[Vision2020] NY Times Article Business as Usual with Executives and their Accountants

Fri, 16 Apr 2004 07:36:05 -0700

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Shell Officer Said to Have Ordered Report Destroyed
By JEFF GERTH and HEATHER TIMMONS

Published: April 16, 2004

ASHINGTON, April 15 - A senior executive at the Royal Dutch/Shell Group told a
subordinate in an e-mail message in December that the employee's preliminary
analysis of the company's oil and gas reserves problems was "dynamite" and
"needs to be destroyed" because it was incomplete, a person involved in the
company's internal inquiry said on Thursday.

The senior executive, Walter van de Vijver, the head of Shell's exploration and
production unit at the time, was dismissed on March 3, along with the company's
chairman, Sir Philip Watts.

Their dismissals came two months after the company stunned investors by lowering
its estimates of proven reserves, a crucial financial indicator, by 20 percent,
or 3.9 billion barrels. The company is under investigation by regulators and
prosecutors in Europe and the United States.

In London, the combined boards of Shell are discussing whether to ask other
executives at the company to step down, an executive close to the situation said
on Thursday. The board members of Royal Dutch Petroleum and Shell Transport and
Trading, the two companies that make up Shell, are meeting in The Hague on
Thursday and Friday to discuss the results of the internal investigation, which
is being conducted by the company's audit committee.

On Tuesday, Mr. van de Vijver issued a statement indicating that he had promptly
warned top executives early in his tenure, which began in mid-2001, about the
need to re-evaluate "potentially noncompliant reserves." He also said he was
asked to resign "without credible explanation."

But the person briefed on the inquiry, who agreed to discuss the situation only
on condition of anonymity because of the current investigations, said that Mr.
van de Vijver's e-mail message figured in the company's internal inquiry. His
e-mail message came on the heels of draft audits by the company describing
serious reserves problems in Nigeria and Oman.

Despite the suggestion in the Dec. 2 e-mail message, the analysis, by Frank
Coopman, the chief financial officer for the exploration and production unit,
was not destroyed, the person added.

On Dec. 8, after further investigation, Mr. van de Vijver forwarded a 42-page
report to top executives describing significant overstatement of the company's
oil and gas reserves. The Dec. 8 report concluded that the company's filing with
the Securities and Exchange Commission might have overstated proven reserves by
2.1 billion to 3.6 billion barrels of oil. The higher adjustment is close to
what Shell reported a month later.

Mr. van de Vijver sent his Dec. 2 e-mail message raising questions about Mr.
Coopman's analysis after Mr. van de Vijver received complaints about the
analysis from Judy Boynton, the company's chief financial officer, according to
the person involved in the inquiry.

Ms. Boynton's complaints, the person said, included the fact that Mr. Coopman
had not fully consulted with other more senior executives, including her.

Samuel J. Weiner, a Washington lawyer for Ms. Boynton, declined to comment on
Thursday.

Mr. van de Vijver's concern about Mr. Coopman's analysis, the person said, was
that instead of proposing options, as he had been assigned, he circulated an
analysis with legal conclusions and recommendations before all the information
had been gathered and senior colleagues had been consulted.

A Shell spokesman, Andy Corrigan, said he was not aware of the e-mail message to
Mr. Coopman. Last week, the company disclosed that Mr. Coopman was being
reassigned to another position.

Shell's audit committee, which is made up of nonexecutives from the board, has
been investigating the reserves change since January to try to determine how and
why it happened. Shell's two boards are involved in an "active discussion" about
whether or not they should ask other executives to leave, the executive close to
the situation said.

Mr. Corrigan, the Shell spokesman, declined to comment on any discussions the
board might be having.

If the board were to make additional management changes, it would be at odds
with the original recommendations of Shell's audit committee and Davis, Polk &
Wardwell, the law firm it hired to investigate. Board members have been
reviewing a several-hundred-page document based on the law firm's findings. The
audit committee "recommended to the boards and external auditors that they
should feel confident in relying on the representations of the group's current
senior management," Aad Jacobs, the committee's chairman, said in a statement a
week after Sir Philip and Mr. van de Vijver stepped down.

The board will be reviewing the audit committee's recommendations and trying to
determine whether or not to follow them or surpass them, executives close to the
review said. Shell directors will also try to decide how much of the report to
make public.

Jeff Gerth reported from Washington for this article, and Heather Timmons from
London.

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<H2>Shell Officer Said to Have Ordered Report=20
Destroyed</H2></NYT_HEADLINE><NYT_BYLINE version=3D"1.0" type=3D" =
"><FONT=20
size=3D-1>By JEFF GERTH and HEATHER=20
TIMMONS </NYT_BYLINE><IMG height=3D5 alt=3D""=20
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width=3D1> <FONT=20
size=3D1>Published: April 16,=20
2004 <NYT_TEXT>
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align=3Dleft=20
border=3D0>ASHINGTON, April 15 - A senior executive at the <A=20
href=3D"http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=3Dhtt=
p://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&amp;sym=
b=3DRD"><FONT=20
color=3D#000066>Royal Dutch/Shell</A> Group told a subordinate in =
an e-mail=20
message in December that the employee's preliminary analysis of the =
company's=20
oil and gas reserves problems was "dynamite" and "needs to be destroyed" =
because=20
it was incomplete, a person involved in the company's internal inquiry =
said on=20
Thursday.
The senior executive, Walter van de Vijver, the head of Shell's =
exploration=20
and production unit at the time, was dismissed on March 3, along with =
the=20
company's chairman, Sir Philip Watts.
Their dismissals came two months after the company stunned investors =
by=20
lowering its estimates of proven reserves, a crucial financial =
indicator, by 20=20
percent, or 3.9 billion barrels. The company is under investigation by=20
regulators and prosecutors in Europe and the United States.
In London, the combined boards of Shell are discussing whether to ask =
other=20
executives at the company to step down, an executive close to the =
situation said=20
on Thursday. The board members of Royal Dutch Petroleum and <A=20
href=3D"http://www.nytimes.com/redirect/marketwatch/redirect.ctx?MW=3Dhtt=
p://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&amp;sym=
b=3DSC"><FONT=20
color=3D#000066>Shell Transport and Trading</A>, the two =
companies that=20
make up Shell, are meeting in The Hague on Thursday and Friday to =
discuss the=20
results of the internal investigation, which is being conducted by the =
company's=20
audit committee.
On Tuesday, Mr. van de Vijver issued a statement indicating that he =
had=20
promptly warned top executives early in his tenure, which began in =
mid-2001,=20
about the need to re-evaluate "potentially noncompliant reserves." He =
also said=20
he was asked to resign "without credible explanation." 
But the person briefed on the inquiry, who agreed to discuss the =
situation=20
only on condition of anonymity because of the current investigations, =
said that=20
Mr. van de Vijver's e-mail message figured in the company's internal =
inquiry.=20
His e-mail message came on the heels of draft audits by the company =
describing=20
serious reserves problems in Nigeria and Oman.
Despite the suggestion in the Dec. 2 e-mail message, the analysis, by =
Frank=20
Coopman, the chief financial officer for the exploration and production =
unit,=20
was not destroyed, the person added.
On Dec. 8, after further investigation, Mr. van de Vijver forwarded a =
42-page=20
report to top executives describing significant overstatement of the =
company's=20
oil and gas reserves. The Dec. 8 report concluded that the company's =
filing with=20
the Securities and Exchange Commission might have overstated proven =
reserves by=20
2.1 billion to 3.6 billion barrels of oil. The higher adjustment is =
close to=20
what Shell reported a month later.
Mr. van de Vijver sent his Dec. 2 e-mail message raising questions =
about Mr.=20
Coopman's analysis after Mr. van de Vijver received complaints about the =

analysis from Judy Boynton, the company's chief financial officer, =
according to=20
the person involved in the inquiry.
Ms. Boynton's complaints, the person said, included the fact that Mr. =
Coopman=20
had not fully consulted with other more senior executives, including =
her.
Samuel J. Weiner, a Washington lawyer for Ms. Boynton, declined to =
comment on=20
Thursday.
Mr. van de Vijver's concern about Mr. Coopman's analysis, the person =
said,=20
was that instead of proposing options, as he had been assigned, he =
circulated an=20
analysis with legal conclusions and recommendations before all the =
information=20
had been gathered and senior colleagues had been consulted.
A Shell spokesman, Andy Corrigan, said he was not aware of the e-mail =
message=20
to Mr. Coopman. Last week, the company disclosed that Mr. Coopman was =
being=20
reassigned to another position. 
Shell's audit committee, which is made up of nonexecutives from the =
board,=20
has been investigating the reserves change since January to try to =
determine how=20
and why it happened. Shell's two boards are involved in an "active =
discussion"=20
about whether or not they should ask other executives to leave, the =
executive=20
close to the situation said.
Mr. Corrigan, the Shell spokesman, declined to comment on any =
discussions the=20
board might be having. 
If the board were to make additional management changes, it would be =
at odds=20
with the original recommendations of Shell's audit committee and Davis, =
Polk=20
&amp; Wardwell, the law firm it hired to investigate. Board members have =
been=20
reviewing a several-hundred-page document based on the law firm's =
findings. The=20
audit committee "recommended to the boards and external auditors that =
they=20
should feel confident in relying on the representations of the group's =
current=20
senior management," Aad Jacobs, the committee's chairman, said in a =
statement a=20
week after Sir Philip and Mr. van de Vijver stepped down. 
The board will be reviewing the audit committee's recommendations and =
trying=20
to determine whether or not to follow them or surpass them, executives =
close to=20
the review said. Shell directors will also try to decide how much of the =
report=20
to make public. 

Jeff Gerth reported from Washington for this article, and Heather =
Timmons=20
from London.</DIV></BODY></HTML>

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