Ecuadoreans Eye Assets of Chevron in Argentina

By Barbara Leonard, Courthouse News Service
1 November 2012

Still angling to collect a $19 billion environmental judgment against Chevron, a group of indigenous Ecuadoreans say they are filing an enforcement action Thursday in Argentina.

The Ecuadoreans estimate that Chevron has $2 billion in assets in Argentina. They have been fighting for nearly 20 years to have Chevron cover the costs of decades of oil exploration that ravaged their rainforest community.

Though the Ecuadoreans blame Chevron, as the parent company of Texaco, for the polluted groundwater and cancer clusters in the Amazon, Chevron has said that liability lies with the state-run Petroecuador.

A provincial court in Lago Agrio, Ecuador, recently ordered Chevron to pay the Ecuadoreans $19 billion, but Chevron says that judgment is the product of corruption. The oil giant sued the Ecuadorean plaintiffs, their lawyers and their consultants in 2011 for extortion.

That case fell onto the docket of U.S. District Judge Lewis Kaplan, who quickly ordered the Ecuadoreans' attorneys to turn over their case files, granted a temporary worldwide injunction on collection of the award, and fast-tracked a trial to make the injunction permanent.

The 2nd Circuit later struck down the injunction and halted the trial, and the Supreme Court refused to intervene.

In the meantime, the Ecuadoreans have filed enforcement actions in courts around the globe. On Oct. 15, the Sucumbios Provincial Court awarded the Ecuadoreans a collection victory that they estimate is worth $200 million.

For its part, Chevron insists that the Ecuadorean assets implicated by the judgment are worth far less.

It has similarly minimized the Ecuadoreans' latest collection effort: an enforcement action filed Thursday in Argentina. The company questioned why the Ecuadoreans have not filed an enforcement action in the United States.

"If the plaintiffs' lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States - where Chevron Corporation resides," Chevron said in a statement. "In the U.S., however, the plaintiffs' lawyers would be confronted by the fact that seven federal courts have made fraud findings related to the plaintiffs' lawyers' scheme."

The fraud findings to which Chevron refers have been entered in the many discovery actions between the parties across the United States. While several courts have green-lit Chevron subpoenas under the crime-fraud exception, they have not actually ruled that the fraud occurred.

Karen Hinton, a spokeswoman for the Ecuadoreans, told Courthouse News on Thursday they "have to go to other countries to satisfy the judgment" since "Chevron in the U.S. is largely a company that operates overseas through subsidiaries."

She said that "80% of Chevron's assets are in other countries."

"As much as they would like it, Chevron's lawyers don't get to say where assets will be attached," Hinton said in an email. "The Ecuadoreans do because they won the case. ... While we have said we will not attach assets in New York, we may attach assets in other U.S. jurisdictions."

Chevron spokesman Kent Robertson says that the company has no assets in Argentina and that he does not know the value of subsidiary assets.

But the Ecuadoreans say that Chevron's oil operations in Argentina produce about 26,000 barrels of crude and 4 million cubic feet of natural gas daily. Coupled with bank accounts, Chevron has $2 billion in assets there, said Enrique Bruchou, an attorney for the Ecuadoreans who filed the suit in Buenos Aires.

Pablo Fajardo, the attorney who won the Lago Agio verdict, says that the Argentinean action and the three prior actions, in Ecuador, Canada and Brazil, target a total of $8 billion in Chevron assets.

Steven Donziger, a U.S. attorney for the Ecuadoreans, told "60 Minutes" correspondent Scott Pelley about the plan to enforce the judgment back in 2009. "At the end of the day, it might be a situation where a U.S. court enforces the judgment, and the marshals have to go to Chevron and seize their assets," Donziger said, according to CBS.

Unlike the earlier seizure actions, the Argentinean action "derives its authority in part from an international treaty in Latin America called the Inter-American Convention on the Execution of Preventive Measures," according to a statement from the Ecuadoreans. "The treaty, which dates from the late 1970s, allows for the automatic freezing of assets of a defendant that fails to abide by the law and refuses to pay a final foreign judgment."

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