'In your opinion, what are the key corporate governance issues presented in this case and why' - Essay Example

The basic role of corporate governance deals with the governance process of the corporation as well as how the management relates with several parties that are interested in the operations of the corporation, namely; shareholders, employees, directors, customers, creditors and suppliers. Every organization desires to have a good corporate governance that is not out to only minimize the possible risks of fraud and failure but also to improve the economic performance and its investment climate.

Such governance relates public savings, investment, integrity and market confidence making corporate governance an important inclusion in order to achieve financial stability and economic growth for a long time. The corporation in question is the Royal Dutch/Shell Group which has remained the third largest production and oil production in the world. The size of the corporation makes corporate governance an important factor as it employs more than 119, 000 employees in more than 145 countries (Evans, 2004).

For decades, Shell/Royal Dutch has been keen to maintain a good position among the top most global corporations. Its corporate governance has mostly been interested in the stability of the corporation in relation to its operations and name. . ation Governance Issues The declaration by Royal Dutch/Shell Group that it was facing inflated oil reserves and that it intended to downgrade approximately four billion oil and gas reserves resulted to a furor among industry analysts as well as its investors who came out strongly blaming the opaque and complex governance structure that was twin-board for the issues facing the group.

Analysts and experts claimed that this type of structure lacked proper accountability as well as resulted to financial manipulations (Hanney, 2004). The main corporation issue facing the Royal Dutch/Shell Group is thus its governance structure that entailed a twin board. This structure is believed to have had several loopholes in its governance thus the several issues associated with the group. The consequent of the above was a series of turmoil for the group. The public announcement of reserves reduction claimed that the company was fond of blaming human failings through its top executives and not come up with critics on the weaknesses of the structure of Shell (Malin, 2004).

The reaction of the group following the mounting pressure from its investors was to institute reviews and recognize and appreciated that it had complicated the organization in unusual ways but still insisted that it is the same structure that had taken the group to the greatest heights for more than one hundred years thus is justified by the legal regimes and differing tax. The issues facing Shell are not just a problem of the group but an issue facing the international gas and oil industry. Royal Dutch/Shell Group Governance Structure The main issue facing the governance of the group goes up to some of its senior executives who recognize that the corporation reserves were overstated.

In addition to this realization,