Daily Mail: Time to get over Shell shock
By Alex Brummer,
11 March 2004
NO ONE should underestimate the scale of the current crisis enveloping Shell/Royal Dutch Petroleum. The £88bn group is on the back foot and its reputation is being tarnished daily by a succession of leaks to the New York financial press.
Only a week after the group threw overboard two of its top executives - including chairman Sir Phil Watts - the management now running the show has come under the spotlight.
New chairman Jeroen van der Veer - seen as a safe pair of hands - and finance director Judy Boynton are alleged to have been among the top brass who knew about a shortfall in reserves and failed to fully disclose it to the main board or communicate it to investors in a timely way.
Shell finds itself caught by the climate of greater disclosure arising from the Enron debacle and has reacted like a frightened deer caught in the headlights of a car.
The audit committee has sought to calm nerves, but the Dutch executives sitting in The Hague appear to have little idea how to deal with the loss of confidence in management that has emerged on Wall Street and in the City.
Instinctively, the Shell approach is to put up the barriers. But there are some signs that the message is getting through. The external report into the overbooking of oil reserves by 20% - or 3.9bn barrels - is now complete and Shell is expected to publish it before the original target date of April 23, its annual general meeting.
There is also a move to bring forward the proposed reorganisation of the governance of the company, which had not been expected until next year.
The leaks of Shell's internal documents-together with its slow response to the allegations, is jeopardising the future of the refreshed management team. The last thing Shell needs at present is further resignations.
But unless it takes control of developments - by making early and full disclosure - it risks being caught up in a frenzy of speculation that can only do long-term damage to its reputation and its investors.