Ecuador seeks Chevron probe

U.S. officials asked to look at rain forest contamination claim

By David Baker, San Francisco Chronicle
23 December 2006

Ecuador's attorney general has asked U.S. officials to investigate Chevron Corp's alleged "fraud and deceit" connected with oil-field contamination in the Amazon rain forest, the latest salvo in a long-running legal dispute.

Attorney General Jose Maria Borja Gallegos wrote to his U.S. counterpart on Dec. 5, asking that the Justice Department look into accusations leveled at the company in a report issued by activists last month.

The report was written by lawyers who are suing Chevron in an Ecuadoran court to force the San Ramon company to clean up a portion of the rain forest where Texaco Inc. used to drill for oil. Chevron inherited the dispute when it bought Texaco in 2001.

The report accuses Texaco of deceiving the Ecuadoran government in 1995 when the two parties reached an agreement on restoring an area where Texaco and the state oil company had worked together. That agreement limited how much of the cleanup was Texaco's responsibility.

The report argues that Texaco concealed from the government the true extent of contamination, in part by hiding pits filled with toxic waste. The lawyers also say the company is using misleading lab tests of water and soil contamination in the current suit. Both sides claim that chemical tests of soil and water in the area support their positions.

"In (Borja's) mind these are serious allegations and he felt it incumbent in his position to ask for this," said attorney Raul Herrera, who represents the Ecuadoran government in the Chevron case.

"We're familiar with the allegations that the plaintiffs have made and they're baseless," Chevron spokesman Kent Robertson said.

Texaco pumped oil in Ecuador from 1964 to 1992, dumping a mixture of crude oil and water into open pits near the wells. Chevron claims the company has already fulfilled its obligations, cleaning all of the sites it was required to.

The legal fight over Texaco's former operations in the Ecuadoran rain forest has grown increasingly convoluted.

While Amazon residents are suing Chevron in Ecuador, the company and the Ecuadoran government are also fighting each other in a New York courtroom. There, the two sides are sparring over the cleanup agreement and who should bear the liability for restoring the disputed area if Ecuadoran judges demand it.

Ecuador's state-run oil company still drills there and wants to minimize its financial risk. Lawyers for the residents claim the cleanup could cost more than $6 billion.

In the New York case, the Ecuadoran government accused Chevron of fraud related to the 1995 agreement, then later dropped the claim. Borja testified that he had no evidence of fraud.

"The notion that the government of Ecuador, which has no evidence of fraud, is asking the Department of Justice to investigate allegations of fraud is absurd," Robertson said.

A U.S. justice department spokesman said any request from a foreign government would be reviewed carefully.

Meanwhile, Amazon Watch, a San Francisco nonprofit group that backs the Amazon residents, says Chevron is being investigated by the Securities and Exchange Commission over the company's failure to alert shareholders to its potential liability in the Ecuador case. Amazon Watch called for such an investigation in February.

"Since we filed a complaint with the SEC, they have followed up with us with requests for additional information," Amazon Watch spokesman Simeon Tegel said.

Chevron spokesman Robertson said the SEC contacted the company after the initial complaint but did not open a formal investigation.

"They called us looking for information, and that was that," he said. "Any insinuation of an ongoing investigation is false."

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