Wednesday, October 17, 2012
Rainforest villagers from Ecuador scored their first significant collection victory against Chevron’s assets this week in their attempt to enforce the historic $19 billion judgment against the oil giant after it was found to have caused cancers and environmental damage to ancestral lands in the Amazon.
An Ecuador court this week issued an order for the plaintiffs to obtain approximately $200 million in Chevron assets in the South American country – a significant sum given that the oil giant tried to strip all of its assets from the country in anticipation of losing the litigation. In a statement released in Ecuador’s capital of Quito, the villagers also reiterated their goal of collecting the entire $19.04 billion damages award by seizing Chevron assets in countries around the world.
Among the assets ordered turned over are a $96.3 million debt Ecuador’s government owes Chevron, monies in various bank accounts held in Ecuador by Chevron and its subsidiaries, and licensing fees generated by the use of Chevron trademarks in the country. The total amount in assets could generate an estimated $200 million for the plaintiffs, who won their case in 2011 after an eight-year trial, said lawyers for the communities.
“This is a huge first step for the rainforest villagers on the road to collecting the entire $19 billion judgment,” said Pablo Fajardo, the lead lawyer for the communities. Fajardo said the assets would be used to begin to fund a clean-up of the ecological disaster left by Chevron, consistent with the mandates laid out by the Ecuador trial court.
“Indigenous people and farmers in Ecuador continue to suffer disease and death because of Chevron’s refusal to respect the rule of law in Ecuador,” said Fajardo. “This is the first example of how Chevron is losing assets as courts force it to comply with its obligations.”
Chevron trademarks affected by the court order include Texaco, Ursa, Havoline, Doro, Geotex, Meropa, Motex, Multigear, Regal, Toro, Texathern, Thuban, and others. All are used in Ecuador under licensing arrangements with local distributors, said Fajardo. Also ordered frozen are all bank accounts related to Chevron, Texaco, and any subsidiary in the country.
The $96 million debt stems from an international arbitration award in favor of Chevron related to numerous commercial disputes between the oil giant and Ecuador’s state-owned oil company, Petroecuador. Those funds will have to be transferred by the government to the rainforest villagers as part of the collection effort, Fajardo said.
Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand. In February 2011, an Ecuador court found Chevron liable for deliberately dumping billions of gallons of toxic waste into the Amazon, causing an outbreak of cancer and devastating the natural habitat relied on by thousands of villagers. Numerous independent studies have found thousands of people have died or are likely to die due to Chevron’s pollution. See here, here, and here.
A video on the case can be seen here; a written summary of the evidence can be read here; and a 60 Minutes segment on the case can be viewed here.
Chevron has the right to oppose the order, which was issued ex parte to prevent Chevron from selling or removing its assets before they could be frozen. If Chevron opposes the order, the trial has to either modify or ratify his original ruling. That job is considered largely ministerial given that the judgment from the long-running lawsuit has been affirmed on appeal and Chevron refused to post a security bond preventing enforcement of the judgment, said Fajardo.
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.
The environmental trial was held in Ecuador at Chevron’s request after the company filed 14 sworn affidavits in U.S. federal court attesting to the fairness of the nation’s judicial system.
The court order, signed by Judge Wilfrido Erazo in the Sucumbios Provincial Court, continues a downward trend for Chevron 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.
In recent weeks, the U.S. Supreme Court denied its attempt to block enforcement of the judgment; several shareholders with an estimated $580 billion in assets under management urged the company to settle the case; and, a U.S. Congresswoman and other large shareholders asked the SEC to determine whether Chevron CEO John Watson and General Counsel R. Hewitt Pate are lying about the Ecuador case to investors. See here, here and here.
Chevron also has suffered a series of devastating courtroom setbacks in the U.S. over the last two years. Its own Deputy Comptroller admitted in open court that the seizure actions likely will cause "irreparable harm" to the company’s operations.
The Ecuadorian rainforest villagers plan to file additional seizure actions against Chevron in other countries in the coming weeks, said Fajardo, the recipient of the CNN “Hero” Award for his work on the case.
He added that key Chevron targets are located in countries in Latin America, Africa, and Asia.