Chevron CEO Faces Down Critics

At shareholders meeting, CEO defends company's handling of pollution suit

By David R. Baker, San Francisco Chronicle
30 May 2013

San Ramon, CA – Still battling a $19 billion pollution lawsuit in Ecuador, Chevron Corp. CEO John Watson faced down his critics Wednesday at the oil giant's annual shareholders meeting, insisting his company would soon be vindicated.

Watson brushed aside demands that he be fired for his handling of the suit, which seeks to hold Chevron liable for poisoning the soil and water in a swath of the Amazon rain forest.

When an Ecuadoran farmer said oil-field contamination killed his parents, Watson told the man that he had been misled by lawyers eager to make money at Chevron's expense. When the head of an environmental group questioned Watson's own actions in the case and kept speaking past her allotted time, Watson had her ejected from the room.

His defense of Chevron drew applause from shareholders gathered at the company's San Ramon headquarters, even as it infuriated activists protesting outside the campus gates.

"We have to complete the legal work, but certainly we've won in the court of public opinion on this case," Watson told reporters after the meeting. "We've certainly won with our shareholders on this case. And I'm hoping we can bring the legal part of it to a close."

The Ecuador suit has cast a shadow over Chevron's annual meetings for nearly a decade, even as Chevron's profits, stock price and dividends have soared.

Urging settlement

Year after year, environmental groups and activist investors have used the meetings to urge Chevron to settle the case. Chevron has refused, calling the suit extortion. The tension only increased after an Ecuadoran court in 2011 ruled against the company, slapping Chevron with penalties that have now grown to $19 billion. Rather than pay, the company sued the opposing team's lawyers for racketeering, arguing that they made up evidence.

So at this year's meeting, Chevron's critics targeted Watson himself.

Servio Curipoma, a cacao farmer from San Carlos, Ecuador, demanded that Watson be fired for pursuing a scorched-earth legal strategy. Speaking through an interpreter, he told shareholders and Chevron board members that his town remains tainted with toxins that killed his parents, who both died of stomach cancer.

"Why has CEO John Watson not been removed from his position for hiding the truth about the crimes committed in Ecuador?" Curipoma said, his voice shaking with emotion. "We are asking you to take responsibility, now that the case has been won, for your actions and the harm you've caused."

In response, Watson pointed out that an environmental consulting firm that used to work for the Ecuadorans recently switched sides. The consultants now claim to have seen no evidence of widespread contamination or illness, he said.

"Mr. Curipoma, I'm very sorry for your loss," Watson said, using his own interpreter to translate. "I find it very sad that the indigenous people are being used by American trial lawyers in this case."

Atossa Soltani, executive director of the Amazon Watch environmental group, criticized Watson for miring Chevron in the suit.

Texaco purchase

The lawsuit was originally filed against Texaco Corp., which drilled for oil in northeastern Ecuador from 1964 to 1992. Chevron only became involved after it bought Texaco in 2001. And Watson, who was Chevron's head of acquisitions at the time, was deeply involved in that purchase. Watson, Soltani said, failed in his "due diligence," paying too little attention to the financial risk the suit posed to Chevron and its shareholders.

Soltani has been a frequent presence at Chevron shareholder meetings, and Watson clearly anticipated her appearance. He played for the shareholders an outtake from the 2009 documentary movie "Crude," showing Soltani discussing the case with lawyer Steven Donziger, who used to lead the Ecuadorans' legal team. In the clip, Donziger suggests raising an "army" of supporters to "watch over the court." Soltani replies, "It's illegal to conspire to break the law."

As the video ended, Soltani - still standing amid the shareholders - objected.

"It was a joke, taken out of context!" she said. When she continued talking past the two minutes allotted each speaker, Watson asked security guards to escort her out.

Watson and his company also faced criticism over last year's major fire at Chevron's refinery in Richmond, which is only now returning to full operations. He apologized for the accident but said he was proud of how Chevron employees responded. And he repeated throughout the meeting that Chevron remained committed to safety.

"We will deliver on our commitments, we will grow, and we will do all of the above safely," Watson said.

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