The Daily Telegraph: Shell braces for second US inquiry into stated reserves
By Christopher Hope, Business Correspondent (Filed: 18/03/2004)
Shell, the oil and gas giant, yesterday raised HK$5.8billion (£409m) when it sold its stake in China Petroleum and Chemical Corporation (Sinopec).
The move came amid speculation that Shell faces an inquiry by the US Justice Department over its controversial restatement of proven reserves.
Shell sold 1.9billion Sinopec shares, representing almost 3pc of the equity, on the Hong Kong Stock Exchange.
A spokesman said the sale did not affect Shell's strategic alliances with Sinopec, such as plans for 500 petrol stations in eastern China.
Shell is in the midst of a corporate crisis over its admission that it had overstated its proven reserves - oil and gas that it can be sure of extracting - by 20pc or 3.9 billion barrels.
That announcement prompted the start of an inquiry by the United States' Securities and Exchange Commission, which is expected to last two years. In the UK, the Financial Services Authority, the City regulator, is also looking at the matter.
Unlike the SEC, the Justice Department has the authority to bring criminal charges as well as civil ones.
A Shell spokesman said: "We are not aware of any contact by Justice Department officials."
The way that Shell accounts for its reserves is also being investigated by its audit committee, which is taking independent legal advice.
A preliminary report from the committee has already cleared Shell's current management, led by new chairman Jeroen van der Veer, of any wrongdoing.
The findings are due to be made public in the next few weeks.
The crisis at Shell has resulted in Sir Philip Watts, the chairman, and Walter van der Vijver, head of exploration and production, losing their jobs.
Full details of executive pay and bonuses at Shell will be revealed in the company's annual report, which is out tomorrow.
Shell shares slipped 2 to 366.5p on the London Stock Exchange yesterday.