Embattled by a
$19 billion judgment in Ecuador, Chevron’s management team -- headed by CEO
John Watson and General Counsel R. Hewitt Pate -- seems to be forgetting that
shareholders actually own the company where they work. In their increasing
arrogance, these fine men seem to ignore this basic truism of the corporate
form.
This disturbing
phenomenon at Chevron has become even more evident in an article published
Sunday by one of the top business writers for The New York Times, Gretchen
Morgenson. Morgenson weighed in on Chevron's attempt to intimidate and
harass an institutional shareholder for urging the company to take
responsibility for one of the world's largest environmental disasters in
Ecuador. Chevron has undertaken an aggressive legal strategy against the
Ecuadorians who filed the lawsuit and any shareholder who has raised questions
over management’s mishandling of the litigation.
Morgenson
reports that Trillium Asset Management, which oversees $1 billion in
sustainable investments and is a Chevron shareholder, has been subpoenaed by
the company in its so-called "extortion" case against the Ecuadorians
and their lawyers and consultants. Trillium, as Morgenson points out, has
asked the Securities and Exchange Commission to determine if Chevron has
"adequately explained" its
litigation risk. It also sponsored a shareholder
resolution last year requiring Chevron’s Board of Directors to hire an
independent expert to analyze its environmental practices.
Essentially,
Morgenson suggested that Watson and his team have an obligation to shareholders
to answer their questions and grant them their right to criticize the company
without trying to intimidate them into silence.
She
writes, "Trillium's activities do not seem outlandish. Hiring an
independent environmental expert to sit on a board is a common shareholder
request these days and asking the S.E.C. to review a company’s disclosures is
fair game for shareholders. And yet, the receipt of the subpoena seems to
indicate that Trillium’s work has drawn the company’s wrath. It is not
alone."
Morgenson
explains that Chevron also has attacked another large shareholder, the pension
fund of New York that owns approximately $800 million of Chevron stock. Chevron
has asked for an investigation into State Comptroller Thomas DiNapoli for
calling on Chevron to settle the case as a way to mitigate its risk. See
here.
Although
Morgenson did not touch on it, Watson seems to have created a delusional
psychological shell for company management. When it comes to the Ecuador
risk, he continues to mislead shareholders as demonstrated by this chilling
report by securities lawyer Graham
Erion. His recent comments to the Council on Foreign Relations – where he
inserted himself personally into the litigation -- have to be disconcerting to
any shareholder.
In short, given
his utter failure to confront the Ecuador reality honestly, shareholders can
now reasonably question whether Watson is even fit to lead the company. It is
already publicly documented that he suffers from a conflict of interest on the
matter, having been a lead Chevron official who never adequately vetted Texaco
for the Ecuador liability when Chevron bought the company in
2001. We note that last year Watson suffered a series of stunning
rebukes from shareholders at the company’s
annual meeting related to the Ecuador matter.
Read the entire
article in The New York Times here.
Become a follower of The Chevron Pit.
Also follow us on Twitter at @ChevronPit and like us on Facebook
Visit and watch a video on ChevronToxico.com to find out more.
Support Amazon Watch and Rainforest Action Network.