The New York Times: Ex-Shell Executive Says He Questioned Reserves

By JEFF GERTH and STEPHEN LABATON

Published: April 14, 2004

WASHINGTON, April 13 - A former top executive of the Royal Dutch/Shell Group said on Tuesday that he was asked to resign in March "without credible explanation," adding that two years earlier he had promptly advised senior executives of problems with Shell's estimates of proven oil reserves.

In his first public statement since his departure from the company last month, Walter van de Vijver, the former head of exploration and production for Shell, said that after assuming his position in mid-2001 he discovered that "some prior bookings" of oil reserves "needed to be re-evaluated for compliance purposes." He continued: "I communicated my findings to the committee of managing directors without delay"; the company's top executives are on the committee.

Mr. van de Vijver's remarks, in a written statement he issued on Tuesday, do not provide details of his communications. But internal Shell documents show that he sent a memorandum in February 2002 to the managing directors' panel, saying that one billion barrels of reserves "are no longer fully aligned" with Securities and Exchange Commission rules. The memorandum also said that an additional 1.3 billion barrels of reserves were at risk.

It was not until January of this year that Shell disclosed that it was downgrading its estimate of proven reserves, a widely followed indicator, by 20 percent, or 3.9 billion barrels, a move that stunned investors. The disclosure led to investigations by regulatory authorities in the United States and Europe, as well as a criminal inquiry by the Justice Department.

Mr. van de Vijver's written statement on Tuesday came soon before the company is expected to release the results of an internal investigation into its disclosures of its reserves. On Monday, The Wall Street Journal, citing unidentified people, said the report largely faults Mr. van de Vijver and Sir Philip Watts, Shell's former chairman, for the overbooking of reserves. The two executives left Shell after the boards of the company, which has a dual British-Dutch structure, said it had lost confidence in them.

Mr. van de Vijver complained about statements in the press from the company or people close to the internal inquiry. "Many statements made in the press," he said, "are misleading to the extent that they portray my role inaccurately or incompletely."

Sir Philip has not spoken or issued a statement since his departure. His lawyer did not return a phone call today.

A Shell spokesman declined to comment on the internal inquiry or Mr. van de Vijver's statement.

Mr. van de Vijver also said that he "regularly communicated" to the senior executive committee "regarding the nature and quantity of the potentially noncompliant reserves" and that he also "spoke with others in the company" about the health of Shell's exploration business and "reserve matters in general."

In July 2002, Mr. van de Vijver sent a memorandum detailing Shell's reserves problems to the managing directors committee, which included Jeroen van der Veer, Shell's current chairman. The July memorandum also noted that it was sent to Judy Boynton, who joined the committee last year and is Shell's chief financial officer.

Mr. van de Vijver said "I led the charge" to promptly disclose the reserves' reclassification as their magnitude "became apparent in late 2003." After 24 years with Shell, Mr. van de Vijver said, he is "saddened" after being asked to resign on March 3.

http://www.nytimes.com/2004/04/14/business/14shell.html