Amazon Defense Coalition
6 August 2012 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109
Lago Agrio, Ecuador – After almost 19 years of litigation, the clock is now ticking down to the final hours for Chevron to pay a $19.04 billion Ecuador court judgment or officially default and face yet another lawsuit to seize its assets, this time in the South American nation.
Such collection lawsuits already are pending against Chevron in Canada and Brazil, where the company collectively has billions of dollars worth of assets that the rainforest communities are asking courts to seize to satisfy the judgment and finance a clean-up of what experts consider to be the world's worst oil contamination, said Pablo Fajardo, the lead Ecuador lawyer on the case.
"People in Ecuador are dying because of Chevron's pollution and company's utter contempt for the rule of law," said Fajardo. "Chevron is going to have to be forced by courts to comply with its legal obligations."
Ecuador Judge Liliana Ortiz on Friday signed an order (see here) giving Chevron until midnight tonight (August 6th) to deposit the funds necessary to remediate the oil contamination, which included the dumping of more than 16 billion gallons of toxic waste into Amazon waterways. Ecuador is the third-largest oil producer in Latin America, with proven reserves of 6.5 billion barrels.
For practical purposes, the latest Ecuador court order allows the rainforest communities to execute the Ecuador judgment against Chevron's remaining assets in their home country and puts them in a stronger legal position to pursue recognition of the Ecuador judgment abroad under various international treaties and domestic law statutes, said Fajardo.
Fajardo estimated Chevron's remaining assets in Ecuador are worth roughly $200 million, including a $96 million court judgment the oil giant won recently in an international arbitration proceeding against Ecuador's government. Chevron had stripped most of its primary assets – including numerous service stations – from Ecuador years ago in anticipation of losing the environmental lawsuit, and the oil giant no longer operates in the country.
If Chevron refuses to pay the court judgment, the oil giant will face a greater risk of liability in the enforcement actions already pending, said Karen Hinton, the U.S. spokesperson for the indigenous and farmer communities who originally filed their lawsuit in 1993 in U.S. federal court in Manhattan.
The case was shifted to Ecuador in 2002 after Chevron filed 14 affidavits praising the fairness of that country's court system and promised to abide by any adverse judgment – a promise which it now appears intent on violating with the midnight deadline imminent, said Hinton.
If Chevron defaults, Fajardo said his legal team will file court actions to seize the intellectual property rights of various Chevron brands in Ecuador, including Havoline. Ultimately, Fajardo said he expects that judges in Ecuador and elsewhere will force the auctioning off of Chevron assets with the proceeds used to secure the long overdue clean-up mandated by the Ecuador trial court.
"Our legal position is getting stronger by the day," said Fajardo. "What is clear is that in the eyes of the law, Chevron becomes a fugitive from justice at midnight Monday unless it pays the Ecuador judgment in full."
"Should Chevron continue to ignore its court-mandated obligations, we will notify governments that they should do no further business with Chevron as long as the company fails to respect the rule of law in communities where it operates, as has happened in Ecuador," added Fajardo.
The latest order from the court is the final step under Ecuador civil procedure to certify the 188-page trial court judgment, which was issued on February 11, 2011 and unanimously affirmed on appeal in early January of this year and which set the amount of the judgment at $18.2 billion. Last week, Judge Ortiz raised the final amount of the award to $19.041 billion after calculating various mandatory costs required by Ecuador law.
Ecuador is currently auctioning off drilling rights in several large fields in the Amazon region. Chevron apparently will be left out of the bidding until it pays the full amount of the judgment, a risk factor that in the past has angered dozens of institutional shareholders who have called on the company to settle the case. See here.
The plaintiffs also plan to file additional asset seizure actions in the coming weeks against Chevron after analyzing the laws of more than 30 different countries, said Fajardo. Key targets include Venezuela, which maintains Chevron's largest investment in Latin America, as well as Panama, he said.
Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand, building hundreds of oil production facilities and reaping an estimated $30 billion in profit. (Chevron claims it made only $500 million in profit by counting only the revenue of its fourth-tier subsidiary that operated in Ecuador, Texpet.)
The Ecuador court found overwhelming evidence that Chevron systematically dumped billions of gallons of toxic waste into Amazon waterways as a cost-saving measure. The company also destroyed documents relating to oil spills, conducted a fraudulent remediation and ultimately tried to bribe and intimidate judges to engineer a favorable outcome (see here), according to evidence presented to the court.
Five indigenous groups in the area have been decimated by Chevron's pollution, which also caused an outbreak of cancer that has killed or threatens to kill thousands of people in the area, according to evidence before the court.
Although experts believe the ecological damage in the area could be the most extensive in the world – an area the size of the U.S. state of Rhode Island is poisoned – Chevron's total liability is less than half of BP's for the comparatively smaller Gulf of Mexico spill, said Hinton.
Chevron's management, including CEO John Watson and General Counsel R. Hewitt Pate, have been dealing with a shareholder revolt over their mishandling of the Ecuador litigation. Pate has been accused of a conflict of interest while recently U.S. Congresswoman Jan Schakowsky requested that the SEC open an investigation to determine if the company is hiding its risks from shareholders. Separately, 40 institutional shareholders rebuked company management over the issue in a recent letter.
In recent weeks, Chevron lawyers tried desperately to delay the final certification of the trial court judgment by filing a motion to recuse Judge Ortiz. The company also filed four frivolous motions on Wednesday and Thursday of last week repeating arguments that already had been rejected numerous times in a last-ditch effort to delay the latest order, said Fajardo.