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The Daily Telegraph: Shell chiefs could be prosecuted over reserves


By Christopher Hope (Filed: 24/03/2004)


Executives at Shell, the Anglo-Dutch oil giant, could face criminal charges over the overstatement of its proven oil and gas reserves. 


Shell confirmed yesterday that it is being investigated by the US Department of Justice. The latest investigation follows three other separate inquiries from regulators in London, New York and the Netherlands. Shell's problems stem from the company's announcement in early January that it had exaggerated its proven reserves by 20pc or 3.9 billion barrels.


Last Thursday, Shell announced a further cut in its proven reserves by 470m barrels. Jeroen van der Veer, Shell's chairman, said then that the justice department had not been in touch with the oil giant. However, it appears officials from the US department contacted Shell's lawyers in New York the next day. Shell said yesterday: "On Friday March 19 a representative of the US attorney's office in Manhattan contacted our outside counsel in the US. [They] asked to be briefed on the information we had previously presented to the Securities and Exchange Commission. We have agreed to meet and do so."


While the SEC can launch only civil prosecutions, the justice department can bring criminal charges if it believes the law has been broken.


The Financial Services Authority is investigating Shell in London while the Euronext bourse in Amsterdam has given a list of questions to Shell.


Another body in the Netherlands is also looking to see whether there was any insider trading at the oil giant.


Meanwhile, pressure is growing on the SEC to modernise the way it asks oil and gas companies to account for their proven reserves.


Analysts argue that new technology such as 3D Seismic data, which Shell uses on some of its fields, can provide a more accurate picture.;$sessionid$0MIEXHPAFMLNJQFIQMFSFF4AVCBQ0IV0?xml=/money/2004/03/24/cnshell24.xml&menuId=242&sSheet=/money/2004/03/24/ixcity.html&menuId=242&_requestid=44069

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