NEW YORK - US authorities will not prosecute Anglo-Dutch oil company Royal Dutch/Shell for overstating its reserves, citing the company's co-operation in a Government probe.
Shell has been under a cloud for overstating its proved hydrocarbon reserves as of the end of 2002 by about 23 per cent. It disclosed
the overstatement last year.
Accurate disclosure of reserves are important because it reflects expected future income for an oil company and has a direct impact on its share price. Shell had overstated its oil reserves by 4.47 billion barrels.
David Kelley, the US Attorney for the southern district of New York, cited the oil company's co-operation with the US Government's investigation as well as Shell's settlement with the US Securities and Exchange Commission over the filings it made in 2002 and earlier.
Last year, Shell agreed to pay US$120 million ($173 million) to settle fraud charges with the SEC and Kelley also cited this as one of the reasons why it had decided not to prosecute the company.
"Because Shell has co-operated fully with the Government's investigation, has implemented substantial remedial efforts to enhance it reserves reporting and compliance, and has paid a US$120 million civil penalty to the SEC, the public interest has been sufficiently vindicated," he said.
Shell's reserves scandal, which surfaced in January last year, stunned financial markets.
Although some of the resulting investor dissatisfaction was countered by rising oil prices, preventing a sharper fall of its share price, it forced Shell to make top-level management changes.
Three leading executives lost their jobs.
- REUTERS
