Jeroen van der Veer cuts a deal with U.S. Attorneys

Jeroen van der Veer cuts a deal with U.S. Attorneys

By John Donovan

Shell shareholders and employees could be forgiven for being under the impression that Jeroen van der Veer, the Chief Executive of Royal Dutch Shell Plc has no further personal involvement in the repercussions from the reserves fraud.

If so, they will be surprised to learn that lawyers acting for Shell, van der Veer, Sir Philip Watts, Walter van de Vijver and Judith Boynton were involved last week in machinations over the ongoing U.S. class action litigation. Moves are also underway right now behind the scenes to keep important related information from reaching the public, which of course includes potential and current Shell shareholders. Hundreds of millions of dollars are at stake as a result of alleged securities fraud by Shell executive directors.

A “mini-trial” has been underway in the USA for over a year in relation to the Shell reserves scandal which first made global news headlines in January 2004. The original litigation brought by U.S. Shell shareholders was put on hold while an attempt was made to have a single trial in the USA to cover qualified U.S. and Non-U.S. purchasers of Shell stock. Just in time to beat a Court imposed deadline, the website royaldutchshellplc.com after an appeal published on the site on behalf of New York lawyers acting for the U.S. plaintiffs, found a European Shell stockholder, Mr Peter M. Wood, who was appointed by the U.S. court to represent all Non-U.S. Shell shareholders.

Several months later Shell torpedoed the attempted unification of U.S. and European claimants by secretly negotiating a settlement with other holders of European Shell stock. The settlement of $352.6 million, plus $47 million in legal fees, is subject to *approval by the Amsterdam Court of Appeals in The Netherlands.

Shell has agreed to pay the law firm acting for the U.S. plaintiffs $27 million to cover legal fees in respect of the mini-trial. It seems reasonable to speculate that this small contribution to the costs of Bernstein Liehard & Lifshitz may have helped to persuade them to drop the Non-U.S. stockholder clients.

The $27 million outlay, which would not have arisen but for the intervention of royaldutchshellplc.com, is on top of the many billions of dollars the same website cost Shell as a result of its key role in Shell’s loss of a majority stake in Sakhalin Energy Investment Company.

It is interesting to note that someone is intent on ensuring the negotiations which led to the $27 million dollar arrangement remain secret, as is plain from an application made to the U.S. Court on 25 January 2008. It asks the Court to find that confidential information, if revealed, would obviate the confidential nature of the documents and subjects contained within them. The papers sought to be filed “under seal” include the award of Attorneys fees.  One of the reasons given is to prevent information being disclosed to the defendants, which is strange bearing in mind that the main defendants (Shell) must have authorised the $27 million payment.  It is conceivable that the current application to seal the papers has been made to stop the website royaldutchshellplc.com from publishing the confidential information, bearing in mind that it is the only source regularly publishing the U.S. court documents free of any charge on the Internet. If we were not monitoring the situation, the machinations would remain hidden from sight.

DOCUMENT: 463-4: BRIEF IN SUPPORT OF MOTION TO SEAL: Filed with the Court 25 JANUARY 2007:

http://www.shellnews.net/classactiondocs/463.4.pdf

A U.S. Judge will make a decision on the Motion to Seal within a matter of days.

As the prospect of a single class action has now ended, the original U.S. proceedings have recommenced.

U.S. CLASS ACTION RESUMES: DOCUMENT 466-2: LEAD PLAINTIFF’S MEMORANDUM IN SUPPORT OF CLASS CERTIFICATION: Filed with the Court: 1 FEBRUARY 2008

http://www.shellnews.net/classactiondocs/466_2.pdf

The above document filed a matter of days ago describes the claim as…

“a prototypical class action brought on behalf of millions of investors who, like the Proposed Class Representatives, have been damaged by Defendants schemes to defraud (and the materially false and misleading statements associated therewith)…”

American lawyers move quickly. On 31 January under a headline entitled “Lawyers close in on Shell Chiefs”, The Daily Telegraph reported that key Shell executives involved in the 2004 “oil reserves” scandal appear ready to give depositions in the U.S. class action.

http://royaldutchshellgroup.com/2008/01/31/daily-telegraph-lawyers-close-in-on-shell-chiefs/

We now know as a result of court papers filed since the publication of the Daily Telegraph story that the executives originally named in the proceedings have reached what amounts to an immunity deal covering any possible liability arising from litigation. In other words, Shell shareholders will once again have to pick up any costs whether legal fees or compensation – arising from any misdeed by the former individual defendants. Is it unreasonable to ask if this arrangement was part of the overall negotiations leading to the $27 MILLION payment to the lead plaintiff lawyers?

DOCUMENT 467: ORDER DISMISSING INDIVIDUAL DEFENDANTS WITH PREJUDICE: Filed with the Court 4 FEBRUARY 2008:

http://www.shellnews.net/classactiondocs/467.pdf

Is it morally right that an executive directors in a public company can be indemnified from any liability arising from deliberately deceiving and cheating shareholders in the company?

Many people who have read the Davis Polk & Wardwell Report would probably agree with me that Sir Philip Watts was more responsible for the lies and deception than anyone else.

http://www.shellnews.net/classactiondocs/Binder1_405-6_OCR.PDF

Sir Philip resigned as Group Chairman but received a severance/pension pot package reportedly worth $18.5 million. This was despite ruining the reputation of Shell and bringing about the end of the Royal Dutch Shell Group on the Royal Dutch Petroleum/Shell Transport partnership basis which had lasted for 100 years.

Jeroen van der Veer is one of the former defendants covered in the above Order which confirms that he has agreed to give evidence and participate in the discovery process as if he were still a Defendant in the case. Van der Veer is Chief Executive of the unified company which rose from the ashes – Royal Dutch Shell Plc. At the time of the reserves crisis he was a Shell Group Managing Director, President of Royal Dutch Petroleum Company and Vice Chairman of the Royal Dutch Shell Group Committee of Managing Directors.  He knew long before the scandal burst into the public domain that shareholders were being deceived over the most important asset an oil company has: the volume of it proven reserves. Van der Veer signed a Form 20F returns filed with the Securities & Exchange Commission which contained false declarations of Shell’s hydrocarbon reserves.

As can be seen by reading an associated updated article setting out the involvement of van der Veer in the unfolding reserves crisis, he does have many questions to answer.

http://royaldutchshellgroup.com/2008/02/10/jeroen-van-der-veer-and-the-shell-reserves-fraud/

However, I believe that most fair minded people would conclude after reading the Davis Polk & Wardwell Report (and our Shell litigation webpage containing free access to many thousands of pages of evidence and testimony from key players) that the main culprit was Sir Philip Watts. We will publish his testimony hopefully in the near future.

http://www.shellnews.net/2007/royal-dutch-shell-reserves-litigation-may-2007.html

I am not of the opinion that Sir Philip deliberately set out to defraud. He became a fraudster at the point when it became apparent that reserves bookings had been wildly over-optimistic and instead of declaring the situation to the market, he engaged in a cover-up and continued to promote Shell shares as if all was well. That same applies to other parties covered in the 4 February 2008 Order who upon learning the truth, did not put the interests of shareholders first and for whatever reasons – perhaps misguided loyalty to CMD colleagues, failed to put an immediate halt to the lies and subterfuge.

Walter van de Vijver was next in the line of culpability. He got fed up of lying about the reserves and said so in his now infamous email to Sir Philip.  Van de Vijver was head of Shell Exploration & Production. Sir Philip was his predecessor. Hence they both had direct executive involvement in the division dealing with reserves bookings.

This did not apply to van der Veer. He signed confirmations of the reserves bookings in his capacity as President and Managing Director of Royal Dutch Petroleum trusting  that those directly responsible for such matters in Shell EP were professional and honest. The issues which arise are whether he should have been so trusting, bearing in mind he was supposed to be acting in a verification capacity on behalf of Shell shareholders and secondly, whether he became part of a cover-up at the time he first became aware of the crisis. It is a fact that he did not immediately disclose to Shell shareholders the news of a major overstatement of reserves. He could have insisted on a public statement being made within 24 hours even though precise details were unknown.  He did not do so. He knew about the crisis a long time before shareholders. That was unacceptable.

My overriding impressive of the reserves litigation is that it all seems to be a game of smoke and mirrors played out by Shell on a basis whereby the interests of its executive directors are put first. Sir Philip lives the life of a multi-millionaire, retains his title and avoids any financial or legal repercussions from his unscrupulous actions. The lawyers involved make a ton of money and Shell shareholders pick up the tab.

It is ironic that the spotlight continues to be focused on Shell’s proven reserves after Shell abandoned its tradition of announcing reserves data at the same time as its full year profits. There is ongoing speculation in the media about the reasons for the delay.

*Relevant Dutch Court Documents

Petition to Amsterdam Court of Appeal April 2007

http://www.shellnews.net/classactiondocs/dutch_petition.pdf

Proposed European Settlement April 2007

http://www.shellnews.net/classactiondocs/dutch_petition.pdf

Related letter to U.S. Securities & Exchange Commission March 2007

http://www.shellnews.net/classactiondocs/Dutch_sec.pdf

For all of the relevant Dutch Court documents go to:

http://www.shellcompensation.com/shell/indexen.php?did=450

SELF-EXPLANATORY EMAIL CORRESPONDENCE WITH SHELL IN RELATION TO THE ABOVE ARTICLE

—– Original Message —–
From: John Donovan < [email protected]>
To: Brandjes, Michiel CM RDS-LC
Cc: van der Veer, Jeroen J RDS-CEJV; Routs, Rob J RDS-ECRR; Cook, Linda Z RDS-ECLC; Voser, Peter R RDS-ECPV; Hess, Beat W RDS-ECBH
Sent: Mon Feb 11 10:22:40 2008

Subject: Article for publication: Jeroen van der Veer cuts a deal with U.S. Attorneys

Dear Mr Brandjes

I have printed below a self-explanatory draft article. Shell is invited to point out any factual inaccuracies. I will take the appropriate action in respect of any information which you state is categorically untrue or misleading. You are also invited to provide comment for publication with the article on an unedited basis. I am sure no other publisher offers Shell this facility. If I do not hear from you today, I will assume the basic facts are true and unchallenged and will state as such in the article. There is no problem if you need more time before responding. If so, please let me know today. We are more interested in accuracy and fairness than in speed.

If you would prefer in future not to have the above opportunity in respect of draft articles relating to Shell, you only have to say so and we will cease sending them in advance of publication. I have mentioned this before and note that thus far, you have raised no objection to this procedure continuing.

Best Regards
John Donovan
Royaldutchshellplc.com

(THE DRAFT ARTICLE SUPPLIED AS PART OF THE EMAIL WAS EXACTLY AS PUBLISHED ABOVE)

EMAIL RESPONSE BY KEITH RUDDOCK, GENERAL COUNSEL, Exploration and Production Shell International B.V.

—–Original Message—–
From: [email protected] [mailto:[email protected]]
Sent: 11 February 2008 16:26
To: [email protected]
Subject: Article for publication: Jeroen van der Veer cuts a deal with U.S. Attorneys

Dear Mr. Donovan,

I refer to your email of today to Mr Brandjes in relation to the above. We do not accept the characterisation of events and individuals which you have made in your proposed article. Nonetheless, we do not believe that providing a detailed response to you would be productive. However, the lack of a rebuttal from, or comment by, Shell does not in any way constitute an acceptance on Shell’s part of the accuracy of any of the materials forwarded, or assertions made, by you, whether now or in the future, and whether on this or on any other matter, and we continue to reserve our position accordingly in respect of all such matters.

Yours sincerely
Keith Ruddock

General Counsel Exploration and Production Shell International B.V.
The Hague, The Netherlands – Trade Register no. 27155369
Address: c/o Kessler Park 1, 2288 GS Rijswijk, The Netherlands
Internet: http://www.shell.com

REPLY BY JOHN DONOVAN

—–Original Message—–
From: John Donovan [mailto:[email protected]]
Sent: 11 February 2008 22:37
To: Ruddock, Keith KA SI-LSEP
Cc: Brandjes, Michiel CM RDS-LC; van der Veer, Jeroen J RDS-CEJV; Routs, Rob J RDS-ECRR; Cook, Linda Z RDS-ECLC; Hess, Beat W RDS-ECBH

Subject: RE: Article for publication: Jeroen van der Veer cuts a deal with U.S. Attorneys

Dear Mr Ruddock

I acknowledge receipt of your response to my invitation to Mr Michiel Brandjes. Since the second sentence in your email is clearly a direct comment on the draft article, I am baffled by the opening words of the very next sentence indicating you have not made any comment. This seems to be an example of the smoke and mirrors mentioned in the draft article.

I also note that Shell has not taken up my invitation to point out any categorically untrue or misleading information in the draft. In case there was any misunderstanding, I will clarify the offer. If Shell says that anything stated as being a fact is categorically untrue, we will accept that this is the case and remove the relevant information from the article. Please let me know by noon tomorrow whether you will be taking up the clarified offer and if so, please provide an indication of how long this will take. I repeat that we would prefer to delay publication rather than publish anything stated as fact which is actually untrue.

If you ignore or reject the offer, readers of this correspondence will be entitled to conclude that the information in the article is accurate, bearing in mind that Shell has had the opportunity to correct factual inaccuracies and the option to take legal action to prevent publication on the basis that it is defamatory i.e. contains false assertions damaging to Shell or named individuals. I note in this regard that Shell has reserved its position (i.e. threatened to take legal action).

In this connection, if you have not already done, please feel free to inform Sir Philip Watts, Walter van de Vijver and Judith Boynton of this matter. I make this suggestion bearing in mind that if any of them decides to take legal action in relation to the finalised article, or this correspondence when it is published, Shell shareholders will no doubt end up footing the bill, as they appear to be fully indemnified by Shell for all possible eventualities and liabilities arising from the reserves fraud. If I have got this wrong, please say so. As you are probably aware, Sir Philip has already threatened to take legal action in respect of allegations accusing him of being a fraudster – an entirely accurate description based on the extensive evidence I have seen.

Yours sincerely
John Donovan

RESPONSE FROM KEITH RUDDOCK

Tue 12/02/2008 10:53
From: keith.ruddock
To: [email protected]

RE: Article for publication: Jeroen van der Veer cuts a deal with U.S. Attorneys

Dear Mr Donovan,

Thank you for your email of 11th February. Our response of yesterday still stands.

Yours sincerely

Keith Ruddock

General Counsel Exploration and Production Shell International B.V.
The Hague, The Netherlands – Trade Register no. 27155369
Address: c/o Kessler Park 1, 2288 GS Rijswijk, The Netherlands
Internet: http://www.shell.com