BBC News: Shell review slammed over secrecy

16 June 04

Shell's reserves are much less than originally stated

Two of Shell's key shareholders have criticised the oil giant for the secrecy surrounding an internal review into the way the company is run.

California pension fund Calpers and US investors Knight Vinke said in a letter to the Financial Times that Shell should release details of the review.

Shell faces shareholder hostility after four reserve downgrades this year which led several top executives to quit.

Amid the debacle, Shell pledged to investigate its governing structures.

'Lost opportunity'

But Eric Knight from Knight Vinke and Calpers' Ted White said for the process to be "credible", Shell needed to disclose the following:

the specific issues to be considered in the examination and whether they would include the need for shareholder involvement in board succession

who will be conducting the investigation and how that body's independence will be assured

when the body's findings will be reported to the group's board and to shareholders

They said they had expected this information to be given before the group's annual general meetings on 28 June.

"We believe there is a significant opportunity for the group to repair some of the confidence that has been lost by conducting this process in a manner that embraces openness and candour," the letter continued.

It said a proportion of the blame for the reserves crisis can be attributed to the "the prevailing governance culture of the group and the absence of orthodox board structures".

Shell said that it was "sensitive and aware" of the criticisms Knight Vinke and Calpers have made in the letter to the Financial Times.

"We have been in dialogue with shareholders... we will make an announcement as soon as we are able," a spokesman told BBC News Online.

In March, Shell had promised that investors and advisory bodies would be involved in the review process.

http://news.bbc.co.uk/2/hi/business/3811315.stm