SHELL, we were told by the Financial Services Authority last summer, was guilty of “unprecedented misconduct”. For five years, from 1998 to 2003, the company had repeatedly misled shareholders over its oil and gas reserves. It was so culpable that the regulator felt it had no choice but to fine it a then-record £17 million.
In the Shell case, the FSA had plenty of evidence of a conspiracy at the highest level against the interests of shareholders. The company’s own investigation unearthed compelling e-mail evidence, not least former exploration director Walter van de Vijver’s infamous complaint that he was “becoming sick and tired about lying about the extent of our reserves issues”.
Shell’s deceit went back many years. As early as 1998, when the company was under the chairmanship of Sir Mark Moody-Stuart, a paper was produced under the title Creating Value through Entrepreneurial Management of Hydrocarbon Resource Values. That may not have been a blueprint for inflating the value of reserves but it was certainly an ominous title. Sir Mark is now a pillar of other British boardrooms, chairman of Anglo American and a director of HSBC.
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