Thursday, December 20, 2018

2018 Was Tough Year for Chevron On $12b Ecuador Case; Board Asked To Investigate CEO Wirth

Chevron had a tough year in 2018 as it dug itself an even deeper hole on environmental issues across the globe, most notably on the landmark pollution case where the company faces a $12 billion liability for causing the "Amazon Chernobyl" in Ecuador.

Chevron's massive expenditures on that litigation -- now up to $3 billion in legal fees to pay 2,000 lawyers -- are intended to try to crush impoverished Ecuadorian Indigenous peoples and farmer communities who won the landmark pollution judgment. Those expenditures are also a telltale sign of the company's increasing anxiety. No matter how you cut it, 2018 was a bad year for Chevron and its pollution profiteers at major law firms who work hard to keep the victorious Ecuadorian communities tied up in court for no good reason.

First, consider the many setbacks suffered by Chevron CEO Michael Wirth in 2018:

**Chevron's own shareholders are rebelling over the company's Ecuador liability. Thirty-six institutional shareholders representing $109b in assets wrote a stunning letter demanding that the hard-headed Wirth explore a settlement. Two shareholder resolutions criticizing Wirth's mishandling of the Ecuador litigation received overwhelming support at the 2018 annual meeting. (See here for background.)

**Civil society is also rebelling against Chevron after it received the ignominious Public Eye Award for being the worst global company. Almost 1 million citizens signed an on-line petition from Avaaz blasting Wirth for failing to comply with the Ecuador judgment. In Canada, 653 aboriginal groups signed a protocol with Ecuador's national federation to hold Chevron accountable for its environmental misconduct. Chevron is becoming persona non grata in the Indigenous world. But wait -- some of the world's most valuable oil reserves sit above Indigenous lands!

**In Canada, Chevron's attempts to shut down the Ecuador judgment enforcement action continue to fail. Canada's Supreme Court has backed the Ecuadorians in a unanimous opinion. Chevron's latest gambit to evade that decision -- to hide its Canadian assets in a wholly-owned 7th-tier subsidiary -- is now before the Canada Supreme Court. Regardless, Chevron faces an embarrassing trial where its star witness Alberto Guerra will face questioning for his lies and corrupt acts and Chevron's American lawyers will be asked about their apparent witness bribery.

**Chevron also faces major tax liabilities in Canada related to billions of dollars of suspicious payments made by the company's Canadian subsidiary to the governments of Nigeria and Indonesia. Chevron's lawyers in Canada, led by Larry Lowenstein, have tried to hide these payments. Chevron's reputation as a global tax cheat extends well beyond Canada to Australia, Argentina, and the Netherlands.

**Chevron's main defense -- that the Ecuador judgment was obtained thru bribery -- has fallen apart. Not only did that defense depend almost completely on Guerra's lies, but there is credible evidence that Chevron and its lawyers might have engaged in a criminal conspiracy to manufacture evidence as part of  a "kill step" marketing strategy being peddled by the ethically-challenged Gibson Dunn law firm -- a firm already caught fabricating evidence in another case. Lawyers at Gibson Dunn and Chevron officials face a criminal referral letter to the U.S. Department of Justice for their apparent misconduct.

In other parts of the word, Chevron is contending with multiple lawsuits over climate change after Wirth's failure to adjust his business model to mitigate harm to the planet. The company is aggressively fighting crab fishermen in California whose catch has dramatically dropped because of warming waters; has been sued by municipalities over global warming; and has been accused by the Mapuche of polluting their traditional lands in Argentina as part of an earlier corrupt move to kill off an enforcement action of the Ecuador judgment in that country. (See here.) That's just the tip of the iceberg for Chevron, as any Google search will disclose.

Chevron faces increasing resistance from civil society groups for its backward-facing approach to environmental issues. Several such groups have organized to thwart Chevron and other polluters from using the legal system to engage in illegal SLAPP-style attacks on environmental and human rights defenders. Our American friend Steven Donziger, who has fought Chevron for 25 years over the Ecuador pollution, was once sued for $60 billion by Chevron in New York as part of its corporate intimidation campaign. That was before the company chickened out and dropped all damages claims against Donziger to avoid a jury of impartial fact finders.

Prominent groups as varied as Amazon Watch, London-based Global Witness, Rainforest Action Network, Greenpeace, the ACLU, and the Electronic Frontier Foundation have protested Chevron's attacks against human rights defenders such as Donziger, the driving force behind the Ecuador judgment. Several groups have formed a coalition ( to safeguard Free Speech in light of Chevron's and Gibson Dunn's assaults on political activity. It doesn't help Chevron that legendary rocker Roger Waters was just in Ecuador's Amazon in a display of solidarity with the people the company poisoned. (See here for a television report.)

After having spent billions to fight the Amazon communities who won in court, Wirth and Chevron General Counsel R. Hewitt Pate have a lot to answer for. Chevron shareholders just filed two more resolutions challenging the mismanagement by Wirth and Pate of their funds. This promises another contentious annual meeting next May that will be dominated by talk of Wirth's human rights violations in the Amazon. Chevron is also trying to coax Team Trump (after donating $500,000 to Trump's inauguration) to pressure Ecuador's fragile government to turn against its own citizens and side with the oil company in the litigation, another project destined to fail.

Wirth also has yet to account for Chevron's Nazi past (via Texaco) as outlined in Adam Hochshild's excellent book, Spain In Our Hearts. The company's board of directors should commission an independent investigation into this issue. While at it, it should also take an independent look at the broader Chevron human rights violations in Ecuador and in the offices of its hired guns at the U.S. law firm Gibson Dunn.

Oops, that might not happen given that Wirth is Chairman of the Chevron Board and CEO, an antiquated structural relic frowned upon by almost all corporate governance experts.

When the history of Chevron is written, the company will surely go down as one of the most corrupt and criminal ever to rampage across the globe. Governments owe it to their citizens and to the survival of the planet to cease doing business with this destructive company until it pays what it owes to the peoples it harmed in Ecuador and it demonstrates it can be a responsible corporate citizen.