BURYING bad news is not a technique restricted to government departments. Yesterday Shell needed to alert the market to the embarrassing fact that there were new question marks over just how well proven 900 million barrels of its reserves might be.

Coming on top of the 25 per cent writedown in reserves that the company has already done and the fact that its review of what was left has not yet been completed, meaning that the 900 million could turn into an extra 1,800 million, this was not what the stock market wanted to hear.

But luckily Shell was also able to announce that it has concluded ahead of schedule its plans for restructuring the business. This was definitely good news. It brought with it the added bonus that tracker funds would need to increase their holdings in the UK business. So the serendipitous outcome of the day was that Shell shares finished on a high note.

Admittedly, the trading news was encouraging, with profits for the third quarter higher than expectations, buoyed by the strong oil price. But any delight there might be at Shell Centre for having trumped BP’s profits seems destined to be short-lived. For while BP has laid the groundwork to enable it to increase production to meet the growing demand, Shell continues to pump up its oil faster than it replenishes its stocks. Years of lagging on the exploration front have left the company now desperate to find new oil and gas supplies. And since yesterday’s confession meant that those stocks might be significantly lower than we had previously been led to believe, even after four adjustments, then the desirability of a bit of burying is clear.

Nevertheless, the changes that the company had to announce about its structure were welcome. They go further than some had expected and would create a unified company with one board, which should leave fewer cracks for nasty e-mails and corporate failings to fall through. However, a change of structure, though desirable, will not on its own amount to a change in culture. Changing company cultures takes time and strong leadership.

Had Sir Philip Watts been in charge of Shell under the planned new structure, would the scandal that has rocked the City, and brought the company hefty fines in the United States and Britain, have been avoided? There is plenty of evidence to suggest that, whatever the apparent corporate governance correctness of a business, if individuals do not want to play by the rules, they may take some time to be stopped. Sir Philip was a strong personality, used to getting his own way in the organisation.

The evidence that has emerged from Shell is of an organisation in which the bonus structure contributed to a creative approach to valuing reserves and a culture of cover-up. This was a business in which a paper could be produced at a high level under the title: Creating Value through Entrepreneurial Management of Hydrocarbon Resource Values. To judge by yesterday’s news about another 900 million barrels being in some doubt, that entrepreneurial approach was widely used.

The IEA is now calling for a new, universally recognised methodology standard for reserve estimation. At the moment, it found, “current practices vary considerably among companies.” A universal standard would certainly be a move in the right direction.

But Jeroen van der Veer will need more than that if he is to restore faith in Shell. He will need a strong board and, in particular, a strong chairman. Until the extent of the reserves problem is finally quantified, that individual may be reluctant to take on the role.

Greed and risk at Rover

MG ROVER’S report to shareholders kindly offers reassurances to employees about pensions — pledging that the company intends “for this excellent pension strategy to continue”.

Rejoice all round. Another final-salary scheme is saved, although the level of contributions is being reviewed and it is in deficit by £67 million.

But then the directors are fond of excellent pension strategies, none more so than their own. This one has, in just four years, rewarded five already well-remunerated people with a fund of £16.48 million. And there will be more to come. To judge by last year’s contribution, the five will benefit from an annual award of around £3.58 million until they retire.

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