Brazil Oil Spill Raises Questions About Company’s Respect For Local Laws
Chevron faces yet another conflict with a key Latin American country where it has a sizable investment – Brazil Chevron is currently embroiled in a huge conflict in the largest country in South America related to a huge oil spill off the coast near Rio de Janeiro. If Chevron’s flouting of local laws in Brazil is as flagrant as it has been in Ecuador, then it could lead to open warfare between Chevron and two Latin American countries.
What's happening in Brazil sounds very similar to what happened in Ecuador, where the company is attempting to evade an $18 billion judgment for massive oil contamination in the rainforest that has cost thousands of lives and devastated an area roughly the size of the U.S. state of Rhode Island.
In Brazil, the Federal Police is investigating Chevron’s statements about the amount of oil spilled, the cause of the spill and the containment. Other government officials and environmentalists are questioning Chevron’s estimates. Also, it appears the spill has not been contained, even though Chevron said it had been. In other words, many Brazilians believe Chevron is lying to them.
Fabio Scliar of the Brazilian Federal Police said the information provided by Chevron did not match the visual evidence at the site. "Initially, the reports do not correspond to reality," said Scliar. "I want to understand what's happening."
Brazil’s Energy Minister Edison Lobao said: “If Chevron is not doing what it should (to contain the spill) it will be severely punished.”
In Ecuador, Chevron’s U.S. executives have declared political warfare on Ecuador's government as part of a strategy to discredit the $18 billion judgment for the cleanup of massive oil contamination left behind two decades ago -- one that experts believe dwarfs the size of BP's Deepwater Horizon spill in the Gulf of Mexico.
The oil giant is paying several U.S. corporate law firms, lobbyists and public relations gurus hundreds of millions of dollars to foment open conflict with Ecuador's government as part of a global strategy to escape justice. It has created the unusual specter of a major American oil company deliberately provoking a diplomatic row with an oil-producing Latin American country that is a key U.S. trading partner.
The stepped-up political strategy comes at a time when Chevron's legal prospects in the case, which is being heard in the Amazon town of Lago Agrio, have considerably weakened. Ecuadorian citizens originally filed the claims in 1993 in New York but a U.S. judge shifted the case to Ecuador in 2002 at Chevron's request. At the time, Chevron heaped lavish praise on Ecuador's court system. When evidence began to show the extent of the contamination, Chevron declared it would never pay a damage award.
In September, a U.S. appeals court blocked Chevron from using an injunction from a U.S. trial judge to enjoin enforcement of the Ecuadorian judgment in any of the dozens of countries where the oil giant operates. Separately, the Ecuador court in February found Chevron liable and imposed $18 billion in damages, which the plaintiffs are appealing as too low.
In any event, the message from Ecuador is simple -- when it comes to Chevron, Brazil should beware.