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Accountancy Age: Shell fiasco haunts Boynton

Jan 25th, 2006
by admin.

On the frontline: lawsuit over reserves error could delay comeback for Judy Boynton
Paul Grant
Around this time last year, we posed the question of whether executives tarnished by corporate scandal, such as former Shell CFO Judy Boynton, would be able to shrug off the problems of the past and reclaim another top job.
Twelve months on and the answer, for Boynton at least, seems to be a resounding ‘no’.
Not only has Boynton disappeared from the corporate radar, but the problems of the past have come back to haunt her in the form of a lawsuit.
A group of 26 Dutch pension funds – led by £11.5bn civil servant fund ABP – is suing Shell, Boynton, four other Shell directors and joint auditors PricewaterhouseCoopers and KPMG over the oil reserves scandal that cost Boynton her job.
APB’s claim is worth $150m (£84.9m), but the total value adding in the other claims could run much higher.
The pension funds argue that, because reserve levels were allegedly reported falsely, it paid inflated prices for Shell stock. Boynton, as the person responsible for preparing financial statements and internal controls, falsely certified Shell’s annual report and SEC filing the funds’ claim.
Should anything come of the action, the £1.5m severance package that Boynton walked off with, to much outrage from spectators, could suddenly seem like a drop in the ocean.
It is nearly two years since Boynton was forced to step down from her role at Shell after the Anglo/Dutch group was found to have overstated its proven oil and gas reserves by 20%.
An independent report into the scandal at the time found that the compliance role of the finance function ‘was not effective’ on the reserves, and although Boynton was responsible for ensuring that financial disclosures to the market and regulators were correct, she took ‘virtually no action’ to check the facts behind the figures.
Instead, she relied on Shell’s existing ‘checks and balances’, and was ‘reassured’ that its exploration and production department was ‘focused on issues’. This was not enough to safeguard her job. Boynton swiftly left Shell, £1.5m in pocket, and has yet to resurface.
Boynton had been the first female to join Shell’s board. Previously she had served as chief financial officer and executive vice-president of business development for camera group Polaroid in Massachusetts. Before that she had served at another oil group, Amoco, in a variety of finance, strategy and M &A roles in its upstream, downstream and chemicals businesses.
Now her exile from the public limelight, whether self-imposed or otherwise, looks like it will have to come to an end in order to fight this litigation. And while a court case could be very damaging for the former director, it may well provide the opportunity for her to put her side of the story forward and help restore some of the shine to her once brilliant reputation.

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