The New York Times: 3rd Shell Executive Quits Over Reserves Issue

By HEATHER TIMMONS

Published: April 19, 2004

LONDON, April 19 — The chief financial officer of Royal Dutch/Shell stepped down today in the wake of an investigation into the company's surprise change in oil and gas reserve estimates in January.

The officer, Judy Boynton, who has been at the company since June 2001, is the third top executive to be forced to leave as a result of the investigation.

Her departure comes as the company released a report on an internal probe into why the Anglo-Dutch group had inflated its reserves. It said that some Shell executives had known about the reserves shortfall since 2001, and that the company would be downgrading its reserves once again. The downgrade is its third in three months.

Two other executives — the chairman, Sir Philip Watts, and the head of exploration and production, Walter van de Vijver — were asked to leave by the company's audit committee in March because of the investigation.

Jeroen van der Veer, the company's new chairman, promised action to address Shell's problems and said in a statement, "Despite the difficulties of recent months, Shell is a sound and profitable business."

Ms. Boynton, who previously served as chief financial officer for Polaroid, will remain an employee of Shell's financial group. The company said Tim Morrison had been appointed as acting Group Chief Financial Officer,

Ms. Boynton has come under increasing scrutiny as the Securities and Exchange Commission, the Department of Justice and European regulators investigate the company. Chief financial officers have added responsibility to ensure their company's reported numbers are correct under the Sarbanes Oxley law passed in response to corporate scandals in the United States.

Even though Shell is headquartered outside of the United States, the company trades on the New York Stock Exchange, so it is subject to the new United States rules.

Shell'saudit committee, made up of non-executive directors, hired the law firm Davis Polk and Wardwell to investigate in January. The firm prepared a report of several hundred pages detailing why the reserve change happened. The report has been reviewed by the board over the past four days.

Shell said in January that its proven oil and gas reserves were 3.9 billion barrels, or 20 percent, lower than previously reported. Proven reserves are one of the most important assets for any oil company, and Shell's stock fell 15 percent in the days following the January announcement.

Shell's audit committee, and Mr. van der Veer, are being closely watched by investors and securities lawyers alike, because the company is one of the first major foreign corporations to be investigated under the new United States law. Many Shell investors have been calling for a host of changes at the company since the reserves writedown, including abolishing the separate Dutch and English boards which now head the company's corporate structure.

http://www.nytimes.com/2004/04/19/business/19CND-SHELL.html