Daily Telegraph: FSA says that reserves report targeted corporate personality, not individuals: FSA dismisses claim as nonsense: Tuesday 26 July 2005

By Rosie Murray-West, City Correspondent (Filed: 26/07/2005)

The Financial Services Authority yesterday dismissed former Shell boss Sir Philip Watts' case against it as "nonsense", in a day-long tribunal hearing.

Sir Philip, who was present at the Financial Services and Markets Tribunal hearing yesterday, is complaining about the publication of a FSA report into the overstatement of Shell's reserves. Though Shell agreed to a £17m fine for market abuse and breaches of the listing rules, without admitting liability, Sir Philip claims he was identified and prejudiced by the report, though not referred to by name.

Yesterday, David Pannick QC, acting for Sir Philip, said the publication of the report had led to extensive media coverage, much of which included reference to Sir Philip, even though he was given no opportunity to refute the allegations as an investigation into his own conduct, by the FSA, was still ongoing.

Mr Pannick made particular reference to a Daily Telegraph article written four days after the publication of the report, which stated: "Neither the SEC (Securities and Exchange Commission) nor the FSA named individuals in their reports, which explained the reasons for their respective $120m and £17m fines against Shell, but they hardly needed to."

He said this coverage proved that Sir Philip had been identified by the report and was therefore entitled to a copy of it before it was published and a chance to reply.

He argued that the FSA's failure to provide his client with a copy of the decision notice was unjust, because Sir Philip was clearly identified in the report. He was chairman of the board during much of the period referred to in the investigation, and had signed reports that were directly cited in the FSA's report. Under the government statutes governing the FSA, it must give any individual who is identified or prejudiced by a report a copy of its findings.

He suggested the FSA could have either waited to publish its findings on Shell until it had finished investigating Sir Philip or it could have published a disclaimer with the report saying it was not about the conduct of Sir Philip or any other individual, merely about the conduct of Shell.

In response, Lord Grabiner, for the FSA, said that, given the size of the company and the seriousness of the allegations, it was "not justifiable" for the FSA to have waited any longer before it published its findings on Shell.

He also said the report did not identify Sir Philip Watts or prejudice him in any sense. All the criticisms in the report were made at the level of corporate personality, not of individuals singularly or collectively. Any identification came from outside sources such as press reports.

He added that, if Sir Philip's interpretation of what constituted identification and prejudice in a report were correct, the authority would be faced with "a potentially massive and administratively impracticable task in considering whether to serve warning notices and decision notices on third parties."

Mr Pannick replied that Parliament had placed justice to the individual above convenience to the authority. He also suggested Sir Philip disagreed with the findings of the Shell Report, which said the oil giant had failed to correct false and misleading proved reserves information, despite warnings, and should have been allowed to reply. The case is now being considered by the tribunal, headed by William Blair QC.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/07/26/cnshell26.xml

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