CNN.com: Justice Department starts Shell probe

March 17, 2004: 7:00 AM EST

Department will look at whether oil firm broke any laws amid reserve overstatement.

NEW YORK (Reuters) - The Justice Department has opened an inquiry into whether Royal Dutch/Shell executives violated any laws by failing to disclose a significant shortfall in proven oil and natural gas reserves in a timely fashion, according to a published report Wednesday.

Citing a person involved in the inquiry, the New York Times quoted Shell spokesman Matt Samuel as saying the company had not been contacted by the Justice Department.

Shell (RD: Research, Estimates) was not immediately available to comment on the report.

The company shocked investors in January when it revealed it had overestimated by 20 percent the amount of oil and gas it was certain it could profitably extract from its fields.

Chairman Philip Watts and oil and gas chief Walter van de Vijver lost their jobs amid the controversy.

The Times reported last week that Watts' replacement Jeroen van der Veer and Chief Financial Officer Judy Boynton knew the company faced huge shortfalls in its proven and natural gas reserves as far back as 2002.

A formal probe by the Securities and Exchange Commission is in full swing, and Shell handed over preliminary findings of its own internal probe last week.

Company officials have said Shell is also holding "discussions" with a number of other regulatory authorities, including Britain's Financial Services Authority (FSA), the Amsterdam Stock Exchange and the Euronext exchange about the overbookings.