London Evening Standard: Shell US probe may lead to charges

Steve Hawkes,

17 March 2004

THE Shell affair could result in criminal charges after it emerged today that the US Justice Department has opened its own inquiry into the overbooking of reserves at the oil and gas giant.

In another huge blow to the Anglo-Dutch group, US justice officials are examining whether Shell executives knew about the crisis long before it was made public in January.

Shell's reputation has plummeted ever since former chairman Sir Philip Watts revealed the group had overstated its drillable reserves by 20%. Watts was ousted a fortnight ago along with exploration chief Walter van de Vijver.

Both the US Securities and Exchange Commission and the Financial Services Authority are carrying out their own probes into the affair.

Peter Hitchens, analyst at Chevreux, said today: 'It's a free for all.'

Last week the New York Times suggested that new chairman Jeroen van der Veer and finance chief Judy Boynton may have known about the reserves issue as long ago as February-2002. It is thought this has forced the US Justice Department's hand.

Shell, which has refused to comment over the past month, said it was not aware of the latest development. A spokesman said: 'To the best of our knowledge, we haven't been contacted by the Justice Department.'

Shell's own internal inquiry is expected to hand its evidence to the SEC within a matter of weeks. City analysts said they doubted criminal charges would result from the Justice Department's investigation.

Hitchens said: 'My impression is that the reserves downgrade was slightly worse than a profit warning. It looks as though Watts booked his way to the top and it's since been about unravelling that.'

Shell releases its 2003 annual report on Friday and it is understood that neither Watts nor van de Vijver will receive a bonus for last year. No details of a severance deal have yet emerged.

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