Amazon Defense Coalition
28 May 2012 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109
New York, NY – Only days before its annual shareholder meeting, forty Chevron investors with $580 billion in assets under management have demanded the oil giant settle the $18 billion environmental lawsuit brought by impoverished indigenous groups in the Ecuadorian rainforest almost two decades ago.
The letter from the investors, sent last Friday, comes at a time of increasing pressure from shareholders on Chevron CEO John Watson for his mishandling of the Ecuador litigation. Last week, two prominent investor advisory firms, citing the risk of the Ecuador liability, dealt Watson a huge blow when they recommended shareholders vote for resolutions that directly challenge his authority to remain both as CEO and Chairman of the company, considered a major corporate governance taboo. See here and here.
In the investor letter, funds from the United States, Canada and Europe also requested a meeting with Chevron executives to discuss what they described as "significant reputational damage" to the company stock resulting from the oil giant's refusal to pay the judgment and end the case.
The investors include New York State Comptroller Thomas P. NiNapoli, whose fund owns $713 million in Chevron stock. Also signing on are the International Brotherhood Teamsters, the Unitarian Universalist Association and the United Steelworkers, which represents many of Chevron's own employees in the United States. A similar letter garnered significant support last year.
Citing a series of legal losses in both Ecuador and the United States, the signees wrote, "Despite management's continual assertion that it intends to challenge the judgment at every opportunity, its financial exposure has only grown over time and its options to evade the $18 billion judgment have greatly narrowed in recent months.
"Over the course of the nearly 20 years of litigation, Chevron has suffered significant reputational damage from its attempts to defend Texaco's record in Ecuador. The current attempts to undo the Ecuadorian court's verdict only keeps the case in the public eye and further damages Chevron's reputation."
An Ecuador court last year found Chevron discharged more than 16 billion gallons of toxic waste into Amazon waterways, decimating indigenous groups and causing an outbreak of cancer. The verdict was upheld on appeal in January and rendered enforceable worldwide when Chevron refused to post a bond. See here.
Tim Breenan, the Treasurer and CFO of the Unitarian Universalist Association, expressed concern in a separate statement that Chevron's public filings to investors reveal "series inconsistencies" with statements by Chevron management in a U.S. court. The UUA has joined other shareholders in formally asking the Securities and Exchange Commission to determine whether Chevron has violated securities laws because of evidence it has made material misrepresentations to investors.
"Recent reports (see here and here) document serious inconsistencies between statements by Chevron management and their public filings. That's why we've asked the SEC to investigate. Shareholders have the right to know what contingencies are in place to protect shareholder value and key strategic investments from enforcement," said Breenan.
Chevron CEO Watson – who at the 2010 Chevron annual meeting had five activists arrested after they challenged him on the Ecuador liability – is facing a major shareholder challenge at the meeting on Wednesday at company headquarters in San Ramon, CA. Last week, Watson took the rare step of sending a letter directly to all Chevron shareholders asking them to vote against the resolutions that cited the Ecuador case.
Shareholders will vote on three resolutions tied to the Ecuador litigation. One would strip Watson of either the CEO or Chairman titles; another would require the company to appoint an independent director with environmental expertise; and a third allows shareholders to more easily call special meetings.
Two rainforest leaders from Ecuador who have suffered from decades of Chevron's contamination also plan to confront Watson at the meeting. They will be joined by a delegation of oil workers from Brazil, where Chevron faces a separate $22 billion lawsuit related to a recent offshore spill.
Environmental advocates from Amazon Watch and Rainforest Action Network plan to ask Watson to show shareholders a video that documents the company's horrific contamination in Ecuador and its impact on public health and reviews serious fraudulent misconduct committed by Chevron during the Ecuador trial. The Ecuadorians have long accused Chevron of lying to shareholders about the extensive fraud it committed to cover up its contamination, as documented in the sworn affidavit of Juan Pablo Saenz and the report of Graham Erion, a well-known securities lawyer.