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The Boston Globe: Shell to pay $151m to settle misstatements

The Boston Globe: Shell to pay $151m to settle misstatements

“fails to hold personally accountable the corporate insiders who perpetrated the fraud,”

By Associated Press

July 30, 2004

LONDON — The Royal Dutch/Shell Group of Cos. agreed to pay a $120 million penalty to US authorities for misstating its oil and gas reserves.

Shell disclosed the fine yesterday as it reported a 54 percent increase in quarterly net income that reflected high global oil prices. Net income for the three months to June 30 was $4.0 billion, compared with $2.6 billion in the same period a year earlier.

Shell said it had agreed in principle to pay a $120 million civil penalty to resolve the pending inquiry by the Securities and Exchange Commission, as well as $31 million in connection with an inquiry by British authorities.

The Anglo-Dutch company stunned shareholders in January when it downgraded 20 percent, or 3.9 billion barrels, of its reserves from “proven” to less certain categories. Three other downgrades followed, for a total reduction in reserves of 23 percent, or 4.47 billion barrels. Shell then dismissed several top executives and delayed by two months the release of its annual report.

Bill Lerach, a San Diego lawyer representing two US pension funds suing the company over the reserves restatements, called the SEC’s decision to settle “short-sighted and disappointing.”

“It does nothing to force the company to correct corporate governance flaws that allowed the oil reserve fraud to occur and fails to hold personally accountable the corporate insiders who perpetrated the fraud,” he said.

© Copyright 2004 Globe Newspaper Company.

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