THE WALL STREET JOURNAL/DOW JONES NEWSWIRES: UK Fincl Watchdog Seeks Tribunal Ruling On Ex-Shell Chmn: “The U.K.'s Financial Services Authority, or FSA, said Monday that it has asked a commercial court to rule on whether the ex-head of Royal Dutch/Shell (RD, SC) was prejudiced by the watchdog's final notice sent to his former company.”: “The internal review, and the subsequent regulatory notices, identified numerous instances where top executives, including Sir Philip, were warned internally of significant reserve-booking problems. The reports also cited severe flaws in Shell's internal reserve-auditing controls.” (ShellNews.net)

DOW JONES NEWSWIRES

Posted October 19, 2004

LONDON -- The U.K.'s Financial Services Authority, or FSA, said Monday that it has asked a commercial court to rule on whether the ex-head of Royal Dutch/Shell (RD, SC) was prejudiced by the watchdog's final notice sent to his former company.

In August, both the FSA and the U.S.'s Securities and Exchange Commission issued notices saying they were levying fines totaling around $150 million on Shell after finding the company misled the market by overstating its tally of oil and natural gas reserves. Ex-chairman Philip Watts stepped down earlier this year after the allegations of the reserves overstatement became public.

The FSA's latest move, published Monday on its Web site, follows Watt's claims Sept. 16 that the FSA had violated his rights and had run a flawed investigation into Shell 's downgrade of its oil reserves.

Watts will now have another 30 days to issue his response to the FSA's move. If approved, a hearing would be likely in early 2005.

Months of published investigative reports by Shell and regulators pin much of the blame for the overstatements on Watts. A decision by the independent tribunal to grant the former chairman a hearing likely wouldn't significantly affect the outcome of the several investigations being pursued by European and American authorities. But if the tribunal determines that at least some of the FSA's published findings were premature or unfounded, it would be a big public-relations victory for the oil man.

An FSA spokesman said Monday that he doesn't know in what way Watts claimed he had been prejudiced.

"We are confident that (Watts wasn't prejudiced) and that the tribunal will agree with us, the FSA said in its release. "This would mean that (it) will have no jurisdiction to consider the other matters which Sir Philip has referred to" the commercial court.

"We have further inquiries which we are pursuing and we have made no determination whether, if at all, any individual is at fault. If and when the need arises, we will ensure that any affected parties are given their full rights," the FSA said.

An FSA spokesman declined to comment on these further inquiries.

In January, Shell disclosed it had greatly overbooked its tally of oil and natural-gas reserves, which oil companies report each year to the SEC and which serve as a crucial indicator for investors. In March, after a preliminary internal review, the company's dual boards ousted Sir Philip and Shell 's former head of exploration and production, Walter van de Vijver.

The internal review, and the subsequent regulatory notices, identified numerous instances where top executives, including Sir Philip, were warned internally of significant reserve-booking problems. The reports also cited severe flaws in Shell's internal reserve-auditing controls.

Company Web site: http://www.shell.com

-By Benoit Faucon, Dow Jones Newswires; 33 1 40 17 17 40; benoit.faucon@dowjones.com