Chevron Loses Major Lobbying Battle In Congress Over Ecuador Trade Benefits

McCain Finance Chair Had Led Campaign
Effort to Quash Claims of Indigenous Tribes Fails

Amazon Defense Coalition

Amazon Defense Coalition
Contact: Paul Paz y MiƱo: +1 510.281.9020 x302,

Washington - Chevron has lost a critical lobbying battle in Congress in its effort to escape a $16.3 billion liability in Ecuador stemming from a landmark environmental case, said Amazonian residents and their lawyers engaged in a court battle with the company.

Despite hiring a team of A-list Washington insiders - including Wayne Berman, John McCain's national finance chairman and former Senator Trent Lott -- Chevron's plan to enlist Congress to help it abort the class-action case in Ecuador has failed with the renewal of trade benefits to the South American country.

"This is a major setback to Chevron's effort to undermine the rule of law in Ecuador to avoid cleaning up an environmental disaster," said Steven Donziger, an American legal advisor to the plaintiffs.

A bill extending the trade benefits to Ecuador, Peru, Colombia and Bolivia passed the Senate on Thursday after clearing the House earlier in the week. A large team of Chevron lobbyists headed by Berman had worked for months to attach a rider that would have excluded benefits for Ecuador, where Chevron stands accused of having caused what experts believe could be the largest oil-related disaster on the planet.

An independent expert appointed by the court found last March that Chevron was responsible for damages in Ecuador and should pay between $7.2 and $16.3 billion. A final decision is expected in 2009.

The potential liability stems from sub-standard practices used by Texaco when it was the operator of an oil consortium in Ecuador's Amazon from 1964 to 1990. Chevron bought Texaco in 2001 and will bear any liability in the case.

Chevron had hoped the threat of cutting trade benefits would pressure Ecuador's government to scuttle the lawsuit, but the strategy backfired as Ecuador fought back via its Washington ambassador, Luis Gallegos. Gallegos told Congress that Chevron had tried to pressure the Ecuador court to undermine the trial once evidence was introduced that suggested the oil giant's culpability.

Gallegos had told Congress his country would lose 350,000 jobs if Chevron succeeded in the lobbying campaign.

Representatives of the plaintiffs - who include five indigenous tribes and residents in 80 rainforest communities -- had accused Berman of misrepresenting the case to several members of Congress and to the office of the United States Trade Representative. One such misrepresentation was that Chevron claimed to Congress it had been "released" by Ecuador's government after a small environmental remediation but in fact that release specifically excluded private claims of the type being brought in the lawsuit.

How Chevron obtained even that limited release is now the subject of an official corruption investigation in Ecuador. The court-appointed expert, for example, found that more than 80% of the sites Chevron claimed had been remediated to secure the release have levels of deadly toxins in violation of legal norms.

Ecuador's national prosecutor recently indicted two Chevron lawyers and seven former Ecuadorian government officials for fraud after they signed documents certifying the clean-up.

Aside from the political jockeying in Washington, Chevron has admitted in court that Texaco dumped 18.5 billion gallons of toxic waste into Amazon waterways and abandoned over 900 waste pits while it operated the concession. Tens of thousands of people now live in the middle of the contamination, some directly on top of waste pits Chevron covered with dirt without cleaning out contaminants.

Health problems and cancer rates in the region have skyrocketed in recent years, according to scientific evidence presented by the plaintiffs. Neither Texaco nor Chevron has ever conducted a single health study of the area nor published a map for local residents detailing the sites of its covered waste pits.

Pablo Fajardo, the Ecuadorian lawyer for the plaintiffs, said he was pleased Congress did not accept "misinformation" put forth by Chevron's lobbying team.

"Chevron is trying to peddle misinformation to the U.S. Congress just like Texaco told the indigenous people of Ecuador that oil was as healthy as vitamins," Fajardo said.

Chevron had hired Berman after he succeeded three years ago in getting Congress to help the company kill a deal for a merger between a Chinese state oil company and California-based Unocal. Berman's efforts paved the way for Chevron to buy Unocal itself.

It turns out Unocal operated in Burma, which has caused Chevron a spate of bad publicity for generating billions in hard currency for the repressive military regime there.

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