Thursday, November 8, 2012

Hell Froze Over As Argentina Embargoes Chevron's $2 Billion In Assets

Yesterday, hell froze over when an Argentine court embargoed or, in effect, froze up to potentially $19 billion in Chevron assets in the South American country.

Now it's time to fight it out on the ice.

Chevron, which now has about $2 billion in assets in Argentina, has sworn it will never pay a dime to cleanup the contamination it left behind in the Ecuadorian rainforest. Said former General Counsel Charles James: "Not till hell freezes over, and then we will fight it out on the ice."

Chevron has defied Ecuador's courts, refusing to pay an enforceable $19 billion judgment and forcing the Ecuadorians to file lawsuits to seize assets in Ecuador, Brazil, Canada and Argentina to obtain the damage award for one of the world's largest oil-related environmental disasters.

The Ecuadorians and their lawyers -- some of the top litigators in these four countries -- have their skates on.

See the press release below and read more details here and here in Kevin Koenig's Amazon Watch blog:

BUENOS AIRES, /CSRwire/ - In a major blow to Chevron’s effort to avoid paying a historic $19 billion environmental judgment in Ecuador, an Argentine judge today signed the first of what is expected to be many orders freezing billions of dollars of assets owned by the U.S. oil company.

The order, signed by Civil Judge Adrian Elcuj Miranda of the Commercial Court of Justice in Buenos Aries, freezes almost all Chevron assets in Argentina pending enforcement of the Ecuador judgment. The embargo applies to 100% of Chevron's capital in Argentina, 100% of dividends, all of Chevron's stake in pipeline operator Oleoductos del Valle SA, 40% of Chevron's oil sales to Argentine refineries, and 40% of the money Chevron has deposited in Argentine banks, said Enrique Bruchou, the lawyer who represents the indigenous and farmer communities in Ecuador who brought the lawsuit.

In 2011, Chevron was found liable in Ecuador for dumping billions of gallons of toxic waste into the Amazon rainforest, decimating indigenous groups and causing an outbreak of cancer and other oil-related health problems. A video on the case can be seen here; a written summary of the evidence can be read here; and a segment from the U.S. news show 60 Minutes on the case can be viewed here.

Since Chevron has refused to pay the Ecuador judgment despite submitting to jurisdiction there, lawyers for the affected rainforest communities filed an action last week to seize the oil giant's assets in Argentina. The affected communities filed asset seizure actions against Chevron in the last few weeks in Canada, Brazil, and Ecuador.

Chevron has at least $2 billion worth of assets in Argentina, said Bruchou.  The freeze order applies to the entire $19 billion amount of the Ecuador judgment, meaning that Chevron will effectively be barred from investing further in Argentina unless it wants to risk seizure of those assets as well.

“We are now on the fast track to collection in our two-decade struggle to force Chevron to clean up its awful environmental disaster,” said Luis Yanza, the Ecuadorian community organizer and driving force behind the lawsuit since it was filed in 1993.

“We are committed to holding Chevron fully accountable for the crimes it has committed against our indigenous peoples,” he added.

The move by the Argentine judge is the first time the plaintiffs have been successful in freezing assets outside their home territory of Ecuador.  The assets will remain frozen until the court rules whether it will enforce the Ecuador judgment, which is expected to be relatively smooth given that the nation has signed a reciprocal enforcement treaty in the region that includes Ecuador.

The legal action in Argentina derives its authority in part from an international treaty in Latin America called the Inter-American Convention on the Execution of Preventive Measures. The treaty, which dates from the late 1970s, allows for the automatic freezing of assets of a defendant that fails to abide by the law and refuses to pay a final foreign judgment.

The Preventive Measures treaty has been ratified by Argentina, Ecuador, Colombia, Peru, Paraguay, Guatemala, and Uruguay. Venezuela and Chile have signed the treaty but not ratified it.

In all, the amount of Chevron assets in the four countries where enforcement actions are pending are worth at least $10 billion based on the latest estimates, said Pablo Fajardo, the lead Ecuadorian lawyer.  Seizure actions will continue to be filed against Chevron assets in more countries to make sure the full amount of the judgment is collected, he added.

Bruchou, a native of Buenos Aries, founded his firm in 1990 after working for several years at the U.S. law firm Shearman & Sterling.  International Financial Law Review named his firm, Bruchou Fernandez Madero & Lombardi, the best in Argentina for five consecutive years. Bruchou himself was named “Law Firm Leader of the Year” in 2011 by the prestigious Latin Lawyer magazine.

In a press conference last week in Buenos Aires, Bruchou said that enforcement of the Ecuador judgment in Argentina and other Latin American countries will signal to foreign investors that they should apply the same environmental standards they use at home to areas where vulnerable indigenous and farmer communities are located.  “We ask for no more than that and no less than that,” he said.  “We call it responsible foreign investment.”

Just recently, a court in Ecuador ordered the seizure of an estimated $200 million in Chevron’s assets in that country, which include bank accounts and a $96.3 million debt owed the oil giant by Ecuador’s government.

The area of Ecuadorian rainforest affected by Chevron’s toxic dumping was once one of the most bio-diverse ecosystems on the planet.  It is home to hundreds of plant and animal species but has been pockmarked with more than 900 open-air toxic waste pits left by Chevron, which operated in Ecuador under the Texaco brand.

Soil tests of Chevron wells sites during the Ecuador trial indicated the oil giant left massive quantities of cancer-causing hydrocarbons, sometimes at levels hundreds of times higher than permissible norms.  Approximately 9,000 people are expected to contract cancer as a result if there is no immediate clean-up, according to a study by Dr. Daniel Rourke, former of the Rand Corporation.  See here.

"We have fought now for almost two decades to correct the injustice created by Chevron in Ecuador,” said Fajardo, who grew up in Ecuador’s oil fields and is the recipient of a CNN Hero Award.

"While Chevron might think it can ignore court orders in Ecuador, it will be impossible for Chevron to ignore court orders in countries where it maintains substantial assets,” he added.  "The decision of the Argentine judge proves that the sentence in Ecuador is legitimate and will be enforced in any country that observes the rule of law."

The action in Argentina comes just weeks after the U.S. Supreme Court denied Chevron’s attempt to block enforcement of the judgment and the oil giant itself suffered a devastating series of courtroom setbacks. In May, Chevron CEO John Watson suffered a stunning reprimand when investors holding 38% of the company’s shares voted for a resolution that found he mishandled the Ecuador case.

Watson’s former lawyer, Charles James, has said Chevron will fight the Ecuador judgment “until hell freezes over, and then skate it out on the ice.”  However, Chevron Comptroller Rex Mitchell recently testified in New York fedeal court that the seizure actions filed by the Ecuadorians would cause “irreparable harm” to company operations.

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