Exxon Mobil sued in New York, accused of deceiving shareholders

ExxonMobil used to illustrate the story
ExxonMobil used to illustrate the story

The authorities in New York on Wednesday sued oil multinational, Exxon Mobil, over claims that the company defrauded shareholders by downplaying the expected risk of climate change to its business.

New York Attorney General, Barbara Underwood, filed the lawsuit against the multinational on Wednesday after three years of investigation, according to the New York Times.

Details showed that the suit does not charge Exxon with playing a role in creating climate change, though the burning of fossil fuels is a major contributor to human-driven global warming.

The report said the suit accused the oil major of “longstanding fraudulent scheme” to deceive investors, analysts and underwriters “concerning the company’s management of the risks posed to its business by climate change regulation.”

It is expected that the litigation would pose a financial risk to the oil major, just as it risks potential reputational damages.

Accordong to the attorney general, Exxon told the world that it was prepared for the more stringent regulations that would inevitably be required to combat climate change but in reality, the company “employed internal practices that were inconsistent with its representations, were undisclosed to investors, and exposed the company to greater risk from climate change regulation than investors were led to believe”.

The report said the investigation spanned the tenures of two New York attorneys general and has also involved attorneys general from other states, with allegations that Exxon has attempted to block the investigation in courts in three states.

The oil major was also reported to have painted it as an attempt by bullies to restrict the company’s First Amendment rights and as part of an anti-fossil-fuel conspiracy.

Ms Underwood brought the lawsuit under the Martin Act, a state law that gives her sweeping powers to investigate and prosecute securities fraud.

The suit demands that Exxon turn over all the money it made through the alleged fraud and make restitution to investors.

It is unclear how much the oil major would be asked to pay as the suit does not name a sum to be paid, but if the case is successful, reports said the amounts could run into the hundreds of millions of dollars.

First made public November 2015, the investigation has been in the works for many months.

In the 2000s, Exxon Mobil stopped funding groups that directly challenged the science of climate change and has since accepted the science of climate change and the need for action to blunt its worst effects.

Exxon Mobil is an oil multinational with business interest and operations in Nigeria and other parts of the world. The company did not immediately respond to a request for comment Wednesday evening.

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