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Former Shell boss challenges the FSA to launch proceedings

Financial Times: Former Shell boss challenges the FSA to launch proceedings

“Yesterday’s one-day hearing was Sir Philip’s first legal move since he was forced to resign from Shell in March 2004, following the company’s admission that it had incorrectly booked nearly 4bn barrels of oil and gas.”

Tuesday 26 July 2005

By Carola Hoyos and Barney Jopson

Published: July 26 2005

Sir Philip Watts, former chairman of Royal Dutch Shell, yesterday challenged the Financial Services Authority to launch proceedings against him to determine his role in the Anglo-Dutch oil company’s reserves scandal.

Lawyers for Sir Philip told the Financial Services and Markets Tribunal, which hears appeals against the FSA: “The applicant’s principal concern is that he be provided with an opportunity to clear his name.

“Ideally, this would be in the course of personal proceedings against him, if the FSA concludes that such proceedings are justified on conclusion of its investigation.”

Sir Philip’s lawyers accused the FSA of identifying and prejudicing him when the regulator fined Shell £17m in August 2004 for misleading the market by overstating its oil and gas reserves between 1998 and 2003. The FSA denies the claim. The hearing highlights the continued scrutiny of the FSA’s enforcement process, which some in the City have said treats those accused of wrongdoing unfairly.

In January, the tribunal, which is part of the courts system, criticised the regulator’s conduct in a mis-selling case against Legal & General. That forced the FSA to initiate an overhaul of its enforcement procedures, for which proposals were announced last week.

Yesterday’s one-day hearing was Sir Philip’s first legal move since he was forced to resign from Shell in March 2004, following the company’s admission that it had incorrectly booked nearly 4bn barrels of oil and gas.

The case is likely to influence how the FSA handles simultaneous investigations into companies suspected of wrongdoing and their executives. It may also raise questions about the FSA’s partnership with the Securities and Exchange Commission, the main US regulator, which it worked closely with on the Shell case.

Sir Philip’s lawyer argued that the former chairman, though not directly named, was “implicitly criticised by the final notice without having had a prior opportunity to persuade the authority to not arrive at such critical conclusion”.

He argued that the FSA could have avoided “prejudicial identification” by delaying the publication of any decision notice against the company until it had concluded an investigation into Sir Philip.

One lawyer who is following the case was surprised that Sir Philip chose to take on the FSA in this way, saying: “He has re-ignited press interest in Shell at a time when one might have thought he would rather let sleeping dogs lie.”

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