Banner Left

Shell chairman leaves over scandal

Shell chairman leaves over scandal

LONDON – Royal Dutch/Shell announced the surprise departure of its chairman, Philip Watts, who has been the target of an investor backlash over the firm’s bungled downgrade of its oil and gas reserves.

Watts had stepped down as chief of Europe’s second-largest oil company with immediate effect and “by mutual consent”, Shell said in a statement. He will be replaced by vice-chairman Jeroen van der Veer, who is also the president of Royal Dutch Petroleum, the group’s Netherlands-based arm.Shell shares surged 3,1 per cent in London on news of the management cull.Royal Dutch rose 2,7 per cent in Amsterdam.”Royal Dutch/Shell has always been a company that doesn’t like to react to shareholder pressure and reacts slowly,” said Commerzbank analyst Clay Smith.”For them to react this severely and this rapidly has got to be seen as a positive.”But Smith doubted whether the reshuffle would wipe the slate clean for disgruntled investors.”Management changes don’t solve operational problems,” he said.The firm angered investors with its announcement on January 9 that it had re-categorised the status of 3,9 billion barrels of oil and gas – one-fifth of its reserves – from proved to unproved.The announcement sent Shell shares down more than 10 per cent and prompted calls for the chairman’s resignation.Watts was singled out because he failed to make himself available to investors to explain how the error occurred.He was also head of the exploration and production division when the disputed reserves were booked.Last month the US Securities and Exchange Commission launched a formal inquiry into the downgrade.Shell is also facing a class-action lawsuit in the US from shareholders who allege the oil group deliberately violated accounting rules by misreporting its reserves.- Nampa-AFPHe will be replaced by vice-chairman Jeroen van der Veer, who is also the president of Royal Dutch Petroleum, the group’s Netherlands-based arm.Shell shares surged 3,1 per cent in London on news of the management cull.Royal Dutch rose 2,7 per cent in Amsterdam.”Royal Dutch/Shell has always been a company that doesn’t like to react to shareholder pressure and reacts slowly,” said Commerzbank analyst Clay Smith.”For them to react this severely and this rapidly has got to be seen as a positive.”But Smith doubted whether the reshuffle would wipe the slate clean for disgruntled investors.”Management changes don’t solve operational problems,” he said. The firm angered investors with its announcement on January 9 that it had re-categorised the status of 3,9 billion barrels of oil and gas – one-fifth of its reserves – from proved to unproved.The announcement sent Shell shares down more than 10 per cent and prompted calls for the chairman’s resignation.Watts was singled out because he failed to make himself available to investors to explain how the error occurred.He was also head of the exploration and production division when the disputed reserves were booked.Last month the US Securities and Exchange Commission launched a formal inquiry into the downgrade.Shell is also facing a class-action lawsuit in the US from shareholders who allege the oil group deliberately violated accounting rules by misreporting its reserves.- Nampa-AFP

Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for only N$85 a month. Invest in journalism, invest in democracy –
Subscribe Now!

Latest News