THE NEW YORK TIMES: Shell Settles Employee Suit About Overstated Reserves: “The $90 million settlement represents profit for less than two days for Royal Dutch/Shell, which had net income of $18.5 billion last year under international financial reporting standards.”: Wednesday 13 July 2005
By BLOOMBERG NEWS
Published: July 13, 2005
AMSTERDAM, July 12 (Bloomberg News) - The Royal Dutch/Shell Group said Tuesday that it had agreed to pay about $90 million to settle a lawsuit brought by its United States employees after company restatements of its oil and gas reserves by a total of 41 percent.
The accord brings to about $240 million costs related to the overstatements, which led to lawsuits, criminal investigations and the ouster of the then chief executive, Sir Philip B. Watts. Insurance will cover $25 million of the settlement, Shell said.
The $90 million settlement represents profit for less than two days for Royal Dutch/Shell, which had net income of $18.5 billion last year under international financial reporting standards.
"The settlement looks like a lot, but if you put it into the context of the numbers Shell has, they can handle it," said Dirk Verbiesen, an analyst at F. Van Lanschot Bankiers in Den Bosch, Netherlands, who has a hold rating on Royal Dutch Petroleum shares.
The complaint was brought by employees enrolled in savings plans covered by the Employee Retirement Income Security Act, or Erisa. Shell Transport and Trading shares dropped 7.7 percent on Jan. 9, 2004, the day Shell cut its reserves estimate 20 percent, the first of several restatements.
If Shell's settlement is approved by the federal court in New Jersey, where the shareholder suit is pending, it would also pay as much as $1 million more in legal fees, Shell said.
"We are hopeful that the court will approve the settlement, which represents an important step toward putting litigation relating to the reserves recategorizations behind us," Beat Hess, Shell's legal director, said in the statement. The case was filed in the United States District Court in New Jersey.
Shell earlier had agreed to pay $151 million in penalties to end inquiries in the United States and Britain. It still faces investigations by the stock exchange Euronext and AFM, the Dutch financial markets regulator. Another shareholder lawsuit is pending in the court in New Jersey.
http://www.nytimes.com/2005/07/13/business/worldbusiness/13shell.html?
Click here for ShellNews.net HOME PAGE