Confronted Publicly, Chevron CEO John Watson Misleads Shareholders over $19 Billion Ecuador Liability
Amazon Defense Coalition
30 November 2012 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109
New York, NY – Confronted publicly about a $19 billion Ecuador liability for causing environmental damage, Chevron CEO John Watson continued an increasingly personal campaign to mislead shareholders and hide his personal conflicts of interest over the case, representatives of the rainforest communities charged.
"John Watson's public comments in New York about the mounting risk posed by the Ecuador judgment to Chevron are increasingly vitriolic, unprofessional, and misleading," said Karen Hinton, the U.S. spokesperson for the rainforest communities who in 2011 won a court case that found Chevron liable for deliberately dumping billions of gallons of toxic waste into the Amazon rainforest.
Hinton suggested Watson suffers from a conflict of interest over the Ecuador matter, given his role in vetting Chevron's purchase of Texaco in 2001. At the time, Chevron did not account for the potential environmental liability of Texaco, which operated in Ecuador from 1964 to 1992.
On Thursday, a managing editor from The Wall Street Journal, Alan Murray, asked Watson about why the Ecuador case was "dogging" the company following remarks Watson made at the prestigious Council on Foreign Relations in New York. In response, Watson repeated the company's litigation position that Ecuador has a corrupt judiciary and that the case is a fraud.
"I have no intention of paying people that have committed criminal acts against us," said Watson.
The plaintiffs not only deny Chevron's charges, but have alleged that Watson is diverting shareholder money for a campaign to cover up multiple court findings related to Chevron's environmental crimes and fraudulent remediation in Ecuador. The fraud allegations against Chevron are summarized in federal court claims filed by an attorney for the Ecuadorians, available here. Chevron's long history of misleading shareholders over the case can be found in this report by Canadian securities lawyer Graham Erion.
Watson has found himself in hot water with many of his own shareholders over the Ecuador matter, with several institutional investors calling on the SEC to determine whether the company is lying to downplay the risk stemming from the judgment. See here, here and here.
Since October 15 of this year, the day an Ecuador court ordered the seizure of Chevron assets in Argentina and Columbia under an international treaty, Chevron's stock price has lost roughly 15% of its value and performed significantly worse that its industry peers. In early November a court in Argentina ordered that the company's assets be frozen while independent analysts are beginning to take notice that Chevron faces significant litigation problems around the world.
Chevron also faces seizure actions from the Ecuador judgment in Canada and Brazil, which together target roughly $15 billion in company assets, according to court records.
At Chevron's annual meeting last May, Watson faced a shareholder rebellion of sorts when a whopping 38% of all shares (valued at $73 billion) voted to strip him of his dual role as CEO and Chairman of the Board because of the company's bungling of the Ecuador lawsuit. Two other shareholder resolutions related to the Ecuador liability also garnered a high level of support. See here.
Chevron's 2010 annual meeting in Houston erupted in chaos when Watson ordered five shareholder critics arrested when they confronted him about the company's human rights abuses in Ecuador. At the time, Watson was accused of "losing his head" over the Ecuador case by a shareholder activist, Maria Ramos.
Chevron has admitted to dumping more than 16 billion gallons of toxic waste into the streams and rivers of the Amazon, decimating indigenous groups and causing an outbreak of cancers and other oil-related diseases, according to evidence relied on by the Ecuador court. A summary of the evidence against Chevron can be found here a video about the case can be seen here, while a summary of the cancer deaths can be found here.
Watson received an estimated $25 million in compensation in 2011, or almost the entire amount spent by Chevron in its purported "remediation" of hundreds of its contaminated waste pits in Ecuador in the mid-1990s. That remediation – which involved covering up toxic waste pits with dirt without cleaning them out – was found by Ecuador's courts to be fraudulent.