Top Chevron Executive Steps In to Manage Rapidly Growing Liability In Ecuador Environmental Trial
Concern Grows Over Potential $10 Billion Damages Claim and Grievous Harm to Indigenous Groups
Ethics Probes In Two Countries Indicate Wider Risks For Chevron
Amazon Watch
16 October 2007 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109
Quito, Ecuador - For the first time in 14 years of litigation over an environmental disaster in the Amazon rainforest, a high-level Chevron executive reporting directly to CEO David O'Reilly has stepped in to contain a rapidly growing liability and manage several related civil and criminal investigations that have cast a shadow over Chevron's corporate reputation.
Charles James, Chevron's General Counsel and a former top Department of Justice official, has appeared for the first time as a company spokesman in the oil major's revamped public relations strategy designed to discredit the Ecuador legal proceedings in which Chevron faces a potential $10 billion liability arising out of a class-action suit brought by tens of thousands of rainforest dwellers. The trial has generated 200,000 pages of evidence and 54,000 chemical sampling results, the vast majority of which demonstrate the presence of life-threatening toxins in inhabited areas where Chevron operated, according to lawyers for the plaintiffs.
The plaintiffs include survivors from four indigenous groups - the Cofan, Secoya, Siona, and Huaorani - some of whom claim they have lost most of their ancestral land and are on the verge of extinction due to the toxic contamination. The population of the Cofan, on whose land Chevron built several oil production facilities in the 1960s and 1970s, has dropped from roughly 15,000 before Chevron's arrival to hundreds today.
Chevron requested the environmental trial be held in Ecuador over the objections of the indigenous groups, who originally brought the action in U.S. federal court in New York in 1993. But with the evidentiary portion of the Ecuador trial coming to a close, company lawyers - and now James, who serves on Chevron's executive management committee and is a former Deputy Attorney General under President George H. Bush - have suddenly launched a campaign to derail the trial proceedings.
Representatives of the indigenous groups accused James of trying to undermine their due process rights and intimidate the presiding judge into delaying the case, while using a public relations smokescreen to help Chevron's management hide the liability from shareholders and the financial markets.
Pablo Fajardo, the lead Ecuadorian lawyer for the plaintiffs, made several points to rebut Chevron's latest allegations (available in detail at www.chevrontoxico.com):
The scientific evidence condemns Chevron: In a display of lawyering dazzling only in its incompetence, Chevron's local counsel has produced thousands of chemical sampling results that prove the plaintiffs' claims that the area where Chevron operated contains life-threatening levels of carcinogens such as benzene and chromium.
Chevron fabricates evidence: Faced with the prospect of losing, Chevron now fabricates evidence by having its scientists lift soil and water samples at points far from contaminated production sites (such as the top of a nearby hill or upstream). Chevron also refuses to test for certain toxins to make sure they are "absent" from the results.
Chevron uses delaying tactics to avoid judgment: The Ecuador trial has lasted more than four years because of Chevron's delaying tactics, Fajardo said. These include asking for redundant field inspections, the filing of repetitive motions, and even manufacturing false security threats against the judge.
Chevron violates human rights: Chevron's local Ecuadorian counsel has worked with military officials in Ecuador's Amazon to intimidate lawyers for the plaintiffs, several of whom have received death threats. Recently, a Chevron lawyer threatened a lawyer for the plaintiffs with bodily harm.
Chevron has tried to politicize the trial: Chevron's high-level executives, including James himself, threatened Ecuador's former President Alfredo Palacio with a lawsuit unless he disrupted the judicial process and ended the Lago trial.
Chevron has corporate governance problems: The company is facing multiple civil and criminal investigations over an allegedly fraudulent remediation committed in Ecuador, including by the Securities and Exchange Commission; U.S. Department of Justice; and Ecuador's national prosecutor, the Fiscal.
The lawsuit accuses Chevron of human rights abuses for dumping 18 billion gallons of toxic waste into Ecuador's rainforest. Several health studies in peer-reviewed academic journals (available at www.chevrontoxico.com) have confirmed increased rates of cancer in the region, historically home to six indigenous peoples.
The trial represents the first time a U.S. oil company has been subject to jurisdiction in the courts of a developing nation for significant environmental damages. Increasingly, the battle in Ecuador is impacting Chevron's image in Latin America.
"The reality is that Mr. James has been sent by CEO O'Reilly to rescue the company from the results of an environmental and public health catastrophe created by its own greed," said Fajardo.
"The trial in Ecuador is a threat to Chevron's brand name throughout Latin America," added Atossa Soltani, Executive Director of Amazon Watch, an environmental and human rights group monitoring the legal proceedings. "Shareholders should take notice that the company has spent over $100 million defending itself yet has refused to disclose this potential legal liability in its 10-k filings.
"It is not surprising that Mr. O'Reilly has sent for the cavalry, in the form of Mr. James. This mess can no longer be left in the hands of Chevron's Ecuadorian legal team which has done such a disastrous job of running the case up to this point."
The sudden appearance of James seems to be a direct rebuke to Ricardo Reis Veiga, the embattled former Texaco executive who has been supervising the Ecuador case for more than a decade. Reis Veiga has been accused of a conflict of interest for supervising a trial in which he has been called as a witness, and in which his own conduct as the director of Chevron's botched remediation is now at issue.