Former Shell chief loses appeal over reserves
Tribunal rules FSA inquiry did not violate Sir Philip Watts’ rights
FORMER Shell chairman Sir Philip Watts yesterday lost his appeal against the chief fi nancial regulator’s handling of an investigation into the oil giant’s reserves scandal.
Sir Philip had accused the Financial Services Authority of “violating” his rights and running a “flawed investigation” into Shell, which admitted it had overstated its proven oil reserves by more than 4billion barrels.
He claimed that the regulator’s Final Notice of its decision to fi ne Shell £17m identified and prejudiced him, despite not being named. Sir Philip argued he should have been allowed to see and respond to the notice.
However, the independent Financial Services & Markets Tribunal rejected the appeal saying: “There is no reason in our view why a market abuse allegation directed at a company must necessarily be taken to impute criticism to particular individuals.”
Lawyers said the decision would come as a major relief to a regulator smarting from an earlier tribunal’s decision to halve a fi ne against life insurer Legal & General for endowment misselling. The FSA was sharply criticised in that tribunal’s judgment.
In a statement, the regulator said: “The FSA welcomes the clarification of the law in relation to the rights of third parties. We have further inquiries which we are pursuing in relation to Sir Philip. These have not yet been concluded.”
However, Sir Philip’s law fi rm Herbert Smith said in a statement: “Sir Philip is disappointed by the tribuna l ’ s decision and we are giving careful consideration to the tribunal’s reasoning.
“The tribunal found that Sir Philip was not technically ‘ identifi in the FSA’s fi nal notice. Unfortunately the FSA did not MARINA IMPERI make its position with respect to Sir Philip and other individuals clear to the media at the time the notice was publicised. Consequently Sir Philip was compelled to bring this action.
“Sir Philip continues to
believe that the FSA’s factual fi ndings in the fi nal notice against Shell are flawed. Sir Philip acted properly and in good faith at all times. He will continue his fight to clear his name and believes that he will be vindicated if any proceedings are instituted against him.”
One option under consideration is an appeal to the Court of Appeal on points of law, although sources close to Sir Philip’s legal team stressed that no decisions had been made.
Jeremy Sandelson, head of
litigation at Clifford Chance,
said: “The FSA must be very
pleased. It would have
been embarrassing for
them for the tribunal
to have found that they
prejudiced Sir Philip
in this way. What the
tribunal has done
is to confirm that if
you are an individual
you are not explicitly identified even
though the company
you work for is criticised.”
The FSA’s decision to
fi ne Shell was released
on the same day that
America’s Securities &
Exchange Commission
imposed a $120m penalty on the company,
which was forced into
a radical overhaul of its
corporate structure and
management team in the
wake of the affair.
Section 393 of the Financial Services & Markets Act gives people named in regulatory actions the right to view evidence relating to them and make representations.
Sir Philip’s lawyers said they
had tried to contact the FSA
over this three times before
the release of the regulator’s fi nal notice.