Amazon Defense Coalition
14 May 2013 - FOR IMMEDIATE RELEASE
Contact: Paul Paz y Miño: +1 510.281.9020 x302, firstname.lastname@example.org
New York, NY – Chevron's CEO John Watson and his management team are misleading shareholders over the company's $19 billion Ecuador judgment and potentially breaching U.S. securities laws, according to a new report published today.
Written by New York securities lawyer Graham Erion, the report describes "a stunning portrait" of a company ignoring its legal obligations to provide full and complete disclosure of material facts about the Ecuador liability. Chevron currently faces seizure actions targeting roughly $20 billion in company assets in Argentina, Brazil, and Canada.
The report is being released two weeks before Chevron's annual meeting on May 29th, when Watson once again will try to push back against shareholder resolutions demanding corporate governance changes exposing the company's bungling of the Ecuador liability. See here.
Watson will be confronted at the annual meeting by indigenous leaders from Ecuador furious with the company's refusal to comply with court orders that it clean up its pollution in Ecuador.
"Chevron's strategy to keep the investing public in the dark over its substantial risk from the Ecuador liability can only result in further backlash from regulators and shareholders," said Erion, who analyzed deficiencies in the company's recently filed 10K annual report and proxy statement.
Among the defects in Chevron's latest public disclosures:
- Chevron has been misleading investors on the threat enforcement actions pose to its operations and business relationships including, most prominently, the embargo of $2 billion inassets in Argentina that has been upheld on appeal in that country;
- Chevron keeps its investors guessing about the risk and range of loss the company faces from the Ecuador judgment, despite the fact the judgment was upheld unanimously on appeal there and enforcement actions targeting roughly $20 billion in company assets are pending in three countries;
- Chevron's disclosures fail to mentionmultiple adverse rulingsagainst it in federal courts in the U.S., including one that reached the U.S. Supreme Court, with either refusals to rule on or rejecting its core defense of trying to block international enforcement of the judgment; and
- Chevron repeats demonstrably false statements about the merits of the lawsuit that arecontradicted by court rulings in the U.S. and Ecuador.
The release of an initial version of Erion's report last April produced criticism of Watson and his management team. At Chevron's annual meeting last year, over 38% of shareholders voted to strip Watson of his dual roles as CEO and Chairman of the Board. This year the company leaned on the SEC to allow it to omit putting the same resolution to a shareholder vote.
Shareholders with over $580 billion in assets under management also demanded that Watson "fully disclose ... the risks to [Chevron's] operations and business from the potential enforcement" of the Ecuador judgment, and a group of shareholders and a U.S. Congresswoman petitioned the Securities and Exchange Commission to investigate whether Chevron had breached its disclosure obligations.
Rather than address these concerns, Watson and his senior management team have retaliated by targeting shareholder critics with subpoenas and claiming they are colluding with the Ecuadorian villagers to "extort" money from the company. Several shareholders and journalists have condemned the strategy as unethical and ineffective.
A full copy of Erion's report, In The Dark, can be found here.