SEC clears Watts over Shell reserves scandal

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The Independent Online

Sir Philip Watts' two-year battle to clear his name ended in victory for the former Shell chairman yesterday after the US Securities and Exchange Commission decided not to take any action against him over the oil giant's reserves reporting scandal.

The decision marks the end of all regulatory investigations into Sir Philip's role in the affair, which led to the biggest corporate shake-up at Shell in the company's 100-year history.

Last year the Financial Services Authority, the UK regulator, decided not to take any action against the former Shell chairman. The US Justice Department is also understood to have decided not to proceed.

Sir Philip said: "I am extremely pleased the US authorities have closed the investigation. As I have stated from the beginning, I have acted in good faith throughout and I had every reason to believe that Shell acted properly and in good faith when disclosing proved reserves."

Shell stunned the oil industry and the financial markets in January 2004 by admitting that 4 billion barrels of oil reserves, previously booked as "proven", had been incorrectly categorised. The scandal led to the ousting of Sir Philip and two other board directors and plunged the company into unprecedented turmoil, ultimately resulting in it abandoning its twin-board and dual-listed status.

A damning report subsequently commissioned by Shell from a US law firm in effect ended Sir Philip's corporate career by accusing him of deceiving shareholders. In one e-mail sent to Sir Philip, Shell's former head of exploration, Walter van de Vijver, complained that he was "sick and tired about lying" over the state of the company's reserves.

Joseph Goldstein, of the Washington law firm Mayer Brown Rowe and Maw, who represented Sir Philip, said he could not comment on what the former Shell chairman might do now. "He is just enjoying the moment."