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London Evening Standard: Shell ‘has lied for 10 years’


London Evening Standard: Shell ‘has lied for 10 years’

James Rossiter,

25 June 2004

EMBATTLED oil giant Shell has been dealt another blow with the filing of a new multi-billion dollar US class action against dozens of directors.

The action accuses the company of falsifying its reserves for almost 10 years and demands that ‘insiders’ who benefited must be brought to book.

Today’s filing is also the first lawsuit in the Shell saga to accuse auditors KPMG and PricewaterhouseCoopers of negligence and malpractice.

The firm has admitted four times since January that it overstated the amount of oil and gas on its books, That has resulted in it reducing its proven reserves by 4.5bn barrels, or 22% of the total.

Seen by the London Evening Standard, the lawsuit accuses 27 of Shell’s current and past directors and senior executives of breach of fiduciary duty, abuse of control, mismanagement, fraud and unjust enrichment.

The UK, Dutch and international partnerships of KPMG and PwC are accused of professional negligence and accounting malpractice.

The class action will be a headache for new finance director Peter Voser, appointed only yesterday and facing the unenviable task of helping oversee a review of the Anglo-Dutch firm’s cumbersome dual-listed structure.

Among the top brass named are Shell’s current group chairman Jeroen van der Veer, former chairman Sir Philip Watts, one-time finance director Judy Boynton, Lord Oxburgh – new head of Shell’s UK arm – and Dutch chairman Aad Jacobs.

The suit also names a list of luminary non-executive directors from Britain and Holland, including former-Reuters chief executive Sir Peter Job, one-time head of the UK diplomatic service Sir John Kerr and former Dutch Prime Minister Wim Kok.

The action is being led by two big US blue-collar workers’ pension funds – the New York-based Unite National Retirement Fund for textile workers, and Virginia’s Plumbers and Pipefitters National Pension Fund.

The claim also calls for a change in the firm’s ‘opaque and complicated corporate structure’. America’s biggest firm of class-action lawyers, Lerach Coughlin Stoia & Robbins is coordinating the claim.

Senior partner there, Bill Lerach, said Shell’s structure allowed it to ‘falsify’ reserves for nearly 10 years and ‘allowed insiders to pocket millions of dollars in undeserved compensation which must be disgorged’.

Two of Shell’s biggest US investors, asset manager Knight Vinke and Californian pension fund Calpers, have written to shareholders ahead of Monday’s annual general meetings in London and The Hague, pointing to worries over ‘transparency and impartiality’ of the current corporate review.

At the Dutch AGM, van der Veer may be voted out of his job over the reserves fiasco.

The London AGM finally takes place after being postponed for two months. Judy Boynton is expected to announce she is leaving at that meeting.

Shell already faces a consolidated class action of 12 separate claims in the US courts, led by Pennsylvania’s state workers.

• BP’s delayed annual filing with US authorities will show its energy reserves are not significantly different from those in its report to shareholders in March, chief executive Lord Browne said. Any differences would be ‘literally immaterial’, he told reporters. BP had postponed the filing to incorporate the result of talks with investors about oil and gas reserves.

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