Chevron Increasingly Desperate in $6 Billion Environmental Lawsuit in Amazon Rainforest

Chevron Seeks to Avoid Judgment It Requested in 2002

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New York - Having lost critical legal motions in recent weeks in two countries over its multi-billion dollar liability in the Amazon rainforest, Chevron's prospects in the long-running case are dimming with a final judgment expected within months despite frantic efforts by company lawyers to delay the process.

The plaintiffs' legal team believes the monetary judgment could break all records for civil cases. Chevron has admitted it dumped 18 billion gallons of toxic waste into Ecuador's rainforest over a 25-year period, threatening the existence of four indigenous groups and causing a regional cancer epidemic that the plaintiffs believe has claimed hundreds of lives.

"We are talking about a possible damages award in the many billions of dollars," said Pablo Fajardo, a lawyer for the plaintiffs. "The environmental clean-up alone is likely to surpass $6 billion, and that does not include health and personal damages for tens of thousands of people who live in the area. This could dwarf any other damages claim in environmental law, as well as in any civil case that resulted in an actual judgment".

In a last-ditch effort, Chevron's local attorneys are now suggesting the company might not abide by the judgment. Chevron executive Ricardo Reis Veiga, who himself has been the subject of a fraud investigation in Ecuador for his role in a botched remediation attempt in the1990s, this week also personally attacked the presiding judge and the current court-appointed expert responsible for calculating the damages.

"Reis Veiga is conflicted because he is partly responsible for the damages, yet Chevron has let him have a free hand to run the trial in which he has been a witness and where his own credibility is being questioned," said Fajardo. "His personal fate in the company is tied to the outcome of the trial, so he is increasingly desperate in his attacks.

"Frankly, it is a shocking violation of corporate governance principles that Chevron's management has not removed Reis Veiga from the case, as he has let his personal interests interfere with the company's fiduciary obligations to shareholders," said Fajardo.

The irony of the recent attacks by Reis Veiga is that the case originally was filed in New York federal court in 1993, but Texaco (now Chevron) fought for years to move it to Ecuador, finally getting its wish in 2002. Once the trial began in Ecuador the following year, Chevron tried again to move the case back to New York. After that effort failed, the legal strategy of the company shifted to delaying the outcome for as long as possible while suggesting it will not abide by the outcome if the case actually finishes.

"The legal strategy is about as weak as you can get," said Steven Donziger, a U.S. lawyer advising the plaintiffs. "We have multiple legal mechanisms to enforce any judgment imposed by an Ecuadorian court in the U.S. as well as in several other countries where Chevron has substantial assets."

Recent events do not bode well for Chevron:

  • On June 19, a federal judge in New York ruled Chevron had no right to force the Ecuadorian government into arbitration to decide who should pay for the damages in the Ecuador case. Chevron had litigated for three years at a cost of many tens of millions of dollars to seek an indemnification from Ecuador's state-owned oil company. Chevron is appealing the decision but that option now appears close to dead.
  • In Ecuador, Chevron has lost repeated motions to delay the beginning of the final damages assessment, which began on June 14.

So far, thousands of judge-ordered laboratory analyses taken at 47 sites operated by Chevron demonstrate elevated levels of toxic petrochemicals, some thousands of times higher than Ecuadorian and EPA norms. Chevron's lawyers have maintained the toxins, including known human carcinogens such as Chromium-6, pose no risk to human health despite overwhelming scientific consensus to the contrary.

The plaintiffs have accused Chevron of manipulating the science by taking samples upstream for surface waters to avoid finding contamination, and by refusing to test for known human carcinogens. "Chevron's scientific ‘method' in Ecuador is no different than what the tobacco industry did for decades in denying smoking caused cancer," said Fajardo.

Another lawyer for the plaintiffs, Alejandro Ponce, added: "It is ironic that Chevron, which argued in New York for over a decade that this trial should be held in Ecuador, is now trying to avoid responsibility by questioning the fairness of the trial here. Since it is losing on all the facts, it is fighting back in the only way it can, by attacking the process itself. Chevron should stop its misinformation campaign and pay up for the damage it has caused."

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