Financial Times: Shell directors question internal report
By Carola Hoyos in London
Published: April 12 2004 21:59
Some members of the non-executive boards of Royal Dutch/Shell have raised concerns about an internal report they say puts too much blame for the energy group's reserves scandal on Sir Philip Watts, its former chairman, and too little on remaining executives.
"Some members were very wary of it; the words 'white wash' have been used," said one person close to the group.
An internal audit committee report commissioned by the boards of Royal Dutch and Shell Transport and Trading has blamed Mr Watts and Walter van de Vijver, head of exploration and production, for one of the worst debacles in the company's century-long history.
Both men were forced to resign in March, two months after Shell admitted that 3.9bn barrels of its proved oil and gas reserves had been wrongly booked with the US Securities and Exchange Commission.
Shell faces investigations by the SEC, the US justice department, one regulator in the UK and two in the Netherlands.
The report - on which the board has yet to sign off - is said to have implicated some lower-level executives at Shell, but did not recommend changes to the current leadership.
Jeroen van de Veer, Shell's current chairman, last month admitted he had been aware of inconsistencies in Shell's reserves bookings while he was head of the company's chemicals unit and was a member of the committee of managing directors.
But he said he did not have prior knowledge of the extent of Shell's problems and had left the issue to those in charge of exploration and production.
He said last month: "The underlying question which you always get is did you know about incorrect bookings in SEC returns? The answer is no."
The report acknowledges that Shell's flawed oversight system allowed the problem to continue for as long as eight years. But it said the fact that some Shell employees received bonuses linked to the quantity of reserves booked were not central to the problem. The booking of new reserves had previously constituted 5-15 per cent of the possible annual bonus for certain staff. That element has now been removed for anyone involved in the assurance of reserves.
Additional reporting by Adrian Michaels in New York