Shell insider inquiry into director deals

Regulators in the Netherlands are understood to be examining share transactions involving directors of Royal Dutch/Shell going back two years as part of an insider dealing investigation connected to the oil giant's reserves downgrade.

Regulators in the Netherlands are understood to be examining share transactions involving directors of Royal Dutch/Shell going back two years as part of an insider dealing investigation connected to the oil giant's reserves downgrade.

The investigation, begun by the Dutch equivalent of Britain's Financial Services Authority, is thought to focus particularly on claims board members were aware of the overstatement of reserves long before Shell made a public disclosure on 9 January.

On Thursday, Shell sought to dismiss the investigation by Holland's Autoriteit Financiele Markten as a routine inquiry. Aad Jacobs, the chairman of Royal Dutch's supervisory board, who was described as an AFM member, added that such investigations were automatic where the share price of a company moved by more than 5 per cent.

However, a spokesman for the AFM said yesterday that was not accurate. "There are many more triggers for starting such investigations," he said. He also corrected Mr Jacobs' involvement with the organisation, saying he was a member of a committee of wise men that advised it on takeover law and had nothing to do with insider dealing investigations or AFM policy. The AFM has powers of investigation and in this context is certain to want to see the memos sent to Shell board directors in early 2002 apparently warning that the company may have to restate its proved reserves in line with updated guidance from the US Securities and Exchange Commission.

The AFM cannot bring charges itself but passes its findings on to Dutch public prosecutors, who can seek fines or prison sentences. Last year the AFM carried out 26 insider dealing investigations.

A spokesman for the Dutch regulator refused to say when the inquiry began, how wide its remit was and whether former and current directors of Shell were being questioned. Asked about the inquiry on Thursday, the Shell chairman Jeroen van der Veer said: "I don't have a clue."

He added that Shell had no indication anyone had used knowledge of the downgrade to get rid of their Shell shares early. The announcement in January that Shell was cutting its proven reserves by 3.9 billion barrels wiped£8bn from Shell's market value. Its shares have fallen 13 per cent since the statement.

The AFM only has the power to investigate in respect of shares traded inAmsterdam. The FSA is not thought to be carrying out a parallel insider dealing inquiry here.