Financial Times: Shell-shocked: “Shell was found to have "announced false or misleading reserves and reserves replacement ratios throughout the period 1998 to 2003"…: “three heads have rolled… other people in key positions during that time remain. They include Jeroen van der Veer… and Sir Mark Moody-Stuart” (ShellNews.net)

By Jane Fuller

Published: August 28 2004 0

Speaking of oil companies, Royal Dutch/Shell endured another pasting from regulators this week.

We already knew it had been fined $120m by the US Securities and Exchange Commission and £17m by the Financial Services Authority for market abuse. But we had not been treated to the full reasons.

Shell was found to have "announced false or misleading reserves and reserves replacement ratios throughout the period 1998 to 2003". While three heads have rolled for covering up or failing to act on this problem, other people in key positions during that time remain. They include Jeroen van der Veer, newly installed as chairman of the committee of managing directors, who has been an MD since 1997; and Sir Mark Moody-Stuart, who preceded the departed Phil Watts as chairman of the CMD and is still a non-executive director.

The fines have drawn a line under the regulators' pursuit of the company, but it is ominous that other inquiries continue, which could involve individual directors. This, along with class-action lawsuits, will perpetuate uncertainty at Shell, which has not admitted or denied the findings.

It attempted to pull off a transformation from within in the late 1990s, trying to match what BP and Exxon achieved by takeovers. It went from an "annus horribilis" in 1998, as oil prices fell towards $10 a barrel, to record profits in 2000. With hindsight, this put massive pressure on an organisation where responsibility and accountability at the top was fragmented. It is yet another reminder that if something looks too good to be true, it is.