THE NEW YORK TIMES: U.S. Attorney Ends Investigation of Shell
“The prosecutor also cited Royal Dutch/Shell’s payment of a $120 million fine imposed by the Securities and Exchange Commission for accounting fraud.”
Friday 1 July 2005
By THE ASSOCIATED PRESS
NEW YORK (AP) — A federal prosecutor in Manhattan has decided not to prosecute the Royal Dutch/Shell Group of Cos. for overstating oil and gas reserves, officially ending a Justice Department probe of the company.
U.S. Attorney David Kelly announced Wednesday he had concluded that ”a criminal prosecution of Shell would not serve the public interest at this time.”
Kelly credited the world’s third-largest publicly traded oil company with cooperating with an investigation launched last year after it disclosed it had overstated its proven oil and natural gas reserves by 4.47 billion barrels, or about 23 percent, from 1997 through 2002.
The prosecutor also cited Royal Dutch/Shell’s payment of a $120 million fine imposed by the Securities and Exchange Commission for accounting fraud. Under the SEC settlement, the company also agreed to spend $5 million on an internal compliance program.
Any further penalties ”would likely have a severe and unintended disproportionate economic impact upon thousands of innocent Shell employees,” Kelly said.
Shell said it was pleased with the decision and that its cooperation had been appreciated.
”The conclusion of this investigation is a most important step toward putting the matter of the reserves recategorizations behind us,” said Chief Executive Jeroen van der Veer.
The company’s disclosure of the reserve inflation stunned shareholders and the oil industry and led to the dismissal of several top executives.
U.S.-traded shares of Royal Dutch Petroleum Co. fell 89 cents to close at $65.08 Wednesday on the New York Stock Exchange, where Shell Transport & Trading Co. shares fell 96 cents to $58.20.
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