Financial Times: Shell chief 'was told in advance' of problems
By FT reporters
Published: June 28 2004 12:25 | Last Updated: June 28 2004 13:25
The most senior non-executive director of Royal Dutch Petroleum, the larger arm of Royal Dutch/Shell, knew of an "imminent problem" with the booking of oil reserves two months before the company disclosed it publicly, it emerged on Tuesday.
The revelation, made at the annual meeting of Royal Dutch in the Netherlands by Aad Jacobs, chairman of the supervisory board, contrasted with comments made in London by Lord Oxburgh, chairman of Shell Transport & Trading.
Mr Jacobs said he became aware of the issue at a November 2003 lunch with Walter van der Vijver, then head of exploration and production. "[Mr van der Vijver] told me there was an imminent problem about the oil reserves. I heard nothing else about that until January."
But, responding to investor criticism of the non-executive directors in the weeks before the first reserves downgrade on January 9, Lord Oxburgh denied accusations of a "cover-up".
He insisted: "The first time non-executive directors were aware of the problem was early January." He blamed some former executives for being "economical with the truth", but added: "It's very difficult to see how the reserves issue could have come to light sooner." Meanwhile, Royal Dutch suffered an unprecedented snub when 40 per cent of shares were voted against a resolution to approve the performance of the directors for 2003.
The company fleshed out details of its governance review but resisted demands for greater disclosure. Lord Oxburgh said the review was looking at "some extreme measures". Mr Jacobs said: "Some [investor] demands will be met and some we will say 'we won't do this'. We know what we have to do."
Mr Jacobs' admission of the reserves "problem" confirms suspicions that non-executive directors knew about the issue before the public disclosure.
Jeroen van der Veer, group chairman of Royal Dutch/Shell, later told the FT that Mr Jacobs had advised Mr van der Vijver to discuss the "problem" with his colleagues and his boss, Sir Philip Watts. Sir Philip, former group chairman, left in March "by mutual consent".
Mr van der Veer dismissed as "nonsense" that the November conversation between Mr Jacobs and Mr van der Vijver implied a governance failing.
Reports by Sundeep Tucker and James Boxell in London, and Ian Bickerton and Raphael Minder in Scheveningen