Sunday Telegraph: Shell's auditors in firing line as US lawyers prepare class action: “Shell had ignored internal warnings for several years that it was overstating its reserves to maintain the appearance of having a strong oil and gas reserves base”
By Sylvia Pfeifer (Filed: 29/08/2004)
The US law firm leading class action lawsuits against Shell is considering targeting the oil giant's external auditors, KPMG and PricewaterhouseCoopers, over their alleged role in the overbooking of reserves.
Stanley Bernstein, the senior partner with Bernstein Liebhard & Lifshitz, which is heading the class actions as "lead plaintiff" on behalf of investors, said that his firm was considering including the auditors when it files an amended complaint against Shell next month.
"We will be filing an amended complaint by mid-September. We are also aggressively looking at their [the auditors'] role. It is something that we are investigating."
Shell shocked investors in January when it revealed that it had overbooked its oil and gas reserves by 25 per cent. The class action suits already name a number of present and former Shell senior executives.
Last week the Financial Services Authority, the UK regulator, and the Securities and Exchange Commission, the US regulator, published their findings into Shell's reserves overbooking. The regulators said that Shell had ignored internal warnings for several years that it was overstating its reserves to maintain the appearance of having a strong oil and gas reserves base.
Bernstein said his firm is still trying to establish whether KPMG and PwC have violated America's securities law. He rejects the argument that because the auditors only audited Shell's financial accounts - which do not include its reserves - they cannot be held responsible.
"KPMG believes it has behaved appropriately and accurately in our audit work at all times," a spokesman for KMPG said this weekend. A spokeswoman for PwC said when the FSA report was published last week: "We stand by the work undertaken by PwC."