From: Associated Press
Published September 17, 2004 12:00 AM

Former Shell Chairman Appeals Censure

The former chairman of Royal Dutch/Shell Group, Sir Philip Watts, petitioned a British regulatory body for permission to challenge some of its findings on Shell's oil reserves scandal.

In a letter submitted to the Financial Services and Markets Tribunal, Watts defended his actions as head of the company.

"I believe that a full and fair examination of all the facts will demonstrate that I have acted properly and in good faith at all times," Watts said in the letter.

Since January, Shell has downgraded its proven reserves by 4.47 billion barrels, or 23 percent.

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 resignations of Watts, head of exploration and production Walter van de Vijver, and chief financial officer Judy Boynton. It also drew the attention of regulators in the United States and Europe.

The Anglo-Dutch company agreed last month to pay $30.2 million to the Financial Services Authority, which found the company guilty of market abuse. The U.S. Securities and Exchange Commission also fined Shell $120 million.

Watts has so far kept silent on the reserves issue. But, through his lawyers, he said the FSA's findings against Shell are flawed, and he distanced himself from the scandal.

The Financial Services Authority's final notice, issued on Aug. 24, said Shell had made false or misleading announcements in relation to its hydrocarbon reserves and reserves replacement ratios between 1998 and 2003, and had made those announcements despite indications and warnings that they were false.

Watts was appointed group managing director in 1997 and chairman in 2001. He resigned in March.

Watts' filing, by the law firm of Crowell & Moring in Washington, D.C., 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 Watts relied on Shell's experts on reserves estimation and on external auditors Pricewaterhouse Coopers and KPMG LLP to ensure the tallies' accuracy.

Watts's lawyer, Joseph Goldstein of Washington D.C. law firm Crowell & Moring, said Watts had no further comment.

The FSA, which has 30 days to respond, declined to comment, as did Shell.

Source: Associated Press

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