Houston Chronicle: Former SEC leader Levitt notes irony in Shell's troubles
Associated Press
May 29, 2004, 7:03PM
Posted 30 May 04
Sometimes a selection of keynote speakers for a high-profile conference is all luck.
Former Securities and Exchange Commission Chairman Arthur Levitt kicked off accounting firm KPMG's annual energy conference last week in Houston with a message similar to the event's 2003 keynote speaker: Restoration of investor trust and attention to integrity are key in the post-Enron corporate world.
Then Levitt noted the 2003 speaker was Philip Watts, former chairman of Royal Dutch/Shell Group, who resigned under fire last March in the wake of shareholder anger over the company's overstatement of oil and gas reserves. On Monday the company downgraded the size of its proven oil and gas reserves for the fourth time this year as the oil giant continued to struggle with the scandal.
Such downgrades garner attention because proven reserves are closely watched estimates of a company's future profit potential.
"What happened at Shell should not come as a great surprise," Levitt said. "The trust that Sir Philip told you was so important last year has been undermined."
During Levitt's 1993-2001 tenure as SEC chairman, the agency tried to get Congress to investigate potential conflicts of interest in the accounting industry. Faced with daunting opposition from the big auditors, Levitt ultimately abandoned the fight.
Then, about seven months after Enron went bankrupt, its auditor, former Big Five firm Arthur Andersen, was convicted of obstruction of justice for destroying Enron-related documents in late 2001 as regulators were circling.
Levitt last week praised new accounting and disclosure rules adopted under the Sarbanes-Oxley Act in 2002 intended in part to prevent such client-auditor coziness, and noted that companies serious about earning and keeping public trust must embrace the act's requirements without complaining.
"Restoring trust can't be accomplished with legislation," he said. "It's about constant vigilance. It requires a change in attitude."
http://www.chron.com/cs/CDA/ssistory.mpl/business/2598852