ChannelNewsAsia: Shell hit by new lawsuit in US over reserves scandal: “fresh lawsuit names 27 directors and officers of Royal Dutch/Shell, and also their accounting and audit firms, PricewaterhouseCoopers International and KPMG International”
Posted: 26 June 2004
LONDON : Embattled oil giant Royal Dutch/Shell was hit with a new lawsuit in the United States on behalf of shareholders seeking compensation over the group's energy reserves scandal.
It comes as Shell faces a rough ride at dual annual shareholder meetings in London and the Hague on Monday.
The group is trying to restore investor confidence in the wake of its admission that it overestimated its proven energy reserves by 4.47 billion barrels, or more than 20 percent.
The fresh lawsuit names 27 directors and officers of Royal Dutch/Shell, and also their accounting and audit firms, PricewaterhouseCoopers International and KPMG International, according to a statement from the lawyers received here.
It was filed by Lerach Coughlin Stoia and Robbins LLP -- the firm leading the civil prosecution of Enron executives -- in New Jersey Superior Court on behalf of the UNITE National Retirement Fund and the Plumbers and Pipefitters National Pension Fund.
The suit accuses executives of breach of duties to shareholders, abuse of control, mismanagement, fraud and unjust enrichment and alleges that the accounting firms, which had unlimited access to information in all of the companies, were guilty of professional negligence and accounting malpractice.
"This is a case in which the officers and directors of these interconnected companies have hidden behind an opaque and complicated corporate structure to falsify proved oil and gas reserves for nearly 10 years in order to make the company seem more competitive and more profitable than was the actual case," said William S. Lerach, counsel for the shareholders.
"It also allowed insiders to pocket millions of dollars in undeserved compensation which must be disgorged," he said in a statement.
The suit seeks to force "dramatic changes" in the governance of the group.
It proposes to simplify Shell's structure and demands a shareholder vote on the combining of the two separate boards of Royal Dutch and Shell as well as the right of shareholders to nominate three directors.
"Although we read lately of Shell's reported willingness to change the way it does business, in our experience Shell has been long on promises and short on delivery," said Bruce Raynor, president of UNITE, the North American Apparel, Textile and Laundry Workers Union.
The suit also seeks money damages against each defendant and proposes that they disgorge salaries, bonuses, stock awards, profits and special benefits resulting from their alleged breaches of duty.