Shareholders can now reasonably question whether Chevron CEO John Watson is fit to lead America’s second-largest energy company. Increasingly, Watson is acting like a palace dictator surrounded by yes men who only deliver good news as the streets rage in protest.
It is well-documented that Chevron’s share price recently has taken a hit due to the $19 billion Ecuador liability and other litigation problems around the world, including a potential $22 billion liability in Brazil. Wall Street has begun to take notice, with the company’s share price down 10% since October.
Recently, Watson ventured out of corporate headquarters and entered what he thought would be a friendly setting at the prestigious Council On Foreign Relations in New York City.
Even there, he was confronted by the Ecuador reality.
After his remarks, the first question that hit Watson was from a Wall Street Journal editor who asked about the Ecuador liability that he said was “dogging” the company. Watson had this to say in response:
"We are largely winning in the court of public opinion. You see much less written because anyone who has done their homework knows it’s a fraud and so we’re winning in the court of the public opinion, we’re making great progress in the courts but yes we do have to fight and we’ll fight it till we win."
This is a man not in touch with reality.
If Watson thinks the case is a fraud, how does he explain how Chevron’s fraud allegations have been examined and rejected by two courts in Ecuador, the U.S. Supreme Court, multiple U.S. appellate courts, and did not bother an enforcement court in Argentina that recently froze $2 billion of Chevron assets in that country?
Chevron now faces asset seizure actions targeting $15 billon in company assets around the world, including massive oil fields in Brazil and Canada critical to the company’s long-term strategic growth. In the meantime, Watson’s lead U.S. law firm fighting the litigation – Gibson Dunn & Crutcher -- has been slammed for committing ethical violations on behalf of Chevron.
The Ecuador case is not only costing Chevron massive sums in legal fees, but is putting Chevron at a competitive disadvantage worldwide. The company already is being forced to suspend planned investments in places where it faces asset seizure actions.
Watson believes much less is being written about the case? Click on the links below and see just how out of touch Watson has become.
Small Sampling of Recent News Coverage of Ecuador Case
New York Times: Chevron Aims At An Activist Shareholder
Al Jazeera: Holding Chevron Accountable
Financial Times: Argentine Judge Freezes Chevron's Assets
Courthouse News: Privacy Groups Enters Chevron's Amazon Fray
Guardian: Chevron Dealt New Blow In Ecuador Case