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The Guardian: Shell finance chief awaits her fate

 

Jane Martinson

Monday April 19, 2004

The Guardian

 

The crisis at Shell is likely to claim another victim today after an internal report into its oil and gas reserves adds to the pressure on Judy Boynton, the oil group's finance director, to quit.

 

Ms Boynton's career at the Anglo-Dutch company was said to be "hanging in the balance" last night following completion of its internal audit into how it overstated reserves by 20%, or 3.9bn barrels.

 

In a statement to the stock exchange which is expected to be made today, the group is also likely to mark a radical departure from previous practice when it commits to hiring specialist external auditors to review its oil and gas reserves in the future.

 

The overstating of reserves, which was first reported in January, has prompted a 2bn drop in the company's stock market value as well as the departure of two senior executives.

 

Directors of the company, who met to discuss the internal report at an all-day meeting on Friday, were understood to be divided on whether more executives should stand down following the departure of executive chairman Sir Philip Watts and Walter van de Vijver, head of Shell 's exploration and production division.

 

As well as the uncertainty over Ms Boynton, the position of the company's new chairman, Jeroen van der Veer, and vice-chairman, Malcolm Brinded, was also being ques tioned yesterday. All were in senior positions when the overbooking of reserves took place.

 

A spokesman for Shell refused to comment on reports over the weekend about the internal review. "We never predict future statements," he said.

 

Last month Shell admitted that for the second time this year it had been forced to slash its proven reserves - by 500m barrels, on top of January's 3.9bn barrels.

 

Ms Boynton, who joined the firm three years ago from Polaroid in the US, is understood to have hired American lawyer Samuel Winer to act on her behalf.

 

Mr Winer was formerly a lawyer in the enforcement division of the securities and exchange commission, the US financial regulator which is conducting its own review into Shell's reporting of its reserves.

 

The hiring of a personal lawyer is common during investigations in the US.

 

In the event that Ms Boynton stands down, it is unclear what Shell is contractually obliged to pay her, although reports suggested it could be as much as 1m.

 

Because she is not on either the supervisory or management board, her remuneration is not revealed in Shell's last published accounts.

 

Shell's internal investigation has been carried out by David Polk & Wardwell, one of the leading Wall Street law firms.

 

The report, which was commissioned in January, is understood to have uncovered tension between Sir Philip and Mr van de Vijver, who has publicly defended his position since being ousted.

 

The report also comes amid a welter of shareholder lawsuits and four separate investigations, including the one by the SEC and another by the US justice department that could lead to criminal charges.

 

 

The problems caused by the overstatement, and subsequent reviews, prompted the company to delay its annual meeting until the end of June.

 

http://www.guardian.co.uk/oil/story/0,11319,1194788,00.html

 


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