London Evening Standard: Shamed Shell chief hits back: “The move is a bolt from the blue from Shell's former chairman, ousted in disgrace in March over the scandal that has led to the worst year in the group's history.” (ShellNews.net)
16 September 2004
IR Philip Watts has dramatically broken his six-month silence over the reserves scandal at Shell by launching an unprecedented challenge to the Financial Services Authority* and throwing yet more doubt on where responsibility for the fiasco at the oil giant lies.
In a devastating attack on the City regulator, Watts claims the FSA broke its own rules when fining Shell £17m last month for stock market abuse by 'identifying and prejudicing' him in the finding and 'unfairly denying' him the right to review the evidence prior to its publication.
'The FSA violated my statutory rights to review and rebut the allegations,' Watts said in a letter issued by lawyers Herbert Smith. 'I believe that a full and fair examination of the facts will demonstrate that I have acted properly and in good faith at all times. I look forward to the time when I will have an opportunity to publicly address these matters.'
He is referring the FSA to the Financial Services and Markets Tribunal. The move is a bolt from the blue from Shell's former chairman, ousted in disgrace in March over the scandal that has led to the worst year in the group's history. It will place huge pressure on FSA chief executive John Tiner. An FSA spokesman refused to comment.
Shell stunned investors earlier this year by revealing it had overstated the amount of proven oil and gas reserves on its books by almost four billion barrels. Today's filing to the tribunal reflects Watts' fury at being made scapegoat for the crisis.
Herbert Smith claims that many of the reserves eventually wiped off the proved portfolio were booked before he became head of the group's exploration arm in 1996 or after his promotion to chairman. It adds that the accuracy of each reserves statement was checked by experts within Shell and external auditors KPMG.
In a statement that will astound the City, the lawyer writes: 'The applicant [Watts] is not an expert in the estimation of reserves or US Securities and Exchange Commission (SEC) reporting.'
While conceding that the FSA does not directly name Watts in last month's findings, Herbert Smith claims they relate to matters that identify him and only highlight periods when he was in charge.
Watts is not pursuing similar action against the SEC, which slapped a £66m penalty on Shell.