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The Scotsman: Shell tight-lipped on claim

The Scotsman: Shell tight-lipped on claim

“TROUBLED Shell was involved in fresh turbulence yesterday as it stonewalled questions”

MARTIN FLANAGAN CITY EDITOR

Fri 16 Jul 2004

TROUBLED Shell was involved in fresh turbulence yesterday as it stonewalled questions about a report alleging that external auditors were warned the oil major was inflating its energy reserves two years before it owned up, early in 2004.

The warnings to affiliates of KPMG International and PricewaterhouseCoopers International were said to be contained in Shell documents reviewed by a newspaper.

However, a Shell spokesman said yesterday: “We will not comment on leaked and unverifiable documents. We have submitted a full report to the regulators.

“US government authorities have allowed us to publish an executive summary of that report and we are continuing to co-operate fully with them and can’t comment further.”

The fresh controversy, following a report in the Wall Street Journal, came as John Tiner, the chief executive of the Financial Services Authority, Britain’s financial regulator, confirmed that the status of the FSA’s investigation into the Shell reserves overstatement was “ongoing”.

Shell stunned investors in January with news that it had overbooked oil and gas reserves by 20 per cent.

However, the Shell spokesman did say: “Although certain issues surrounding a number of fields had been identified earlier than January 2004, at the time these warnings were raised it was believed that any differences between the reserves classified under Shell internal guidelines and those under SEC rules would be offset by potential reserves adjustments in other areas.”

It is understood that Shell therefore thought the reported total volumes continued to be, in the aggregate, materially accurate. However, insiders say audits completed in late 2003 pushed the difference well beyond this equation and much of the reliance on offsets subsequently proved to be unfounded.

The newly revealed warnings, by then top internal reserves auditor Anton Barendregt, said only a small part of Shell’s reserves were at risk of being overstated – about 1 per cent of total company reserves for 2002, for example, the WSJ said.

A KPMG spokesman said: “We stand by the quality of our auditing work.” PriceWaterhouseCoopers said: “We never talk about any work we do for clients.”

( Posted here by John Donovan of http://royaldutchshellplc.com/ )

royaldutchshellplc.com and its also non-profit sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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