London Evening Standard: Watchdog probes Shell scandal
15 March 2004
HE Financial Services Authority* has launched an investigation into the overbooking of oil and gas reserves at Shell, the scandal which has already cost the company the heads of its two top executives.
It has also emerged that Shell is trying to hire former US Securities and Exchange Commission chairman Harvey Pitt as a consultant as the storm clouds continue to gather over the revelations two months ago that its drillable reserves had been overstated by 20% over the past four years.
Admission of the overstating sparked shareholder anger and has cost chairman Sir Philip Watts and oil and gas chief Walter van der Vijver their jobs.
It is understood the Anglo-Dutch group is now facing probes from European regulators. The Securities and Exchange Commission has already launched an investigation and now the FSA, its equivalent Dutch authority and Euronext, which incorporates the Amsterdam Stock Exchange, have all approached Shell.
A spokesman for Shell, now headed by Jeroen van der Veer, said: 'We have been in contact with the FSA in line with our continuing obligations and we will continue to work with them.'
The FSA, like the SEC, has the power to fine companies if they are found guilty of failing properly to disclose information or of misleading investors. The authority declined to comment.
It is understood the FSA probe includes an investigation into when the overstating of reserves was first raised internally. It is thought some executives may have been questioning the policy for years.
That Shell was booking assets as proven or easily realisable in parts of Nigeria and off Australia's western coast - against the norm elsewhere in the industry - shocked analysts when the disclosure was made in January.
Shell shares, which fell by more than 15% after the January announcement, were 1 1/2p weaker today at 371 3/4p.