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The Guardian: Ousted Shell chairman begins fight against regulator

The Guardian (UK): Ousted Shell chairman begins fight against regulator

“A year ago, the regulator decided to fine the company after discovering “unprecedented misconduct”. Sir Philip is not named in the report, but he argues that he could be identified because he was running the company at the time.”: “He left Shell in March 2004 after it had admitted overstating reserves by almost a quarter. The company has been trying to put the episode behind it…”

Monday July 25, 2005

Jill Treanor

Sir Philip Watts, the former chairman of oil company Shell, today begins a battle with the Financial Services Authority over his claim that the City regulator abused his rights.

Ousted over the oil company’s reserving problems, Sir Philip is disputing the way in which the City regulator handled his case when it levied a record £17m fine on Shell.

The Financial Services and Markets Tribunal, which is hearing the case, is convening today to establish whether Sir Philip should be allowed to proceed with his claim.

Sir Philip, who is thought to be considering attending the tribunal in person, is arguing that he was “identified and prejudiced” when the FSA published the findings of its investigation into the company’s handling of the overstating of reserves.

A year ago, the regulator decided to fine the company after discovering “unprecedented misconduct”. Sir Philip is not named in the report, but he argues that he could be identified because he was running the company at the time.

Today’s preliminary hearing follows an application by the FSA last October asking the tribunal to decide whether Sir Philip had been “identified and prejudiced”.

The decision by the tribunal, which is scheduled to sit for a day and a half, is crucial. If it backs the FSA’s contention that Sir Philip was not identified, it would have no jurisdiction to hear the rest of his claim. If it rules in Sir Philip’s favour, it is possible that the events surrounding the Shell saga will be publicly raked over once more.

The hearing comes less than a week after the FSA announced major changes to the way it handles investigations. It is shaking up its enforcement division and strengthening its regulatory decisions committee, which rules on penalties recommended by the enforcement division.

Sir Philip is being advised by Martyn Hopper, a partner at law firm Herbert Smith who is a former senior member of the FSA’s staff. Sir Philip argues that the FSA was so keen to conclude its investigation into Shell that it did not allow him to present his version of events.

He left Shell in March 2004 after it had admitted overstating reserves by almost a quarter. The company has been trying to put the episode behind it and last week consolidated its board and shareholder structure to meet investor demands that it improve corporate governance.

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