Argentine Judge Freezes Chevron Assets

By Jude Webber, Financial Times
7 November 2012

Buenos Aires, Argentina – An Argentine judge has ordered the immediate freeze of the assets of Chevron, the US oil major, in the South American country to enforce an Ecuadorean court order awarding $19 billion in damages to Amazonian villagers over environmental contamination.

Enrique Bruchou, a lawyer for the plaintiffs, said all per cent of Chevron Argentina's stock, worth some $2 billion, all of its dividends, its entire 14 per cent stake in Oleoductos del Valle, an oil pipeline company, 40 per cent of revenue from oil sales and 40 per cent of its Argentine bank accounts were covered by the court order.

The order would stand until the $19 billion had been paid up, Mr Bruchou said. Assets seized would be put into a judicial escrow account pending appeals in the two-decades-old case.

"This measure is for immediate compliance," he told reporters, adding that court officials already had been dispatched to enforce it. Chevron would have to lodge an appeal with the Argentine judge who ordered the assets seized, who would then transfer the request to Ecuador.

Chevron, the second-biggest US oil company by market capitalisation, said it knew of no order in the dispute, known as Lago Agrio. It has refused to pay the Ecuador judgment, alleging the case was "illegitimate" and fraudulent.

"Chevron Corp, the Lago Agrio judgment debtor, has no assets in Argentina. All operations in Argentina are conducted by subsidiaries that have nothing to do with the plaintiffs' fraud in Ecuador," it said in a statement. "The plaintiffs' lawyers have no legal right to attach subsidiary assets in Argentina and should not be allowed to disrupt Argentina's pursuit of its important energy resources."

Mr Bruchou called the reaction "a joke". He added: "Go to Chevron's website and look at everything they say they have... This argument is an offence to logic and common sense."

Chevron inherited the Ecuador dispute when it bought Texaco Petroleum in 2001. The plaintiffs accuse Chevron of malpractice that has led to severe environmental damage and 306 cases of cancer in 227 families. Chevron argues that Texaci fulfilled its clean-up responsibilities under a 1995 agreement with Ecuador and blames state-owned oil company Petroecuador for much of the contamination.

Chevron, Argentina's fourth-biggest oil producer, has said it wants to partner with YPF to develop the vast Vaca Muerta shale reserves. YPF, taken by surprise by the Argentine court order, believed the enforcement order would not scupper that deal.

Plaintiffs have filed suits seeking to collect on the Ecuador judgment in Canada, Brazil and Colombia, but the Argentine action was sped up under a regional treaty. "Our next step will be [to file suits] in a country in Europe, Asia or Oceania," said Mr Bruchou. "This will be successful."