ShellNews.net: Royal Dutch Shell settles Class Action Lawsuit and undertakes ethics makeover: Wednesday 31 August 2005: 20.00 ET
Royal Dutch Shell settles another US Class Action Lawsuit and undertakes ethics makeover
By John Donovan
Shell today announced that a settlement has been reached with plaintiffs in a shareholder derivative actions arising out of Shell’s 2004 reserves recategorisation - the Shell reserves scandal.
The action alleged that named individual defendants and third parties including PRICEWATERHOUSECOOPERS and KPMG breached their fiduciary duties to the companies, abused their control over the Companies, aided and abetted breaches by others, and/or committed gross mismanagement and/or constructive fraud.
The Plaintiffs are Shell shareholders, Unite National Retirement Fund and the Plumbers and Pipefitters National Pension Fund. Named defendants included current directors of the unified new company, Royal Dutch Shell plc – namely its CEO Jeroen van der Veer, Executive Director Malcolm Brinded and Maarten van den Berg.
Under the terms of the settlement, Royal Dutch Shell plc has agreed to adopt and implement certain corporate governance principles negotiated with counsel for the derivative plaintiffs and a corporate governance expert retained by plaintiffs’ counsel.
The principles include a section covering corporate ethics, honesty and legal compliance.
In particular, Shell has agreed to: -
Adopt and implement an effective compliance function, including the appointment of a senior compliance officer who shall have the duty and authority to do the following:
(a) Create, implement and oversee a system by which corporate employees, suppliers, customers and advisor professionals and the like can, on a confidential basis and without fear or reprisal, provide information concerning possible illegal or unethical conduct regarding the Company; and
(b) Subject to the consent of the Company's Legal Director (or the functional equivalent of the most senior internal legal advisor to the Company), retain separate and independent counsel at the Company's expense to provide advice and counsel.
This officer, whose identity will be disclosed on the Company's website, will also act as a neutral party for the employees to report instances of illegal behavior or other compliance-related concerns. This change may have ramifications in respect of Shell's draconian legal action against reserves whistleblower Dr John Huong, a former Shell geologist. It is a tactic acceptance that Shell management has acted unethically as alleged by Dr Huong in his comments which led to the lawsuit against him. Eight Royal Dutch Shell companies collectively obtained a High Court Injunction to silence him. The injunction against information published on this website remains in force.
Terms of the settlement include payment by Shell of $9.2 million in attorneys’ fees and expenses to counsel for the derivative plaintiffs.
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