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Shell Accused of Hanging Shareholders ‘Out to Dry’

The Scotsman: Shell Accused of Hanging Shareholders ‘Out to Dry’

Tuesday 28 June 2005

By David Winning, PA City Staff

Shell shareholders today expressed anger at an £80 million tax bill that will follow the biggest overhaul in the oil giant’s 100 year history.

They accused the board of “hanging them out to dry” by devising a scheme to unify its UK and Dutch assets that leaves many facing large losses from capital gains tax.

Shell Transport, which has its headquarters in London, plans to merge with Netherlands-based Royal Dutch Petroleum next month as it strives to eliminate failings that led to its reserves crisis last year.

The enlarged company – to be called Royal Dutch Shell – will be listed on the FTSE 100 index with a potential value of more than £120 billion and will vie with rival BP as the biggest quoted firm in the UK.

The plan won the overwhelming support of investors at the annual meeting of Shell today, but only after the board faced a barrage of criticism over the tax burden and fears that the voice of private shareholders in the UK will no longer be heard.

British investors who hold shares in the Dutch side of the business will have to pay capital gains tax of 40% by law when their stock is converted into that of Royal Dutch Shell.

Shell chairman Lord Oxburgh said the company sympathised with shareholders but its hands were tied and it could only urge them to seek help and financial advice.

Peter Hatfield, who worked for Shell for 33 years, told the meeting: “Shareholders (like me) don’t need this help they need the cash to pay the capital gains tax. They didn’t have for the scheme but now they are going to be stuck with the bill.

Another private shareholder complained: “Less than 1% of this company have been left to hang out to dry and are faced with a very substantial capital gains tax demand and nothing to help them.

One woman, who did not identify herself, said the tax bill would be particularly hard on people who had built up Royal Dutch shares as a pension pot to leave to their families.

Shell said the unification plan was in the overall interests of shareholders because it made the company less complex, more efficient and improved transparency.

The present structure of two boards meeting separately in The Hague and London has been blamed by the City for contributing to the reserves fiasco.

Shell, which made profits of £9.3 billion last year, downgraded its reserves five times during a crisis that claimed the scalps of three senior executives and led to regulators in the UK and the US imposing fines totalling £82.7 million. It is still facing a number of investigations related to the downgrade.

Earlier the meeting was disrupted by environmentalists and representatives of communities that live close to Shell plants and pipelines around the world.

They were escorted out of the meeting hall shouting: “Shell is hell” after criticising the company’s environmental record in countries including Nigeria, Russia and the US.

A representative from South Africa presented Lord Oxburgh with a miniature coffin when claiming Shell’s refinery in Durban had a detrimental impact on the health of communities close by.

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