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Shareholders have grounds to bring lawsuits against Royal Dutch Shell Plc?

Screen Shot 2013-10-01 at 07.56.54According to an informed source, there is significant potential for shareholder lawsuits against the directors of Shell on the basis of their failure to control spending, possibly in breach of both their fiduciary obligations and internal corporate procedures. The expenditure of $26 billion on “unconventionals” suggests that in North America spending was completely out of control. Message to the mainstream media. Check with your lawyers. I believe they will confirm the likelihood of a flood of class actions lawsuits. 

By John Donovan

According to an informed source, there is significant potential for shareholder lawsuits against the directors of Shell on the basis of their failure to control spending, possibly in breach of both their fiduciary obligations and internal corporate procedures. The expenditure of $26 billion on “unconventionals” suggests that in North America spending was completely out of control. Comments on this site and in the press suggest that little of this expenditure is likely to be recovered, with multi-billion dollar write-downs of US assets expected to be a feature of Shell’s accounts for years to come.
 
The Brent price fixing investigations have been largely stalled by Shell’s actions in attempting to block the sharing of discovery information between the various government agencies investigating the allegations. The sharing was authorised by a federal court, but this ruling has been appealed by Shell, effectively stalling the process.
 
A cynical view is that the major projects in Alaska, Pennsylvania and Louisiana (and possibly unconventionals) were primarily about buying political influence. In states where employment is a major issue much of the business of congress is taken up with bringing home “pork” to their home states and landing these projects would have been major achievements for the congressmen concerned.
 
The cancellation of the Louisiana GTL plant, the doubts surrounding the viability of the Pennsylvania petrochemical facility, and the indefinite postponement of the Alaska exploration programme should be seen as both a means of reducing capital expenditure by Shell and as a means of putting pressure on the US government. The reality is that Shell can ill-afford any of these projects.

Message to the mainstream media. Check with your lawyers. I believe they will confirm the likelihood of a flood of class actions lawsuits. 

Now we all know the real reason for the early retirement of Peter Voser. He must have known what was coming at the time when he announced his surprise departure last May for a “lifestyle change.” Shareholders were kept in the dark until the profit warning was issued on 17 January, some eight months later.

The position of CFO Simon Henry is beginning to look untenable. He too may have to face a lifestyle change, but don’t be too concerned. He and his former boss amassed millions while ruining the company. And they will no doubt be fully indemnified by Shell against any claims arising from their conduct as executive directors of Royal Dutch Shell Plc.

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