The
Scotsman:
US watchdog launches full Shell inquiry
BY JAMES DOW
Fri 20 Feb 2004
SHELL’S hopes that
it had shut the door on the outcry following its reserves re-statement in
January were blown apart yesterday after Wall Street regulators revealed they
are launching a formal investigation into the shock downgrade.About 10 per cent
was wiped off Shell’s share price in a matter of minutes last month after the
Anglo-Dutch energy giant admitted it had been overstating its proven oil and gas
reserves by 3.9 billion barrels, or 20 per cent of its global supplies.
Institutional
investors were then left fuming when Shell chairman Philip Watts subsequently
failed to make himself available to explain the misjudgement. And the company
was unable to provide the full background to how the error occurred.
At its results
announcement on 5 February, Shell attempted to deflect a barrage of criticism
over the debacle. But investors, who have questioned Watts’ future, said their
questions remained unanswered. Management at the company have since refused to
respond to further investigation.
However, the US
Securities and Exchange Commission revealed yesterday that its preliminary
investigations into the affair have prompted it to begin a formal inquiry.
In a brief
statement to the stock market, Shell said its legal representatives had been
contacted by the SEC, and told the regulator’s enforcement division wants to
extend its informal queries.
"Shell will
continue to co-operate fully with the SEC’s investigation," a spokesman for the
company said. He stressed the inquiry was not a criminal investigation.
Analysts
remained sanguine about the implications of the investigation. Oil expert Tony
Alves at Investec Securities said: "It’s not unexpected because the initial
informal review would probably have raised further questions.
"I would say
it’s 99.5 per cent a reputational issue."
The shares
closed up 2p, or 0.5 per cent, at 352.5p.
SHELL has
restarted gas production at its Brent Charlie platform in the North Sea, which
closed last September after a fatal accident on the nearby Brent Brave complex.
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