GLOBAL – Oil giant Royal Dutch Shell has resolved its dispute with US retirement plans in a $90m (€74.1m) settlement.
The class-action case derived from the company’s misstatement of its crude oil reserves between 1999 and 2004.
The suit had been brought against certain Shell companies by US employees enrolled in the plans.
The settlement - of which $25m is covered by insurance policies - came after the Shell Provident Fund and Shell Pay Deferral Investment Fund launched a lawsuit against the oil company.
They claimed they had suffered financial damage due to the overstatement of reserves.
Shell confessed last year that its oil and gas reserves were some 25% lower than previously stated – costing the funds an estimated $120m.
“This is a really great settlement. Dollar for dollar, this is huge,” said plaintiff lawyer David Scott in one report.
The affair also hit Shell’s share price and led to investment losses at the pension funds. Three senior executives were axed, followed by the suit brought under the Employee Retirement Income Security Act (ERISA).
The settlement was reached in July, and the money was to be distributed to “eligible participants in the relevant employee savings plans” following certain deductions such as court fees, said a Shell press statement.
“Shell believes that this is a good settlement for plan participants and for the companies,” said Shell’s legal director Beat Hess.
It “represents an important step towards putting legislation relating to the reserves re-categorisations behind us”.
Shell’s third quarter report showed a surge in underlying profits with $6.6bn (€5.4bn) cash from operations.
“Despite the impact of the hurricanes, the production outlook for 2005 is around 3.5 million barrels of oil equivalent per day. LNG growth continues at pace. Downstream performance, profitability and cash generation remain very satisfactory,” said chief executive Jeroen van der Veer.
Yesterday IPE reported that Shell is facing possible strike action over pensions in the Netherlands.