Royal Dutch Shell Group .com Shell reserves scandal may aid Ogoni case


UK: April 21, 2004


LONDON - A lawyer seeking damages from Royal Dutch/Shell over its human rights' record in Nigeria says the unfolding scandal surrounding the oil giant's overbooked reserves may help his clients' case.


Carey D'Avino, of U.S. law firm Berger & Montague, questioned former Shell Chairman Phil Watts for two days last week and said Watts' aggressive approach was at the heart of both issues. Watts was ousted in March for his role in the over-optimistic reserves bookings.

"The tie-in is his management style, his no-holds-barred, get things done and then spin it to the press approach," D'Avino said.


Watts' testimony, part of a class-action suit that accuses Shell of supporting military operations by Nigeria's former government against Ogoniland separatists in the Niger River delta in the early 1990s.


D'Avino declined to disclose the contents of Watts' testimony, which was taken privately under oath in London.


On Monday, Shell released the findings of an independent report it commissioned in the wake of the revelation this year that it had overbooked proven reserves by over 20 percent.


The report said Watts, having overseen over-optimistic bookings from 1997 to 2001 as head of exploration and production (EP), covered them up after he became chairman in the apparent hope new finds and rising output would eventually justify them.


Watts' successor as head of EP, Walter van der Vijver, was quoted in the report saying he had come up against a brick wall when attempting to address the overbooking situation.


"My attempts... were met with resistance," he said. "The atmosphere between myself and the chairman became gradually more tense as I identified issues in EP".


The scandal broke in January when Shell came clean on the overbookings, about a third of which were made in Nigeria.


The news hit Shell's reputation and its share price, prompting a series of investigations in the U.S. and Europe, including one by the U.S. Department of Justice.




D'Avino's class action was filed back in November 2002 on behalf of 15 Nigerian plaintiffs who claim to be victims of human rights violations. Shell is the defendant, but Watts a central character.


The ousted chairman was the senior Shell executive in Nigeria from 1991, throughout the early days of its controversial involvement in Ogoniland.


Militants who accused Shell of propping up Nigeria's military rulers and of directly helping its security forces forced Shell to stop production there in 1993.


The public relations crisis came to a head in 1995, when Shell was linked by international campaigners to the military government's execution of author and activist Ken Saro-Wiwa.


By this time, Watts was Corporate Director for Planning, Environment and External Affairs and oversaw a team known as "crisis group". The group was charged with presenting Shell's point of view on Nigeria, and later on an environmentally controversial plan to dump the Brent Spar oil platform in the North Sea.


Watts has long been seen as tough and single-minded. "This guy sets a target and expects to hit it, he doesn't like excuses," one industry insider said in 2000 after he was named chairman.


D'Avino expects his case to come to court around the end of this year, unless it is thrown out by summary judgements or Shell settles with the Nigerian plaintiffs.


"The new management may find this a proper time to clean up the rest of the Watts legacy," he said.


A Shell spokesman said: "The allegations are without foundation, and should the case come to court we are confident that the court will find that to be the case"


Lawyers acting for Watts declined to comment.


Story by Andrew Callus  




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