Royal Dutch Shell Plc  .com Rotating Header Image US Class Action Suit Against Shell CEO Jeroen van der Veer Alleging Securities Fraud Given Consent to Proceed US Class Action Suit Against Shell CEO Jeroen van der Veer Alleging Securities Fraud Given Consent to Proceed

Thursday 11 August 2005

A securities fraud case against the world’s third-largest oil company, Royal Dutch/Shell Group, and named Defendants including Shell Chief Executive Officer Jeroen van der Veer, has been given permission to proceed by U.S. District Chief Judge John Bissell. The 152 page Court Order was issued on 9th August 2005. It is accessible via the link below.

The Lead Plaintiff in the case is the Pennsylvania State Employees Retirement System and the Pennsylvania Public School Employees Retirement System.

The Defendants include Royal Dutch Shell (RDS) several of RDS’s current and former senior executives, and RDS’s outside auditors, PricewaterhouseCoopers LLP (“Pv;C UK”) and KPMG Accountants N.V. {“KPMG NV”), as well as PricewaterhouseCoopers International and KPMG International. The Complaint seeks to recover damages caused by alleged violations of the federal securities laws.

The claims in the Complaint stem from the dissemination by RDS of what Plaintiff characterizes as “materially false and misleading statements” concerning RDS’s reported proved oil and natural gas reserves.

The Complaint alleges that, during the Class Period, RDS issued false public reports, overstating: (a) their proved oil arid natural ga3 reserves by billions of barrels of oil equivalent (“boe”), (b) their reserves replacement ratio {“RER”), and (c) their future cash flows by over $100 billion. Oil reserves are a key measure of an oil company’s wealth and future strength.

Jeroen van der Veer served as the Vice-Chairman of the CMD from 1997-2003 and signed the allegedly false and misleading Annual Reports on Form 20-F under the Sarbanes-Oxley Act.2 It is also alleged that he reviewed and authorized the filing of the 1998 and 1999 Annual Reports on Form 2 0-F. Van der Veer has served as President of Royal Dutch since 2000 and was promoted to Chairman of the CMD in March 2004. He joined RDS in 1971 and has held a number of senior management positions around the world.

Although some counts in the law suit were dismissed, the Judge has allowed claims to proceed against individual Defendants including current and former Shell executives Sir Philip Watts, Walter van de Vivjer, Jeroen van der Veer and Judith Boynton, Maarten van den Bergh and Sir Mark Moody-Stuart.

The Plaintiff has also been given consent by the Order (accessible below) to amend the present Complaint to plead certain claims against KPMG International, and individual Defendants including Malcolm Brinded, Paul Skinner, Aad Jacobs, Harry Roels and Steven L Miller.

It isn’t clear how many people were affected by the alleged fraud. However the case is regarded as one of the most significant securities fraud actions because of the size of the multinational and the length of the class period, which is roughly five years. It is being closely watched by regulators and lawyers from around the world.

There was activity in the United States to perpetuate… fraud,” said Stanley Bernstein, the lead attorney. Mr Bernstein cited meetings in Houston about calculating the company’s reserves in Nigeria and Angola. Shell’s group reserves auditor came from Europe to attend at least one of those meetings, he added. And the oil company had a New York office for investor relations. “This was a central location. … The fraud does not have to be masterminded in the United States,” Bernstein said.

Royal Dutch Shell has already settled for *$90 million dollars a Pension Fund Class Action Law Suit brought its US employees and will probably enter into discussions to settle this claim now that it has cleared the legal hurdles to proceed.

(Click here for *related article in Convenience Store News: Read the article)

The 152 page Court Order by District Chief Judge John W Bissell

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