Shells pays £80m to settle fraud inquiry

Oil giant Shell has agreed to pay more than £80m in penalties to settle inquiries by US and UK regulators into the firm’s restatement of reserves.

The company slashed its reserves by 20% in January, a move which cost three top executives their jobs.

News of the settlement came as the company unveiled second-quarter net income of $4bn (£2.2bn) up from $2.6bn last year helped by high oil prices.

Shell added the review of its corporate structure was moving at a “good pace”.

Costly error

Investors were stunned in January when Shell revised its estimates of oil and gas reserves down by 20%.

Subsequent smaller downward revisions also ate into shareholder confidence.

The scandal surrounding the downgrades led to the departure of Shell’s chairman Philip Watts, oil and gas chief Walter van de Vijver and finance chief Judy Boynton.

Shell announced it had reached an “agreement in principle” with both the UK’s Financial Services Authority (FSA) and the US Securities and Exchange Commission (SEC) to resolve their inquires into the matter.

The firm will pay a penalty of £17m to the FSA and a $120m (£65.7m) civil penalty in the US.

In addition, Shell said it had undertaken to spend an extra $5m to develop a comprehensive internal compliance programme.