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CSR Press Release

Chevron Reportedly Offered $1 Billion to Quash Huge Environmental Case In Ecuador

Rainforest communities slam oil giant for engaging in "corrupt" attempt to avoid paying for environmental cleanup

Submitted by: Amazon Defense Coalition

Categories: Environment, Corporate Governance

Posted: Jan 09, 2012 – 03:52 PM EST

 

QUITO, Ecuador, Jan. 09 /CSRwire/ - Representatives of the rainforest indigenous groups in Ecuador who last week had their historic $18 billion judgment against Chevron affirmed on appeal slammed the company today after reports surfaced that the oil giant was trying to float a $1 billion bribe offer to Ecuador's government to quash the case before international enforcement can begin, said Karen Hinton, a spokeswoman for the communities.

"We are putting Chevron CEO John Watson and all Chevron lawyers on notice that we are monitoring the situation closely to prevent any bribes or so-called settlement plans from being offered to Ecuador's government that bypass the legal case," said Hinton.

Hinton cited reports from officials in Ecuador's government that Chevron flooded Ecuador's capital of Quito over the weekend with at least a dozen lawyers as it plotted a last-ditch effort to prevent the judgment from migrating to other countries where it could potentially be enforced against Chevron assets. 

In a previous effort, Chevron had offered $1 billion to Ecuador's government in exchange for the case being choked off -- an action that would clearly be illegal under Ecuador and international law and violate the legal rights of the plaintiffs, said Hinton.

Chevron has stripped almost all of its assets from Ecuador and its officials have stated repeatedly that the company will not pay the judgment, forcing the communities to consider standard collection efforts in other countries. 

That said, the judgment in Ecuador is not currently enforceable given that the appellate court in Ecuador will probably take several weeks to respond to requests that it clarify its decision, and other hurdles remain, said Hinton.

Chevron will have the right to suspend enforcement of any Ecuador judgment in other countries simply by posting a bond while it appeals to Ecuador's highest court.  Should Chevron decline to post a bond and the judgment becomes enforceable, the company will still have a right to contest enforcement via the courts of any country where a collection action might be filed. 

"Chevron has a number of legitimate ways it can contest the judgment in Ecuador and contest enforcement in Ecuador and other countries," said Hinton.  "Offering bribes to bypass the legal process it not a legitimate way to contest the judgment, and it raises questions about whether Chevron is violating anti-bribery statutes in Ecuador, the U.S., and other countries."

Chevron also has remained silent in the face of mounting evidence that it defrauded the Ecuador court by using a secret laboratory to hide evidence of contaminated soil samples; that it lied to its own experts so they would defend the company's fraudulent sampling practices, and that it paid substantial sums of money to a Chevron contractor in Ecuador so he would remain silent about a sting operation against a sitting judge who was prepared to rule on the case.

In the meantime, Chevron's main law firm on the Ecuador matter -- Gibson Dunn & Crutcher -- faces ethical questions of its own as courts have repeatedly sanctioned the firm for trying to harass witnesses for the Ecuadorian plaintiffs. The firm has also come under fire for using overly aggressive litigation tactics that have increased risk to the company and caused a backlash from shareholders. See here and here. In the meantime, Chevron faces increasingly dim prospects in the litigation.  The Ecuador appellate court decision, which came out on Jan. 3, was a devastating setback for the company.  Three days later, a U.S. federal trial court judge denied a Chevron attempt to attach the assets of the plaintiffs on allegations the judgment was procured by fraud.

Chevron has now turned its attention to a private international arbitration it started against Ecuador's government, but that the rainforest communities have repeatedly said that action is not binding on them and that the relief Chevron seeks is illegal under international law. 

The Chevron bribe issue first surfaced in December when a blog on the Huffington Post reported that Ivonne Baki, an Ecuadorian government official, had discussed a $500 million "donation" from Chevron as part of a package or benefits that would be used to end the legal case.

Baki directs Ecuador's internationally-celebrated Yasuni project, which seeks to keep more than one billion barrels of crude oil permanently in the ground in a biodiverse area of Ecuador's Amazon rainforest in exchange for payments to Ecuador's government of $350 million annually for ten years.  

In a statement at the time the reports surfaced, Baki denied having contact with Chevron.  But Chevron's own legal filings in U.S. federal court outlined a series of meetings between Baki and Chevron lawyers related to resolving the case by bypassing the plaintiffs. See here, here and here.

The latest news about Chevron using Baki to float the offer has created a media firestorm in Ecuador, with unflattering articles about Baki appearing here, here and here.  Chevron officials have not disputed the reports of the $1 billion offer.

There is no evidence anybody with authority in Ecuador's government considered accepting the proposal, which would have violated the legal rights of the 30,000 plaintiffs and run afoul of Ecuador's Constitution which guarantees the independence of the judiciary, said Pablo Fajardo, the lead lawyer for the rainforest communities.

"Chevron and Baki apparently think Ecuador is a banana republic where officials would be willing to sacrifice the rights of their own citizens for a small bribe," Fajardo said when the reports first surfaced. 

Separately, Chevron still has not commented on a memorandum from Texaco (Chevron's predecessor company in Ecuador) that ordered the destruction of company documents related to oil spills in Ecuador.  The memo was disclosed via a U.S. discovery action.

Texaco reportedly caused hundreds of oil spills in Ecuador, many of which were "remediated" by setting them on fire, according to the book Amazon Crude, which was published in 1989 and which documented Texaco's substandard operational practices. The company also has admitted to pouring sludge from the waste pits along dirt roads.

From 1964 to 1990, Chevron used the Texaco brand to operate a large concession in Ecuador's Amazon region that included an extensive network of pipelines and hundreds of wells and separation stations. The Ecuador court found Chevron liable for dumping billions of gallons of toxic waste, decimating indigenous groups and causing a dramatic increase in cancer rates.

The impact of the disaster in Ecuador – which has haunted the local population for almost fifty years – dwarfs that of the BP spill in the Gulf of Mexico, according to experts.

The trial unfolded in Ecuador after Chevron had it shifted out of U.S. federal court, the preferred forum of the indigenous communities. At the time, Chevron offered effusive praise for Ecuador's judiciary.

Since evidence pointed to the company's guilt, Chevron has engaged in an all-out legal and public relations war to taint Ecuador's judicial system and by hiding the fact the company itself has won several cases in Ecuador in recent years.  See here.

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