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Former Shell boss loses case against FSA

The Times (UK): Former Shell boss loses case against FSA

The FSA, which is continuing to investigate Sir Philip’s personal conduct during the affair, welcomed the ruling… In August last year the FSA found Shell guilty of “unprecedented misconduct” in repeatedly mis-stating its oil and gas reserves levels from 1998 to 2003.

Wednesday September 14, 2005

By Patrick Hosking, Investment Editor

SIR PHILIP WATTS, who was ousted as Shell’s chairman after the company’s oil reserves scandal, suffered a setback yesterday in efforts to clear his name.

The Financial Services and Markets Tribunal found against Sir Philip and ruled that he had not been unfairly treated by the Financial Services Authority (FSA). The former oilman had complained that he had not been given the chance to challenge the FSA’s market abuse ruling and £17 million fine against Shell last year.

Although he was not named in the FSA’s final notice, he argued that he was in effect identified and prejudiced by the FSA judgment and should therefore have had the opportunity to put his case.

But the tribunal rejected Sir Philip’s case as artificial: “There is no reason in our view why a market abuse allegation directed at a company must necessarily be taken to impute criticism to particular individuals,” said the tribunal, headed by William Blair QC.

Sir Philip said that he was disappointed by the decision and was giving careful consideration to its reasoning. He can appeal to the Court of Appeal on points of law. He said he would continue to fight to clear his name and believed he would be vindicated in any proceedings brought against him.

The FSA, which is continuing to investigate Sir Philip’s personal conduct during the affair, welcomed the ruling, saying that it clarified the law governing the rights of third parties.

In August last year the FSA found Shell guilty of “unprecedented misconduct” in repeatedly mis-stating its oil and gas reserves levels from 1998 to 2003.

Sir Philip, who absented himself from the briefing at which Shell first revealed its failings, was dismissed in March 2004 with a £1.1 million payoff and a £13 million pension pot.

Robert Turner, a partner at Simmons & Simmons, said it was important for the FSA that it had prevailed. “It will be able to continue dealing with corporate failings quickly, as it did with Shell, and will then be able to deal with individuals at a more leisurely pace.”

The FSA’s systems and procedures came under fire this year when the tribunal criticised it over its handling of a mis-selling case against Legal & General. It has since put in place reforms to its entire enforcement regime.

During the hearing David Pannick QC, for Sir Philip, argued that people reading the FSA’s final notice would understand the FSA to be criticising not some faceless company, but individuals seen as responsible.

Sir Philip was “implicitly” criticised in the final notice, he argued, and the unfairness was magnified by the fact that the FSA was at the same time investigating Sir Philip personally.

The FSA’s counsel, Anthony Grabiner QC, argued that Sir Philip’s application failed at the first hurdle because he was not identified.

Each side will pay its own costs.

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