Showa Shell cuts top executives over massive losses

TOKYO -- Japan's leading oil company, Showa Shell Seikiyu K.K., announced Thursday a sweeping reshuffle of its top management, including the resignation of the chairman and president, in the wake of a huge foreign exchange loss.

The Anglo-Japanese oil refiner had reported an estimated loss of 125 billion yen, or $1.1 billion, in 1992 because of forward contracts for dollar-buying, forcing the company to liquidate land and stock holdings.


President Takeshi Henmi said he intends to resign along with Chairman Kiyoshi Takahashi after the in-house confusion is over.

'We will do our utmost to get the situation under control,' he said.

A company official said two treasury division officials, Executive Director Yutaka Otaka and Director Yasuyuki Futami, resigned their posts at a board of directors' meeting.

The official said the board also decided to dismiss the treasury manager in charge of foreign exchange deals, and executives and auditors will surrender their regular bonuses.

Ralph G. Gaskell, manager of pension fund investments at Shell International Petroleum Co., will assume the position of representative director and vice president of Showa Shell, the company announced.

The company had announced earlier the loss was caused by a financial officer who started expanding its forward buying in 1989 in violation of company regulations. Treasury Manager Yukihisa Fujita was dismissed effective Monday.


Other treasury division directors, including Managing Director Yutaka Otaka, who had concealed the losses although he knew about them, will resign, the company said.

Showa Shell's pretax profits in the 1992 business year ending Dec. 30 declined 12.3 percent from a year earlier to $324 million. Its sales also posted a 3.2 percent year-on-year drop.

The company has made a downward revision of its projection for 1993 pretax profits from an initial figure of $341 million to half that amount because of the exchange losses.

The official said the company is now mapping out a three-year reconstruction plan.

In London, Sir Peter Holmes, chairman of the committee of managing directors of the Royal Dutch-Shell Group of companies, said the firm was 'very shocked and disappointed by Showa Shell Sekiyu's huge speculative losses.'

Royal Dutch-Shell has a 50 percent shareholding in Showa Shell.

John Jennings, managing director of Royal Dutch-Shell, said the losses would have bankrupted other companies. 'But Showa Shell has nonoil assets such as land which may be realized to meet these losses,' he said.

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