The Sunday Telegraph: The Shell debacle infects four FTSE company bosses
By Sylvia Pfeifer and Robert Peston (Filed: 21/03/2004)
A quartet of FTSE100 chairmen is being sued in the US in multi-billion dollar court cases stemming from the crisis at Royal Dutch/Shell over the overstatement of its oil reserves.
Sir Mark Moody-Stuart, of the mining giant Anglo American, Paul Skinner, of its rival Rio Tinto, Maarten van den Bergh, of Lloyds TSB, and Jeroen van der Veer, the new chairman of Shell's committee of managing directors, are named in class action suits filed against Shell and present and past executives. Moody-Stuart, Skinner and van den Bergh all took their current posts after careers at the oil giant.
"The fall-out from the Shell debacle is hurting lots of companies," said one of the UK's most respected businessmen. "It's the most extraordinary story of my 40 year career."
Investors who bought into Royal Dutch/Shell between December 3 1999 and January 9 2004 - the period covered by the class actions - have until this Friday to file motions to appoint a lead plaintiff to head the cases.
The suits were filed after Shell stunned the financial world in January by admitting it had overbooked its proven reserves by 25 per cent. Shares in Shell Transport & Trading and Royal Dutch have fallen by around 10 per cent since January 9, wiping £9bn off their market value. US lawyers say that the damages claims will run to billions of dollars.
The class action suits allege that the four chairmen are among a number of Shell executives who deliberately violated accounting rules and guidelines relating to oil and gas reserves which resulted in the overstatement of reserves. The Telegraph contacted all four and their companies for a response to the allegations. However, they all declined to comment.
Peter Seidman - an attorney at Milberg Weiss Bershad Hynes & Lerach, the law firm that filed the first class action suit against Shell in January - said that in the light of Shell's announcement on Thursday of a second reduction in its reserves it was "inevitable that the dates of the class period will be amended to cover that period".
Sir Philip Watts - the former chairman of Shell who was ousted earlier this month - is also named in the suits. Watts has since hired the Washington-based law firm Crowell & Moring to advise him.
The US Securities and Exchange Commission began a formal investigation into the reserves downgrade in February. Probes are also being carried out the Financial Services Authority and by Dutch regulators.
Shell directors have privately conceded that the company's finance director, Judy Boynton, may have to quit if the SEC is critical of the group's financial controls.
Royal Dutch/Shell is under pressure from shareholders to simplify its management structure. The Association of British Insurers will tomorrow host a meeting of investors and two Shell non-executives, Lord Oxburgh and Sir Peter Burt.