Business Week Online: Group of investors files suit vs. Shell: “Shell has protested that U.S. courts shouldn't have jurisdiction over the Anglo-Dutch oil company, which is based in The Hague, Netherlands. But in August, federal Judge John Bissell ruled the U.S. case could continue. In the past, European investors have rarely sued companies for damages after accounting fraud, but that is beginning to change.”:  "The new suit names the company as well as past and present executives, including Chairman Jeroen van der Veer.": Tuesday 10 January 2006

Press/AMSTERDAM, Netherlands

By TOBY STERLING

Associated Press Writer

A group of major European shareholders is suing Royal Dutch Shell PLC for several hundred million dollars in damages after the company's 2004 oil reserves accounting scandal, their lawyers said Monday.

The group of 26 institutional investors represents up to 5 percent of Shell's stock, and is led by Dutch pension fund ABP -- the world's second-largest pension fund by assets.

The investors say they should be compensated for losses suffered when Shell's stock fell after the company admitted overstating the size of its estimated oil and gas reserves by up to 33 percent.

According to the filing made Friday in the U.S. District Court for New Jersey, Shell made "materially false and misleading statements" between 1997 and 2003 that caused the investors "to sustain substantial losses."

Jay Eisenhofer, representing the investors, said it was too early to determine the exact amount of damages they would seek, but it would likely amount to "several dollars per share, or several hundreds of millions" in total.

A Shell spokeswoman said the company "contests these claims and will vigorously defend itself against the action."

Shell shares gave up early gains after the suit was announced Monday and closed up 0.1 percent at 26.89 euros ($32.48) in Amsterdam.

The reserves scandal cost Shell almost $150 million in fines imposed by U.S. and British regulators and led to the dismissal of three senior executives. The company's shares suffered a one-day decline of more than 10 percent when the problem was first made public in January 2004, and several smaller decreases later that year as Shell was forced to adjust the size of its estimated reserves -- an oil company's most precious asset -- five times in all.

Shell has already paid $90 million to settle one lawsuit brought by employee shareholders and is facing a separate shareholder class action lawsuit in the same New Jersey court.

Shell has protested that U.S. courts shouldn't have jurisdiction over the Anglo-Dutch oil company, which is based in The Hague, Netherlands. But in August, federal Judge John Bissell ruled the U.S. case could continue.

In the past, European investors have rarely sued companies for damages after accounting fraud, but that is beginning to change. In November, Dutch retailer Royal Ahold NV agreed to pay $1.1 billion to settle a class action lawsuit filed in the U.S. after a 2003 accounting scandal.

Eisenhofer said the European Shell investors' decision to sue in the U.S. wasn't merely a case of shopping for the most favorable court, but showed how pension funds like ABP are becoming more proactive in defending their interests.

"I think shareholder law is more fully developed in the United States," he said.

Shell spokeswoman Bernadette Cunnane said the company couldn't comment further on the pending cases or speculate on how they will eventually be settled.

The new suit names the company as well as past and present executives, including Chairman Jeroen van der Veer.

ShellNews.net: The relevant court document can be viewed via this link: http://www.gelaw.com/royaldutchshell.html

(select "Complaint (filed copy).PDF")

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