Financial Times: FSA and former Shell chief seek tribunal ruling: “While Shell paid the £17m fine, the FSA has always made clear that inquiries into executives remained open.”: “The FSA denies that the final ruling on Shell identified Sir Philip or anyone else, and insists that individuals will be given their “full rights” if it decides to bring cases against specific Shell directors.” (ShellNews.net)
By Krishna Guha in London
Posted 19 October 2004
The legal battle between Sir Philip Watts, former chairman of Royal Dutch/Shell, and the Financial Services Authority, the UK's chief regulator, took a fresh turn on Monday when both sides agreed to ask an independent tribunal to make an early ruling on a critical issue that could decide the outcome of the case.
The two parties asked the financial services and markets tribunal, an independent review body which is part of the UK courts system, to decide whether Sir Philip was “identified and prejudiced” by the FSA when it published a formal notice fining Shell a record £17m ($30.6m) for misleading the market over the size of its oil reserves.
This followed Shell's admission in January that it had overstated its proven reserves by 20 per cent.
The FSA's response was welcomed by many as representing a new “get tough” approach from the regulator. But critics suggested the regulator had been too quick to reach its conclusions.
Sir Philip, who resigned under fire with two other senior executives, claims the statement on Shell effectively identified him personally, without first allowing him to review the evidence and put his side of the case.
If true, this would be a violation of his statutory rights as a “third party” in an FSA investigation. While Shell paid the £17m fine, the FSA has always made clear that inquiries into executives remained open.
The former Shell chairman also argues that the FSA's findings were “flawed” because they did not give due weight to internal and external audits, and failed to acknowledge that judgment of reserves was necessarily subjective.
His appeal is highly unusual, since very few high-profile FSA judgments are challenged. The FSA denies that the final ruling on Shell identified Sir Philip or anyone else, and insists that individuals will be given their “full rights” if it decides to bring cases against specific Shell directors.
The regulator said yesterday: “We are confident he was not [identified] and the tribunal will agree with us.”
The FSA claimed that if the appeals tribunal ruled in its favour on the identification issue, Sir Philip's case would collapse. Sir Philip did not comment.