Chevron Faces Fraud Charges In Ecuador Over Toxic Dumping In Amazon Rainforest

Embattled Chevron Executive Forced To Appear In Quito To Explain Company’s Flawed Remediation

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New York, New York - Embattled Chevron executive Ricardo Reis Veiga is to appear in Quito this week to defend the company against fraud charges filed by Ecuador's top law enforcement agency as Chevron faces a widening circle of criminal and civil investigations in two countries over its environmental remediation in the Amazon rainforest.

Ecuador's Department of Justice recently accused Chevron in federal court in New York of deceiving Ecuador officials to secure a legal release after a $40 million environmental remediation by the company in the mid 1990s. If Ecuador prevails, Chevron could face a $6 billion clean-up tab - the estimated cost of a comprehensive remediation -- in addition to liability claimed by 30,000 citizens in the area for oil-related damages. The company is already the subject of an SEC investigation in the U.S. for hiding the potential Ecuador liability from shareholders.

Chevron is also the target of a separate criminal probe on the fraud charges in Ecuador by the country's Fiscal, or national prosecutor. Reis Veiga and Chevron's legal agent in Ecuador, Rodrigo Perez Pallares, supervised and signed off on the remediation.

Reis Veiga, a lawyer and Chevron's Vice President and General Counsel for Latin America, announced in an e-mail to Ecuadorian journalists that he will defend the company in Quito on Tuesday at a press conference. It is his first trip to Ecuador since the fraud charge became public.

Chevron is a defendant in a separate civil suit in Ecuador that accuses the oil giant of dumping more than 18 billion gallons of toxic waste into Ecuador's rainforest between 1964 and 1992, or 30 times more oil than was spilled during the Exxon Valdez disaster. The suit charges the dumping and the abandonment of roughly 1,000 toxic waste pits - many as big as a football field -- threaten five indigenous groups with extinction and have produced cancers and other oil-related health problems.

Chevron, which just reported record quarterly profits, claims the contamination caused no harm and that the release from the government protects it from further liability in Ecuador. The company earned roughly $30 billion in profits in Ecuador over the course of its operations.

Ecuador asserts that Chevron misled government investigators about remediating the toxic waste pits, which surround 350 well sites in an area roughly the size of Rhode Island. In making the fraud charge, Ecuador relied on evidence from the civil trial that show levels of toxins at least hundreds of times higher than E.P.A. and Ecuadorian norms in places Chevron claimed to have remediated.

At the civil trial, a Chevron well site (Lago 2) considered consistent with an overall pattern reported Total Petroleum Hydrocarbons (a benchmark measure of petroleum contamination) in the soil at 325,000 parts per million (ppm), or 3,250 times higher than the typical U.S. standard of 100ppm. Chevron reported to the government that Lago 2 had fewer than 5,000ppm after its clean-up.

"The trial results clearly show Chevron never met its contractual obligations and then deceived the government by using a series of bogus laboratory tests," said Atossa Soltani, executive director of Amazon Watch, an environmental group which is monitoring the trial.

The civil suit also claims Chevron never assessed - much less treated - extensive groundwater contamination and totally ignored the separate impact of the dumping of the produced water, which is toxic and contains known human carcinogens such as benzene.

Ecuador's claim likely represents the first time a foreign government has accused an American oil company with fraud in a U.S. court, experts say. The move is the latest in a series of problems to beset Chevron over its Ecuador operations.

Currently, the SEC is investigating a complaint that Chevron has failed to disclose its Ecuador liability in its public filings and has made misleading statements about the trial in its press releases. Amnesty International has criticized the company and increased its vigilance of the situation in Ecuador following a series of threats and robberies of members of the plaintiff's legal team. Several large shareholders have brought resolutions asking management to reassess its Ecuador litigation strategy.

"Ecuador has become Chevron's worst nightmare in terms of its public image," said Soltani. "This is rapidly becoming Chevron's Watergate, where the original offense has been compounded by a cover-up that appears to reach into the upper layer of company management."


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