a petrochemical complex in the Kingdom
Despite some recent forays into other areas, the overwhelming majority of INEOS’ operations are based on refining and processing chemical products from oil and gas and supplying them to a wide range of markets including fuels, pharmaceuticals, foods, construction and agriculture. The company now employees 21,000 people at 113 sites across the globe.
Ratcliffe controls INEOS through a Luxembourg-registered holding company called INEOS Group Holding SA. The other 40% of INEOS shares are owned, in equal measure, by his long-time lieutenants John Reece and Andrew Currie.
INEOS made a profit of EURO 1.2 billion in 2018, after bringing in revenues of EURO 16.1 billion. The majority – EURO 9 billion – of INEOS’ revenue came from Europe, with another EURO 5 billion from the Americas.
The company paid out EURO 194 million in dividends to Ratcliffe, Reece and Currie in 2018. This is less than previous years, but still a huge amount.
Ratcliffe was knighted in the 2018 Queen’s birthday honours list. Later the same year it was revealed that he was relocating to Monaco for tax purposes (see below). In 2019, to mark the 20th anniversary of the founding of the company, Ratcliffe hired someone to design an INEOS coat of arms. Apparently proud of his Machiavellian approach, Ratcliffe decided the Latin motto VENI EMI VICI, ‘I came, I bought, I conquered’, was appropriate.
Environmental pollution and safety
INEOS has an alarming history of serious environmental and safety incidents. Its operations around the world have breached major environmental regulations on numerous occasions and are a huge source carbon emissions, pumping out millions of tonnes of CO2 every year. INEOS plants also emit thousands of tonnes of Nitrogen and Sulphur oxides each year and are a source of other pollutants such as ammonia, benzene and hydrogen cyanide.
Accidents at INEOS plants have included serious explosions, fires and leaks that have hospitalised workers on numerous occasions. Just one INEOS site in Cologne has had a series of serious incidents, including ammonia leaks, explosions and a fire that sent flames and 130 feet into the sky, and took nearly 1,200 fire-fighters to battle, the largest fire fighting operation since the Second World War.
INEOS has had a host environmental and safety issues in the US as well, where it paid nearly £3 million in environmental and workplace penalties and fines from 2003 to 2016. In one incident in 2015 at a plant in Port Lavaca, Texas, a hydrogen cyanide leak resulted in a worker dying [for more information on INEOS’ environmental and safety record see ‘Ineos Chequered Environmental Track Record in Europe’]
Plastic pellet pollution is a regular problem near INEOS facilities, and the company has admitted in the past that its plant was the probable source of local plastic pollution.
As one of the largest plastic producers in Europe, INEOS bears responsibility for an enormous amount of plastic waste. This, combined with it’s expansion into fracking in the UK, led to many accusing the company of greenwash when it bought a famous UK cycling team from Sky. This was seen as especially egregious given the team’s recent plastic waste reduction campaign #passOnPlastic.
INEOS is notable absent from the Plastic Waste Alliance instead choosing to back Operation Clean Sweep, a programme created by plastics industry trade association, PLASTICS over 27 years ago.
Ratcliffe’s earned his union-busting reputation when INEOS became mired in an industrial dispute at Grangemouth in 2008. Workers held a two-day strike in response to INEOS’ plan to change the pension contribution scheme for new employees, which would mean a 6% pay cut.
The strike caused serious disruption to the UK’s oil infrastructure and INEOS was forced to cave in, scrapping the pension changes. The company had been hit hard by the financial crisis in 2008. It was already in serious debt from the Innovene deal and came close to being taken over by the banks it owed money to.
Ratcliffe, renowned for his stubbornness and aggressive approach to negotiations, was determined that would not happen again.
Further disputes took place in 2013. INEOS said the refinery was making a loss and proposed a rescue plan involving worsened terms of employment for workers, particularly around pensions. The union, Unite, rejected the move and the dispute was escalated by the suspension of a union official, on controversial charges. However, this time, Ratcliffe was ready.
INEOS had been stockpiling oil reserves since March that year. The union had threatened strikes in response to the official’s suspension, but then called off plans to close the plant despite INEOS walking out of negotiations. Ratcliffe responded by locking the workers out the next day and shutting down the plant himself, threatening to close half of it permanently. Some workers were bought off and the union was eventually forced into accepting significantly-reduced pension plans plus a three year pay freeze.
Many see the Grangemouth disputes as an example of the dominance of neoliberalism, where a billionaire held hundreds of livelihoods to ransom in order undermine organised labour and push through cost cutting measures.
Fracking the UK
INEOS has been at the centre of attempts in the UK to push fracking, a highly controversial and environmentally damaging hydrocarbon extraction process. The company is the majority holder of fracking licences in the country, covering an area of one millions acres, and has clashed with local campaigners and environmental groups on numerous occasions.
The revolving door between industry and government is obviously apparent when it comes to INEOS and fracking. This is illustrated by the case of Patrick Erwin, a former top civil servant in the department of energy and climate change (DECC) and the department for communities and local government (DCLG). In 2013 Erwin was seconded to INEOS and helped the company develop its fracking plans and then secure a huge number of fracking licences across the country. Despite Freedom of Information requests DECC had refused to reveal who the civil servant seconded to INEOS was. It was only discovered when Erwin put it on his linkedin profile after the secondment had ended.
INEOS has been particularly litigious when pushing fracking. In 2017 the company took action against the National Trust at the High Court after the charity’s refusal to allow seismic surveys on its land due to environmental concerns. INEOS’ lawyers forced the Trust’s lawyers to drop their objections.
The company also attempted to overturn the Scottish ban on fracking using a judicial review, claiming compensation for a breach of it’s ‘human rights’. The Court of Session, Scotland’s highest court, ruled against the case by accepting that the government had a ‘preferred policy position’ against fracking rather than a legal ban.
A widespread anti-fracking campaign in the UK saw several INEOS sites being targeted by protesters, often using tactics intended to hinder operations. In 2017 the high court granted INEOS a sweeping injunction against protesters. The injunction, described by critics as “draconian and anti-democratic”, meant that anyone obstructing the firm’s fracking activities would face prison, a fine, or seizure of their assets. Two aspects of the injunction were later overturned by three Appeal Court judges following a challenge by campaigners. In response to the ruling, Ratcliffe’s deputy and INEOS chief of operations Tom Pickering said: “We respect peaceful protest, but we must stand up to the militants who game the legal system with intimidation and mob rule. We stand for jobs and opportunity. They stand for anarchy in the UK.”
INEOS has also called for the government to relax rules on earthquakes caused by fracking operations, which it described as ‘unworkable’. Ratcliffe called the government’s attitude on the issue “pathetic”, and said the policies risked an “energy crisis” and “irreparable damage” to the economy.
Ratcliffe claims he wants his company to frack to provide cheap energy. But as well as profiting from selling the gas it fracks, INEOS will also use the energy as a feedstock for its chemical operations. INEOS currently imports shale gas from the US using it’s 8 custom built ‘dragon ships’. Producing shale gas in the UK would greatly reduce their costs.
Believer in Britain?
Jim Ratcliffe has been an outspoken supporter of Brexit, saying “We are an island, we are an independent people. We are a very creative nation, hard-working. We can thrive as an independent nation, we don’t need people in Europe telling us how to manage our country. I have no problem with the common market but I don’t think the United States of Europe is a viable concept.”
Many have suspicions that Ratcliffe’s enthusiasm for Brexit is more about trying to avoid EU environmental regulations than patriotism. Documents were obtained showing that shortly before the EU referendum, INEOS lobbied, as part of the Chemistry Growth Partnership, to be exempt from climate change levy (an environmental tax) and to abolish the UK carbon floor price in order to reduce energy costs to the chemicals sector.
Later, in October 2018, INEOS wrote a letter to the Secretary of State for Business, Energy and Industrial Strategy threatening to close its manufacturing plant in Middlesbrough unless it could avoid EU pollution rules.
Earlier this year, Ratcliffe wrote an open letter to the European Commission president attacking expensive EU regulations and “stupid” green taxes, saying that Europe had the “world’s most expensive energy and labour laws that are uninviting for employers”.
INEOS announced its decision to invest £3 billion in a petrochemical plant in Belgium just hours before MPS in the UK voted to reject the Brexit deal.
Ratcliffe’s lobbying efforts have not been confined to the EU. In 2017 INEOS attempted to block the Scottish Environmental Protection Agency’s new restrictions on air and noise pollution at Grangemouth. The proposed new restrictions followed years of complaints, investigations and breaches, including a series of safety lapses that led to oil and gas leaks. Two incidents involving gas leaks led to road closures and school children being kept indoors to avoid exposure.
And for all his professed love for Britain, Ratcliffe isn’t too keen on paying taxes on the island.
Following the UK government’s refusal to reduce INEOS’ tax burden in 2010, Ratcliffe moved the head office to Rolle, Switzerland. This may have saved the company £100m a year in tax payments.
Ratcliffe himself moved back to the UK for tax purposes in 2016, but has attracted further controversy over plans to create a new tax structure and move up to £10 billion to Monacco, a move which has been estimated could deprive the UK Treasury of up to £4 billion in tax.
In summary, Ratcliffe and INEOS are symbols of the neoliberal order: Ratcliffe’s vast wealth, built on hyper-capitalism and extreme cost cutting, being the equivalent of 623,000 years of the minimum wage.