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Developments in Royal Dutch Shell Securities Fraud litigation

By John Donovan



LEAD PLANTIFFS: Pennsylvania State Employees Retirement System and the Pennsylvania Public School Employees Retirement System

DEFENDANTS: Royal Dutch Petroleum Company and The “Shell” Transport and Trading Company p.l.c.

We recently published an update on the Global class action brought against Shell in the U.S. Courts.

Titanic battle in U.S. Courts over Royal Dutch Shell reserves scandal

We are now able to provide a further update supported by additional documents filed with the Court.

Before the case can proceed to trial in the U.S. Courts a decision has to be made whether the proceedings brought by U.S. holders of Shell stock will include claims from non-U.S. Shell shareholders.

Chief Judge John Bissell had ruled that a non-U.S. Shell shareholder, Mr Peter M. Wood (recruited after an appeal on the website could represent all non-U.S. shareholders. Judge Joel A. Pisano took over the case after the retirement of Chief Judge Bissell and the issue of “subject matter jurisdiction” is being reconsidered.
A retired Judge, Nicholas H. Politan, was appointed to make a recommendation to the Judge Pisano in what has become a mini-trial involving a huge volume of documents with potentially billions of dollars at stake dependent on the recommendation of the Special Master and whether it is accepted by Judge Pisano. An important factor in deciding the issue is whether any part of the fraud took place in the United States or only in Europe. 

The following is an extract from a transcript of court proceedings on 9 July 2007. The extract involves the Special Master and Stanley Bernstein, an attorney representing the Lead Plaintiff: –

THE SPECIAL MASTER: What makes the conduct in the United States fraudulent in this case?

MR. BERNSTEIN: In this case the record is replete with evidence of attempts to manipulate the oil and gas reserves. We’ll go through that. Meetings and meetings and meetings and documentation and effort primarily in Houston to manipulate the oil and gas reserves. That ultimately were recategorized and, I might say for this particular record, the liability of the act being fraudulent is a given. It is not even challenged.

However, the Special Master arrived at the conclusion that the ruling of Chief Judge John Bissell was wrong and that the European claims should be dealt with in Europe, not as part of the U.S. litigation. He has recommended accordingly to Judge Pisano.

We have updated the court documents on our website to include a transcript of the relevant hearing before the Special Master in July 2007 involving lawyers for the lead Plaintiff and for Shell. The transcript was filed with the Court on 16 October 2007.

Since reference is made to the David, Polk & Wardell Report, a “Highly Confidential” Shell internal document containing evidence of a cover-up with incriminating emails between senior Shell executives, we have added the report to the files accessible via the link below. It was filed with the Court on 12 October 2007.

Some of the files are over 90 pages, so be patient when loading them.

Readers of the Politan transcript proceedings can form their own opinion. My own impression is that the Special Master had already formed a conclusion before the July 2007 proceedings and was far from being impartial.

Such a complete reversal in a decision already made by a senior Judge may raise suspicions in some minds when a highly influential oil giant with a long track record of unethical conduct is the defendant in the proceedings with, as stated above, potentially billions of dollars at stake.

Shell’s track record, including for example, a leadership role in an illegal cartel, participation in fictitious trades, involvement in espionage and in corruption, is set out in the Wikipedia article below, to which I am a major contributor.

The case continues

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