HL Deb 18 April 1951 vol 171 cc376-404

5.27 p.m.

LORD TEVIOT rose to call attention to the grave position of the British Union Oil Company Limited in Barbados, arising from the preferential treatment given by the Barbados Government to a foreign company, and to ask His Majesty's Government for protection and adequate compensation for the confiscation of their property; and to move for Papers. The noble Lord said: My Lords, I apologise for bringing this very important matter before you at this late hour, but I found on inquiry that there was no other date for a long time on which I could bring this matter before you, and I hope, therefore, that you will bear with me this afternoon. As is customary for one who has any interest at all in any matter one raises in this House, I must say that I have a small interest in the British Union Oil Company. This is a somewhat unusual matter to bring before your Lordships and, before doing so, I took steps to find out whether it was a proper matter to raise. With your Lordships' leave I will read this short letter from the Colonial Office. It says: … there is no reason why a question on the subject of British commercial interests in Barbados should not be asked in Parliament. Barbados has a Legislative Assembly of its own but is still administered through the Colonial Office and consequently is not independent of Parliament in the same way as the Dominions are…. Therefore, I thought that in the circumstances, and as it was so important, I should be in order from every point of view in raising this matter in your Lordships' House.

Before moving the Motion, I should like to give a short history of the British Union Oil Company and its operations in Barbados. This company is entirely British, and was registered as long ago as 1914 with a capital of £6,000,000, its main object being to acquire oil and petroleum-bearing lands and to explore, work, exercise, and develop them. In the year 1919 the company obtained leases over 78 per cent. of the available drillable area of Barbados. I would mention, in passing, that no one else had explored this area for oil; it was an entirely new venture. These leases were granted by the owners of over 340 estates and a number of peasant proprietors holding ten acres or less. Between the years 1919 and 1940, the company drilled no fewer than fifty-two wells, the greatest depth reached being 4,015 feet. The production amounted to only 137,000 barrels, which, while not a commercial quantity, nevertheless confirmed the opinion of eminent geologists that the island had great potentialities as a source of commercial oil once deep drilling had been carried out. In addition, nineteen exploratory boreholes were drilled and a vast amount of geological survey work carried out.

The total expenditure by the British Union Oil Company was roughly £1,000,000, and the evidence obtained for the expenditure of this sum and the great amount of work it entailed proved that oil in commercial quantities was not available at shallow depths, and it would be necessary to drill deep down to 10,000 or 12,000 feet. The company had this in mind when war broke out in 1939—and the outbreak of war, of course, seriously interrupted its plans. It was not possible to obtain essential equipment. In fact, permission to acquire it was refused. A full report by the company's geologist, the late Dr. Senn, dated January, 1941, was given by the company to Sir Frank Stockdale, Controller of the West Indian Development and Welfare Commission, and forwarded by him to the Colonial Office here with a strong plea for action.

In June and July, 1941, the company made an application to His Majesty's Government for United States dollar ex-change for the purpose of carrying out a geophysical survey in Barbados, but this was refused, and the company, therefore, had to break off its negotiations with the United States geophysical survey contractors. In 1945, the company called for estimates from drilling contractors in the United States of America, and also approached a contractor operating in Haiti. It was evident that deep drilling was going to be a costly business, amounting, roughly speaking, to somewhere between £250,000 and £300,000 for each well, and a minimum of three deep wells was necessary. The company felt that it was not justified in incurring such expense unless it could be certain that it would be protected against pirate competitors who would not have borne any share of the expense of the discovery.

In March, 1946, the Colonial Secretary in Barbados told the British Union Oil Company's manager there that the Government proposed to take over all under-ground rights and that they would give the company a prospecting licence over the whole island. On July 28, 1947, the company's manager in Barbados inter-viewed the Governor, Sir Hilary Blood, who read extracts from a dispatch to him from the Colonial Office in London, which document suggested that the Barbados Government might give the British Union Oil Company a prospecting licence over the whole island in return for leases they held. The Governor further staled that the Executive Commit-tee had agreed to this proposal. On December 21, 1950, the Colonial Secretary was advised regarding the above, and on January 19, 1951. I requested that a copy of the document quoted by Sir Hilary Blood might be cited by me. On January 29, the Colonial Secretary, the right honourable James Griffiths, refused my request on the grounds that the document in question was a dispatch, but he confirmed that his predecessor (Mr. Creech Jones) had suggested to Sir Hilary Blood that the British Union Oil Company might be given an oil prospecting licence over the whole island.

A very firm understanding existed and, relying on the promises made to the effect that the British Union Oil Company would receive a prospecting licence over the whole island, the company entered into negotiations with Trinidad Leaseholds Limited, who are the principal oil operators in Trinidad and own one of the largest refineries in the British Empire. This company have vast experience of deep drilling, and they undertook to do deep drilling in Barbados by arrangement with the British Union Oil Company. They had waiting all the equipment required to begin work at once. In October, 1948, the Colonial Office appointed the late Mr. G. M. Lepper, a highly qualified mining engineer and petroleum geologist and technical adviser on oil exploration developments to His Majesty's Ministry of Fuel and Power from 1936 to 1946. What I am going to tell your Lordships now is of great importance. Mr. Lepper's terms of reference were to advise the Governor of Barbados on the subject of oil mining legislation and on the subsequent issue of licences, and to furnish a report.

That report, which is dated January, 1949, definitely recommended, in Paragraph 122, that the British Union Oil Company, which had secured a first-class operating partner in Trinidad Leaseholds Limited, should be given the sole prospecting licence over the whole island. Mr. Lepper stated—I am reading his words from his report— In my opinion all that is known to-day about the oil prospects of Barbados has been due to the drilling operations of the British Union Oil Company and the researches of its geologists.

On May 17, 1949, the Acting Governor of Barbados confirmed to the British Union Oil Company's manager there that his Government did not intend to deviate from the Lepper Report. As late as September 30, 1949, this gentleman advised the company's manager that he had cabled to the Colonial Office in London an assurance that the Barbados Government would not depart in any way from the Lepper Report. Relying upon the assurance given, the company gave up their leases to the Government and did not oppose the Petroleum Bill introduced into the Legislature of Barbados. This became law on January 5, 1950. The Bill provides compensation for land owners for loss of rights, but contains no provision for compensation for loss of rights to explore for oil, et cetera. This means that the company's leases, which gave them the right to explore for oil, et cetera, were rendered valueless without compensation for the loss of their rights. Such a provision is quite unknown under British administration anywhere in the world.

I would refer your Lordships to the measures governing the nationalisation of various industries in this country, all of which have provided for compensation, however inadequate, for the owners of rights taken over by the Government. I would also refer your Lordships to the case of the Irrawaddy Flotilla Company Limited, which was taken over by the Government of Burma, when compensation was paid. I would also refer to the nationalisation measures in Jugoslavia and Czechoslovakia which took place after the war, and to the strong diplomatic action taken by the British Government which resulted in securing compensation amounting to many millions of pounds—I believe in the case of Czechoslovakia the figure was £8,000,000—for British interests which were affected by the nationalisation measures. There-fore, it seems that British interests behind the Iron Curtain can obtain some measure of support and protection from the British Government for their properties, while a company operating in a British Colony can get nothing.

Immediately the Petroleum Act was passed in Barbados the company applied for a prospecting licence, and also re-quested that a provisional licence be granted as a drilling rig was ready at Trinidad to proceed to Barbados to commence deep drilling. To the company's astonishment, this was refused, although the Governor, then Mr. (now Sir) Arthur Savage, stated, among other comments, that he fully appreciated that the company had a strong moral claim for first consideration for an island-wide concession. However, the Barbados Government invited Mr. Tanner, the Minister of Mines in Alberta, to come to Barbados to advise them on the preparation of petroleum regulations under the Petroleum Act. Apparently the Government had already decided to grant a prospecting licence to more than one company. A Mr. Bishop, who had been in the island some time and was in close touch with the Government, filed an application on behalf of the Gulf Oil Corporation, an American concern. The Government decided to adopt Mr. Tanner's suggestions for working to plan, which meant applying the same conditions to the small island of Barbados as applied to the vast territories of Alberta, a decision which, in all the circumstances, was manifestly absurd. As a result of this decision the company were offered what amounted finally to only 22 per cent. of the drillable area of the island. Of course, this was declined. Prior to this offer to the B.U.O.C, the Gulf Corporation were made an offer on much the same terms and accepted, over land already explored by the B.U.O.C. and on the very spots where they would have commenced deep drilling had they been protected.

I know that it has been said that the B.U.O.C. started with 78 per cent. of the drillable area, and I also know that they had an offer of 55 per cent. Let us just study that offer for a moment and see whether that does not boil itself down to 22 per cent. The offer was for 55 per cent. of the whole island, less strips of one mile wide, dividing the island into four quarters, these strips including drillable land. The offer was only for licence. If exploratory work had been successful, lease would have been granted of half the area licensed—that is to say, 27½ per cent. of that area, which equals 22 per cent. of the whole island. The offer was presented as a last word, and in the shape of an ultimatum. In fact, the Gulf Corporation subsequently succeeded in securing several important alterations in the conditions of their arrangements. As I have said, Mr. Tanner was called in and the matter was going to be dealt with on the Alberta system. In our view, for a small island like Barbados, that was ridiculous.

Since then, the terms to the Gulf Company have been greatly modified, as will be seen from the licence, a copy of which I have here. We have other evidence of favouritism being displayed towards the American Corporation, and it should be emphasised that the Gulf Corporation had done nothing in the island: they had made no surveys, and had bought no equipment, whereas the B.U.O.C., during the thirty-two years they had been working in the island, have done a great deal of valuable work and, as I have already stated, have incurred heavy expenditure. Put simply, the Government of Barbados went back on their promise to the B.U.O.C. to grant them a prospecting licence over the whole island, which, be it noted, under the usual Colonial legislation, calls for a selection of half the area, and therefore does not constitute a monopoly. In its place they offered the B.U.O.C. a licence giving them first choice on only one quarter of the island, on terms which were so unworkable that they were consequently relaxed in the case of the Gulf Corporation after the B.U.O.C. had withdrawn.

In addition to oil research work, the work of the company's geologists has resulted in the provision of a first-class water supply, and the report on the geological investigations of the underground water resources in Barbados drawn up by the company's geologist, the late Dr. Senn, is regarded as a model work. The B.U.O.C. have also provided employment for many of the inhabitants of Barbados and, by importing the necessary supplies of oil, have enabled the electricity works and waterworks to operate. The discovery and harnessing of natural gas has also proved a great boon to all in the island. However, so far as we can see, all this has counted for nothing, and the company's rights have been confiscated.

On June 7, 1950, the company's representative saw the Permanent Undersecretary for the Colonies in London, but he could make no practical suggestions, beyond saying that if the company would prepare a claim against the Barbados Government the Colonial Office would forward it to Barbados, with comments on questions of fact only. At the same time, the Minister must have known of the altered instructions which were sent to Barbados, and which were most certainly not in the interests of this country. I have exchanged a number of letters with the Colonial Secretary, but have been unable to ascertain exactly what is meant by the offer in question. It seems to me—and I am sure your Lordships will agree—a waste of time to put forward any claim to the Barbados Government unless it is backed by a directive from the Colonial Secretary. In this connection, I may say that I have made the fullest inquiries, and have been informed that, while Barbados has a Legislative Assembly of its own, it is still administered through the Colonial Office and. consequently, is not independent of Parliament. Incidentally, in one letter I received from the Colonial Secretary he referred to Barbados as virtually a self-governing Colony, which entirely substantiates the letter that I read out to your Lordships at the beginning of my speech. If I correctly interpret this reference, it means that a directive from the Secretary of State would have to be obeyed by the Legislation in Barbados, but to put forward a claim as suggested would surely be a waste of time.

The last letter I received from the Colonial Secretary, dated March 2, 1951, in effect admitted that the B.U.O.C. were promised the sole prospecting licence when the Government decided to nationalise the underground rights in Barbados. It was further stated by the Secretary of State that the Colonial Secretary in Barbados went so far as to inform one of the local representatives of the B.U.O.C. that the Petroleum Bill then before the Legislature was based on the Lepper Report, and that he would consider himself bound by it unless and until he received contrary instructions from the Secretary of State. As the Lepper Report was departed from, I have asked the Secretary of State whether instructions were given to this effect from London. His reply, however, is evasive, and does not state definitely what was done. I now ask for a reply to that question. I hope that the noble Lord who is going to answer on behalf of His Majesty's Government will be able to give me some information as to what was said. It was, I think, the Colonial Secretary in Barbados. Mr. Perowne, who made that statement.

Summarising the position, the B.U.O.C.'s case is quite simple. For many years they held leases giving full mining rights over the greater part of the drillable area of Barbados. During this period they spent lavishly, and carried out exploratory work which, in the words of the expert appointed by the Colonial Office, the late Mr. Lepper, has resulted in the discovery of all that is known about the oil prospects of Barbados. Just before the B.U.O.C. had completed arrangements with Trinidad Leaseholds, Limited, to carry out deep drilling, the Government of Barbados passed the Petroleum Act, 1950, which vested in the Governor in Executive Committee the property in petroleum existing in its natural condition within the island. That Bill would never have been thought of at all had it not been for the tremendous work and exploration carried out by the B.U.O.C. The Government broke the promise given to the B.U.O.C, that the Lepper Report would be put into operation and that the B.U.O.C. would be given mining rights over the whole island. Instead, they put forward conditions for the granting of a licence to explore which were so impossible that the company had no option but to reject them. An American company, so eager to get into the island that apparently they were prepared to take any terms, did accept, but the B.U.O.C.'s attitude was fully justified, as the terms originally put forward by the Government proved so unworkable that they have since had to be greatly relaxed.

The Barbados Petroleum Act, 1950, provides for payments by way of royalty to land owners in areas where oil may be found, and also for compensation to land owners for the taking over of ancillary rights, such as the right to enter on land to search for and take petroleum, or to use and occupy land for the erection of buildings, tanks and the like. People receiving royalties from an existing well, or the lessee of an existing well, are en-titled to compensation, but no compensation whatsoever is provided for the loss of the right to drill for oil, such as was possessed by the B.U.O.C. before the passing of this Act. In other words, so far as the B.U.O.C. are concerned, the measure has resulted in complete confiscation of their rights, without compensation, and this, as your Lordships must be aware, is completely contrary to all practice in areas under British influence. That these mining rights are extremely valuable is clearly proved by the willingness of Trinidad Leaseholds, Limited, to under- take deep drilling, and by the eagerness of the Gulf Oil Corporation to get into the island at almost any price and to incur the great expense of deep drilling. All the B.U.O.C. now ask for is justice and a fair deal.

As further evidence of the arbitrary methods of the Barbados Government, I would mention that the gas well operated by B.U.O.C. was taken over under the Petroleum Act, but compensation will be payable and a claim has been filed. However, although the gas was taken over, the pipeline and accessories necessary to operate the gas were not taken by the Act. The company, in the course of business, naturally declined to part with their property, the pipeline and so on, until the compensation claim was settled. The Barbados Government's answer to this was to pass the Natural Gas Corporation Act, 1950. Under Section 18 of this Act, natural gas plant is transferred to the corporation set up by the Government. This, I am sure your Lordships will agree, is more worthy of action in a totalitarian State than in a democracy. In conclusion, I would call your Lordships' attention to the recent happenings in Persia, and to the statement made in this House and in another place. This is the statement: It is both the right and the duty of the British Government to take all possible measures to protect the legitimate interests of a British commercial undertaking overseas.

This is, of course, a fundamental fact, and it will be appreciated that if a member of the Colonial Empire, such as Barbados, is allowed to confiscate, without compensation, rights acquired by a British company, such as the B.U.O.C, then, to say the least, it will be extremely difficult for the British Government to object to similar action being taken against a British company by a foreign Government. I feel confident that the position held by this country over centuries for honest and fair dealing will be upheld by the members of the present Government, and that they will see that the necessary steps are taken to ensure that full and adequate compensation is paid to the B.U.O.C. for the compulsory taking away of their drilling rights by the Government in Barbados. My Lords, I beg to move for Papers.

5.57 p.m.


My Lords, I wish to offer a few brief remarks on this Motion, largely because I view it from a slightly different angle from that of the noble Lord who has moved it. I have no personal interest in the British Union Oil Company, but I have a considerable personal interest in Colonial policy and in the reputation of the British Government. I may also, perhaps, say that I have had personal experience in two or three Colonies of the introduction of this model oil ordinance. As your Lordships are no doubt aware, it is, and has for long been, the policy of the British Government to vest oil rights in various Colonies in the Crown. That is largely to ensure efficient commercial exploitation of oil. And may I say that I have never seen any proceedings in a Colony with which I have been associated which would compare with the way in which this matter has been dealt with in Barbados.

I do not wish to go again into the facts of the case, which, I understand, are not in dispute and which have been stated by the noble Lord, Lord Teviot, but I should like to underline the absurdity of going to the Mines Department of Alberta for advice on how to deal with oil concessions in Barbados. As your Lordships possibly know, the Alberta Government works on what is known as the "chequer-board system." Under that system, when oil is found in commercial quantities the area is divided up into sections. The prospector gets alternate sections and the Government the other alternate sections, which are sold by auction. However well that kind of system may work in Alberta, which is, I understand, about 255,000 square miles in area, it obviously does not make any kind of sense in the island of Barbados, which has an area of 166 square miles, or, in other words, is 21 miles in length by 14 miles at the broadest point. It is clear, I should have thought, that in that particular island oil can be worked efficiently and commercially only by one concessionaire.

Having said that on the facts—and the action of the Barbados Government reflects no credit on them or on their reputation for fair dealing—I should like, if your Lordships will bear with me, to say a few words on the contention that it was not open to the British Government to intervene in this matter, on the ground that they cannot intervene in the domestic affairs of Barbados. May I glance, for a moment, at the Constitution of Barbados? As your Lordships may know, it consists of a Legislature, which is the Governor, the Legislative Council of fifteen members, and a House of Assembly of twenty-four members. The Governor has a negative voice in the making and passing of laws and, in the normal phraseology, laws are passed with the advice and consent of the Legislative Council and General Assembly of the island, who may make all such laws as may from time to time be required for the peace and good government of the island.

So much for legislation. But, you may ask, who has executive power in the island? The answer is, the Governor, his Executive Council and, in a wide sphere, a body called the Executive Committee. The Executive Council consists of the Governor, the Colonial Secretary and the Attorney-General, ex officio, and such others as His Majesty may appoint—at the present moment, three others. The Executive Committee was created by local Statute and consists of all members of the Executive Council ex officio, plus one member of the Legislative Council, plus four members of the House of Assembly who are appointed by the Government at the beginning of each session of the Legislature. This Committee is, in fact, the principal instrument of government, and introduces all money votes, prepares Estimates and initiates all Government measures. It is responsible for Government works and for the management of Government property. The four members who come to the Executive Committee from the House of Assembly are responsible for the conduct of public business in that House. But in spite of their acceptance of collective responsibility for policy, the Executive Committee would not resign if defeated in the House, in that they are responsible to the Governor and not to the House. There are other details I could give to make the point clear, but I do not think it is necessary. The last Colonial Office List says of Barbados: This Colony possesses representative institutions but not responsible Government. The Crown possesses a veto over legislation and the Secretary of State retains power of appointment and control of public officers, except, strangely enough, of the Treasurer, who is nominated by the House of Assembly.

I suggest that one word of advice from His Majesty's Government to the Governor, through the Secretary of State, would have the desired effect. Indeed, why not? It may be. and I do not doubt that it is, the policy of His Majesty's Government not to interfere in the domestic affairs of such Colonies as Barbados, but surely there is equally no doubt that they can interfere, if only by authoritative advice to the Governor, when a scandal, such as this seems to be, occurs. As I see it, this transaction transcends the domestic scene, affects the reputation of His Majesty's Government and makes a mockery of the principles of British justice. Will it not be suggested, perhaps, that Justice has lost her blindness, once the symbol of her impartiality, and is now able to see, though perhaps only through her left eye?

Let me take one or two instances. Suppose an injustice, such as I conceive this to be, had been done in Barbados to a group of smallholders, is it conceivable that His Majesty's Government would have said that it was powerless to intervene? Suppose, if you like, it was a more authoritative body, something like the Co-operative Wholesale Society, a capitalist organisation which has seen the light, if only the red light: would they not have the means of making their views heard? Or let me turn to the other side, and suppose the position had been reversed; that it was the American company which had been in the position of the British Union Oil Company over those twenty years, and they had been treated in this manner; and suppose, as undoubtedly would have happened, that the American Government had made representations about such treatment: is it conceivable that His Majesty's would have said that they were not able to do anything in the matter? I suggest that the answer is plain.

So we come to this: a delicate squeamishness against interference at all with Colonies whose Governments have wide powers of managing their own affairs. That is to me an altogether strange detachment. Are the principles of British justice and fair dealing being disregarded by the Barbados Government? "Well," say His Majesty's Government, "they have the right to do so, if they wish." And what is the melancholy moral of all this? Surely it is that if British investors want the protection of His Majesty's Government they must go outside the British Empire. It is a curious contradiction, based perhaps on popular appeal, that the protection given in a foreign country is denied in a small British Colony—patriotism, in the first place, and, in the second, more of the incense which has been offered to the great idol of self-government. My Lords, the British Government are not really impotent. In these matters, "where there's a will, there's a way." They must accept responsibility for their wards, and surely they must curb such unhealthy manifestations of self-expression. There is a grave side to the case we are considering. It is only one symptom of many, a symptom of our lack of any real and positive colonial policy: that divorce between words and deeds to which the noble Marquess who leads the Opposition in this House has drawn attention before.

Let me turn from Barbados and this question of principle to the West Indies in general. There is a growing feeling there that they stand friendless and impotent amid the economic rivalries of the Metropolitan Powers, and they dread what may be happening behind the closed doors of the Cuban negotiations. I gather that, as in photography a darkened room is necessary for development, and the intrusion of a little light may ruin the picture, so they wait, dreading lest they are to be sacrificed, butchered to make a Cuban holiday. Let us leave the West Indies and go to East Africa, where the settlers of our own race await with deepest apprehension the dogmatic pronouncements of Whitehall doctrinaires. They, too, fear lest all they stand for may be sold for a slogan—"Quantity, not quality"—the miscarriage of democracy.

And so on. One could go round the Empire, but there is no time, showing the inconsistencies which arise from lack of consistent purpose and lack of consistent principles. We seem to be getting the worst of both worlds. We discourage the British investor, on the one hand, and we undermine the confidence of nascent Dominions, on the other. I repeat that the case before us is not creditable to the Barbados Government and merits the intervention of His Majesty's Government. I claim that that is so because it is their duty to try and preserve traditional morality in Government business in Colonies still under their control and influence. In conclusion, I say that I am loth to look on and see, as it seems, the British Government in the rôle of Gallio. I do not think that Gallio was really a prototype of a Socialist Government, asked to defend the principles of public honesty, and I hope that they will yet relent from the attitude which they have taken up.

6.12 p.m.


My Lords, I must first express my appreciation to the noble Lord, Lord Teviot, for consenting to adjourn this de-bate from its original date until to-day, in order to meet my convenience. I think your Lordships will agree with me when I say that the speeches of the two noble Lords who have so far taken part in the debate show that behind this case is a constitutional issue of some importance. The case, so far as the company is concerned, is a matter of deep concern, but it is also a matter of concern to us in this House, and to many outside. There is a constitutional issue here. Therefore, before coming to the actual events as given by the noble Lord, with many of which I agree, I should prefer to say something of the background, because in this case the background is of great importance. In the first place, as the noble Lord, Lord Milverton, has told us, Barbados is a small island. I can never picture what "so many miles by so many miles" means, and perhaps it is easier if we bear in mind that the island is a little larger than the Isle of Wight. It has a long association with this country, and particularly with your Lordships' House, as I will show in a moment.

The island was first discovered by the Portuguese in the sixteenth century, and it was called Los Barbados after the bearded fig tree. That is a curious specimen which I admit I have never discovered myself, but apparently there are bearded fig trees on the island, and from those the name derives. It was first discovered for this country by Captain Cataline, of the good ship "Olive Blossom," in 1625, and it was claimed by him for "James, King of England and of this island." A succession of adventurers went to the Caribbean. The thirst for gold, enmity towards Spain, jealousy of her rich conquests, love of adventure, the desire for freedom of religion and hostility towards the reigning powers in England all played their part in actuating the people who went to Barbados, and to other of our possessions in the Caribbean. But, in fact, this small island, which had been bypassed by the Spaniards in their search for gold, was first developed by a London merchant. Sir William Courteen, who was a protégé of the Earl of Marlborough. Since that day many members of your Lordships' House have been connected with this island—the Earls of Marlborough. Carlisle, Pembroke, Harewood and Lord Willoughby. I regret to have to inform your Lordships that on one occasion there was a pitched battle between the supporters of two members of your Lordships' House for possession of the island, or of part of it.

Many famous and colourful characters have been associated with this island. There was Sir Henry Morgan, who started, as we know, as a buccaneer, and who ended up in an aura of sanctity as Governor of Jamaica, as a predecessor of the noble Lord, Lord Milverton, whose career started in somewhat different circumstances. There were Admiral Benbow, Admiral Nelson, and George Washington, and as it is the custom to-day to take note of the views of United States citizens I should like to say that George Washington enjoyed himself in the island. He was made a member of the Beefsteak and Tripe Club, which I understand was an aristocratic organisation, and noted in his diary: Hospitality and genteel behaviour is shown to every Gentleman stranger by the inhabitants. With its connection with this country and your Lordships' House, one can well imagine that the dominant party in the island were people of some character and some independence of mind: in fact, they raised the issue of "No taxation without representation" over a hundred years before the Boston Tea Party. The constitution, as the noble Lord, Lord Milverton, indicated, is an ancient one. The House of Assembly was constituted in 1639, and it is the second oldest colonial legislative body in the whole Colonial Empire, being second only to Bermuda. It possesses representative institutions, but not completely responsible Government, because, as the noble Lord, Lord Milverton, said, the Crown has a veto on legislation.


Has it a power of certification?


I am not certain on that point, but I will find out. This Executive Committee, which is of comparatively recent date, and whose constitution has been described by Lord Milverton, is the controlling organism in Barbados. So we find that this Colony is virtually self-governing in domestic matters, although on matters of foreign policy and the like, and on any relations which are not purely domestic, His Majesty's Government are the controlling authority. I entirely agree with the noble Lord, Lord Teviot, that ultimately, through the Secretary of State, Parliament has a responsibility for Barbados. I do not for a moment attempt to waive any responsibility, nor do I want it to be thought that we do not believe we should answer for events in Barbados, although, as I say, Parliament and the Secretary of State nowadays have certain limitations to the power which they had originally. I will deal with that point in a moment.

The issue which is presented by this case is one of the most important in the modern Colonial Empire. For years past, successive Governments in the United Kingdom, of whatever Party colour they have been, have supported the movement for self-government. That has not been sought by one Party alone, but by all Parties. It may be that one Party may think the movement is going a little faster than it would desire, but that is a question of degree. The principle has been agreed upon by all Parties. This necessarily entails a relinquishment of power on the part of the Government of this country. It means that the Barbados Government may do things which we do not like. It also means that we cannot intervene except in cases of great constitutional importance. In other words, we cannot give a very great degree of self-government and, at the same time, interfere in what the other Government do. It is an extraordinary thing, but during the time I was at the Colonial Office I noticed one curious fact. The very same people who endeavoured to persuade the Government to give more and more power to colonial peoples, at a pace which the Government did not always think was advisable, were those who, when anything happened, wanted the Government to make the maximum interference. This sort of case came up on more than one occasion during that period. We had to decide whether we thought it wise to interfere in a case where the Government had made a decision with which we did not agree. In other words, could we risk a constitutional crisis over what might be a comparatively small matter, although a very important matter to those directly concerned?

On the history of this particular dispute there is not very much difference between us. I agree very largely with what the noble Lord, Lord Teviot, has said, although there are one or two differences which perhaps I should mention. The company first applied for an allocation of steel and dollars in 1941—as the noble Lord has said—and that was refused. In 1946 they applied for protection. They took the view that they were unable to incur heavy expenditure on deep drilling, without protection against competitive drilling in areas over which they had not a licence. I expect the noble Lord would agree with that. This request necessarily implied, from the company's point of view, nationalisation of the mineral rights. One point which the noble Lord did not bring out, but which I now want to bring out, was that the whole of this affair developed from this application by the company to be protected against heavy expenditure on drilling in areas over which they had no control.


The whole matter arose for a very simple reason, which I am sure every noble Lord in this House who has any knowledge of business will appreciate. It was that a company proposing to spend about a million pounds in preliminary prospecting, wants to be quite certain that it has protection against other people tapping its sources.


I am not objecting, and I am not saying that the company were unreasonable at all in that view. I am saying merely that this was not, as one might have thought from the speech of the noble Lord, a sudden desire on the part of the Government for nationalisation. It was an attempt, in the beginning at all events—although we shall see that there was a slight slide away towards the end—to meet the legitimate requirements of the company to be protected when they desired to do this extra deep drilling. I think the noble Lord will agree with me there. This request implied nationalisation of the mineral rights, because there was no other way in which the Government could protect the company against competition. The company felt that, unless they could get this monopoly, when they got down to very great depths they would be at the mercy of land owners over whose land they had not been granted leases. The noble Lord may shake his head, but I do not understand otherwise why they applied for protection in this way. I thought it was common ground between us that they did want protection. I do not blame them, and I should feel the same way myself; but that was the origin of this attempt by the Government to meet the company's wishes.


I do not want to interrupt the noble Lord unnecessarily, but let me just make this matter clear. We had 78 per cent. of the drillable area. Outside that 78 per cent., there was no available drillable area—it was mountains, or land upon which there could be no oil. Therefore over the island we had a complete licence to prospect, and the noble Lord will see what Mr. Lepper said.


I really do not understand why the company applied to the Government in respect of these other lands if they were satisfied with what they had. I do not understand why they should go to the Government and say: "We want protection." I do not agree with the noble Lord on this point. I should have thought that the company, from their own limited point of view, were entitled to make a request at a time when they were expending large sums of money. I am not blaming the company; I am only trying to explain how this thing arose. I hope the noble Lord will find that I am fair to him when I try to explain what happened.

In 1946, the acting Governor informed the Secretary of State for the Colonies of the situation, and after some talk be- tween them, in April, 1947, the Secretary of State for the Colonies replied to the Governor suggesting that the company might be given an oil-prospecting licence over the whole of Barbados. So far as His Majesty's Government here were concerned, they thought that the company should have this prospecting licence over the whole of the island—that is common ground between us. The Barbados Government reconsidered the question of the vesting of the mineral oil in the Crown, which had been in abeyance since 1938, and the Secretary of State suggested that they should follow the example of the United Kingdom Act, 1934, which vests in the Crown property in mineral oil in the United Kingdom, and provides for no compensation to land owners. The Government published the Bill on the lines of the United Kingdom Act, offering no compensation, and this, quite naturally, aroused some hostile criticism from land owners. The Government invited an oil expert from the United Kingdom to advise. When Mr. Lepper went there, he was not advising merely on the question of the B.U.O.C.'s leases and their managerial operations, but also, I understand, on the question of the rights or otherwise of land owners under the Act.


But he did refer to it.


I am coming to that. In the meantime, the Governor informed Mr. MacIntyre, of the company, that they had decided to introduce legislation. On May 5, 1948, the Governor informed Mr. Fitzgerald and Mr. MacIntyre that no formal decision with regard to the prospective licence had been reached, and that it was impossible for him to say how the Committee would react. Mr. Lepper went to Barbados towards the end of 1948, having been appointed by the Barbados Government but on the recommendation of the Colonial Office. After full examination of the position, he recommended the vesting of mineral oil in the Crown and the grant of a prospecting licence over the whole island to the company in recognition of the amount of money that had been spent. In January, 1948, a representative of the Gulf Corporation appeared in the picture, and he also applied for a prospecting licence. He said that the Corporation would be satisfied with a licence over half the island. The Gulf Corporation, as your Lordships know, is a big American corporation. There is another issue involved here, other than that exposed by the noble Lord. Before deciding, the Executive Committee asked Mr. Tanner, the Minister of Mines of Alberta, to advise, and he formed the opinion that it was in the best interests of the island that two companies should have prospecting licences. He felt, however, that the Government should first take the decision on the claim of B.U.O.C. to be granted an island-wide licence on account of past operations. In other words, Mr. Tanner decided, on oil grounds, so to speak, that it would be better to have the two companies operating, but he said that as there was a political matter involved—namely, the existing leases of B.U.O.C.—it would be better for the Government to decide rather than that he should advise.

The Petroleum Act of 1950 was passed, whereby the property in petroleum in its natural condition in strata was vested in the Governor in the Executive Committee. As a result, no person may now search for or get petroleum except in pursuance of a licence. This Act also made provision for the grant of compensation to the company for their two producing wells previously mentioned—the only two wells producing in Barbados—or, alternatively, for the grant to the company of a lease of the wells. The B.U.O.C, of course, took some exception to this proposal, and they presented their case before the Executive Committee. After hearing them the Executive Committee decided to divide the island for oil prospecting purposes into two parts—55 per cent. to B.U.O.C.— and they proposed to give rights to prospect to both B.U.O.C. and the Gulf Corporation. So they definitely departed there from the recommendation of Mr. Lepper. The Government also resolved that, in recognition of the part played by B.U.O.C, they would give them a licence over 55 per cent. of the island, with a right to lease half this area for twenty-one years, with a renewal for a further twenty-one years if the lessees desired. They were allowed to select this area: they were given the choice of four sub-divisions of the island for oil prospecting purposes. The Government also offered B.U.O.C. 50 per cent. of certain territorial waters surrounding the island, with similar rights as regards the licensing. The Gulf Corporation were offered a licence over the remainder of the island and the remainder of the territorial waters. They were not offered this licence prior to the offer to B.U.O.C.: it occurred simultaneously.

The working conditions to which the noble Lord, Lord Teviot, referred were rather onerous. But there is no doubt that these would have been relaxed if B.U.O.C. had proceeded with their lease. The reception of this offer by the Government fell on stony ground, so far as B.U.O.C. were concerned. They stated in their interview with the Attorney-General that the offer was unacceptable, and after a number of somewhat hostile references to their competitors they rose abruptly and left the room. This broke up the discussions. The Government decided to continue the discussions with the Gulf Corporation, on the basis of a prospecting licence for half the island, leaving the remaining half as a Crown reserve. Eventually, the Gulf Corporation were granted an oil prospecting licence over half the island and certain of the territorial waters, the Corporation paying a royalty on crude oil produced and a rental for land held under lease—the normal basis for Colonial leases. In an interview at the Colonial Office in June last, B.U.O.C. urged a claim for compensation against the Barbados Government on moral grounds. They were informed that this was a matter for decision by the Barbados Government, but that the Secretary of State would forward written representations. The company have not taken advantage of this offer—in fact, as the correspondence, a copy of which Lord Teviot has kindly sent me, shows, six months went by before the next approach to the Colonial Office was made by the noble Lord. Until then, the Company had not accepted the offer of the Secretary of State or his representative to send written representations through the Colonial Office to the Barbados Government.

There is one other item that I must mention here, because the noble Lord made reference to it, and it would be con-fusing if I did not touch on it. In addition to the Petroleum Act of 1950, another Act was passed—namely, the Barbados Natural Gas Corporation Act of 1950. The Barbados Government opened negotiations with B.U.O.C. in April, 1950, for the grant to them, in lieu of cash compensation, of a lease of the two wells producing natural gas. The company made certain stipulations. They wanted certain qualifications to the offer: first, that during the term of the lease no other person should be allowed to get or supply natural gas and, secondly, that they should have the right to open new wells in substitution for existing wells, if these ceased to produce. The Government could not accede to this suggestion, which might have been in contradiction of the Gulf Corporation's licence and lease. The Gulf's prospecting licence specifically excludes B.U.O.C.'s gas wells. B.U.O.C. did not agree that this was sufficient protection, and they wanted further protection. The Government were unable to grant their request, as it was not unlikely that the two wells could have been tapped from Gulf land. As regards the natural gas, in this case again, as in the case of petroleum, the Government were not prepared to give B.U.O.C. a monopoly of natural gas; and as a result they passed the Gas Act which I have mentioned, and have entered into negotiations to purchase the company's pipelines and equip them. The company created difficulties about the basis of compensation, but they have not submitted a claim under this Act, as they are entitled to do.

The noble Lord, and also the noble Lord, Lord Milverton, commented on the fact that the Gulf Corporation is an American concern. In fact, since 1936, it has been the policy of His Majesty's Government to grant reciprocal rights to foreign subjects—that is to say, where their Governments give certain rights to our subjects; and in 1938, this policy was extended to Colonial territories. We, therefore, have no ground for discrimination—even if we wished to exercise any —against the Gulf Corporation. I am sorry that the noble Lord made a reference to Persia, which is a very delicate subject at the moment. Apart from the passing of the Natural Gas Corporation Act, which gives them the right to take over the two gas wells, all that the Barbados Government have done is to nationalise mineral oil rights, and it was done on more handsome and favourable terms to the land owners than in this country under a Conservative Government. So I do not think one can say that there has been any question of bringing in a totalitarian State. I am sure noble Lords opposite would reject such an allegation. Harsher measures were passed in 1934 than those passed by the Barbados Government.


I am not here to argue about that. The analogy does not seem to me to be exact, because, so far as I understand the noble Lord, Lord Teviot, he is not complaining about the terms on which mineral was nationalised. What he says is that, since the company had rights granted by a leasehold, when the State nationalised the mineral which was under lease or under prospecting licence, the State ought to take them over subject to those rights. I should have thought that that was a tenable proposition, and was not at all inconsistent with the Act we passed on nationalising British oil. I think I am right in saying that, in our dealing with oil here, the State took over subject to any rights which had been granted. Is that not so?


That is not at all, of course, what the B.U.O.C. wanted. They did not want the State to take over the rights to the oil subject to existing rights, because they were not satisfied with the rights they already possessed. They wanted more rights than they had.


And ended by getting less.


And ended by getting less. I am sorry for them, but that is what happened. In Persia, as we know, the mineral oil rights have been owned by the Persian Government for some considerable time —but I do not want to go into that, because it is a delicate subject. Then there was a reference to the Irrawaddy Flotilla Company: they were paid compensation under nationalisation by the Burma Government, but not by His Majesty's Government.


No, I did not say that.


I do not want to weary the House. I will come now to my series of conclusions, and try to sum up the position as fairly as I can. As I see it, in the first place, the company have no legal right to compensation under the Petroleum Act, 1950, for their expropriated leases. It is unfortunate, but I think it is agreed that that is so. In the second place, the company have a legal right to compensation under the Petroleum Act, 1950, in respect of two wells, and under the Natural Gas Corporation Act, 1950, in respect of their pipeline. Thirdly, the company have broken off negotiations with the Government. If I may say so, I think they have been hasty in doing so. Also, they have been dilatory in presenting their request for compensation under the Petroleum Act, and under the Natural Gas Corporation Act. They started this whole manœuvre with the intention of obtaining a monopoly, because they were not satisfied. I do not know why they started it at all, unless they were not satisfied with their existing rights. The Colonial Secretary made representations to the Barbados Government to grant a prospecting licence for the whole island to the Company, but the Barbados Government did not agree, and decided to grant them only 55 per cent. of the area under prospecting licence.

There has been no preferential treatment of a foreign company. Under the constitution and by practice, the Government and the Legislature have wide powers in internal affairs. For the Colonial Secretary to have enforced his wishes, overriding the Executive Committee, would have been incompatible with modern trends in colonial administration. I was rather surprised to hear from the noble Lord, Lord Milverton, a view which from my experience of him (I was not in office when he was a Governor, so I can say this; I was a private Member of Parliament) is quite incompatible with what he would have thought of this matter if he were the Governor of Barbados. He would be a bold Secretary of State who would have overridden the noble Lord, Lord Milverton, and his Executive Committee during his period as a Governor. I think his change of scene from the West Indies here has also changed his views greatly in a matter of this kind.

It is true that on occasion, in matters of great constitutional importance, a course such as has been suggested to us by two noble Lords would have to be taken, but I do not think one can be expected to take such a course on matters of other than great constitutional importance. In my view the company would be well advised to accept the suggestions that I am about to make. I suggest, first of all, that the company should reopen negotiations with the Barbados Government for the grant of a prospecting licence over the remainder of the island. I suggest, secondly, that they put in their claim for compensation under the Petroleum Act and the Natural Gas Corporation Act, because it seems to me that to charge the Government of Barbados with harsh treatment, and to describe them in the. way in which they have been described by the two noble Lords who have spoken, is somewhat extreme when one remembers that it is the company who have broken off negotiations. I would suggest that they re-enter negotiations on both the matters to which I have referred, and I am sure that the Colonial Office will assist them so far as possible. I realise the disappointment that the company must necessarily have felt over this matter, but I think that in their own interests, and in the interests of good relationships between the business world of this country and of the West Indies, they should reopen negotiations on these matters, in order to see what decision the Barbados Government will in fact come to. It may be that in the course of negotiations the company will be able to obtain a more liberal offer than has so far been the case. As we who have had any dealings with business all know, once you break off negotiations, the other party does nothing at all about reopening them. Whilst negotiations are on, there is always a possibility of good treatment from the other side.

6.48 p.m.


My Lords, I must thank the noble Lord for his answer to my Motion, but I fear I am not at all satisfied with it. For a few moments I should like to refer to some of the things that the noble Lord has said. To begin with, I cannot believe that it was wrong for a British company to go into a British Colony like Barbados and prospect for oil. In order to do so, we had definite property, in that, as I have already told your Lordships, we obtained from land owners leases over 300-odd properties. We have given up that property. We were induced to give it up by the assurances which, as the noble Lord will admit, we received through the Lepper Report. If we had anticipated that this sort of thing was going to happen, we would not have given up those leases and we would have objected to the Petroleum Bill, but we did not do so because we had every confidence in the assurance of the Governor and his Executive Committee at that time. We gave up our property in view of the assurances which were given here and over there. The Colonial Secretary has said he was bound by the Lepper Report, and we thought that we were quite safe in giving up those leases. The noble Lord may say that we broke off negotiations: but what is the good of talking to people who do not stand by their bargains? You cannot go on doing it.

I should like to correct the noble Lord on his remarks regarding gas. The gas question is still the subject of negotiation. Nothing has been broken off there. I will tell the noble Lord the reason why we wished to be careful about gas. As I understand it, the gas comes through a fault, and we wanted to be quite certain that a certain area round the fault could not be tapped by somebody else. If it were tapped, they would get the gas which otherwise would come through to us. That was quite a reasonable view, and one which any business man would have taken. It was quite a reasonable thing for which to ask. It is all very well to say that we may have been a little tire-some about this matter, but we never had the offer that the Gulf Corporation have now obtained. We received an offer which, from a business point of view, was perfectly hopeless. The Gulf Corporation accepted the offer and subsequently obtained a very much better one.


My point was that in the first place the British Union Oil Company had a slightly better offer than the Gulf Corporation were given—55 per cent. as against 45 per cent. In the second place, through negotiation the Gulf Corporation managed to get much better terms, and it was rather foolish of the British Union Oil Company not to have entered into further negotiations, instead of breaking them off, in order to obtain the same result.


The noble Lord will remember that we held leases over 78 per cent. of the area and we were cut down to 22 per cent. I thought I explained very clearly that the 55 per cent. merely meant 22 per cent. The noble Lord will see that that is so.


I know.


That is a fact, and this is something you cannot pass over as being a fair deal. I am not throwing any stones at the Gulf Corporation. They were perfectly right. They went in and Mr. Bishop negotiated for them. We knew all about that. They managed to complete a deal which has proved very much to their advantage. I think that Lord Milverton made an excellent point. I wonder what the Government would have done if the Barbados Government had treated the Gulf Corporation as they have treated us. It would have been a very different matter. I can see the United States representative here making a great song and dance about it, if they had received the treatment we have.

The noble Lord concentrated on the question of protection. In the early part of my life I was a miner in Canada, America and South Africa, and I know all about "pegging out" and getting a preliminary licence to prospect. But immediately you get on to anything that is of value, then you want to get protection. You want to see that you get what you have found and that somebody else is not going to tap what you have discovered. Sir Hilary Blood with his Executive Committee endorsed the Lepper report: Mr. Perowne said he was bound by it. We have reached a most unfortunate state, if a British undertaking in any part of the Empire is not going to be protected by the home Government where it is possible under the Constitution for it to be protected. I am afraid that, as the noble Lord has told us, we can entertain no hope of receiving any assistance from the Colonial Office here in regard to what I consider to be our outstanding claim for compensation. That is all I have to say. It appears that we shall receive no help, and we must re-consider our position. I thank the noble Lord for the suggestion at the end of his speech. We will seriously consider it; but it does mean that, whatever happens, unless the Gulf Corporation are out of our way, we shall get a very raw deal after the expenditure of a large amount of money. I am not going to ask the House to divide, but I am not going to withdraw the Motion.

On Question, Motion disagreed to.