Sunday Telegraph (UK): FSA steps up inquiry into Shell reserves fiasco: “The FSA has already fined the oil giant £17m for committing market abuse and breaching the listing rules. But it has also said it is continuing its investigation into "other aspects of this matter".: “In its ruling accompanying the fine, the FSA said Shell's false or misleading announcements of proved reserves were made despite warnings from 2000 to 2003 that its proved reserves as announced to the market were false.” (ShellNews.net) 5 Dec 04
By Sylvia Pfeifer (Filed: 05/12/2004)
The Financial Services Authority, the City regulator, has asked some of Shell's largest institutional shareholders for records of their meetings with Sir Philip Watts, the former chairman of the oil giant who resigned earlier this year.
The unusual move is thought to be part of the FSA's continuing investigation into Shell's shocking admission earlier this year that it had overstated its proven oil and gas reserves by 25 per cent.
Though the FSA has never confirmed that it is investigating individuals, the letter will be seen as an attempt by the regulator to try to establish whether anything that was said during the meetings materially influenced the institutions' investment stance towards Shell's shares.
On the day the overbooking was announced Shell's shares plunged, with its market value dropping by almost £3bn. The FSA has already fined the oil giant £17m for committing market abuse and breaching the listing rules. But it has also said it is continuing its investigation into "other aspects of this matter".
This was widely interpreted as referring to investigations into the conduct of certain Shell executives, although this has never been confirmed. Nevertheless, the Securities and Exchange Commission, the US regulator, which fined Shell $120m (£66m) at the same time, has made it clear it is still investigating the behaviour of key individuals.
It is understood that the FSA has recently written to institutions asking them to hand over their records of any meetings held over a period of two years with three of Shell's most senior executives: Watts, Walter van de Vijver, the company's former head of exploration and production, and Judy Boynton, the former finance director.
"The FSA is looking for contemporaneous records," said one executive close to the situation. "They are asking institutions to hand over records of any meetings." Another executive said: "To my knowledge, this has never happened before."
Unlike their US peers, UK institutions place great emphasis on one-to-one meetings with executives to help them with their investment decisions. Institutions regularly take notes during meetings.
The reserves scandal led to the departures of Watts and van de Vijver, while Boynton has since been moved from her position. Shell also announced in October that it would scrap its historic dual structure and merge its two operating companies, Shell Transport & Trading and Royal Dutch.
In its ruling accompanying the fine, the FSA said Shell's false or misleading announcements of proved reserves were made despite warnings from 2000 to 2003 that its proved reserves as announced to the market were false.
Meanwhile, the FSA is trying to persuade an independent tribunal to throw out an appeal against it by Watts. The former chairman complained to the Financial Services and Markets Tribunal, which hears appeals against FSA decisions, in September that his rights had been violated after the regulator imposed its fine on Shell. Watts claimed that he had been "identified and prejudiced" by the FSA's ruling.