Shell Facing New Legal Action From Dutch Pension Funds

by Ulrika Lomas, for LawAndTax-News.com, Brussels

11 January 2006

A group of 26 Dutch pension funds has launched legal action against oil firm Royal Dutch Shell over the company's overstatement of its oil and gas reserves.

In January 2004, Shell announced that it had conducted an extensive review of its world-wide reserve base, as a result of which it would be cutting its estimate by 3.9 billion barrels, or 20%.

Given the size of the cuts announced (which sent share values in Shell operations such as Shell Transport and Trading and Royal Dutch plummeting), analysts at the time suggested that the overstatement was unlikely to have been accidental.

The investors in this latest legal attack on the oil giant hold around 5% of Shell's shares, and are reported to be seeking $150 million in compensation.

In a statement, Grant & Eisenhofer, representing the pension funds, explained that:

"The funds claim they acquired their shares at artificially inflated prices and that the overall value of their holdings suffered massive losses, the exact amount to be determined at trial."

The statement continued:

"Despite the complex oil reserve accounting issues behind the suit, this case is really about misplaced trust."

"The fact that such a large group of public institutional investors, representing virtually the entire workforce of a single country, has joined forces in this case is a good indication of the sense of betrayal felt by Dutch shareholders by the management of Royal Dutch."

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