Shell Rebuked, Fined Over Reserves Failings

By Agence France-Presse Royal Dutch/Shell Group was fined a total of $150 million Aug. 24 by U.S. and British regulators, which criticized the oil giant for a catalog of failings in relation to its misstatement of energy reserves. The British Financial Services Authority said its inquiry had found Royal Dutch/Shell guilty of "unprecedented misconduct," committing market abuse and breaching stock-exchange listing rules. In Washington, the U.S. Securities and Exchange Commission said its own probe had identified "violations of the antifraud and other provisions of the federal securities laws." Shell paid a $120 million penalty to the SEC and 17 million pounds (US$30 million) to the FSA, the regulators said in separate statements, confirming an agreement in principle announced by Shell last month. The FSA's fine was its biggest ever. The U.S. and British regulators launched inquiries after Shell admitted in January it had overstated its proven oil and gas reserves, which it has since cut by a total of 4.47 billion barrels, or 23%. According to the SEC order, Shell also inflated the standardized measure of future cash flows reported in the 2002 filing by about $6.6 billion. The company corrected the figures for reserves from 1997 to 2002 in an amended filing on July 2 of this year. Royal Dutch/Shell neither admitted nor denied the findings of the two inquiries. Copyright Agence France-Presse, 2004

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