Wednesday, November 28, 2012

Chevron Ignores Safety Standards At California Refinery Where 19 Fires, Spills & Explosions Have Occurred Since 1989

About 4,800 Richmond, California residents have sued Chevron for negligence at an oil refinery and putting them at risk by not issuing public health warnings immediately after a recent explosion, the 19th disaster to have occurred at the refinery since 1989. The explosion, resulting from a corroded pipe, exposed them to toxic fumes that brought on respiratory, gastrointestinal and other serious health problems.

Chevron's refusal to adhere to state and federal safety regulations is another example of the oil giant's disrespect for environmental laws both in the United States and abroad.

See this Huffington Post blog and this recent story about the refinery.

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Wednesday, November 21, 2012

Can't Define Irony? Then, Read Chevron's "Ethics" Complaint.

Grist blogger Philip Bump hits the nail on the head in his blog today about Chevron's "ethics" complaint against New York State Comptroller Tom DiNapoli, who has been one of only a handful of elected officials willing to stand up to Chevron's thuggery and own unethical misconduct in Ecuador. In a blog entitled, "Chevron is newly concerned about politicians being influenced by money," the Grist blogger writes:

"We now have an example of irony that will stand the test of time. An example of irony that is so obvious and appreciable that when, several millennia from now, people are arguing about Alanis Morissette, the debate will be curtailed when someone notes this news story.

"For you see, Chevron has filed a complaint against the comptroller of New York, suggesting that he was unduly influenced to criticize the company due to campaign contributions he received. Chevron. Complained about how campaign contributions influenced an elected official.

Can. You. *&$##!!. Imagine.

Read the entire blog here.

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Tuesday, November 20, 2012

A Race For Time? Chevron Desperate to Extort Its Way Out of Paying $19 Billion Ecuador Judgment

An Argentine newspaper La Nacion reported that Chevron is in a "race for time" to convince a court in Argentina to lift a freeze of its assets as payment of the $19 billion judgment for oil contamination in the Ecuador rainforest. Chevron is trying to scare Argentina government officials by saying its subsidiaries there will go bankrupt and, as a result, have to close down its operations unless, of course, the government pressures the courts to unfreeze their assets. Or, in other words, extortion: If you don't tell your courts how to rule, we'll shut down our investments.

Meanwhile, back in the United States, Chevron has filed an ethics complaint against New York State Comptroller Tom DiNapoli, who has had the courage to stand up to Chevron and question its misconduct in Ecuador and its use of shareholder funds in regard to the historic, long-running lawsuit. 

Interestingly, Chevron is filing the complaint more than two years after obtaining emails that the oil giant falsely bases its complaint on. Why did Chevron wait so long? If it's so concerned about ethics, why not two years ago? Or one year ago? Do you think it might have anything to do with Argentina, Brazil and Canada, where lawsuits have recently been filed to seize company assets as payment for the judgment?

They have tried and failed to get U.S. courts to stop enforcement of the judgment.

They have tired and failed to get negative press coverage in these three countries to pressure their governments and courts to stop enforcement.

Maybe the Albany, NY press corps will come to Chevron's defense.

But, wait, this article basically says the complaint against DiNapoli is a lot of nothing.

Read the press release below for more details about Argentina:

Chevron Threatens to Shut Down Argentina Operations Over Ecuador Lawsuit

Buenos Aires, Argentina – In a clear effort to apply political pressure to judges, Chevron is threatening to bankrupt the company’s subsidiaries in Argentina unless an asset freeze order issued against $2 billion of the oil giant’s assets is lifted, according to news reports. 

The order was imposed last week because Chevron refuses to pay a $19 billion judgment in Ecuador for systematically dumping toxic waste into the streams and rivers of the rainforest, decimating indigenous groups and causing an outbreak of cancer. 

For background on the overwhelming evidence against Chevron in Ecuador, see HERE; a video on the case can be seen HERE.

La Nacion, a leading newspaper in Argentina, is reporting  that desperate Chevron executives are giving Argentina’s national government until December to force a court to reverse the freeze order before facing “operational problems” that could shut down two subsidiaries that produce an estimated $600 million in revenue annually for the parent company.

The newspaper reported that “a host of Chevron lawyers and executives in Miami were analyzing alternatives in a race against time” given that they expect funds to run out in several weeks – a prospect that the plaintiffs in the case call a “manufactured scare tactic” designed to apply pressure to Argentina’s courts.

Representatives of indigenous rainforest villagers in Ecuador had little sympathy for the company, calling Chevron’s threats another example of “improper political pressure” used to avoid being held accountable under the law.

“Chevron has been running from the law for years in Ecuador, where out of pure greed it deliberately created what is probably the world’s worst oil contamination,” said Graham Erion, a Canadian lawyer advising the rainforest communities.  “It is not surprising that the company’s illegal behavior is finally catching up to it.

“The pollution Chevron intentionally caused in Ecuador is an assault on all of Latin America,” he added. “Chevron would never commit such atrocities in its own country.”

The Argentina embargo prohibits Chevron from disposing of any interests in concessions, pipelines, or other projects without the court’s consent and diverts 40 per cent of the company’s annual revenue to an escrow account controlled by the court.  The court chose to garnish less than half of the revenue to allow Chevron’s subsidiaries to operate with flexibility, said Erion.

Chevron also was planning to invest $1.8 billion over the next three years in Argentina to build 120 new oil wells, and was exploring an investment in a huge oil shale project called Vaca Muerta.

“The threat by Chevron CEO John Watson to pull out of Argentina endangers the company’s interests in a country that should be a key driver of future growth in the region,” said Karen Hinton, U.S. spokesperson for the rainforest communities in Ecuador. “This is not in the interests of Chevron shareholders.”

Chevron’s woes in Argentina were compounded this week when Spain’s Repsol oil company sued the oil giant in Spain on the grounds that  it was trying to profit from operations that had been expropriated by Argentina’s government.

Reports out of Argentina were quick to show that Chevron has already begun to lobby furiously for an extra-judicial solution. 

La Nacion reported that the governor of the oil rich province of Neuquén publicly stated that he hopes Chevron succeeds in fighting the embargo, which was imposed pursuant to an international treaty in Latin America that allows for the reciprocal recognition of foreign judgments. 

Chevron’s attempts to enlist political allies in Argentina are directly out of the oil giant’s playbook, with documented  attempts to bribe Ecuadorian government officials, use the U.S. embassy in Quito to undermine the case, and lobby the U.S. government to cut Ecuador’s trade preferences for refusing to intervene in the case.  

Pablo Fajardo, the lead Ecuadorian lawyer for the affected communities, told La Nacion that Chevron is trying to “extort” Argentina.

“Chevron has options,” he said. “You can pay the judgment or offer bail in Argentina bail to replace the embargo. It seems that Chevron intends to act outside the law and is choosing to attempt to extort Argentina. If the company suspended its operation, it is demonstrating that it is only interested in working when it has impunity."

One of the consequences of the freeze order is that any future investments Chevron makes in Argentina will also be subject to seizure, up to the full amount of the $19 billion Ecuador judgment.

Chevron also faces asset seizure actions over the Ecuador judgment in Brazil , Canada, and Ecuador. 

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Monday, November 19, 2012

Gibson Dunn, Chevron Suffer Another Devastating Setback In $19 Billion Ecuador Case

The U.S. law firm Gibson Dunn & Crutcher is getting hit with a new round of hurt because of its bungling of Chevron’s Ecuador environmental case.

The recent order in Argentine to freeze roughly $2 billion in Chevron assets to help pay for the $19 billion Ecuador judgment is a monumental failure for Gibson Dunn’s defense strategy and a personal setback for its self-described “dream team” of litigators.   These lawyers -- Randy Mastro, Ted Boutrous, Scott Edelman, and Andrea Neuman – prematurely tried (in a stunning display of arrogance) to create an entire practice group off the Ecuador case.

The freeze order in Argentina is a potent setback, not just in one country but throughout Latin America and maybe beyond.  Company officials are ever closer to having to write checks to the very indigenous groups they decimated with their reckless, criminal, and even racist operational practices in the rainforest.

Gibson Dunn probably did not know that International treaties in the region allow for the reciprocal enforcement of foreign judgments.  The Ecuadorians already have seizure actions pending against Chevron in Brazil and are planning to file one soon in Colombia, said Pablo Fajardo, their lead counsel.  Venezuela and Panama are also potential targets.  In Ecuador, Fajardo’s team is in the process of seizing an estimated $200 million in Chevron assets

The recovered Ecuador assets can be used to fund even more seizure actions against Chevron around the world, including in Asia, Africa, and Europe.   Chevron thus faces the prospect of a far more constricted reality where its global investment opportunities begin to choke off, little by little.  Countries where Chevron should be considering investments on equal footing with its peers are falling off the map because of the added risk created by Gibson Dunn’s utter failure to contain the Ecuador liability.

In Canada, a key strategic country in the oil industry where the Ecuadorians have an enforcement action pending, Chevron may have as much as $12 billion in assets.  The same goes for Argentina.  In that country, Chevron produces roughly 30,000 barrels of crude daily but has plans to invest another $1.8 billion to drill 120 new wells over the next three years, according to Platt’s Oilgram News.

Ecuador is clearly off the map to Chevron while other international companies vie to buy the drilling rights to numerous oil fields in the Amazon.

This downward Chevron trend line could be a case study in how a top U.S. law firm can lose sight of the big picture while it obsesses over minute details of a satellite (and baseless) “fraud” case in New York. Gibson Dunn keeps billing huge fees to landscape Chevron’s front yard without realizing the house is on fire.

Gibson Dunn has now lost at least 10 major legal actions since entering the case in 2009, including before the U.S. Supreme Court in an appeal headed by none other than Ted Olson, the former Solicitor General of the United States. Olson has probably won more U.S. Supreme Court arguments than any person alive.  But not even he could figure out a way to put lipstick on Chevron’s pig. 

Chevron hired Mastro and the GDC dream team in 2009 to “rescue” it from the impending liability in Ecuador.  Two years later, the Ecuador court – despite eleventh-hour efforts by Chevron to bribe and threaten judges – found the oil giant liable and imposed a $19 billion damages award.  It was based on overwhelming evidence that Chevron deliberately dumped billions of gallons of toxic waste into the environment, poisoning the water supply of indigenous groups and causing an outbreak of cancer and other oil-related health problems.

Courts also found Mastro and his colleagues committed ethical violations on behalf of Chevron, including using lawsuits as weapons of intimidation designed to suppress the First Amendment rights of the company’s critics.

Evidence also emerged that Chevron might be deceiving shareholders about the degree of risk it faces over the Ecuador liability, as documented in great detail in a report by Canadian securities lawyer Graham Erion.  A U.S. Congresswoman and a group of institutional investors have called on the SEC to investigate the company.

This blog by Kevin Koenig of Amazon Watch clearly explains the misrepresentations and hypocrisy radiating out of Chevron’s corporate headquarters in San Ramon.  Even some analysts, most of whom are still in the thrall of the industry, are catching on to the extent of Chevron’s problems in the Ecuador case.  

Gibson Dunn is of course reaping a financial windfall to help Chevron evade responsibility for the destruction it has caused.  Mastro recently trooped into U.S. federal court in New York with 11 lawyers in tow for a minor hearing at which one person spoke.  He has admitted to using more than 60 lawyers from his firm on the Chevron case.   The firm’s profits rose by 20% the year after Chevron hired it.

The Gibson Dunn/Chevron losing streak in Ecuador highlights Chevron’s utter lack of corporate governance. Chevron General Counsel R. Hewitt Pate, for example, was given an obscene 75% raise last year (to $7.8 million) after he lost the Ecuador case. In granting the raise, Chevron’s Board actually praised his handling of the matter.  Taking care of insiders -- that’s how aging dictators act as the winds of change start to sweep over the palace.

Pate and notoriously short-fused Chevron CEO John Watson need independent oversight, but none exists.  The conflicted Watson is both Chairman of the Board and CEO, making him his own boss.  He was also the main Chevron executive who vetted the purchase of Texaco in 2001 and at the time failed to account for the massive Ecuador liability.  By all accounts, he is emotional and unrepentant when talking about the Ecuador case – telltale signs of a man who suffers from an acute conflict of interest.

There will be more international enforcement actions filed against Chevron soon.  The company’s investment map will get smaller.  In the meantime, expect more delusion, denial, and deceit as long as Watson and Pate are leading the company.

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Thursday, November 15, 2012

Did President Obama & His Justice Department Extort Money From BP?

Did President Obama and the U.S. Department of Justice extort the billion-dollar damage settlement with BP for its 2010 accidental spill off the Gulf Coast?

Based on legal arguments being made in a U.S. court, Chevron would have you believe so.

Chevron has accused the Ecuadorian indigenous groups and their lawyers suing the oil giant for massive oil contamination in the Amazon rainforest of extorting money from the company by applying pressure on its executives to settle.

In a brief filed recently with the Southern District Court of New York, the Ecuadorians’ lawyer Craig Smyser argued:  (See here, page 4.) 

“Chevron fallaciously argues that any effort to effectuate a settlement is part of an organized crime scheme. Hogwash. The argument turns every settlement conference into a meeting of crime bosses. Under Chevron’s reasoning, the meetings and public discourse among the United States Government, plaintiffs’ lawyers, and British Petroleum concerning settlement of the Deep-Water Horizon oil spill dispute were a RICO scheme.”

Well, today, BP and the DOJ announced a settlement agreement but no mention by BP of possible extortion or racketeering charges. See this Chevron Pit, comparing the accidental BP spill to the intentional contamination by Chevron of the Ecuadorian rainforest.

Chevron also has accused Ecuador President Rafeal Correa of being part of the racketeering conspiracy to extort money from the oil giant because he expressed concern for people living near Chevron’s contamination.

“They will pay for the mess they’ve made,” he said. But, wait, that wasn’t President Correa.  That was President Obama.

From the White House web site: 

“So let’s be clear about a few things: BP is responsible for -- and will be held accountable for – all of the very significant clean-up and containment costs. They will pay for the mess they’ve made….The bottom line is that the Administration will aggressively pursue compensation from BP for any damages from this spill.”
Aggressively pursue?  Be careful, Mr. President. If Chevron has its way, every government official, lawyer, lobbyist, PR consultant or even CEO working in tandem to collect damages, possibly through a settlement, could be facing extortion charges, filed by companies with executives who would rather fight in court than be held accountable for their misconduct. 

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BP Held Accountable For Deaths & Oil Spill; Chevron Remains Fugitive From Justice

Today BP got hit with four arrests for manslaughter and lying to Congress and $3 to $5 billion in federal fines for the ACCIDENTAL oil spill that resulted in 11 deaths and an estimated $40 billion plus in damages to individuals and local businesses. The U.S. Department of Justice is expected to announce a settlement deal later today. It will not include civil claims under the Clean Water Act and other legislation,  pending private civil claims and state claims for economic loss, which means the total cost to BP could be $40 to $60 billion for a spill that was remediated, at least on the surface, in a few months.  See here.

This news is in stark contrast to the legal battle against Chevron for massive oil contamination in Ecuador. Chevron has refused to pay a $19 billion judgment awarded last year by an Ecuador court, forcing the Ecuadorians to file lawsuits in other countries to seize company assets as payment.  

Consider this:

1) The damages in the Ecuadorian rainforest was intentional, not accidental. Chevron designed, built and operated its drilling system in Ecuador to pollute in order to maximize its profits there.

2) Chemical toxins and pure crude have been leeching into the soil and waterways for five decades, while Chevron has fought the Ecuadorians' lawsuit for damages for 20 years. U.S. courts forced the Ecuadorians to try their case in Ecuador, delaying a judgment by a decade. BP cleaned its contamination in a few months.

3) At least 1,400 people have died from cancer and thousands more have oil-related illnesses resulting from Chevron's contamination.  The BP spill resulted in 11 deaths and damage to wildlife and other environmental impacts.

4) Chevron dumped 16 billion gallons of oil and toxic water into the soil and waterways and built 900 huge unlined pits to store pure crude and toxic water. The BP spill occurred off shore and is not believed to be a threat (at least for now) to humans and wildlife.

5) Chevron, U.S. oil analysts and the U.S. media laughed at early damage estimates against Chevron ranging from $16 to $27 billion in Ecuador. BP will likely pay up to $60 billion in damages.

It's hard not to conclude that a U.S. life is just worth more than an Ecuadorian life. BP is being held accountable for its mistake, but Chevron remains a fugitive from justice for its intentional crimes. 

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Monday, November 12, 2012

Chevron’s Latest “Defense” In Ecuador Case: Hide Assets In Subsidiaries

After a dreadful series of legal setbacks, it sure didn’t take long for Chevron to come up with a new tricked-up defense to evade the $19 billion Ecuador environmental judgment.

Like Chevron’s many other failed defenses in the Ecuador case, this one won’t wash either.

Let’s review how we got here.

The company’s first line of defense in the 1990s was we didn’t really dump billions of gallons of toxic waste into the rainforest.  That lie was put to rest by multiple courts around the world based on overwhelming scientific evidence, as confirmed by numerous independent media outlets such as 60 Minutes.

Then, Chevron tried to claim that the devastated communities in Ecuador sued the wrong party.  According to Chevron, they should have sued Texaco, the company that operated in Ecuador.  That argument was rejected out of hand by appellate courts in Ecuador and the U.S.

Then the company blamed Petroecuador, Ecuador’s state-owned oil company and Texaco’s former partner in Ecuador.  But various courts rejected that defense after evidence surfaced that Chevron’s predecessor company was the exclusive operator of the oil concession in Ecuador.

When that defense failed, Chevron tried to claim Ecuador’s government released it from any clean-up obligations.  But courts found this so-called “release” did not cover the private claims of the rainforest communities, and in any event was a product of fraud.

Left with virtually no options, Chevron then tried to coax New York federal Judge Lewis A. Kaplan to enjoin the villagers from enforcing the Ecuador judgment anywhere in the world.  This unprecedented action caused an international furor, and a U.S. appellate court quickly reversed Kaplan.

When Chevron hired the respected litigator Ted Olson to appeal that setback to the U.S. Supreme Court, the company was rejected yet again.   By this point, nobody seemed to be able to put lipstick on Chevron’s pig.

So what’s left?

Well, now Chevron claims that its 73 revenue-producing subsidiaries around the world should be off-limits to the Ecuadorian villagers as they try to collect on the $19 billion judgment.

Consider the absurdity of Chevron’s latest gambit.  The company discloses in its annual report that almost all of its revenues are generated from subsidiaries around the world which are managed by the parent company from its global headquarters in California.

So according to Chevron, if you win a lawsuit against the parent company it simply won’t pay up.  Yet at the same time, its subsidiaries are off limits because their assets are not really owned by Chevron or connected to its activities in Ecuador.   Chevron already stripped almost all of its assets from Ecuador.

The order by the Argentine court last week to freeze Chevron assets in that country – a shareholder shocker if there ever was one -- was met with an apoplectic response at the company’s headquarters. “The plaintiffs' lawyers have no legal right to embargo subsidiary assets in Argentina," huffed spokesman James Craig.

Yes they do, James.  Hiding behind subsidiaries to avoid paying liabilities is now considered an antiquated notion in the legal world.  It rarely if ever works, particularly when the judgment is out of the country where you wanted the trial held and where you promised to pay up if you lost.

There’s another reason Chevron spokesman Craig is out of sorts.

Chevron discloses that about 80% of its annual revenue comes from subsidiaries outside of the U.S. Chevron’s subsidiaries in Canada and Argentina, two countries where the affected communities have filed seizure actions, produce an annual revenue stream of $2 billion to $3 billion for the parent company.   The rainforest communities can collect the full amount of their judgment in a few years just be diverting those funds to a clean-up.

The arithmetic Chevron-style works like this: when it comes to counting $240 billion in annual revenue collected from subsidiaries around the world, Chevron is as proud as a peacock.  Every penny counts.  But when it comes to paying out its environmental liabilities, there is nothing in the piggy bank.

We now get it. Under Chevron’s twisted logic, after fighting in court for almost two decades, the Ecuadorian who are suffering from cancer and birth defects now have no place to collect their winning judgment.  This is how a large oil company convinces itself that it is entitled to impunity for its human rights crimes.

It is well-documented that Chevron’s management team, led by CEO John Watson and General Counsel R. Hewitt Pate, is mired in conflicts of interest when it comes to Ecuador. Watson gave Pate a 75% raise last year – for a total compensation of $7.8 million -- after he lost the Ecuador case.  The company has admitted under oath that it faces “irreparable harm” from the Ecuador judgment but outside court it claims the risk is no big deal.

Any court in the civilized world that hears this case will not allow Chevron to manipulate the corporate form in this fashion.  The company is acting like a Deadbeat Dad fleeing a jurisdiction to avoid a child support payment.

The day of reckoning for Chevron management is fast approaching.

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