SAN DIEGO, July 29, 2004 Today’s legal news, law firm announcements…

SAN DIEGO, July 29, 2004 Today’s legal news, law firm announcements & legal research in LAWFUEL– The Securities and Exchange
Commission’s (SEC) decision to end its investigation of the Royal Dutch Shell
Group petroleum companies is short-sighted and disappointing because it does
nothing to force the company to correct corporate governance flaws that
allowed the oil reserve fraud to occur and fails to hold personally
accountable the corporate insiders who perpetrated the fraud, the attorney for
two large American institutional shareholder groups said today.

The Royal Dutch Shell Group announced today that it would pay the SEC $120
million in fines, on top of $31.1 million to Britain’s Financial Service
Authority, to shut down further probing by the two agencies into the Group’s
fraudulent overstatement of its proven petroleum reserves by 4.5 billion
barrels. The false claims resulted in massive financial restatements and
depressed Royal Dutch Shell Group share prices dramatically.

“The fine is the exact type of damage to the Company that should be paid
by the defaulting executives or board members,” said Bill Lerach of Lerach
Coughlin Stoia & Robbins, which filed suit June 25 in New Jersey state court,
on behalf of workers and retirees participating in the UNITE National Pension
Fund, based in New York, and the Plumbers and Pipefitters National Pension
Fund, based in Virginia. The suit names 27 directors and officers of The
Shell Group, and also their accounting and audit firms, PricewaterhouseCoopers
International and KPMG International. It accuses the executives and board
members of breach of fiduciary duty, abuse of control, mismanagement, fraud
and unjust enrichment and alleges that the accounting firms, which had
unlimited access to information in all of the companies, were guilty of
professional negligence and accounting malpractice.
“The settlement involves no admission of wrongdoing and, far worse,
includes no promise of changes in the way the Royal Dutch Shell Group
operates. Without significant internal governance reform, there is nothing to
keep this disaster from repeating. Also, we will seek to hold board members
and executives personally accountable for this fine as well as the other harm
their misconduct has inflicted on the Royal Dutch Shell Group.”
Among other relief, the suit seeks to force the Shell Group to break down
the walls that limit shareholder access to company decision-making. It
proposes to simplify Shell’s structure, including a demand for a shareholder
vote on the combining of Royal Dutch Shell’s and Shell Transports’ boards, the
right of shareholders to nominate three directors and other new procedures
that give shareholders better information and influence on policies,
particularly in the area of executive compensation.

World-renowned corporate governance guru, Bob Monks, an advisor to the
Lerach Coughlin firm, has observed: “The Shell Group of companies has an
arcane structure that for years has frustrated investors’ attempts to obtain
reliable information and influence the board’s policies. The scandal that has
engulfed the Group and the boards’ staunch refusal to lay out a clear and
informative plan to fix the problems, has justifiably resulted in investors
seeking to hold board members personally accountable and force the necessary
changes through litigation. We are going to insist on improved internal
controls and corporate compliance procedures to protect Shell and its
shareholders from any recurrence of such events.”

“Executives and directors cannot be permitted to use shareholders’ money
to buy their way out of problems that they cause — and we are going to try to
hold them accountable for these fines. Shareholders deserve assurance that
the companies will take the steps required to open up their processes and make
it much harder for future officers to enrich themselves by lying and
withholding information,” Lerach said.

Lerach Coughlin Stoia & Robbins LLP is the nation’s largest plaintiffs’
securities law firm, with 140 lawyers and offices in San Diego, Los Angeles,
San Francisco, Houston, Washington DC, Philadelphia, Florida and New York. It
specializes in shareholder litigation involving many of America’s high profile
public companies.

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