The Scotsman: Ex-Shell Chairman Challenges Watchdog over Oil Reserves Scandal: “The FSA found Shell guilty of market abuse and the Anglo-Dutch company last month agreed to pay £17 million to the FSA. (ShellNews.net)
By Phil Waller, City Staff, PA News
Posted 17 Sept 04
The former chairman of oil group Royal Dutch/Shell today challenged the City watchdog over its findings on the company’s oil reserves scandal.
In a letter to the Financial Services and Markets Tribunal, Sir Philip Watts sought permission to challenge some of the Financial Services Authority’s (FSA) findings on the reserves overstatement, which has led to Shell downgrading its proven reserves by 23%, or 4.47 billion barrels, since January.
The FSA found Shell guilty of market abuse and the Anglo-Dutch company last month agreed to pay £17 million to the FSA.
The authority’s final notice, issued on August 24, said Shell had made false or misleading announcements relating to its hydrocarbon reserves and reserves replacement ratios between 1998 and 2003.
It said the company had made those announcements despite indications and warnings that they were false.
The United States Securities and Exchange Commission also fined Shell 120 million US dollars (£70 million).
Through his lawyers, Sir Philip said the FSA’s findings against Shell were flawed and distanced himself from the scandal.
Sir Philip said in his letter that he believed “a full and fair examination of all the facts will demonstrate I have acted properly and in good faith at all times”.
Proven reserves are the amount of oil and gas a company expects to commercially pump to the surface.
They are a crucial measure for investors of an oil company’s performance and future value.
The reserves overstatement led to the resignation of Sir Philip, of the group’s head of exploration and production Walter van de Vijver and of chief financial officer Judy Boynton.
Sir Philip was appointed group managing director in 1997 and chairman in 2001. He resigned in March.
His filing, by the law firm of Crowell & Moring in Washington, said he was “not an expert in the estimation of reserves or SEC reporting”.
The filing says the FSA’s final notice failed to acknowledge that Sir Philip relied on Shell’s experts on reserves estimation and on external auditors Pricewaterhouse Coopers and KPMG LLP to ensure the tallies’ accuracy.
Sir Philip’s lawyer, Joseph Goldstein of Washington law firm Crowell & Moring, said his client had no further comment.
The FSA, which has 30 days to respond, declined to comment, as did Shell.
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