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Toronto Star: Oil giant’s brass beg for pardon and time

Toronto Star: Oil giant’s brass beg for pardon and time: Contrition expressed at Royal Dutch/Shell: Reserve-booking fiasco stays at centre stage

Jun. 29, 2004.

LONDON—Royal Dutch/Shell Group’s top brass, chastened by this year’s reserves-booking fiasco, have begged shareholders for forgiveness and time to revamp the Anglo-Dutch oil giant.

At twin annual general meetings yesterday in The Hague and London, board members of the parent companies, Royal Dutch Petroleum Co. and Shell Transport & Trading Co., were pressed by both the usual coterie of individual shareholders and an uncommonly large number of institutional investors who have been chafing for structural change and greater openness from the oil giant.

Contrition was the order of the day in the London meeting:

“Let me start by offering a sincere apology for the failures that led to the significant restatement of the group’s proved reserves earlier this year,” said Ron Oxburgh, non-executive chairman of Shell T&T.

Oxburgh later insisted, again, that non-executive members of the board didn’t know anything about problems with booking reserves until early January of this year. “The boards have asked themselves what could we have done sooner,” Oxburgh said.

The answer was, not much, considering “some of the executive directors were economic with what they passed on to the board,” Oxburgh said in what appeared to be a thinly veiled reference to ineffectual dialogue from ousted chairman Philip Watts and former head of exploration and production Walter van de Vijver.

In The Hague, however, Shell supervisory board chairman Aad Jacobs revealed he had a lunch meeting with van de Vijver in November, 2003, where van de Vijver referred to problems with the booking of proved oil reserves. Jacobs didn’t specify what the meeting was called for.

Questions about who knew what, and when, have swirled around Shell’s top management since the first of four downgrades in proved reserves was disclosed in January. The ensuing debacle cost Watts, van de Vijver and chief financial officer Judy Boynton their jobs.

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