SAN DIEGO, October 28 2004 LAWFUEL – Lawsuit, law, legal, attorney newsThe attorneys in a ground-breaking shareholder law suit against the executives and board members of Royal Dutch Shell Petroleum Company and the Shell Transport and Trading Company (The Shell Group) said today’s announced plan to combine the corporations into a single entity with a single board and chairman does not go far enough.
“It is a timid, inadequate step forward,” said William S. Lerach, who filed suit in June on behalf of shareholders and the companies against the executives and board members of the firms, demanding that they be held accountable for the huge fines and excessive bonuses resulting from repeated fraudulent claims of the companies’ proven reserves.
“They are proposing to go from a very bad, very dysfunctional corporate governance structure to a conventionally bad single corporate governance arrangement,” said Lerach.
“We will study the details, but on the surface there appears to be nothing to open up the nomination and election process for independent board seats and nothing that guarantees the rights of independent board members to call meetings, have appropriate independent legal and accounting advice and to take steps to remove directors,” he said.
Patrick Daniels, a partner in the firm and a principal in the Royal Dutch Shell lawsuit, is available for comment.
Lerach’s firm, Lerach Coughlin Stoia Geller Rudman Robbins LLP, filed suit June 25 against 27 executives and directors of Royal Dutch and The Shell Group, seeking to force company officials to pay back undeserved compensation, citing their mismanagement and fraud.
Officers and director of the companies hid behind Shell’s opaque corporate structure to falsify proved oil and gas reserves for nearly a decade to make the company seem more profitable and competitive than was the case. As a result, the lawsuit charges, these insiders were able to pocket millions of dollars while share prices plummeted.
In late July Royal Dutch Shell paid the Securities and Exchange Commission US$120 million in fines, on top of US$31.1 million to Britain’s Financial Service Authority, to end investigations into evidence that the Shell Group had overstated its reserves by 4.5 billion barrels.
The suit was brought by the UNITE National Retirement Fund, based in New York, and the Plumber and Pipefitters National Pension Fund, based in Virginia. It was filed in New Jersey Superior Court. Lerach Coughlin Stoia Geller Rudman Robbins LLP is a 150-member law firm with offices in nine cities, specializing in shareholder derivative and class action litigation.