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Shell bosses 'fooled the market'
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"Shell overestimated its figures by four billion barrels"
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Shell executives knowingly hid the company's oil and gas shortfalls as far back as 2001, an independent review has revealed.In its most damning piece of evidence it quotes one of the firm's former executives writing about "lying" and how the firm had "fooled" the market.Following the review, Shell downgraded its reserves for the third time in 2004 and its finance officer resigned.Judy Boynton became the third casualty of the company's reserves crisis.Although she was not herself accused of wrongdoing, her position was said to be untenable.Appointing responsibilityThe Shell scandal first broke back in January when it made its initial announcement that reserves were being downgraded. Despite the difficulties of recent months, Shell is a sound and profitable business
Jeroen van der Veer, ShellLatest Shell shares dataMonday's internal, but independent report firmly placed the blame on the shoulders of former chairman Sir Philip Watts and oil and gas chief Walter van de Vijver, who had both resigned over the earlier reserves' downgrades.The review said that although many executives had been aware of the problem, Sir Philip and Mr van de Vijver were "the most powerful forces in management" and the issue was "particularly within their expertise and experience".At the same time it cleared current members of the Shell board of "material responsibility".Two of the key memos the review unearthed were written by Mr van de Vijver himself.Damning memosIn one he wrote about how investors could not be "fooled" forever, and in the other he said he was "sick and tired about lying about the extent of our reserves issues".Shell has cut its reserves for the third time in as many monthsBut a month later Mr van de Vijver told staff to destroy a document outlining part of the reserves shortfall, because it was "dynamite".And while Mr van de Vijver last week issued a statement saying he had alerted the company to the reserve problem back in 2001, the report said that he had pushed it as a "serious and immediate business problem" rather than "a regulatory and disclosure failing".Shell's latest downfall means that its oil and gas reserves for 2002 are now a combined 4.35 billion barrels lower than previously thought.It also cut its reserves for last year by 500 million barrels.Wanting closureThe overall impact of the moves would be just over $100m per annum (£55.4m), it said.The key task of management will be to rebuild investor confidenceShell chairman Jeroen van der Veer said he hoped the report would bring the matter to an end."The [report and review] draws a line under the uncertainties that have surrounded the status of our reserves," he said."Despite the difficulties of recent months, Shell is a sound and profitable business."He added that new controls had been put in place that would be "rigorously enforced" and "subject to greater scrutiny" internally.The company's shares ended Monday trading in London down 0.76% to 389.5p, after being much lower in earlier trading.Scandal continues"When you have these scandals, one of the things the market wants to see is a house cleaning," said Lyle Brinker, from US oil and gas industry consultancy John Herold.Despite Mr van der Veer saying he hoped to draw a line under the matter, the saga is still not at an end.Shell is under investigation in the US by both the Securities & Exchange Commission and the Justice Department.The UK's Financial Services Authority and the Netherlands' market regulator AFM have also launched inquiries into the scandal.Shareholders, meanwhile, have brought a number of class action lawsuits in the US.
The TRUTH will set you FREE.
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