Daily Telegraph (UK): Shell scandal 'could happen again': “Lord Oxburgh of Liverpool, the UK chairman of Shell, yesterday warned that another reserves scandal could still strike the oil and gas giant despite the changes to the company's structure.” (ShellNews.net)
By Christopher Hope, Business Correspondent (Filed: 30/10/2004)
Lord Oxburgh of Liverpool, the UK chairman of Shell, yesterday warned that another reserves scandal could still strike the oil and gas giant despite the changes to the company's structure.
Lord Oxburgh also said that the radical changes to Shell's Anglo-Dutch structure announced this week were held up by concerns about the tax impact on shareholders.
Under the restructuring, Shell is ditching its dual structure - 40pc owned by Shell Transport & Trading and 60pc controlled by Royal Dutch - and replacing it with a single business called Royal Dutch Shell.
Lord Oxburgh said the move was prompted by Shell's admission earlier this year that it had overstated its proven or commercially exploitable reserves by 23pc, or 4.47billion barrels.
However, he admitted that such a scandal could occur again despite the overhaul: "What happened in March could have happened under any governance system. This makes it difficult."
The scandal was the catalyst for reform, he said: "People had talked about this for decades. But what you have seen happen over the past two days could not have happened nearly as quickly as before."
Lord Oxburgh admits there was "slight tension" between the British and Dutch parts of Shell. But talk of a Dutch putsch - the new company is based in The Hague, both the new CEO and new chairman are Dutch - is wrong-headed.
He said: "The structure is right for an international company. They are the best people for the job."
Under the plans, which must be approved by shareholders at annual meetings in April, Shell will become a £100 billion capitalised business with its main listing on the London Stock Exchange.
Lord Oxburgh, who took over as UK non-executive chairman in March after his predecessor Sir Philip Watts quit in the wake of the reserves scandal, has worked nearly full-time to overhaul Shell's structure since March.
About 30 different permutations of the new structure were discussed at 25 meetings of the joint boards. "It has been full-time and really fascinating," he said.
Eventually just two options remained (the other was maintaining the status quo but run by a slimmed-down board), which were presented to Shell's 25-strong combined board on Wednesday afternoon.
This could have happened sooner but Shell's lawyers were concerned that there had to be no adverse tax burden on either set of shareholders. "The dividend problem was holding us back," he said.
The meeting, which was chaired by Lord Oxburgh, took just 20 minutes to approve the plan. The boards of Shell Transport and Royal Dutch then met in adjoining rooms at the Shell Centre on London's South Bank to confirm it all.
Lord Oxburgh said: "At 4.30pm, we opened the doors between the rooms. They said 'we will if you will' and we did it." The merger of Royal Dutch and Shell Transport, started in 1907, was at last going to be completed.
While Royal Dutch's team flew to the Netherlands to ratify the agreement on Dutch soil, Shell's UK team fanned out into Westminster. Malcolm Brinded, head of exploration and production, met Chancellor Gordon Brown at 11 Downing Street. Lord Oxburgh telephoned Patricia Hewitt, Trade and Industry Secretary, while other directors contacted the Prime Minister's office.
By yesterday afternoon, the job was done. Lord Oxburgh will now retire at Shell Transport's last annual meeting in April (he is 70 on Tuesday).
Surely the Shell merger (he prefers "unification") was the toughest deal he has ever done?
Of course not, he said: "The simultaneous unification of four medical schools in north London [as rector of Imperial College] in 1995 and negotiating with two secretaries of state. That was the most difficult."