Chevron Tries To Buy A Way Out Of $18 Billion Liability In Ecuador

Blog About Cozy Relationship Between Chevron and Government Appointee Creates Stir in Ecuador

Looks like Chevron is trying to buy its way out of the $18 billion liability it faces in Ecuador. Mitch Anderson of Amazon Watch writes in Huffington Post about Chevron's latest scam to escape justice. Below is his blog, Crude Politics: Is Chevron Involved in a Billion Dollar Bait-and-Switch in Ecuador. Anderson writes that Chevron is trying to work its connections with certain rogue officials in Ecuador's government as a way to escape its $18 billion liability for polluting the country's rainforest. We are investigating the information in the blog and will report any findings in the coming days.

Crude Politics: Is Chevron Involved in a Billion Dollar Bait-and-Switch in Ecuador?

As the Yasuni-ITT Initiative deadline approaches, did its chief negotiator make a deal with the devil?

With Chevron running out of legal options in its attempt to avoid its $18 billion liability in Ecuador over egregious environmental crimes and rights abuses, the company may have turned to its longtime government insider Ivonne Baki to help it out of a multibillion dollar jam, taking corporate malfeasance and greenwashing to a whole new level.

Baki is the head of Ecuador's Yasuni-ITT Initiative, the pioneer proposal that has captured the world's imagination by seeking to keep close to one billion barrels of crude permanently underground in exchange for payment. The ITT fields (Ishpingo, Tambococha, Tiputini) sit underneath the Yasuni National Park, a UNESCO World Biosphere Reserve widely considered to be one of the most bio-diverse places on the planet. The Park is also home to two nomadic indigenous groups living in voluntary isolation.

President Rafael Correa set Dec. 31, 2011 as the deadline to obtain $100 million -- a down payment that would give the government more time to raise the $3.6 billion ($350 million annually over 10 years) it needs to offset forgone revenues for leaving the oil untouched. If the money isn't raised, drilling would ensue.

But there hasn't exactly been a stampede of donors knocking down Ecuador's door. The government has fought an uphill battle since the proposal's inception in 2007. In a recent interview with Al Jazeera, Baki admitted that the world financial crisis has taken a toll on donor government enthusiasm. Additional challenges to Yasuni fundraising have included lingering concerns about Ecuador's history of political instability, the proposal's initial lack of political and financial guarantees, and a reluctance from industrialized countries to donate to forest protection without receiving carbon offset credits.

With the clock ticking -- and both the proposal's and Baki's future on the line -- Baki told the Financial Times in a Nov. 28 article that the Initiative donation total was $70 million, the bulk of which was a $35 million debt cancellation deal with Italy. She went on to declare that, "I think in the next month we are going to have more than $100 million."

However, the Yasuni Trust Fund administered by UNDP shows a mere $2 million in actual funds. Unfazed, Baki affirmed to the Miami Herald and several Spanish language newspapers on Dec. 5 that the $100 million mark had been met, saying an "appeal for private sector donations, has been paying off." Another article describes the unnamed private donations as "flooding in." Correa has yet to make an official announcement on the fate of the proposal and whether the fundraising goal has indeed been met.

If one takes Ms. Baki at her word that $70 million is at least pledged (though not physically in the bank), the question is: where did the additional $30 million come from in a week's time?

Sources close to the project have confirmed that meetings between Baki and Chevron regarding a possible "donation" to the Yasuni-ITT initiative have occurred, according to environmental organization Amazon Watch, who has been working for over a decade to hold Chevron accountable for a massive environmental disaster in Ecuador. Word on the street is that Chevron authorized Baki to propose the idea of a $500 million "donation" to the initiative in exchange for quashing the case. Though a very handsome quid pro quo, it's a drop in the bucket if this subterfuge helps the company thwart the $18 billion legal case.

Sound far-fetched? This April 2008 cable courtesy of Wikileaks between the U.S. Ambassador in Quito and the State Department shows that Chevron has been plotting something similar for years:

"Meanwhile, Chevron had begun to quietly explore with senior GOE officials whether it could implement a series of social projects in the concession area in exchange for GOE support for ending the case, but now that the expert has released a huge estimate for alleged damage, it might be hard for the GOE to go that route, even if it has the ability to bring the case to a close."

"Given Chevron's toxic legacy and the debt it owes the people and rainforests of Ecuador, the fact that this 'bribe' is even on the table is an aberration of justice," said Kevin Koenig, Ecuador program coordinator for Amazon Watch. "This is a multi-billion dollar bait and switch, it's illegal, and can't be allowed. We're calling on Ms. Baki to disclose any meetings held between herself and Chevron, the terms and conditions of any offer from the company, and full disclosure of all private sector donations."

A look back at Baki's history reveals a long list of favors for Chevron while she held official roles within the Ecuadorian government:

• In 1998, as Ecuador's Ambassador to the United States under the rightist government of Jamil Mahuad, she signed an official letter to a U.S. federal judge in New York seeking dismissal of the environmental lawsuit against Chevron.
• Throughout 2004, Baki, then serving as Ecuador's Trade Minister, helped organize and participated in several meetings between Chevron and high level Ecuadorian officials -- including the Attorney General -- which sought strategies to end the case, according to discovery documents produced recently in the United States. During one of those meetings, rainforest residents staged a sit-in in her offices and demanded she stop efforts to undermine the legal case against the company.
• In 2008, Baki, then serving as president of the Andean Parliament, organized and participated in a meeting with Chevron and Gustavo Larrea, Coordinating Minister for Internal and External Security who at the time was an influential member of Correa's Cabinet. The contact led to several other meetings between Chevron and Larrea in Ecuador and Washington, DC.
• Baki also has been active in Chevron's lobbying efforts in the United States to cancel U.S. trade preferences for the country in retaliation for the lawsuit. A cancellation of the preferences would cost Ecuador upwards of 300,000 jobs, according to Ecuador's government.


"We are not about to give Chevron a get-out-of-jail-free card by 'donating' to the Yasuni," said Esperanza Martinez, a founder of Accion Ecologica, a leading Ecuador environmental organization and key backer of the project. "Not only would such a donation violate the rights of thousands of Ecuadorians who are victims of Chevron's misconduct, it would also violate the very spirit of the initiative."

"In short, we are not interested in Chevron's blood money," she added.

Chevron itself has been accused of numerous acts of corruption in its attempt to sabotage the case. These include: lying about the results of a fraudulent remediation in the 1990s to secure a government release; fabricating evidence during the trial to minimize evidence of contamination; using a hidden video recorder to try to entrap a judge who Chevron thought would rule against it; threatening judges with jail time if they failed to grant Chevron's motions to delay the trial; and permitting the lawyers for the plaintiffs to be victimized by death threats and mysterious robberies of their offices.

The case is currently on appeal in Ecuador after a judge ruled against the company on Feb. 14, 2011 for up to $18 billion. Because Chevron has refused to respect the judgment, the rainforest communities are being forced to prepare legal actions against Chevron's assets in the dozens of countries around the world where the oil giant does business.

For years, Chevron has publicly lambasted the Ecuadorian government with false accusations of siding with the plaintiffs in the case. In actuality, it appears that Chevron, once again with Baki's help, is behind the scenes secretly pressuring government officials to intervene on its behalf to kill the lawsuit.

Given Ms. Baki's long standing ties to Chevron and her previous efforts to help the company quash the Aguinda v. Chevron litigation or end run it entirely, it appears she again could be using her position to help Chevron evade its liability in Ecuador -- at the expense of justice, her own people, and the potentially historic Yasuni proposal.

Follow Mitch Anderson on Twitter: www.twitter.com/kukoosh

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Bill Moyers Blasts Chevron For Attacking First Amendment Rights

Bill Moyers

Bill Moyers, the celebrated and venerable journalist, blasted Chevron's recent attempt to force an independent filmmaker to turn over the 600 hours of private video outtakes from the documentary "Crude," in an article which appeared on the Huffington Post recently. "Crude" chronicles the legal struggle of more than 30,000 indigenous people and their lawyers in Ecuador where Chevron is accused of dumping more than 18 billion gallons of toxic waste directly into the Amazon Rainforest.

Moyers, along with Michael Winship (the Director of the Writers Guild of America, East) wrote the article in response to Chevron's unprecedented attempt to force Joe Berlinger, the director of Crude, to allow Chevron to rummage through his files to find film footage that the oil company can take use to attack the litigation pending against the company in Ecuador. They were uncompromising in their condemnation of Chevron's maneuver, writing: "Chevron is trying to avoid responsibility and hopes to find in the unused footage -- material the filmmaker did not utilize in the final version of his documentary -- evidence helpful to the company in fending off potential damages of $27.3 billion…If we -- reporters, journalists, filmmakers -- are required to turn research, transcripts and outtakes over to a government or a corporation -- or to one party in a lawsuit -- the whole integrity of the process of journalism is in jeopardy; no one will talk to us."

Read the entire article here.

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BP, Chevron, and the Gulf spill: Lessons for CEO John Watson

Chevron CEO Watson: Open to new lessons?

Lost in the news about BP's Gulf spill is that Chevron has admitted dumping billions of gallons of oil sludge into Ecuador's Amazon, on purpose. Unlike BP, Chevron's executives, led by CEO John Watson, have not acknowledged they have any responsibility for the disastrous impacts on the environment and the damage caused to human health.

As background, thousands of indigenous persons and farmers from Ecuador's Amazon have been in litigation against Chevron over the damage for almost two decades. The case was filed in U.S. federal court in 1993, but shifted to Ecuador at Chevron's request as part of its stratagem to evade accountability. Now that the trial in Ecuador is almost over and the evidence clearly stacks up against Chevron, the oil giant is looking for what it hopes will be greener courtroom pastures.

Chevron is accused of deliberately discharging more than 18 billion gallons of "produced water" (salty water which contains chemicals, including at times the carcinogen benzene) into the rivers and streams of this once pristine ecosystem covering an area roughly the size of Rhode Island. Texaco, now owned by Chevron, operated a large oil concession there from 1964 to 1990 and was the mastermind of the polluting scheme that Chevron now defends. (When Chevron bought Texaco in 2001, Watson was the young Chevron executive in charge of the integration of the companies.)

In a classic example of corporate colonialism, Chevron's public relations flaks have called the indigenous leaders behind the lawsuit everything from liars to con men. Chevron has even claimed that the higher incidences of cancer, spontaneous miscarriages, birth defects, and other diseases are due to a lack of "sanitation" and the poor personal hygiene of the local residents. It's the theory that body odor causes cancer.

Creepy, to say the least.

Chevron has admitted that it had dumped more than 15 billion gallons of "produced water" into the Ecuadorian Amazon rainforest. "Produced Water" is ten times saltier than ocean water. In Ecuador, it equates roughly to 2% pure crude oil, meaning that Chevron had admitted dumping more than 30x the amount of oil spilled in the infamous Exxon Valdez disaster.

Yet the Valdez disaster (like the BP situation in the Gulf) was still an accident -- in Ecuador, the disaster was deliberately planned by Chevron as a mechanism to save costs.

Click to take a look at the advertisement placed by Chevron during the trial in a leading Ecuadorian newspaper. In the ad, the company admits that it dumped billions of gallons of produced water in to the Amazon – with the admission highlighted.

The advertisement – which was purchased by Chevron lawyer Rodrigo Perez Pallares – translates to: "3. While in Ecuador, the consortium poured 15.834 billion gallons between 1972 and 1990 during the entire period of Texaco's operation of the consortium, i.e. an annual average of 880 million gallons."

Talk about an admission of guilt. With lawyers like Perez Pallares, it is no wonder Chevron is having a hard time evading its liability in Ecuador.

In the advertisement Perez Pallares plainly admits that Chevron discharged toxic waste – and experts advising the plaintiffs have estimated, based on well records, that Chevron is undercounting the amount of produced water it dumped. The real number is over 18 billion gallons.

Chevron tries to blame Petroecuador for the problem, given that Texaco turned over this substandard operating system to that company in 1992. Yet Texaco was the party that exclusively designed, engineered, constructed and operated this system – sort of like of building the Valdez with a big hole in its hull, thereby guaranteeing it would gush oil as it cruised the world's oceans.

Petroecuador has now converted over to "reinjection wells" and is no longer discharging produced water. That is, this cash-strapped company already has done far more to protect the environment than cash-flush Chevron ever did with its First World technology.

Chevron won't cop to its misconduct. Instead, the oil giant claims that the "produced water" is safe to discharge into the sensitive ecosystem of the rainforest – no matter what alarm bells scientists ring. Perez Pallares and Chevron's other lawyers have made this preposterous claim during the trial while sipping bottled water imported from Quito.

Chevron needs to understand is that it is not legally or morally permissible to dump billions of gallons of cancer-causing industrial run-off into the drinking water of your neighbors just so you can inflate your profits. In this case, the drinking water was that of indigenous groups in Ecuador that had lived prosperously in the rainforest for centuries until Texaco showed up.

In its 26 years in Ecuador, Chevron never conducted a single environmental impact study or health evaluation. It never released any test results to determine the level of toxicity of the sludge it was discharging. That's either outright deception, or willful blindness. It is still practiced today by Chevron's executives, none of whom have visited the disaster zone in Ecuador.

It is high time for Chevron's executives to accept responsibility for the harm and destruction their company continues to cause in Ecuador. They might start by admitting that Texaco and Perez Pallares used the fraudulent TCLP laboratory test to lie to Ecuador's government about a purported clean-up in the mid-1990s, for which the company received a "release" from certain government officials.

Compared to Chevron's executives, BP's managers are starting to look like saints. They at least grunt about accepting responsibility. BP engineers at least seem to be trying to stem the awful leak.

They have a long way to go, but in the Gulf they are a marathon's distance ahead of Chevron's John Watson in Ecuador.

Visit www.chevrontoxico.com for more information.

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