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Verdict on Royal Dutch Shell CFO Simon Henry

Shell internal email correspondence irrefutably proves that Simon Henry was aware in March 2002 that “reserves bookings were made that should not have been made”. Walter van de Vijver, the “sick and tired” Chief Executive of Shell EP, gave the information directly to him. As can be seen in the email, Walter van de Vijver aggressively accused Mr Henry of setting targets that were near impossible to achieve. The question arises of whether Mr Henry was a culprit, an accomplice, or an innocent bystander.

By John Donovan


We have published a series of articles about the starring role of Simon Henry in the Royal Dutch Shell reserves scandal.

Shell internal email correspondence irrefutably proves that Simon Henry was aware in March 2002 that “reserves bookings were made that should not have been made”. Walter van de Vijver, the “sick and tired” Chief Executive of Shell EP, gave the information directly to him. Walter van de Vijver accused Mr Henry of setting targets that were near impossible to achieve.


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Simon Henry was the Shell senior executive propelled into the media spotlight in January 2004 when news of the scandal first broke and Sir Philip Watts was too frightened to take the heat himself.

Although Mr Henry joined Shell in 1982 as an instrument engineer at Stanlow Refinery, his expertise is as a finance man and he moved up in financial and marketing roles at Shell, before being appointed as Head of Shell Group Investor Relations (IR), commencing full-time from the second week of March 2001.

In that position, he was a key player in the gathering and reporting of reserves data. In an earlier job, as Finance Controller of Shell Egypt, Mr Henry had been responsible for the calculation of proven reserves, so he already had expertise and experience in the subject.

He and his IR team were responsible for ensuring that only accurate information, such as production and reserves data, was passed externally to analysts and investors, including in the form of Quarterly Results Announcements and senior management presentations to third parties. It was part of the function of IR to ensure compliance with regulatory requirements.

We have already reported on how Mr Henry feared Shell would score an own goal on reserves. He was also a participant in internal Shell email correspondence in which there was a warning of a reserves time bomb.

Simon Henry had warned his colleagues in July 2001 of the “potential dynamite for management credibility and the share price” arising from profoundly depressing production growth volumes at that time. Many equally memorable comments and dire warnings were made in the same string of internal email correspondence, all involving senior Shell executives, including Mr Henry.

I have previously said that the involvement of Mr Henry in the reserves scandal is not as clear cut as the situation with Chris Finlayson, where there was absolute proof that he was either part of the reserves cover-up, or negligent in his fiduciary duties as a senior Shell executive.

That situation has changed. Further research has uncovered email correspondence between Simon Henry and Walter van de Vijver, which provides irrefutable evidence that in March 2002 Mr Henry was aware reserves bookings had been made that should not have been made.

This is an extract from an email from Walter van de Vijver to Simon Henry dated 24 March 2002.

“- the latest is the embarrassment on reserves replacement some of which driven by reserves bookings that should not have been made”

The correspondence was also copied to other Shell executives Judith Boyton and Dominique Gardy

As can be seen in the email, the thoroughly fed up Walter van de Vijver, living up to the description given to him by colleagues as the “Tall Angry Dutchman”, complains to Henry: “we have too many targets out there, some near impossible to achieve and some of them driven by you”.

The U.S. Securities Exchange Commission raised this email exchange during the interrogation of Mr Henry. When asked: “And how about the driven by reserves bookings that should not have been made, what did you interpret that to mean?

Mr Henry replied: “Exactly what it says…”  

The interrogator put the question again: “So, when you read it, your perception was that, you know, Mr van de Vijver believed that there were reserve bookings made that should not have been made and you didn’t think much more of it? Mr Henry replied: “Correct. And this was just a long way for Walter to say no, that’s what I thought. And also, how take in this fifth bullet, his perceptions of IR.” 

The perception Walter van de Vijver had of IR was apparently that he held Mr Henry responsible for being the driving force behind some reserves targets that he felt were near impossible to achieve.

Screen Shot 2013-02-10 at 23.48.28In email correspondence between Shell colleague Rhea Hamilton and Simon Henry concerning the preparation of information for an investor Q&A session at which new reserves booking would likely be raised, it was described as a dangerous question. Henry said in response to a question by the SEC interrogator: “So, she is advising and correctly that it’s a dangerous question because this is one of those areas where expectations of investors may be higher than the likely delivery”.

The exchanges in the Simon Henry deposition for the SEC dealing with reserves bookings that should not have been made and of being a potentially dangerous Q&A question can be seen in pages 250 to 254 – the numbering at right side foot of each page.

Mr Henry has been candid in his comments about his bosses at the time, Shell Group Chairman Sir Philip Watts and Shell EP Chief Executive Walter van de Vijver; the two executive directors that many would consider to be the main culprits in the reserves fraud. The question arises of whether Mr Henry was a culprit, an accomplice, or an innocent bystander.

In view of the evidence we have revealed, he was clearly not an innocent bystander. Simon Henry knew years before Shell investors that reserves had been booked that should not have been booked and that there was high level long term internal anxiety over the issue. However, he continued to deal with analysts and investors without giving any clue about the well-founded concern on a vitally important matter, bearing in mind that Mr Henry is on record as stating: “The only consistent measure available to anybody looking at the industry is proved reserves“.

Personally, I do not think that anyone, including Philip Watts and Walter van de Vijver, deliberately set out to defraud investors. A stage was reached when they realized that reserves bookings had been recklessly optimistic and would not be met. This happened as a result of sheer greed. Bonuses for executives and senior managers were linked to reserves bookings via Shell’s scorecard system.

Instead of coming clean with investors when it became clear that there was a serious problem, those involved, including Mr Henry, misled the markets. Mr Henry was the main communicator in the years leading up to January 2004 and in the months after the bombshell hit the markets.  He was the executive chosen to face a media firestorm and put forward a defence that the reserves situation was not as bad as it seemed.

As can be seen from the media reports quoted below, he gave a variety of excuses, none of them accepted by the U.S. Security and Exchange Commission, nor the UK Financial Services Authority, which found Shell guilty of fooling the markets and fined the company accordingly.

Extract from an announcement by the United States Attorney for the Southern District of New York, not to launch a criminal prosecution:

The decision by the United States Attorney not to prosecute was based on the factors set forth in former Deputy Attorney General Larry Thompson’s memorandum, Principles of Federal Prosecution of Business Organizations (the “Thompson Memorandum”). The decision was based on, among others, the following factors: Shell’s full cooperation with the Government’s investigation; Shell’s settlement of an enforcement action by the United States Securities and Exchange Commission (“SEC”), a settlement which included Shell’s consent to a cease-and-desist order finding violations of the antifraud, internal controls, record-keeping, and reporting provisions of the federal securities laws, arising out of the same conduct, and its payment of a $120 million civil monetary penalty; Shell’s commitment as part of the SEC settlement to take substantial remedial actions to enhance the accuracy of its reserves reporting and compliance, including its commitment to spend $5 million to develop and implement a comprehensive corporate compliance program; and the negative effect that charges against Shell would have on the companies’ innocent employees and legitimate activities.

Mr Henry was either a culprit or an accomplice in the actions that led to the fines from the financial regulators.

Having read all of the evidence and other information relating to Mr Henry, I believe his natural inclination is one of integrity and that he is a competent executive.

He was caught up in a situation not of his own making and his judgement and actions were no doubt swayed by loyalty to Shell and his colleagues. In other words, the die was already cast. He could have blown the whistle, but that would have been the end of his career in the oil industry. Instead, he participated in the cover-up and in my view, became an accomplice.

By following that path he won his eventual reward, earning millions as CFO of Royal Dutch Shell Plc and according to the FT, is the prime candidate as the next CEO. Undoubtedly a clever man, some might say he played a bad hand very well, in his own best interests.

Contrast his happy and prosperous outcome with that of a conscience driven whistleblower, Shell production geologist, *Dr John Huong, who did blow the whistle internally on reserves bookings and was subsequently buried in High Court injunctions by eight Royal Dutch Shell Group companies to ensure his silence.

I have provided links to all legal documents dealing directly with Mr Henry and the reserves scandal so that extracts can be read in context. Some of the evidence featured in our Simon Henry articles comes from court documents relating to other Shell executives.


Simon Henry 1: Simony Henry sworn deposition Washington D.C. 16 Oct 2006. FOR THE UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY Civ. No. 04-3749 (JAP) (Consolidated Cases) Hon. Joel A. Pisano: 200 pages.

Simon Henry 2:  Simon Henry testimony page 293 to 367

Simon Henry 3: Page 368 onwards of Sion Henry testimony ending page 392, continuing as related exhibits

Simon Henry 4: 75 pages of Exhibits relating to Simon Henry testimony

Simon Henry 5: 50 pages of Exhibits relating to Simon Henry testimony

Simon Henry 6: 50 pages of Exhibits relating to Simon Henry testimony

Simon Henry 7: 50 pages of Exhibits relating to Simon Henry testimony

Simon Henry 8: 38 pages of Exhibits relating to Simon Henry testimony

Simon Henry 9: U.S. Securities and Exchange Commission interrogation of Simon Henry. 301 searchable pages. Commencing Tuesday, October 19, 2004

Simon Henry 10:  Simon Henry Declaration for U.S. District Court of New Jersey: 18 pages dated 12 June 2007

United States Attorney Southern District of New York: Jun 29, 2005: – U.S. DECIDES NOT TO PROSECUTE SHELL. DAVID N. KELLEY, United States Attorney for the. Southern District of New York, announced …

Financial Services Authority: Final Notice Shell Reserves Fraud

US Securities and Exchange Commission: CEASE AND DESIST ORDER against Royal Dutch Petroleum Company and The “Shell” Transport and Trading co., p.l.c.

Related News Articles

The independent; Reserves shock wipes £8bn from value of oil giant Shell: 10 Jan 2004

Simon Henry, Shell’s head of investor relations, said that, nothwithstanding the huge extent to which proven reserves had been over-booked, none of the executives involved would be disciplined. The calculations, relating mainly to reserves booked between 1996 and 2002, had been carried out in “good faith” but now Shell recognised it had to work to tighter specifications. Nigeria Doesn’t Have As Much Oil Reserves as Publicized – Shell: 9 Jan 2004

Analysts said they were particularly concerned that Shell appears to have not been following its own standard in booking reserves, namely by not booking reserves before a final investment decision on a project is made.

In a conference call with analysts and reporters, Shell’s head of investor relations, Simon Henry, confirmed this was the case in a number of projects, including the ChevronTexaco Corp. (NYSE:CVX News)-led Gorgon project off Australia. 

Around 50% of the adjusted reserves are in Nigeria and Australia, with no more than 10% of reserves from any other one country being downgraded, Shell’s Mr. Henry He insisted the people that had originally judged the downgraded reserves as proved made their decision with “reasonable certainty,” based on the technical and commercial conditions of the time. Restates Its Reserves, Shares Plummet: 10 Jan 2004

Shell’s proved reserves at the end of 2002 were 15.5 billion barrels, not the 19.4 billion stated earlier, spokesman Simon Henry said.

The U.S. Securities and Exchange Commission has asked oil companies to review their assessment of reserves in the Gulf of Mexico, Henry said.

The changes came because Shell is using a “tighter” definition of reserves, Shell’s Henry, head of investor relations, said on a conference call. Watts and other executives such as Chief Financial Officer Judy Boynton weren’t on the call. Shell cuts reserves estimate shares fall sharply: 12 Jan 2004


However, investor relations head Simon Henry declined to restate the group’s three per cent a year output growth ability projection set last year. Chief executive Phil Watts was the director in charge of the group’s core upstream division from 1997, when some of the now questionable reserves were booked as proven. He was absent from a conference call with investors, analysts and journalists that followed the announcement, and investors were critical. “I’m surprised that Phil Watts is not on this call,” said David Cumming of Standard Life.

Businessweek: Shell: The Case Of The Missing Oil: 25 Jan 2004


Even though Shell cut its estimates of proved reserves from 19.4 billion barrels of oil (or the equivalent in gas) to 15.5 billion, “the hydrocarbons are there”, says Shell spokesman Simon Henry.

Did Shell do anything illegal? There’s no evidence of that yet. “We were acting in good faith at the time”, insists Henry.

Toronto Star: Restatement of reserves rocks Shell: 9 April 2004

LONDON—The Royal Dutch/Shell Group of Cos. has replaced the chief financial officer of its exploration and production division, which is at the centre of the controversy over Shell’s oil and gas reserves estimates.

The group said yesterday that Simon Henry, the head of investor relations, will take over the position from Frank Coopman, who had been in the job since July, 2002. The division has until recently been solely in charge of booking oil and gas reserves.

CNNMoney: Now If Only Shell Could Find Some Oil: 17 May 2004

“There’s a limit to what we can do today to affect production in the next two to three years,” says Simon Henry, Shell’s head of finance in exploration and production. As those projects start producing, Shell will rebook some of the 4.4 billion barrels it moved into the unproved category in recent months. “There’s no question that the barrels are there,” Henry says. “We just didn’t have plans to commercialize them.”

To further boost its reserves, Shell is increasing spending on exploration to $1.4 billion this year and next, up from $1.3 billion last year. That’s nearly twice what some of its competitors are spending. Half that money is targeted on big wells with the potential to boost reserves by 100 million barrels each. “We’ve stopped doing a lot of the little bitty stuff,” says Henry.

“We maybe took our eye off the ball on exploration and made a strategic shift to negotiate for reserves,” says Henry. Trusted with Shell’s reserves: 13 March 2009


Mr Henry has risen since then to become one of four executives on the Shell board, after bearing the wrath of shareholders as the head of investor relations when Shell first admitted it had a problem, on January 9 2004. It was he who came out to face the music when Sir Philip Watts, then chairman, would not, taking a conference call with angry investors.



*Dr John Huong, who worked for Shell Malaysia for 29 years, registered in a Shell internal document his deep moral reservations about misleading Shell shareholders over reserves. His concern was in relation to the computer reservoir-engineering model for the Kinabalu Field. Dr Huong stated in a Shell internal document of which I have a copy: “Do you want to tell your investors that the volume carried in the ARPR (Annual Review on Petroleum Reserves) is suspected because a change in reservoir work will be expected! How can we live a day with a free conscience by getting the money from our investors through the 502F when our depositional model work is in question?” Dr Huong was later sacked. Following the publication of his whistleblower information on this website, eight companies within the Royal Dutch Shell Group collectively sued him for defamation, buried him in injunctions, engaged in dirty tricks and intimidation, even seeking his imprisonment in Shell’s determination to silence him. Dr Huong sued Shell for wrongful dismissal. The litigation went on for six years during which Dr Huong felt in necessary to use body guards. Shell eventually settled to ensure that none of his evidence was heard in open court. During that long period, no oil company was willing to employ Dr Huong. Honesty clearly does not pay at Shell.

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