Royal Dutch/Shell agrees to pay $90 million to settle U.S. lawsuit over reserves scandal

Tuesday, July 12th 2005, 10:16 am

By: News On 6

LONDON (AP) _ The Royal Dutch/Shell Group of Cos. said Tuesday that it has agreed to pay $90 million to settle a U.S. lawsuit related to its writedown of its oil and gas reserves last year.

Shell said about $25 million of the class action settlement, brought by employees participating in some retirement savings plans, will be covered by insurance.

The Anglo-Dutch oil company shocked investors last year when it confessed that its oil and gas reserves _ its most precious asset _ were around 25 percent lower than previously stated.

The scandal cost the company almost $150 million in fines imposed by U.S. and British regulators and led to the sacking of three senior executives. The company's share price also fell sharply each of the five time the reserves were restated during the year.

Shares in Royal Dutch Petroleum Co. on Tuesday dropped 0.9 percent to 53.50 euros ($65.23) in Amsterdam trading, while Shell Transport & Trading Co. fell 0.5 percent to 546 pence ($9.66) in London.

The company, which still faces other shareholder class actions on the issue, said the settlement announced Monday is dependent on final approval from the U.S. federal court in New Jersey.

Shell has also agreed to pay up to $1 million toward the cost of the employees' lawyers and the cost of providing notice of the settlement to employees.

``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,'' said Beat Hess, Shell's legal director.

U.S. federal authorities said last week that Shell would not face criminal charges over the reserves restatement, saying that the fines imposed on the company and its willingness to cooperate with the investigation meant a prosecution would not be in the public interest.

The reserves fiasco led Shell to propose ending its twin-board structure in the biggest shake-up in its almost 100-year history, a move that won the backing of investors at meetings in London and the Hague last month.

The merged company, to be named Royal Dutch Shell PLC, will be based in London, though its physical headquarters and tax home will be in The Hague.