ERHC Energy Inc (ERHE)

[nordicroots]

I think everyone agrees that this outcome is certainly unacceptable and very unfavorable for shareholders. It doesn't help for us to keep rehashing the fact that the situation sucks(that's pretty much a given), but it might be helpful to collectively get our heads around possible corrective actions so we as shareholders can estimate the odds of potential variable outcomes - both positive and negative. The issue of accountability is what I was interested in reviewing with you and what you have seen in your professional experience in terms of dealing with D&O or E&O insurance claims.

If this is something characterized as "gross negligence" as you suggest then it may ultimately fall to shareholders to initiate some sort of action to prompt a claim under one or both policies. And although they are famous for not disclosing much of anything I cannot believe they would fly naked and not carry such insurance. Companies large and small carry it, heck even one of the small employee self directed groups where I serve in a director capacity carries this insurance liability - in case someone makes a mistake (i.e., does something stupid) (fortunately it has not been necessary for us to use it - but that might not be the case with the situation faced by our ERHC management team...).

Take a look at this:

"What is the difference between Directors and Officers (D&O) and Errors and Omissions (E&O) coverage?
D&O provides protection for the directors and officers of an organization in the event there are allegations of wrongful acts in their capacities as directors and officers. D&O typically covers allegations of mismanagement, misrepresentation or breach of fiduciary duty against the individual directors and officers. Often, the organization itself is not protected in the event of these types of claims. Shareholders of the company typically bring the claim. On the other hand, E&O protects the organization, its management, and employees in the event of an allegation of an error or failure in the provision of the company's professional services. Clients of the company typically bring the claim."

http://www.eperils.com/pdf/eo_qa.pdfinsert-text-here

Here is a short overview that reviews the difference between D&O, E&O and EPLI Insurance.

http://law.freeadvice.com/insurance_law/insurance_law/do-eo-epli-insurance-differences.htm

Here is a white paper reviewing and discussing these issues from the ABA:

http://www.americanbar.org/content/dam/aba/administrative/litigation/materials/2012_inscle_materials/12_1_towers.authcheckdam.pdf