A draft report by the audit committee for Royal Dutch/Shell Group plans to blame two former executives for overbooking reserves of oil and gas, but not to recommend further changes in top management, sources told The Wall Street Journal.
In March, Royal Dutch/Shell ousted Sir Philip Watts, the group’s chairman, and Walter van de Vijver, former head of the exploration and production division. The report — which must still be approved by Shell’s two parent companies, wrote the Journal — reportedly faults Watts and van de Vijver for not disclosing the overbooking sooner.
On January 9, Shell announced that it had overstated reserves by about 20 percent, or the equivalent of 3.9 billion barrels. Last month, the company said it would reclassify 250 million barrels of oil because it “did not strictly follow SEC guidance.” An additional 220 million barrels, which as of February were expected to be booked as reserves in a final tally for 2003, were also not included.
Last month, the Journal reported that Shell’s guidelines on accounting for natural-gas reserves were relaxed as early as the mid-1990s, which possibly played a role in the company’s overstatement of its holdings. The Securities and Exchange Commission, the Department of Justice, and European regulators are investigating the company’s disclosure, added the Journal.
Jeroen van der Veer, Shell’s current chairman, tightened internal controls last month, according to Bloomberg. Finance directors at each of Shell’s four units now report directly to Judy Boynton, the chief financial officer of Royal Dutch/Shell Group, instead of to the head of each operating unit, added the wire service.