Royal Dutch Shell Plc  .com Rotating Header Image

Is Shell Executive Director Matthias Bichsel Trustworthy?

Matthias Bichsel, Executive Director, Projects & Technology, Royal Dutch Shell Plc

Irrefutable evidence proves that Matthias Bichsel knew years before Shell investors that Shell had a major problem over its proven reserves bookings, which were not in compliance with the U.S. Securities and Exchange Commission rules. Like his colleague Simon Henry, the current CFO of Royal Dutch Shell Plc, he participated in the cover-up by not blowing the whistle, thus protecting his own ambitions inside Shell.  The evidence suggests he may have had a role in the reserves conjuring process and also has a memory problem. Lets hope it has not deteriorated further. He is not a man who can be trusted to look after the best interests of investors.

By John Donovan

Matthias Bichsel, a Swiss citizen, is currently an executive director of Royal Dutch Shell Plc. He joined Shell in 1980, rose through the ranks and was appointed as Director of Projects & Technology on 1 July 2009.

His current responsibilities include:

  • Project Execution
  • Global Technical Expertise
  • Research and Development
  • Third-Party Services
  • Safety and Environment
  • Contracting & Procurement
  • Technical IT

Can shareholders place their trust in Matthias Bichsel to protect their interests? The answer is absolutely NO, not if his track record is any guide.

Since Mr. Bichsel is the executive director responsible for safety and environmental issues, he may well have questions to answer about Shell’s Arctic debacle, with U.S. federal prosecutors currently being asked by the Coast Guard authorities to take legal action over safety and environmental violations committed by Shell and/or its contractor, Noble Corporation

However, this article deals with the involvement of Matthias Bichsel in one of the biggest scandals to engulf Shell in several decades. I refer to the securities fraud relating to claimed proven hydrocarbon reserves, which brought about the untimely demise of the Royal Dutch Shell Anglo-Dutch partnership that had lasted for over a 100 years. All that remains is a Dutch company. Any pretense to the contrary was ended by the recent announcement that the Royal Dutch Shell Plc AGM will be held solely in Holland. There is what has been described as a “Swiss mafia” element in the Executive Committee team – the Chief Executive, Peter Voser, is also a Swiss citizen.

This article is based on authentic Shell internal communications and documents.

Irrefutable evidence proves that Matthias Bichsel knew years before Shell investors that Shell had a major problem over its proven reserves bookings, which were not in compliance with the U.S. Securities and Exchange Commission rules. Like his colleague Simon Henry, the current CFO of Royal Dutch Shell Plc, he participated in the cover-up by not blowing the whistle, thus protecting his own ambitions inside Shell. The evidence suggests he may have had a role in the reserves conjuring process and also has a memory problem. Lets hope it has not deteriorated further. He is not a man who can be trusted to look after the best interests of investors.

THE EVIDENCE

On 18 September 2000, Matthias Bichsel was on the “cc” list of an email sent by his boss, Heinz Rothermund (another Swiss citizen) containing the following instruction:

One of the important elements in the EP scorecard is reserves replacement. It is essential that we should come up with imaginative ways of booking those reserves we have.

This message evidently made an impression on Matthias Bichsel because an email he sent to his colleagues in November 2000 contained the following pledge:

I can assure you that I am personally pushing and cajoling my staff to get the most out of what is possible. Contrary to what you have heard, we are not “covering our back side” and are “overly conservative” but are exploring every avenue to trying to increase reserves bookings.

He promised: “I do not believe that we are missing a trick here.”

It was plain from the content of the relevant email string that reserves booking was already a very sensitive issue on the minds of Shell EP executives, including Matthias Bichsel. The correspondence shows that proved reserves booking were incorrect and not in accordance with U.S. Securities and Exchange Commission rules. The same emails also reveal a degree of bitchiness between Rothermund and Bichsel over the quality of reserves engineering. Bichel informed colleagues in one email that he had received a reprimand from Heinz that he did not feel he deserved.

This is the relevant November 2000 email string

By February 2002, Shell’s reserves problem had grown even further in significance.

On 20 February 2002, Shell EP executive Lorin Brass, sent an email with an attachment to ten senior Shell executives, including Matthias Bichsel, Walter van de Vijver and Linda Cook.

It concerned “our Reserves situation”.

The attachment was headed: “Note For Information CMD 11th February 2002 EP Hydrocarbon Resources Update 1/2002”

The following is an extract from the four page note provided to the “CMD” (Committee of Group Managing Directors)

Exposures Securities and Exchange Commission (SEC) Alignment

Recently the SEC issued clarifications that make it apparent that the Group guidelines for booking Proved Reserves are no longer fully aligned with the SEC rules. This may expose some 1,000 min boe of legacy reserves bookings (e.g. Gorgon, Ormen, Lange, Angola and Waddenzee) where potential environmental, political or commercial ‘showstoppers’ exist.

The content could not have been plainer and provides further proof that Matthias Bichsel and the others named in the  communication knew years before investors were informed, that Shell proven reserves bookings were not in accordance with the rules of the U.S. Securities and Exchange Commission.

On 26 September 2002, a secretary sent, on behalf of Walter van de Vijver, emails and an attachment (containing slides) to Matthias Bichsel and other listed high level Shell executives.

Extract

Please note these slides are strictly confidential and therefore, not meant for further distribution.

One slide contained the heading:

“The EP Dilemma: Caught in the box?”

Screen Shot 2013-02-26 at 15.12.52

 

The minutes of an EP EXCOM (Executive Committee) meeting held on 11 November 2002, attended by Walter van de Vijver and Matthias Bichsel and several other high level Shell EP executives contained a warning under item 2: “Hydrocarbon Reserves Outlook”:

“Reserves issues in Nigeria continued to be a matter of concern. Brian Ward noted certain issues raised in the recent reserves audit of SNEPCo.”

THE MOMENT WHEN IT BECAME CLEAR THE S*** WAS ABOUT TO HIT THE FAN

On 2 December 2003 Frank Coopman, the then Chief Financial Officer of Shell EP sent an email and attachment to four senior colleagues, including Matthias Bichsel.

Mr Coopman said in a reference to Walter van de Vijver, the Chief Executive of Shell EP: “My functional boss is not happy.”  We know what he was really saying.

The attachment had the heading: Script for Walter on the proved reserves position

It contained some dynamite facts and related Legal Consequences and Required Steps.”

It listed reserves bookings which had been overstated, were not in compliance with SEC guidelines and indicated that information already filed with the SEC was materially wrong.

It also warned that failure to disclose the situation to investors would constitute a violation of US securities law and increase exposure to liability within and outside the US. It further stated that disclosure could not await the next Form 20-F 2003 appearing in April 2004.

Matthias Bichsel 13 page Declaration 12 June 2007

Some Extracts

From August 1999 through December 2001, I was employed as the Director of Shell Deepwater Services (“SDS”) in Houston, Texas. Prom January 2002 through March 2006, I acted as Exploration Director and was employed as such by SIEP, B.V., in The Hague from March 1, 2002. I also served as a member of the Executive Committee (“ExCom”) of the Group’s Exploration and Production (“E&P”) business or its successor body, now called EP Leadership Team (“EPLT”). From December 2003 onwards, I also served as a member of the E&P Reserves Committee.

In this email, I meant to encourage my staff at SDS to do its best to think outside the box and explore the entire universe of technological development concepts, so SDAN would have many development solutions, rather than only one or two, from which to select.

In paragraph three of this email, I stated that we “are exploring every avenue to trying to increase reserves bookings.”

On October 31, 2006, I stated that, when I wrote the last paragraph of this email and used the phrase “leave no stone unturned,” I meant that I wanted to make sure that SDS’ s work favored development scenarios that emphasized a maturation of the project’s reserves rather than scenarios that emphasized capex or production cost savings.

By clicking on the link, you can read in his own words, explanations provided by Matthias Bichsel for pushing and cajoling his staff in relation to being imaginative over reserves bookings and leaving no stone unturned to this end.

INDEX OF COURT DOCUMENTS RELATING TO MATTHIAS BICHSEL WHERE ALL OF THE ABOVE CITED INFORMATION (AND MUCH MORE) CAN BE READ IN CONTEXT

You will see from his 13 page deposition that Matthias Bichsel has a memory problem in regard to some of the emails in which he was a participant.

Exhibit 49 (200 pages) Bichsel Deposition: Transcript of Videotaped Deposition of MATTHIAS BICHSEL, Executive Vice President Technical, Shell Exploration and Production B.V.: taken in New York, New York October 31, 2006

Exhibit 52 Declaration of Bichsel Matthias (13 pages)

Shell EP November 2000 Internal email correspondence involving Matthias Bichsel, Martijn Minderhoud, Heinz Rothermund and many others: Subject: West Africa Reserves 2000: Every page marked “CONFIDENTIAL”:

Exhibit 113: October 2000 Shell SIEP internal email involving Grigore Simon, Robert Inglis, Susan Lovelock, Heinz Rothermund and others: “Bichsel under pressure”: Every page marked “CONFIDENTIAL” :

Exhibit 169: Confidential EP EXCOM Minutes of meeting in The Hague: EP Excom Members Present: Walter van de Vijver, Matthias Bichsel, Lorin Brass, Linda Cook, Frank Coopman, John Darley, Carol Dubnicki, Dominique Gardy, Din Megat, Bob Sprague and Brian Ward. Curtis Frasier attended as Secretary. Wide ranging discussion on 11 November 2002 covering Nigeria and many other EP matters.

Exhibit 50 (75 pages)

Exhibit 51 Confidential Production forecasts for Shell, ExxonMobil, TotalFinaElf, Chevron and Texaco (47 pages)

Exhibit 170: 5 October 2001: Confidential “Deepwater Steering Council Meeting” held 8-9 Houston Time/3-4 Hague Time: Attendees: The Hague: Lorin Brass, Heinz Rothermund and John Darley: Houston: Matthias Bichsel, Lori Priess: Fran Lohr via telephone

Comments are closed.

%d bloggers like this: