Shell is very different from Enron. We were criticized for that some time ago and Im glad we have a absolutely rock-solid way we do business. And, if you read our annual report, you read our footnotes and all the details, everything is in there. Its all completely transparent, as far as Shell is concerned.
Sir Phillip Watts, Group Chairman, Royal Dutch Shell Group
By John Donovan
During a Bloomberg interview in 2002, with the then Group Chairman of Royal Dutch Shell, Sir Phillip Watts, reference was made to the core Royal Dutch Shell business principle of complete transparency.
The following is an extract from his exchange with Guy Collins of Bloomberg on 8 February 2002: –
COLLINS: I want to ask you about Enron and any parallels there. Do you have any off balance sheet liabilities? Do you have trigger mechanisms in place that make you vulnerable to changes in the share price or credit ratings?
WATTS: Shell is very different from Enron. We were criticized for that some time ago and Im glad we have a absolutely rock-solid way we do business. And, if you read our annual report, you read our footnotes and all the details, everything is in there. Its all completely transparent, as far as Shell is concerned.
The reality was very far removed from the pledges of transparency.
On 9 November 2003 Royal Dutch Shell Group Managing Director/Boss of Exploration & Production, van de Vijver, sent the following infamous email to the Group Chairman, Sir Philip Watts complaining that he was: –
becoming sick and tired about lying about the extent of our reserves issues and the downward revisions that need to be done because of far too aggressive/optimistic bookings.
The Shell reserves scandal burst into the public domain in January 2004. Links to a selection of news reports are provided below. Sir Phillip and van de Vijver were forced to resign.
They did not suffer financially. Shell directors are Teflon protected by contracts which stipulate that they are bailed out by Shell shareholder funds even if they cheat shareholders by engaging in outright lies, deception and cover-up, as happened in the reserves scandal. The disgraced Sir Philip Watts ended up with a package worth over $18 million (USD) to help cushion his sudden departure from the company.
THE ROYAL DUTCH SHELL RESERVES FRAUD UNFOLDS IN NEWS HEADLINES
Daily Telegraph: Shell drops bombshell on reserves: 9 January 2004
The Times: How Shell blew a hole in a 100-year reputation: 10 January 2004
The West Australian: Investors howl for Shells blood: 12 January 2004
London Evening Standard: Shell bosses lied to the City: 19 April 2004
(Former executives, led by ex-chairman Sir Philip Watts, admitted they had repeatedly lied to investors about the true level of Shells oil and gas reserves.)
Houston Chronicle: Sick and tired about lying at Shell: 19 April 2004
Bloomberg: Shell Loses AAA Credit Rating: 19 April 2004
Shell bosses fooled the market: 19 April 2004
The Guardian: Shell admits it misled investors: 20 April 2004
The Scotsman: Shell admits reserve lies: 20 April 2004
The Scotsman: Shells reputation left in tatters: 21 April 2004
TheStarOnline: Shell report exposes lies, CFO sacked: 21 April 2004
Daily Telegraph: Shell suffers second cut to credit rating: 21 April 2004
Daily Telegraph: Sacked Shell boss escorted from HQ: 22 April 2004
(an audience with Sir Phillip Watts)
Daily Mail: Shell attacked from all sides: 26 April 2004
(OIL giant Shell urgently needs to embark on a damage limitation offensive with investors before regulatory probes and lawsuits send the crisis spiralling out of control.)
Daily Telegraph: Watts pension pot tops £10m: 28 May 2004
fin24: Shell directors under fire: 20 June 2004
Extract: The report came just a day after Dutch paper NRC Handelsblad quoted a former executive of one of the oil groups subsidiaries as saying half of the companys 400 most senior managers were aware of the problem.
London Evening Standard: Shell has lied for 10 years: 26 June 2004
Sadistic sacking of a Royal Dutch Shell whistleblower: 27 October 2010
Shell Closes Book on 2004 Reserves Scandal as Claims Deadline Passes: 5 November 2010