The legal proceedings surrounding the collapsed oil and gas drilling company, Shemen, have finally ended with the approval of a compromise settlement by the Tel Aviv District Court. According to the settlement, former chairman Gabi Ashkenazi, former CEO Yossi Levy, and Shemen Oil and Gas must compensate shareholders with NIS 22.5 million, which will be transferred from the insurance companies’ funds. The plaintiffs and their lawyers will receive NIS 4.5 million from this amount. The court’s decision came after two years of legal battle against Shemen, Ashkenazi, and Levy, who were accused of misleading investors with a false report on the drilling activity called “Yam 3” in 2013. The stock price surged but plummeted by 90% after it was discovered to be a dry well. The cost of the drilling, which produced no oil, amounted to $180 million. The court concluded that the company’s report on the drilling had misled investors, which violated its reporting obligations.
The saga of the class action in the oil and gas drilling company Shemen, which collapsed about a decade ago, has come to an end. A request was submitted to the District Court in Tel Aviv for the approval of a compromise settlement, according to which Shemen Oil and Gas, the former chairman Gabi Ashkenazi and the former CEO Yossi Levy must compensate the shareholders in the amount of NIS 22.5 million, which will be transferred from the funds of the insurance companies. From this sum, an amount of NIS 4.5 million will be deducted, which will be paid to the plaintiffs themselves and their lawyers.
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This development comes almost two years after the Vice President of the District Court in Tel Aviv, Judge Khaled Kabov, approved the management of the class action against Shemen, Ashkenazi (former Chief of Staff and Foreign Minister) and Levy.
In 2013, the oil company carried out a drilling called “Yam 3” in it and reported in September on the discovery of significant signs of oil. Following that report, the company’s stock jumped sharply. However, it quickly became clear that it was dry drilling, and the company’s stock crashed by about 90%. ,
About 180 million dollars were invested in the drilling, about 16 km west of the Ashdod coast. Shemen’s share of the cost of the dry drilling amounted to 140 million dollars.
Offshore drilling rig Yam 3 of the Shemen oil company off the coast of Ashdod / Photo: Ran Vinogrin
As mentioned, the court accepted the argument of lawyers Yitzhak Aviram and Shahar Ben Meir two years ago, and noted that “on its face, the applicants proved that the company’s report about drilling it carried out on September 1, 2013 was an overreport, which, according to the applicants, led to an increase in the share price.”
Judge Kabob further stated that “in the conduct of the company to point out a flaw in the way it conducts itself with regard to the fulfillment and violation of the reporting obligations that apply to it – for accurate and complete reporting that reflects all the information that it must publish to investors.”