New York Times: Ousted Shell Chairman Assails Regulators: “Sir Philip continues to face investigations by British and American regulators and is a defendant in some of the dozen investor lawsuits filed against Shell since its restatement of reserves.” (ShellNews.net)
By HEATHER TIMMONS
Published: September 17, 2004
LONDON, Sept. 16 - Sir Philip Watts, in his first public statement since he was ousted as chairman of the Royal Dutch/Shell Group in March, said on Thursday that British financial regulators had violated his rights in their investigation of the company's restatement of its oil and natural gas reserves.
Denying that he had misled investors, Sir Philip said that Britain's Financial Services Authority, "violated my statutory rights to review and rebut" accusations made in a July 29 order charging Shell with market abuse. Shell paid a fine of £17 million ($30 million), the largest ever levied by British market regulators. At the time, it also agreed to $120 million in fines in a settlement with the United States Securities and Exchange Commission.
The challenge by Sir Philip is the first time that findings by the Financial Services Authority have been directly contested by an executive at a company that was the subject of the investigation, lawyers here said.
Sir Philip's statement was released as his lawyers asked the Financial Services and Markets Tribunal, an independent appeals body in Britain, to review the regulator's actions. The notice was made available by Joseph I. Goldstein, a lawyer for Sir Philip with the firm of Crowell & Moring in Washington. Mr. Goldstein said Sir Philip was not available for an interview and had no comment beyond the statement.
Sir Philip is asking the tribunal to review the investigation and take into consideration evidence he will submit. The tribunal must respond within 28 days. The Financial Services Authority said it was aware of the filing but had no comment.
John B. Wade III, a partner in the law firm of Dorsey & Whitney in New York, said the filing was an unusually proactive approach. Challenging a regulator is "like staring into the eyes of a gorilla," Mr. Wade said, adding, "I don't think I've ever seen anyone take that approach with the S.E.C."
The July order from the British regulators did not name Sir Philip. But he can be "readily identified" by referring to other public sources, according to the notice filed by his lawyers. British law requires the Financial Services Authority to give any third party the right to see evidence and offer a defense in actions where they are identified.
Sir Philip's filing also notes the investigation's unusually short four-month time span, and says it is "fundamentally flawed," in part because it is "based on an investigation that the F.S.A. has yet to complete."
Sir Philip continues to face investigations by British and American regulators and is a defendant in some of the dozen investor lawsuits filed against Shell since its restatement of reserves.
In his statement, Sir Philip also denied that he had waited to address problems in Shell's oil and gas division until years after he knew about them, a theory put forward in a report released by the company in April. "I believe that a full and fair examination of all the facts will demonstrate that I have acted properly and in good faith at all times," he said in the statement.
Shell's oil and gas bookings were "made in accordance with Shell guidelines in effect at the time and were reviewed by Shell's internal and external auditors," according to the notice filed by his lawyers.
KPMG was the auditor for Shell's operations outside the United States for the whole time the company's reserves were restated. "We stand by the quality of our audit work and our audit opinion," said Gavin Houlgate, a spokesman for KPMG here.
Shell, which has been considered a conservative company, was thrown into upheaval in January, after management said it would reduce estimates for its oil and gas reserves by one-fifth, causing the stock price to plummet.
Sir Philip and the company's head of exploration and production were asked to step down in March, and British and American regulators began investigations.
Walter van de Vijver, Shell's former head of exploration and production, who left at the same time as Sir Philip, said a month after his departure that he had been asked to leave "without credible explanation." He has not made any statement since the company settled with British and American regulators.
A spokesman for Shell, Simon Buerk, said, "We are aware of Sir Philip's actions today, but in the light of ongoing investigations we are unable to comment."
http://www.nytimes.com/2004/09/17/business/worldbusiness/17shell.html