London Evening Standard: Shell faces flood of lawsuits by workers
28 April 2004
EMBATTLED oil major Shell faces a fresh wave of fraud claims in the US from lawyers acting for thousands of current and former employees.
The workers say the firm's oil reserve mis-statements caused major losses to more than £1bn worth of share savings schemes, and claims could extend back as far as the mid-Nineties.
The move comes as lawyers slug it out in the US courts to win the coveted 'lead plaintiff' role to consolidate competing class actions from retail and institutional Shell stockholders into one huge, multi-billion dollar claim for all shareholders against the company, its present and former directors.
Court insiders predict that tussle is a two-horse race between Shell's biggest US shareholders, the Pennsylvania, and Ohio state retirement schemes.
Other big shareholders include the city of Detroit's policemen and firemen's retirement system.
All the Shell actions stem from a series of admissions beginning in January when ousted chairman Sir Philip Watts was at the helm, that the firm had overstated its proven reserves of oil and gas for at least the past two years, causing billions of pounds to be wiped from Shell's market value.
Watts and ousted finance director Judy Boynton are both named in the class actions, which could be extended to Shell's auditors KPMG and PwC.
New York lawyers Milberg Weiss Bershad Hynes & Lerach - the first firm to file a class action suit in January - has dropped out of the lead plaintiff battle to work on a separate claim for members of Shell's various company pension schemes.
Milberg partner Steve Schulman said: 'We have moved into an Erisa (Employee Retirement Income Security Act) action on behalf of employees or employee funds directed to Shell stock.' A similar claim has been filed by lawyers Scott & Scott on behalf of the Shell Provident Fund and the Shell Pay Deferral Investment Fund.
These claims can run side-by-side with the consolidated class action for other Shell shareholders, making the company and its directors liable for a potentially bigger total payout if there is any finding of wrongdoing.
They may also allow Shell employees to sue for any losses going back further than the 26 March, 2004 to 3 December, 1999 period set out under the existing class actions, thanks to complex rights to protect employee pension schemes.
Schulman added: 'As much as £1bn in Shell stock was in those plans as of last year's valuations, so the new action will run beside the federal securities case, and it may have different statutes of limitations.'
In the main class action, Pennsylvania state has hired lawyers Bernstein Liebhard & Lifschitz, a firm which helped oversee a $1bn payout last June from 309 consolidated claims relating to more than 300 American initial public offerings between 1998 and 2000.
Meanwhile, Shell plans to switch hundreds of IT jobs to India in a cost-cutting drive likely to be only the first such shake-up under new chairman Jeroen van der Veer. The group's global IT workforce of 9,300 will fall by between 1,900 and 2,800 as the firm looks to outsource all it can to either India or Malaysia and slim down its huge IT budget of £475m