Funds Call on ChevronTexaco to Resolve $6bn Rainforest Action
By Christopher Hopson, Upstreamonline
29 April 2005
CHEVRONTEXACO is coming under mounting pressure to resolve its $6 billion Ecuador rainforest trial, which escalated significantly this week when leaders representing the three largest public pension funds in the US called on the company to take action to settle the dispute.
Shareholders and other advocates from groups such as Amnesty International and Amazon Watch raised the issue with ChevronTexaco's chief executive David O'Reilly during the company's annual meeting on Wednesday.
The lawsuit is taking place in Ecuador on behalf of five indigenous tribes and 80 communities, which allege Texaco dumped more than 18 billion gallons of toxic wastewater into the Ecuadorian rainforest during its two decades of operations in the country's northern Amazon region, from 1970 to 1992.
The pollution in Ecuador is considered by the groups as the largest oil-related contamination on the planet.
It is alleged that the amount of direct crude dumped is roughly 30 times larger than the amount of oil spilled during the Exxon Valdez tanker disaster in Alaska.
Steve Westly, head of California state controller's office, who sits on the board of the US' first and third-largest public pension funds Calpers and Calsters, called on ChevronTexaco's board to conduct an independent review of how O'Reilly is managing the litigation.
"ChevronTexaco is a California company that has based its reputation on going the extra mile to be a good neighbour in the California community," he said.
"I am concerned that actions taken by Texaco prior to its merger with Chevron in 2001 may be tarnishing that hard-earned reputation," Westly added.
Alan Hevesi, comptroller of New York whose $120 billion retirement fund is the second-largest public pension fund in the country, said he found it troubling that ChevronTexaco's reputation continues to suffer because it has not been able to resolve its issues in Ecuador.
"Each day that this environmental and health crisis continues, ChevronTexaco's future business opportunities abroad are more at risk. As an institutional investor, I hope that the company will resolve its issues in Ecuador as soon as possible," he said.
The three public pension funds represented by Westly and Hevesi collectively hold more than $2 billion of ChevronTexaco stock.
The funds voted in favour of a resolution calling on the management to report any new initiatives to address the concerns of the communities in the company's former Ecuador oil blocks.
A ChevronTexaco spokesman said the resoulution on the Ecuador issue was roundly defeated by approximately 91% of shareholders.
"With respect to the statement by fund managers, we respectfully disagree because the overwhelming body of science that has been submitted to the court during the trial demonstrates Texaco's remediation programme was effective and that there is no evidence of harmful levels of
petroleum-related contaminants," the spokesman added.