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Email from John Donovan to Shell CEO, Jeroen van der Veer

Friday 3 November 2006

Dear Mr Van der Veer

As you may be aware, our website www.royaldutchshellplc.com, is one of two  recommended by Fortune Magazine for information about Royal Dutch Shell – the other being www.shell.com

I therefore wondered if you would care to grant me an interview to discuss with you the Sakhalin II project and a number of issues of particular interest to ethical investors, some of which are listed below. 

In the latter connection, I am concerned that the actions of Shell management in practice are not in line with your stated business principles of honesty, integrity and transparency in all of Shell’s dealings. I fear that there is a vast gap between what amounts to empty PR pledges, compared with hard commercial reality.

If Shell monitors traffic on our website, you will already know that we received nearly 1.7 million hits and over a million page views in October. It is important to note that this traffic is not from the general public but from people interested in Shell e.g. your shareholders, employees, contractors, suppliers, NGO’s, energy news media etc. Our “Live Chat” facility is very popular and fills the void left by the closure of the “Tell Shell” Internet Discussion Forum a year ago. I strongly recommend that you read the postings which, unlike “Tell Shell”, are uncensored.

Sakhalin II

I have written to you previously expressing my concern as a Shell shareholder about the uncertainty relating to the cost of the Sakhalin II project. In my email of 27 September 2006, I quoted some of the costs cited at that time by various sources: $20 billion (The Wall Street Journal); $22 billion (Bloomberg); £25 billion (The Observer) and $26 billion in our own ShellNews.net articles (based on information from Shell insiders).

On Sunday 22 October 2006, a new, even higher figure of $28 billion was published by The Observer (story link below). This figure is apparently based on information from an internal report by the Russian government leaked to the newspaper.  I am sure that like me, other Shell shareholders would like to know what the correct figure is.   

The Observer: Shell’s costs on Sakhalin spiralling: $28 bn

At least it appears there is some two way traffic of leaked documents relating to Sakhalin II bearing in mind that we have supplied Shell internal documents to the Russian government via Oleg Mitvol. As you may recall, I also supplied information directly to President Putin last November (see link below). It is therefore possible that our role in passing on news of potentially calamitous design and construction flaws disclosed to us by Shell insiders may have resulted in the Russian reassessment of the Sakhalin II project.

http://shellnews.net/week46/shellnewsputinwarning25november2005.htm

Funds set aside to settle litigation

I note from the quarterly financial report that Shell has set aside $500 million to settle a U.S. class action relating to the reserves fraud. I assume that one of the reasons why Shell is willing to settle is to prevent public disclosure of documents arising from the discovery process.  Senior partners of Bernstein Liebhard & Lifshitz LLP, the New York lead plaintiff attorneys in the relevant class action, consulted with me in a conference call on finding a non U.S. Shell shareholder to represent all non U.S. Shell shareholders. Our website subsequently successfully found, within a deadline set by a US Judge, the gentleman who now legally fulfils that role. Without our assistance, the historic global class action against Shell would almost certainly not have happened.

Documents covering the reserves fraud and a range of other potentially hugely embarrassing issues will need to be disclosed by Shell in the discovery process relating to the defamation action against Dr John Huong by eight Royal Dutch Shell companies. It will cost shareholders a significant sum of money just for lawyers to assemble and catalogue the documents.  Even worse, when made public in open court, the documents about these explosive matters will likely create the biggest PR disaster in corporate history, eclipsing even the McLibel debacle. It therefore seems safe to predict that the defamation action against Dr Huong will never reach trial. I wonder how many millions have been earmarked to settle the extensive litigation involving Shell and Dr Huong.

Cravath Swaine & Moore

I was surprised to read that Wall Street lawyers Cravath Swaine & Moore have been appointed to represent Royal Dutch Shell Plc in the offer to purchase the non Shell owned stock in Shell Canada. It is remarkable to me that this appointment was made despite a U.S. Judge recently imposing sanctions on three of their top lawyers for improper conduct while representing Shell in the Ogoni class action lawsuit. How can the latest appointment be compatible with Shell’s statement of General Business principles pledging honesty and integrity in all of Shell’s dealings? Is this not encouraging improper conduct which degrades the legal profession?

ShellNews.net: Shell attorneys in Ogoni human rights case fined by U.S. Judge for conduct which degrades legal profession

http://royaldutchshellplc.com/2006/10/30/thelawyercom-cravath-scores-key-royal-dutch-shell-role/

Iran

Shell’s activities in Iran are highly controversial and could potentially backfire particularly as far as the American government and American public opinion is concerned, bearing in mind the call for UN sanctions in respect of Iran’s nuclear ambitions.

http://royaldutchshellplc.com/2006/11/01/gulf-times-shell-rak-plan-to-pipe-iran-gas-into-uae/

Darfur region of Sudan

Again Shell is playing with fire with regard to inflaming American public opinion. Cornell University recently announced that its endowment assets would not be invested in any oil companies operating in Sudan and therefore supporting the Sudanese government. “It is the best way to stand up for the people of Darfur by refusing to invest in such companies that, in effect, provide the financial backing to the instigators of genocide,” Cornell President David Skorton said in a statement. Others U.S. institutions are following the same policy.

http://royaldutchshellplc.com/2006/10/31/democratandchroniclecom-university-of-rochester-wont-invest-in-sudan/

If you are willing to grant an interview, I am sure we could have an interesting discussion on some of these matters.  I would be perfectly happy for Shell to tape record the meeting. Shell International General Counsel Richard Wiseman has some experience in this regard. Apparently he feels it appropriate to do so when discussing sensitive matters with journalists involving our activities.

Yours sincerely
John Donovan 
Editor/Co-owner
RoyalDutchShellPlc.com

Cc
Malcolm Brinded, Chief Execution, Shell Exploration & Production
Richard Wiseman, General Counsel, Shell International Petroleum Company Limited

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