"Attempting to Reconcile the Irreconcilable? The Expansion of the Anglo-Persian Oil Company’s International Business and UK Public Policy after the First World War"

The Anglo-Persian/Anglo-Iranian Oil Co. (then British Petroleum) was founded in 1909.But, with the international climate worsening, soon developed a unique corporate structure: the British government took an unprecedented step of acquiring a majority shareholding in the company, on the eve of the first World War, in order to try to ensure control over the security of oil supplies to the British navy. The UK Treasury defined what the role of the state would be: two of the Board members would be government appointees but, crucially, there was to be no governmental interference in the company’s commercial policy.
However, after 1918, the challenge of reconciling the expansionist, market-driven interests of what was a rapidly developing multinational enterprise with the regulatory, political and geo-strategic interests of the state quickly became apparent. By the very nature of its business, a large proportion of the company’s assets have always been located overseas – the Middle East originally and subsequently worldwide; equally, profits have been derived from markets globally, including a significant market presence in Europe. The company grew quickly; foreign direct investments established several subsidiaries for different aspects of the business, which then engaged in transfer pricing manipulation to help minimise tax liabilities. This paper, based on relevant archival sources, examines the tensions and dynamics involved in this particular oil business -state relationship.