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Shell mugs up on its history and pours oil on troubled waters: Shell merger approved amid fury over tax bill

Daily Telegraph (UK): Shell mugs up on its history and pours oil on troubled waters: Shell merger approved amid fury over tax bill

“No wonder private shareholders are cross. They have been treated shabbily, particularly since they are long-term investors who stood by the company during its crisis when it lost one in four of its barrels last year.”

Wednesday 29 June 2005

City comment

Edited by Kate Rankine, Deputy City Editor (Filed: 29/06/2005)

Sometimes Shell just can’t seem to help itself. Investors trooping out of yesterday’s historic meetings were handed gold-rimmed mugs commemorating “The ‘Shell’ Transport and Trading Company plc, 1907-2004”.

The irony of the gift would not have been lost on the 3,000 British holders in Royal Dutch Petroleum who are now left with a £77m capital gains tax bill as a result of the merger of the Dutch and British parts of the company.

Shell insists that loan notes or buying out those affected by the CGT bill wasn’t possible. Instead, it claimed (rather weakly) that its offer was fair on a pre-tax basis to all shareholders, wherever they live.

No wonder private shareholders are cross. They have been treated shabbily, particularly since they are long-term investors who stood by the company during its crisis when it lost one in four of its barrels last year. Many will now have to sell their shares to pay a tax bill which they never asked for.

It isn’t too surprising that they demanded yesterday that their tax bills be paid from the $115m in fees (much of it in tax advice) charged by Shell’s advisers. They shouldn’t hold their breath, however.

At least they will be selling into a rising market in Shell shares. Helped by a strong oil price, the shares have jumped 40pc since the height of the reserves scandal last year. Yesterday, they were up again as the big institutions scrambled to re-balance their holding in an oil and gas monolith which will account for 9pc of the FTSE 100. Indeed, Shell’s move to list all of its shares in London mean that a fifth of the index will be linked to the oil price.

This won’t matter much to those mostly elderly Brits who hold Royal Dutch stock; rather it is a timely reminder of Shell’s old, arrogant disregard for the outside world which led to the last year’s problems.

New chief executive Jeroen van der Veer has a long way to go to catch up with Lord Browne at BP. Still, the newly agreed streamlined structure should at least ensure that Van the Man probably can’t take his shareholders for mugs ever again.

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