The Miami Herald: Further Resignations Expected at Shell

By Ian Watson, Sunday Business, London Knight Ridder/Tribune Business News

Posted on Wed, Mar. 17, 2004

More resignations are expected shortly at Shell after the recent sacking of its chairman, Sir Philip Watts, and Walter van de Vijver, the group's head of exploration and production.

They are being demanded by the directors of both Shell companies -- Shell Transport & Trading and Royal Dutch Petroleum -- as a result of leaked internal memos suggesting several senior executives knew about the massive shortfall in the group's oil reserves long before it was officially revealed to the board last January. According to an insider, the group's chief financial officer Judy Boynton is losing support. One memo suggested that some executives were discussing the shortfall in proven reserves almost two years ago.

The pressure to take action is increasing as the US Securities and Exchange Commission (SEC) continue to investigate the affair. If executives had withheld price-sensitive information of this magnitude -- the downgrading of 4 million barrels of previously proven oil and gas reserves equivalent to about 20 percent of its total reserves -- a false market would have been created in Shell's shares on Wall Street. Another aspect of the SEC probe is to establish what remedial action the directors are taking. The directors are also concerned over the possibility that the crisis could have on Shell's credit rating. One agency, Fitch, has already revised it downward from stable to negative.

The overstating of reserves by such a significant amount has put the company in breach of standards required by the SEC. Some leading UK shareholders are pressing to have an outside candidate appointed as chairman of Shell Transport & Trading.

http://www.miami.com/mld/miamiherald/business/national/8212472.htm