Oil Giant Chevron Seeks Taxpayer Bailout from $18 Billion Ecuador Judgment
QUITO, Ecuador -- Facing devastating setbacks in the courts of two countries over its $18 billion Ecuador liability, Chevron is now seeking a taxpayer-funded bailout for the clean-up costs of its environmental catastrophe in the Amazon rainforest, said a lawyer for the Ecuadorians.
Chevron's annual revenues (roughly $240 billion
in 2011) are five times the GDP of Ecuador, but
that has not stopped the oil giant from seeking a private arbitration to force
Ecuadorian taxpayers to foot the bill for the clean-up costs of the
environmental disaster that the oil giant created in the South American nation,
said Pablo Fajardo, the lead lawyer for the
Photo: The Pollution Chevron Left Behind...Shushufindi pit 38. Chevron's scientists found no contamination at this pit. Credit: Amazon Defense Coalition
"We now have a situation where Chevron, one of the wealthiest
corporations in the world, is seeking the same type of taxpayer-funded bailout
in Ecuador that distressed companies like AIG
and General Motors secured in the United States
during the financial crisis," said Fajardo.
"This would be grossly unfair," he added.
Given that the per capita income in Ecuador
is only $4,000 per year, the cost of clean-up for
each adult Ecuadorian would amount to a one-time $1,200
tax, according to the plaintiffs.
After having lost at the trial and appellate levels in Ecuador and after suffering a stunning setback just
last week in a U.S. federal appeals court (see here
Chevron is now trying to use the U.S.-Ecuador Bilateral Investment Treaty
("BIT") to shift the cost of clean-up to Ecuador's
government. Such a move violates international law and Ecuador's
separation of powers doctrine, Fajardo wrote in a letter
to Ecuador's Attorney General Diego Garcia Carrion.
See this backgrounder
on how Chevron's attempt to use the arbitration tribunal to evade the Ecuador court decision is illegal.
On February 11, Chevron will ask a panel of
three private lawyers named as "arbitrators" under the BIT to nullify
the entire nine-year Ecuadorian court process that recently found the company
liable for $18 billion in clean-up costs. Chevron
is hoping the panel, which meets in secret and refuses to let the Ecuadorian
plaintiffs appear, will grant an "order" requiring Ecuador's government to violate its own laws and quash
the case. See letter
from Government of Ecuador.
Citing a wide body
of scientific evidence -- much of it provided by Chevron's paid technical
experts – the Ecuador trial court in February 2011 found the oil giant liable for deliberately
discharging more than 16 billion gallons of toxic "water of
formation" into Amazon waterways when it operated in the country under the
Texaco brand from 1964 to 1992. The dumping poisoned rivers and streams
relied on by local inhabitants for drinking water, decimated indigenous groups
and caused a dramatic increase in cancer rates, according
to the court's findings.
Fajardo emphasized in his letter that the remedy sought by Chevron before
the arbitral panel is illegal.
"The remedy that Chevron is seeking -- essentially a total
nullification of the decision of a judicial system of a sovereign nation --
would be unenforceable in any country that observes the rule of law," said
Fajardo, who represents the 30,000 rainforest dwellers who sued the oil giant
for clean-up costs.
The panel of arbitrators has come under criticism for its conflicts of
interest and for attempting to influence the underlying Ecuador litigation. (An academic article critical of
the investor arbitration system can be found here.)
Last February, without as much as an evidentiary hearing or access to the
complete Ecuador trial record, the panel issued
an order requiring Ecuador's government to take
all measures "at its disposal" to prevent enforcement of any judgment
in the environmental case until the panel itself could rule.
The arbitrators, who often work as practitioners in the same arbitration
system where they sit on panels, stand to reap millions of dollars in fees from
hearing the case. Further, the arbitrators seem to believe they have the
authority to override decisions by the highest courts of functioning public
judicial systems around the world, according to legal commentators.
Fajardo said in his letter that the BIT investor arbitration mechanism could
be used appropriately by responsible investors to correct legitimate instances
of unfair treatment, but that Chevron's conduct in this particular case denied
the fundamental human rights of the claimants and went well beyond the scope of
what the BIT permits.
Chevron, which has admitted using at
least 39 law firms to fight the rainforest communities, had the
environmental case moved from U.S. federal court to Ecuador
in 2002 by submitting 14 affidavits heaping praise on Ecuador's
judicial system. The company reversed course and started attacking Ecuador's courts once the evidence in the subsequent
trial pointed to its culpability, said Fajardo.
Chevron's problem always has been its inability to come to grips with the
overwhelming scientific evidence proving the claims of the rainforest
communities, which has been confirmed not only by several firsthand news
but also by the Ecuador trial and appellate
courts based on a 220,000-page trial record. The trial court cited ample
evidence that Chevron provided that helped to prove the claims of the
Chevron's legal position in the case has
weakened considerably in the last year as the company has lost multiple
decisions in both the U.S. and Ecuador. Its main
American law firm on the matter, Gibson Dunn & Crutcher, has been
sanctioned repeatedly by judges for engaging
in unethical litigation practices on behalf of the oil giant.
Out of court, Chevron has fared no better with a series of disastrous
revelations suggesting it tried to corrupt the Ecuador
Evidence has surfaced that Chevron offered Ecuador's
government $1 billion to quash the case,
potentially violating anti-bribery
statutes in the U.S.; that Chevron paid $2.2 million
in hush money to a man who threatened to blow
the whistle on the company's corrupt activities in Ecuador;
that another witness to Chevron's corruption suddenly vanished from the U.S after being
subpoenaed for a deposition under federal court order; that Chevron used a
secret laboratory to hide "dirty" soil samples from the Ecuador court, while its "clean"
samples were sent to a court-approved laboratory; that Chevron falsified
lab results during a sham remediation in the 1990s; and that the company
defrauded Ecuador's trial court by using U.S.
experts to submit misleading testimony about field sampling practices designed to
hide the existence of contamination.
Diplomatic cables also came to light that demonstrate Chevron tried
enlist officials at the U.S. Embassy in Ecuador
to try to undermine the lawsuit. Separately, a company executive ordered
the destruction of all documents related to oil spills.
"Chevron has lost this case in every legitimate public court for almost
twenty years because the science does not lie and the facts speak for
themselves," said Karen Hinton, the U.S.
spokesperson for the Ecuadorians. "Now it wants another bite at the
apple in a private proceeding court where it will have no opposition and where
the outcome will have no legitimacy."
Source: Amazon Defense Coalition
Published by: Magne Ove Varsi