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Royal Dutch Shell Another Enron?

Shell is very different from Enron. We were criticized for that some time ago and I’m 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. It’s all completely transparent, as far as Shell is concerned.

Sir Philip 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 Philip 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 I’m 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. It’s 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 Philip 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.

RELATED ARTICLES

Royal Dutch/Shell Another Enron? Assessing the seriousness of Shell’s crisis The Economist 11 March 2004

The fall of Sir Philip Watts: By retired Royal Dutch Shell Executive Paddy Briggs. Now an elected trustee of the Shell Contributory Pension Fund

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