Thursday, August 31, 2006

I wish I could be like Philip Watts

Former Shell chairman Sir Philip Watts damn well knew for years that the company he headed systematically overstated oil reserves by something like 25%.

After all, most of the overstatement occurred during his stint as chief executive of its exploration and production division, which kind of makes it hard to plead innocence.

That was why he had to leave the oil major in March 2004, with only a £1m-plus pay-off cheque and an index-linked annual pension of £584,000 to show for it. Shortly after his resignation, a series of leaked memos pretty much confirmed the case against him.

Shell itself commissioned a report into the affair from a US law firm, which effectively accused Sir Philip of deceit. It was revealed that Walter van de Vijver - then Shell’s head of exploration - sent him a series of concerned emails, stressing that he was ‘sick and tired about lying’ to cover his boss’s backside.

Of course, both Britain and America have powerful watchdogs in place to prevent the investing public getting ripped off. Surely, given the regulatory climate in wake of the Enron and WorldCom scandals, Sir Philip should rightly have been looking at 99 to life in Sing Sing?

Nope. Sir Philip – knighted for his services to British business and to the World Business Council for Sustainable Development, no less - has ‘emerged without stain on his character’, as the establishment euphemism has it.

In June 2005, the US Justice Department closed a criminal investigation into the affair. In November last year, the Financial Services Authority in the UK closed inquiries into Watts’s role in the proceedings. Yesterday the US Securities and Exchange Commission announced it is to take no further action against him. And that’s that.

Few of us would be that lucky. If it came to light that the guys in the circulation department at a newspaper exaggerated circulation figures by 25%, the least they could expect is instant dismissal for gross misconduct. If a salesman artificially topped up sales figures to boost his commission earnings, prosecution for obtaining pecuniary advantage by deception would surely beckon.

But the rules that apply to the rest of us plainly do not apply to likes of Sir Philip. His only punishment is to be exposed as a grubby little liar. Enjoy your retirement, mate.

PS: One of Shell’s former PR men is a blogger, and made this revealing comment at the time of Watt’s ouster:

‘Phil Watts was perhaps the most notable modern example of the Peter Principle (the theory that employees within an organisation will advance to their highest level of competence and then be promoted to and remain at a level at which they are incompetent) and the ructions following his fall will hang around Shell for a long time.’

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