Chevron Threatens to Shut Down Argentina Operations Over Ecuador Lawsuit
Amazon Defense Coalition
20 November 2012 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109
Buenos Aires, Argentina – In a clear effort to apply political pressure to judges, Chevron is threatening to bankrupt the company's subsidiaries in Argentina unless an asset freeze order issued against $2 billion of the oil giant's assets is lifted, according to news reports.
The order was imposed last week because Chevron refuses to pay a $19 billion judgment in Ecuador for systematically dumping toxic waste into the streams and rivers of the rainforest, decimating indigenous groups and causing an outbreak of cancer.
For background on the overwhelming evidence against Chevron in Ecuador, see here; a video on the case can be seen here.
La Nacion, a leading newspaper in Argentina, is reporting that desperate Chevron executives are giving Argentina's national government until December to force a court to reverse the freeze order before facing "operational problems" that could shut down two subsidiaries that produce an estimated $600 million in revenue annually for the parent company.
The newspaper reported that "a host of Chevron lawyers and executives in Miami were analyzing alternatives in a race against time" given that they expect funds to run out in several weeks – a prospect that the plaintiffs in the case call a "manufactured scare tactic" designed to apply pressure to Argentina's courts.
Representatives of indigenous rainforest villagers in Ecuador had little sympathy for the company, calling Chevron's threats another example of "improper political pressure" used to avoid being held accountable under the law.
"Chevron has been running from the law for years in Ecuador, where out of pure greed it deliberately created what is probably the world's worst oil contamination," said Graham Erion, a Canadian lawyer advising the rainforest communities. "It is not surprising that the company's illegal behavior is finally catching up to it.
"The pollution Chevron intentionally caused in Ecuador is an assault on all of Latin America," he added. "Chevron would never commit such atrocities in its own country."
The Argentina embargo prohibits Chevron from disposing of any interests in concessions, pipelines, or other projects without the court's consent and diverts 40 per cent of the company's annual revenue to an escrow account controlled by the court. The court chose to garnish less than half of the revenue to allow Chevron's subsidiaries to operate with flexibility, said Erion.
Chevron also was planning to invest $1.8 billion over the next three years in Argentina to build 120 new oil wells, and was exploring an investment in a huge oil shale project called Vaca Muerta.
"The threat by Chevron CEO John Watson to pull out of Argentina endangers the company's interests in a country that should be a key driver of future growth in the region," said Karen Hinton, U.S. spokesperson for the rainforest communities in Ecuador. "This is not in the interests of Chevron shareholders."
Chevron's woes in Argentina were compounded this week when Spain's Repsol oil company sued the oil giant in Spain on the grounds that it was trying to profit from operations that had been expropriated by Argentina's government.
Reports out of Argentina were quick to show that Chevron has already begun to lobby furiously for an extra-judicial solution.
La Nacion reported that the governor of the oil rich province of Neuquén publicly stated that he hopes Chevron succeeds in fighting the embargo, which was imposed pursuant to an international treaty in Latin America that allows for the reciprocal recognition of foreign judgments.
Chevron's attempts to enlist political allies in Argentina are directly out of the oil giant's playbook, with documented attempts to bribe Ecuadorian government officials, use the U.S. embassy in Quito to undermine the case, and lobby the U.S. government to cut Ecuador's trade preferences for refusing to intervene in the case.
Pablo Fajardo, the lead Ecuadorian lawyer for the affected communities, told La Nacion that Chevron is trying to "extort" Argentina.
"Chevron has options," he said. "You can pay the judgment or offer bail in Argentina bail to replace the embargo. It seems that Chevron intends to act outside the law and is choosing to attempt to extort Argentina. If the company suspended its operation, it is demonstrating that it is only interested in working when it has impunity."
One of the consequences of the freeze order is that any future investments Chevron makes in Argentina will also be subject to seizure, up to the full amount of the $19 billion Ecuador judgment.
Chevron also faces asset seizure actions over the Ecuador judgment in Brazil, Canada, and Ecuador.