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THE WALL STREET JOURNAL: Britain Drops Probe Of Shell Ex-Officials On Overstatements: "In August 2004, the FSA fined Shell 17 million ($30 million), citing market abuse stemming from the overstatements. The SEC settled a fraud investigation with the company after Shell agreed to pay $120 million in penalties. Shell didn't admit or deny wrongdoing. The FSA's Regulatory Decisions Committee, a body that approves regulatory action by the agency, rejected a recommendation from the FSA enforcement staff seeking a 1.25 million fine against Sir Philip and a 750,000 fine against Mr. van de Vijver, according to an internal letter from the RDC.": Thursday 10 November 2005

By CHIP CUMMINS
Staff Reporter of THE WALL STREET JOURNAL
November 10, 2005; Page A10

LONDON -- Britain's financial watchdog dropped its investigation of two former senior executives at Royal Dutch Shell PLC related to the oil giant's overstatement of energy reserves last year.

The Financial Services Authority, or FSA, had been probing for more than a year the actions of various individuals at Shell, including Philip Watts, Shell's former chairman, and Walter van de Vijver, the company's former head of exploration and production. In a statement yesterday, the FSA said those probes "have reached a conclusion, and the FSA will be taking no further action."

The move is a legal win for Sir Philip and Mr. van de Vijver, who were forced out by board members after the disclosure of the overstatement. The Securities and Exchange Commission, which spearheaded a probe into the overstatements last year, and the Justice Department are conducting investigations. The SEC declined to comment. An official for the U.S. attorney's office in Manhattan wasn't available.

Shell said early last year that it had greatly overstated its tally of oil and natural-gas reserves -- the amount of energy the company thinks it can pump someday from the ground. The measure is an important barometer for investors.

An internal report commissioned by Shell directors and issued in April 2004 put the bulk of the blame for the overstatements on Sir Philip and Mr. van de Vijver. The report faulted them for not adequately disclosing the extent of the company's reserve problems. Both men have maintained they acted properly.

In August 2004, the FSA fined Shell 17 million ($30 million), citing market abuse stemming from the overstatements. The SEC settled a fraud investigation with the company after Shell agreed to pay $120 million in penalties. Shell didn't admit or deny wrongdoing. The FSA's Regulatory Decisions Committee, a body that approves regulatory action by the agency, rejected a recommendation from the FSA enforcement staff seeking a 1.25 million fine against Sir Philip and a 750,000 fine against Mr. van de Vijver, according to an internal letter from the RDC.

"Walter knew the allegations were baseless," said John M. Dowd, an attorney with Washington law firm Akin Gump Strauss Hauer & Feld LLP representing Mr. van de Vijver, in an email. In a statement, Sir Philip's attorney, Joseph Goldstein of Mayer, Brown, Rowe & Maw, said the FSA's decision "vindicates the position Sir Philip has maintained throughout: that he acted properly and in good faith at all times."

---- Deborah Solomon and Kara Scannell contributed to this article.

Write to Chip Cummins at chip.cummins@wsj.com

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