Amazon Defense Coalition
19 October 2012 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109
Quito, Ecuador – A court decision this week in Ecuador to freeze an estimated $200 million of Chevron assets is clear evidence that the oil giant's CEO and General Counsel were lying to shareholders when they repeatedly claimed the company had no assets in the country, according to an analysis by the Amazon Defense Coalition.
An Ecuador court this week froze all bank accounts of Chevron and its subsidiaries in the country as part of seizure actions stemming from a $19 billion judgment against the oil giant for causing environmental contamination in the rainforest, decimating indigenous groups and creating an outbreak of cancer. See here and here.
On four separate occasions this year, Chevron CEO John Watson and General Counsel R. Hewitt Pate signed off on statements that explicitly said the company had no assets in Ecuador. Watson used the statements to mislead shareholders by downplaying the level of risk the company faces from the judgment, said Graham Erion, a Canadian securities lawyer who advises the rainforest communities.
In an earnings conference call with shareholders and analysts on January 27 of this year, Watson described the legal status of the case in Ecuador and then said: "Remember, we have no assets in Ecuador."
In three separate filings this year with the Securities and Exchange Commission, Chevron said it "has no assets in Ecuador" in the context of saying it would defend against any seizure actions to enforce the Ecuador judgment. The SEC filings were made on February 23rd, May 3rd, and August 2nd, said Erion.
"These statements are the latest examples of a pattern whereby Chevron executives routinely mislead shareholders and the financial markets about the financial risk the company is facing due to its Ecuador liability," said Erion.
Erion is the author of a report documenting numerous examples of how Watson and other Chevron executives have misrepresented facts to shareholders and the financial markets about the long-running case, which was decided in Ecuador after Chevron asked that the case be moved there from U.S. federal court.
Separately, the Ecuadorian villagers in May and June filed seizure actions in Canada and Brazil targeting billions of dollars worth of Chevron assets, including refineries, offshore oil platforms, and oil production facilities. The Canadian court, located in Ontario, has scheduled an initial hearing for late November.
Chevron assets in Ecuador include a $96.3 million debt owed to it by the government of Ecuador, licensing fees from numerous Chevron trademarks such as Havoline and Texaco, and various bank accounts held by the company and its subsidiaries. Monies collected would be used to remediate the environmental damage caused Chevron and to help ensure the rest of the judgment is collected, said Karen Hinton, the U.S. spokesperson for the Ecuadorians.
Chevron continues to suffer a downward trend in the legal case since it hired the U.S. law firm Gibson Dunn & Crutcher in 2009 to "rescue" it from the impending Ecuador liability. Gibson Dunn not only lost the largest environmental judgment ever against an American oil company, but in recent weeks the U.S. Supreme Court denied Chevron's attempt to have a U.S. trial court try to block global enforcement of the judgment.
In addition, institutional shareholders from Chevron with an estimated $580 billion in assets under management urged the company to settle the case; and, a U.S. Congresswoman and other shareholders asked the SEC to determine whether Chevron's Watson and Pate are lying about the Ecuador case to investors. See here, here and here.