Shell agrees €73m employees settlement over reserves crisis
Oil giant Shell said today it had agreed to pay $90m (€73m) to settle litigation stemming from its reserves crisis of last year.
The group, which suffered a share price slump after telling investors that its oil and gas reserves were 20% lower than previously thought, said the proposed agreement with employees who participated in certain US-based savings plans was an “important step” towards putting litigation behind it.
Shell has already paid $120m (€98m) in a settlement with the Securities and Exchange Commission in the US last year and was also hit with a £17m (€24m) fine by the Financial Services Authority – the heaviest penalty ever imposed by the UK regulator.
Pending approval by the US Federal Court in New Jersey, Shell said today it had agreed to pay more than $90m (€73m), of which around $25m (€20.5m) of the class action claim is covered by insurance policies.
Beat Hess, Shell’s legal director, said: “We are hopeful that the court will approve the settlement, which represents an important step toward putting litigation relating to the reserves recategorisations behind us.”
The company is still facing shareholder class actions.
Shell discovered last week that it would not face criminal charges from federal authorities in the US over the overstatement of its reserves.
A federal prosecutor in the US said regulatory fines imposed on Shell and its willingness to co-operate with the investigation meant a prosecution would not be in the public interest.
The fiasco led Shell to propose ending its twin-board structure in the biggest shake-up in its history – a move which won the backing of UK investors at the annual meeting of the oil giant in London last week.
As well as the 20% cut in its proven reserves in January 2004, Shell reduced its estimates four more times in a crisis that claimed the scalps of chairman Sir Philip Watts, exploration and production boss Walter van de Vijver, and finance chief Judy Boynton.
