Shell was embroiled yesterday in Britain's biggest corporate scandal for almost 20 years after it admitted a three-year plan to deceive its shareholders.
The City reacted with astonishment after the crisis-stricken multinational released details from an internal report that exposed how the company had deliberately overstated its oil and gas reserves for several years.
Judy Boynton, the finance chief, became the third boardroom casualty of the furore that followed the shock 20 per cent downgrade in reserves three months ago. The Shell affair, the most damaging scandal in the UK since the Guinness debacle 18 years ago, has already led to the departure of the chairman, Sir Philip Watts, and the head of exploration and production, Walter van de Vijver.
The pair were savaged in the damning, independent report commissioned by Shell for appearing to know that reserves failed to meet market rules as far back as 2001. The report listed a bewildering array of e-mails sent between increasingly desperate executives. In one, Mr van de Vijver told Sir Philip last November: "I am sick and tired about lying about the extent of our reserves issues and the downward revisions that need to be done because of far too aggressive/optimistic bookings.''
A month later, Mr van de Vijver, responding to an internal report that suggested Shell's position on the reserves was a violation of US securities law, wrote: "This is absolute dynamite, not at all what I expected and needs to be destroyed."
The prospect of criminal charges being brought against some Shell executives appeared increasingly likely last night.
The report was designed to get to the bottom of an affair that has rocked confidence in the stewardship of Shell since the disclosure that its reserves had been overstated.
It says Mr van de Vijver repeatedly e-mailed Sir Philip over a period of nearly two years to inform him of concerns over the group's reserves. The report, carried out by the US law firm Davis, Polk & Wardwell, paints a picture of Sir Philip resisting attempts by Mr van de Vijver to scale back the amount of oil and gas the company was telling the outside world it was discovering.
Sir Philip directed Mr van de Vijver to "leave no stone unturned" to hit targets.
The company again cut its reserves estimates in March, and yesterday - saying it was drawing a line under the matter - made further reductions.
The contents of the internal report will be a huge blow to Sir Philip, sacked by Shell along with Mr van de Vijver last month after the company's financial woes became public.
It is unclear whether they will receive any financial settlements, but Sir Philip was paid £1.8m in 2002, and has a pension worth £480,000 a year. Mr van de Vijver is reputed to have earned a salary in excess of more than £1m, and a generous pension.
Ms Boynton, the chief financial officer, was forced out after she failed to address the inaccurate nature of Shell's reserves reporting policy. A fourth person, joint chairman Lord Oxburgh, is expected to resign within the next few days.
Sir Philip and other senior directors are thought to have been named in law suits initiated by shareholders in America.
The company said yesterday it had been requested to publish only a summary of its report by the US regulatory authorities.
Attempts to contact Sir Philip at his Berkshire home yesterday were unsuccessful.
America's financial regulator - the Securities and Exchange Commission - and the Justice Department are investigating.
The bar on Shell publishing the full result of its investigation sparked speculation the US authorities did not want to scupper a potential criminal prosecution of Sir Philip, and possibly others, by releasing information that could prejudice the case.
Kenneth Vianale, a partner in Florida-based Vianale & Vianale, which has launched a shareholders' class action against Shell, said: "Shareholders would like to have full disclosure of the report. But if a company conducts an internal report which is then given to a third party, such as the SEC, lawyers' privilege is waived."
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