Financial Times: European funds unite to sue Shell: “The fact that such a large group of public institutional investors, representing virtually the entire workforce of a single country, has joined forces in this case is a good indication of the sense of betrayal felt by Dutch shareholders by the management of Royal Dutch.”: Monday 9 January 2006
By Thomas Catan in London and Ian Bickerton in Amsterdam
Published: January 9 2006
Royal Dutch Shell, the third-largest energy company by market value, is being sued by 26 mostly Dutch pension funds for overstating its oil reserves between 1999 and 2003.
The pension funds, led by ABP, Europe’s largest retirement fund, have withdrawn from a class-action lawsuit in the US and launched their own claim in a New Jersey court for several hundred million dollars.
Shell vowed to fight the new case, which names several current and former company executives including Sir Philip Watts, the former chairman, and Jeroen van der Veer, the current chief executive.
“We contest ABP’s claim and will vigorously defend ourselves against the action,” Shell said. “As the case is pending before the court in the US, we are unable to provide any further comment.”
ABP, by far the largest plaintiff in the case, said the group had broken away from the US class action lawsuit because of the risk that foreign investors could be excluded from any settlement or decision. By that time, the European investors fear that the deadline for any further legal action will have expired.
“We wanted to avoid our rights being jeopardised, so we have safeguarded them by starting our own procedure,” said a lawyer for ABP. “We did ask Shell to postpone the expiry of our rights voluntarily, but they refused. We were left with no other choice.”
ABP is seeking $150m in damages from Shell. Grant & Eisenhofer, the US law firm representing the plaintiffs, declined to specify how much the group as a whole was claiming, saying only it was in the “hundreds of millions of dollars”. Shell has paid more than $150m in fines by US and UK regulators after admitting two years ago to exaggerating the size of its “proved” reserves. The reserves downgrades led to the departure of Sir Philip Watts along with two other senior executives from the company.
Shell last year paid $90m to settle claims brought by its US employees, who also claimed their pension fund had been hit by the reserves restatements. “Despite the complex oil reserve accounting issues behind the suit, this case is really about misplaced trust,” Grant & Eisenhofer said.
“The fact that such a large group of public institutional investors, representing virtually the entire workforce of a single country, has joined forces in this case is a good indication of the sense of betrayal felt by Dutch shareholders by the management of Royal Dutch.”
ShellNews.net: The relevant court document can be viewed via this link: http://www.gelaw.com/royaldutchshell.html (select "Complaint (filed copy).PDF")
Click here for ShellNews.net HOME PAGE