Investments & Pensions Europe: Shell facing costs from Dutch funds’ action

IPE.com 2/Feb/06: GLOBAL – Oil giant Shell today says the two class actions brought against it by Dutch pension schemes and German and Luxembourg institutions could dent its earnings significantly.
Shell said in its full-year results that the claims are linked to a pending securities class action in the US.
Shell management stated it could not predict when the matters would be resolved nor how they would be resolved.
It is also “currently unable to estimate the range of possible losses from such matters and does not currently believe the resolution of these pending matters will have a material impact on Royal Dutch Shell’s financial condition, although such resolutions could have a significant effect on periodic results for the period in which they are recognised”.
Last month, IPE reported that Stichting Pensioenfonds ABP, the Dutch civil service fund, is leading a group of 26 funds in a class action lawsuit against Royal Dutch Shell over the oil giant’s reserves scandal.
The group is seeking hundreds of millions of dollars in damages following Shell’s improper accounting of its oil and natural gas reserves between 1997 and 2003.
The schemes, which bought over 200m between 1999 and 2005 in predecessor firm Royal Dutch, claim they acquired their shares at artificially inflated prices and that the overall value of their holdings suffered massive losses.
Shell did not respond to IPE questions on the matter.
In other news, the South African arm of Shell has been accused of “improperly” using surplus pension fund money according to a 2001 amendment of the Pension Funds Act.
According to local reports, a tribunal set up by Registrar of Pension Funds has ruled that Shell should repay millions of rands to the staff DB pension scheme.
The ruling found, amongst others, that the Shell Southern Africa Pension Fund had enjoyed a contribution holiday since December 2001.
Reports also state that a shortfall was created because insufficient assets were shifted following a transfer of members from other funds – largely Shell subsidiaries Cera, Easigas and Veetch.
The Financial Services Board (FSB) is reviewing the ruling, but has yet to make a final decision.
The scheme, Alexander Forbes (scheme administrator) and Edward Nathan (scheme attorneys) could not be reached for comment.
By Meagan Rees

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