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The New York Times: S.E.C. Will Take No Action Against Former Chief of Shell

By DOW JONES/THE ASSOCIATED PRESS
Published: August 31, 2006
By Dow Jones/AP

The Securities and Exchange Commission has decided to take no action against Sir Philip Watts, the former chief executive of Royal Dutch Shell, over the 2004 scandal involving the overbooking of oil reserves, the law firm representing him said yesterday.

The S.E.C., which conducted a two-year joint investigation with the British Financial Services Authority, concluded that no action should be taken against Sir Philip, former chairman of Shell’s committee of managing directors, according to a news release by the firm, Mayer, Brown, Rowe & Maw.

The S.E.C. also cleared two other former top Shell executives, Judith Boynton and Walter van de Vijver, Shell confirmed yesterday. An S.E.C. spokesman declined to comment.

Sir Philip is still a defendant in civil litigation related to the reserves scandal, but no longer faces regulatory scrutiny, said his lawyer, Adriaen Morse of Mayer Brown. “As far as we know, there is no government or regulatory interest in him anymore,” Mr. Morse said.

The Justice Department said in June 2005 that it closed a criminal investigation into Shell over the reserves problem.

Shell startled the markets with a series of reserves downgrades in 2004 that reduced its total oil and gas reserves by about one-fourth.

Shell executives, including Sir Philip, expressed dismay about the problem when Shell first disclosed the downgrade in January 2004. But a subsequent investigation showed that he and Mr. van de Vijver, Shell’s exploration and production chief, had been brooding over the issue for months.

The scandal led to the resignations of Sir Philip, Mr. van de Vijver and Ms. Boynton, the chief financial officer. Shell, a British-Dutch conglomerate, also streamlined its corporate structure, compressing into a single corporate entity with one board.

Sir Philip and others remain defendants in a shareholder suit in federal court in New Jersey. A federal judge has scheduled a three-phase hearing for May 2007 that will focus on Shell’s proposed motion for summary judgment and class certification, among other issues.

 

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