The Justice Department has begun an investigation into whether top officials at Royal Dutch/Shell Group broke any laws by failing to disclose earlier an overbooking of the company’s proven oil and natural gas reserves, a source close to the inquiry told the Houston Chronicle.

The reported Justice Department probe comes on top of inquiries that already are under way by European regulators and the Securities and Exchange Commission (SEC). Last week, it was revealed that the SEC probe was focusing on whether upper level management of London-based Royal Dutch/Shell received bonuses and incentives in exchange for inflating the company’s proven reserves (see Daily GPI, March 9).

The Justice Department inquiry is being spearheaded by prosecutors in the U.S. attorney’s office in Manhattan, which often takes charge of securities law inquiries involving large publicly traded companies, the newspaper reported. Unlike the SEC, federal prosecutors have the authority to bring both criminal and civil charges against violators.

“As far as I’m aware, we’ve not been contacted by the Justice Department,” said Royal Dutch/Shell spokesman Simon Buerk in London. The company, however, has been contacted by the Financial Services Authority in the United Kingdom, the Dutch stock exchange (Euronext) and the SEC, he noted.

“The SEC told our lawyers that it had launched a formal, non-public investigation. We are cooperating fully with them,” Buerk told NGI.

The focus of all of the attention is Shell’s disclosure in January that it was cutting its proven reserves by 20%, or by about 3.9 billion barrels of oil equivalent. The SEC announced a formal inquiry of the company a month later.

It’s been reported that Shell’s former chairman, Sir Phillip Watts, may have known about the overbooking of oil and gas reserves as far back as two years ago. Watts was forced to resign in early March, along with the company’s exploration and production chief amid the fallout over Shell’s reserve restatement.

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