Ecuadorian Tells Chevron It's Time For Change In Leadership

Amazon Watch's latest official blog gives us a heads-up that one of the Ecuadorians suing Chevron will be at the oil giant's next shareholder meeting in San Ramon, California, Chevron's headquarters, on May 29th, urging CEO and Chairman of the Board John Watson to take a permanent hike.  The blog is below and here. Enjoy!

Servio Returns to Hand Watson a Pink Slip

May 20, 2013

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Two years ago Ecuadorian farmer Servio Curipoma left his rainforest home and traveled thousands of miles to bring his story to the United States. This month he returns to demand – on behalf of all the Amazonian communities that have been destroyed by Chevron – that John Watson pay a personal price for his region's suffering. Servio is calling on Watson to resign from his dirty post as CEO of Chevron.

You may remember how Servio had us all grasping our seats just two years ago with his deeply personal story of how Chevron devastated his lands and drinking water, causing a public health crisis that continues to this day. Servio lost both his parents (his mother's heartbreaking story is told here) and a sister to cancer, which doctors have attributed to drinking water contaminated by toxic crude waste. Since that time, Servio has become an active voice for his community over the past 16 years, demanding that Chevron take responsibility for the contamination that has so severely affected his family.

In 2011, we were honored to accompany Servio to the halls of power in Washington DC and New York to meet with decision makers in the government, media and environmental and human rights groups. He then took it right to Chevron's doorstep in San Ramon, California to confront John Watson and Chevron face to face. At that time Chevron had just lost the $19 billion legal battle for environmental and human rights crimes in Ecuador. Watson, who had been CEO for just over a year, was dismissive of Servio and his plea for help for the communities of Ecuador. Watson, an architect of the Texaco-Chevron merger, knew full well what had happened in the rainforest and did everything but take responsibility for the disaster, blaming Servio's suffering on Ecuadorian oil companies. Of course Watson knows that to be untrue since Texaco was the sole operator and has been found guilty of deliberately creating the environmental disaster.

Servio will return to Chevron headquarters for their Annual General Meeting on May 29th with a pink slip in hand for Watson and clear a demand of the Board of Directors. In the last two years, rather than face the reality and consequences of the judgment against them, John Watson has led Chevron on a "scorched earth" legal campaign against anyone and everyone who has ever spoken up about the company's atrocious crimes in Ecuador. He has labeled Servio and his community members as global conspirators and accused THEM of attempting to extort money from Chevron. Ludicrous and completely unacceptable! He has even attacked his own shareholders and tagged human rights and environmental organizations (including Amazon Watch) as co-conspirators. His company now faces a criminal investigation in California, billions of dollars in damages in Brazil, has its assets frozen in Argentina and Watson himself will be deposed in a matter of weeks related to the matter.

John Watson clearly represents the failed approach and reprehensible strategy of Chevron. Human rights and environmental organizations have now called for his resignation. Thousands of individuals citing these serious issues and others have added their voices to Servio's in a growing chorus that demands that John Watson must go! Please join them if you haven't already.

When will Chevron finally FESS UP and CLEAN UP its toxic mess in Ecuador and help the communities who still suffer to this very day?

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$19B Ecuador Liability Puts Chevron CEO Watson On Hot Seat Before Annual Meeting

Amazon Watch has issued this press release (see below) about Chevron's upcoming shareholder's meeting and the heat CEO and Chairman of the Board John Watson will take from activist shareholders about the Ecuador liability.

OAKLAND, Calif., May 14 /CSRwire/ - Facing growing shareholder unrest over asset seizure actions and forced to testify about his alleged misconduct in the $19 billon Ecuador case, Chevron CEO John Watson again will be on the hot seat at the company’s annual meeting in late May where rainforest indigenous villagers and investors plan to confront him over his company’s toxic dumping in the Amazon.

In a stunning rebuke to Watson, U.S. Magistrate Judge James C. Francis last week ordered that he and another top Chevron legal official sit for depositions to be taken by lawyers for the villagers and one of their representatives, New York-based attorney Steven Donziger. (See the judicial order hereand a Reuters article here.) Watson likely will have to answer questions about his own role in the case, including payments from Chevron officials for witness testimony, among other hot-button topics that the villagers say prove Chevron committed crimes in Ecuador.

The depositions had been furiously opposed by Chevron’s lawyers at Gibson Dunn & Crutcher, who are facing their own ethical challenges in defending the oil giant’s toxic dumping in Ecuador. (See this court ruling and this blog.)

At the Chevron annual meeting, scheduled for May 29 at company headquarters near San Francisco, Watson also will try to beat back two shareholder resolutions that directly challenge his mishandling of the Ecuador liability. Currently, Chevron faces enforcement actions targeting billions of company assets in Argentina, Canada and Brazil (see here for Canada, here for Brazil, and here for Argentina) and has suffered a series of devastating courtroom setbacks, including one in the U.S. Supreme Court, which prevented the oil giant from using U.S. courts to block international enforcement efforts.

The Financial Times reported just this week that Chevron was forced to “rethink” a planned $1.5 billion investment in a huge gas field in Argentina because of the enforcement action stemming from the Ecuador judgment. Earlier, a Chevron official has testified that the enforcement actions could cause “irreparable harm” to the company’s global operations.

The enforcement actions stem from an Ecuador court finding that Chevron dumped billions of gallons of toxic waste into the Amazon rainforest, decimating indigenous groups and causing an outbreak of cancer and other oil-related diseases. A summary of the judgment, based on a 220,000 page trial record and more than 64,000 chemical sampling results, can be found here.

A video about Chevron’s human rights abuses in Ecuador can be viewed here while a 60 Minutes report on the legal battle – which documents how Chevron installed pipes to deliberately run oil sludge into streams – can be viewed here.

Watson also is under fire for subpoenaing the files of several shareholder critics and alleging they are in a “conspiracy” with the Ecuadorian villagers who won the judgment against the company.New York Times columnist Gretchen Morgenson called the Chevron counterattack against its own investors “remarkable” in the annals of shareholder activism. (See Morgenson's article here.)

Last year, a resolution critical of Chevron management for the Ecuador liability received a whopping 38% of the vote from shareholders representing a combined $73 billion worth of Chevron stock. In addition, 40 institutional investors representing $580 billion in assets sent Watson a letter asking him to settle the case.

This year, the two shareholder resolutions that cite the Ecuador liability as a driving factor call for Chevron to appoint a director with environmental expertise and to lower the threshold needed to hold a special meeting.

Watson also faces these additional problems related to the Ecuador liability:

**Conflict of interest. Shareholders and activists say Watson should step down as Chevron CEO because of his failure to properly vet the Ecuador liability when the company purchased Texaco for $31 billion in 2001. Watson was a key driver behind the controversial transaction even though Amazon Watch specifically warned the company about the size of the liability.

**Deceit of shareholders. Watson also has been accused of lying to shareholders and the markets about key facts in the case, according to a recent report prepared by a Canadian securities lawyer. Several shareholders and a U.S. Congresswoman have asked the SEC to investigate Chevron for violating its disclosure obligations under U.S. law.

**Use of Kroll to spy on Chevron adversaries. The order from Judge Francis also requires that an official from the U.S. investigative services company Kroll, which essentially functions as a private surveillance agency for Chevron on the Ecuador case, sit for a deposition. Kroll operative San Anson was caught trying to bribe journalists to spy on the plaintiffs, while evidence surfaced the company has been involved in payments to judges in Ecuador and espionage against Donziger and his family, who live in Manhattan.

**Cash for witness testimony. Under Watson’s leadership, Chevron used Miami lawyer Andres Rivero to offer a suitcase full of cash to a former Ecuador judge in exchange for favorable testimony. Chevron later admitted it paid the judge more than ten times his annual salary and moved him to the U.S., where it is helping him obtain political asylum even though he is an admitted criminal.

**The Diego Borja bribery scandal. Under Watson’s tenure, Chevron admitted that it paid former employee Diego Borja more than $2 million to try to sabotage the Ecuador trial by entrapping a sitting judge in a fake bribery scandal. The move backfired, but the company still moved Borja to the U.S., where it pays him a substantial salary – the plaintiffs call it “hush money” – with no indication he is working.

As for enforcement actions, Watson faces a series of growing headaches.

In early November, a court in Argentina ordered that the company's assets be frozen while independent analysts are beginning to take notice that Chevron faces significant litigation problems around the world related to the Ecuador judgment. Chevron has $2 billion worth of assets in Argentina, and approximately $80 million of in cash is already in a court escrow account pending resolution of the enforcement action.

While Chevron recently won a temporary stay of the enforcement action in Canada on narrow technical grounds, the court found that the Ecuadorians established jurisdiction over Chevron subsidiaries that control roughly $15 billion worth of assets. The stay is now on appeal, with a decision expected in a few months.

In Brazil, where Chevron has an estimated $4 billion in assets, the Ecuador enforcement action is going through a streamlined process in the country’s highest court, with a ruling expected sometime in 2014. Chevron also faces a lawsuit from Brazilian authorities over its spill off the coast of Rio de Janeiro in 2011.

On a more personal level, the indigenous communities in Ecuador plan to confront Watson directly at the annual meeting. In past years, Watson has turned off the microphones of the Ecuadorians to silence them.

“Chevron needs to put its pants on, start acting like a grown up and accept responsibility for its mess in Ecuador,” Watson was told last year by Luz Trinidad Andrea Cusangua, an Ecuadorian who traveled from the rainforest to speak at the 2012 annual meeting.

Two years ago, Chevron’s annual meeting in Houston erupted in chaos when five shareholder critics were arrested as they confronted the company about its human rights abuses in Ecuador. At the time, Watson was accused of "losing his head" over the Ecuador case by Rainforest Action Network’s, Maria Ramos. Last year, he prevented two villagers from showing a video of the company’s damage to their ancestral lands. Chevron security officials also blocked them from passing out copies of the video to shareholders.

“Since becoming CEO Watson has led Chevron further down a dismal path – one where its international reputation is that of a corporate criminal on the run from justice,” said Paul Paz y Miño, a director at Amazon Watch, which has been monitoring the Ecuador liability for a decade.

“At any other company with an independent Board of Directors that adhered to proper ethical standards, Watson probably would have been fired by now,” added Paz y Miño.

For more background on the case, see this update prepared by Fenton Communications.

For more information, please contact:

Matt Krack

Twitter: @ChevronPit

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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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New Shareholder Report Warns Chevron Investors of Risks Surrounding $18 Billion Ecuador Environmental Liability

Financial Analyst Raises Questions Over Chevron Management of Litigation & Misleading Disclosures to Shareholders

Raising the eyebrows of Chevron shareholders is a new report on the financial and operational risks to the company over its $18b legal liability for illegal dumping of toxic waste in the Ecuadorian Amazon rainforest. It warns investors about “misleading” disclosures made by Chevron’s management about the “significant risk” the liability poses to the company’s business and value.

Noted shareholder risk analyst Simon Billenness and shareholder-rights attorney Sanford Lewis authored the independent report, entitled “An Analysis of the Financial and Operational Risks to Chevron Corporation from Aguinda v. ChevronTexaco.” It was released as Chevron prepares for a May 25th annual meeting where shareholders are expected to voice their concern about Chevron’s handling of the lawsuit.

Billenness and Lewis write:

“While Chevron has admitted in sworn legal statements that the company is at risk of ‘irreparable injury to [its] business reputation and business relationships’ from potential enforcement of the Ecuadorian court’s judgment, the company has failed to characterize these risks to the company in its public filings and statements to shareholders.”

For example, the report describes Chevron’s assertion in its 10-K SEC filings that Ecuador’s courts “lack jurisdiction over Chevron” as “misleading” based on the company’s failure to disclose that the U.S. Second Circuit Court of Appeals has ruled that Chevron “assured the district court that it would recognize the binding nature of any judgment issued in Ecuador…As a result, that promise, along with Texaco’s more general promises to submit to Ecuadorian jurisdiction, is enforceable against Chevron in this action and any future proceedings between the parties.”

Nell Minow, a leading expert on corporate governance and investing, reviewed the report and found it “hard to dispute … that the company’s admissions about its liability risks in court documents are inconsistent with its financial reports and that its legal and public relations strategy poses an unacceptably high risk.” See her article here.

Meanwhile, Robert Kropp, a financial writer for Socialfunds.com, reported that “Trillium and its co-filers are preparing an Investor Statement, in which the company's failure to negotiate a settlement in the lawsuit raises questions about its ability to manage risks associated with environmental and human rights issues. Echoing the findings of Billenness and Lewis, it calls on the company to provide full disclosure of the risks associated with enforcement of the judgment in Ecuador.” Read his article here

Billenness and Lewis also criticize the Chevron board of directors for their failure to fulfill their duties to oversee management and respond to shareholder concerns regarding the Ecuador liability. According to the report, the board has been “unresponsive” to approaches by shareholders to discuss concerns regarding managements and quantification of the Ecuador litigation’s risk and liabilities.

“These choices may lead some investors to question the adequacy of the company’s public statements and disclosures and whether the board and management are fulfilling their fiduciary duties to properly manage this significant risk to the company’s business and value,” the report concludes.

See these stories for more information here and here.

The 2011 report is simply the latest in a long series of concerns expressed by shareholders over the company’s management of its environmental liabilities in Ecuador. As early as 2003, shareholders filed the first in a series of shareholder resolutions on the issue, culminating in a 2010 shareholder resolution asking Chevron to nominate an independent board member with a “high level of environmental experience” to oversee the company’s environmental actions, including the Ecuador liability.

Despite efforts by Chevron’s management to defeat the 2010 resolution and to downplay the environmental liability in Ecuador, the resolution garnered the support of more than 25% of the outstanding Chevron shares, equal to approximately $38 billion in shareholder value. Typically, any shareholder resolution opposed by management that gains more than 10% of shareholder support is considered a success.

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Chevron Lies in Failed Attempt to Silence Critics

Shareholder Nonprofit Finds Oil Giant Refused to Seat Attendees at Shareholder Meeting with Legitimate Proxies

If you are thinking about criticizing Chevron about its oil drilling practices, go hire a lawyer now. Dozens of American citizens have had to lawyer up during the past year because of Chevron executives’ Putinesque refusal to suffer any criticism whatsoever. Sheila McNulty, who covers the oil industry for the Financial Times out of Houston, reported this week that an inquiry by the United States Proxy Exchange found Chevron inappropriately refused a number of people with legitimate proxies to attend its last shareholder meeting, including four people who were arrested after Chevron called the police. About 20 people had traveled from Ecuador, Nigeria, Burma and Angola to attend the meeting but were refused. The people arrested were American activists who have criticized Chevron in the past.

Arrests unlikely to curb Chevron shareholder meeting protests

January 24, 2011 12:48 pm by Sheila McNulty

At Chevron’s last shareholder meeting, five people were arrested. The company has for years now been having a hard time with protestors – particularly about a lawsuit about environmental damage allegedly left in Ecuador by one of the companies it acquired. And certainly the arrests of those who the company says were troublemakers at the meeting must have been a welcome turn of events for Chevron.

Yet it really has not worked out as Chevron might have hoped. There will likely be continued protests at its upcoming shareholder meeting.

Todd Ward of the prominent Houston law firm DeGuerin & Dickson took the defendants’ case without payment because he felt those arrested had been treated unfairly and it was the right thing to do.

The Harris County district attorney let one of the protestors go. The other four were offered deferred adjudication, whereby all charges would be dropped if they did not protest at the next shareholder meeting. Only one accepted that. The other three refused.

Among them was Mitch Anderson, corporate campaigns director at Amazon Watch, which has been a thorn in Chevron’s side over Ecuador. He pled guilty, the court accepted the day he already had spent in jail upon being arrested as time served, and he is free to continue protesting.

Although he insists he was not guilty, Mr Anderson says he wanted the case behind him so he could get back to work:

I plan on being as vocal at the upcoming shareholder meeting as I was in the past. Chevron has failed to own up to its responsibility for environmental contamination in Ecuador. And with a court decision looming, this is too vital a time for us to be restricted from shedding light on the Ecuador environmental disaster.

Chevron does not believe it is responsible for whatever environmental damage remains in Ecuador.

Mr Anderson considers the arrests part of that publicity battle and, in his words, pure harrassment. He claims he had a valid proxy – the same document he has used to attend past meetings. In all, the protestors say some 19 people were told their proxies were invalid. Chevron said it could not confirm that.

But it does insist Mr Anderson’s proxy was invalid. And, besides, it insists it did not make the arrests or prosecute Mr Anderson and the others – the county did. The company only called the police to get the trespassers from blocking the path of shareholders. What happened next was out of its hands.

Nonetheless, Chevron said the protestors arrested were being disruptive. One had tried to lead shareholders in an anti-Chevron chant; others had sat in front of the exits, blocking the doors. And others had refused to move beyond the barricade to keep out those without valid proxies. This was interfering with the ability of those who were there to listen to participate in the meeting:

We do not condone behavior which could compromise the safety and security of our employees and stockholders. The Harris County District Attorney’s office has prosecuted four individuals for their actions at Chevron’s Annual Stockholders’ Meeting. We are confident that this matter is being handled appropriately by the District Attorney’s office, and we will continue to cooperate with them until it is resolved.

Yet, regardless of how all five cases are finally resolved by the courts, Glyn A Holton, executive director of the United States Proxy Exchange (USPX), a non-profit dedicated to facilitating shareowner rights, is disappointed in the whole affair.

Following the shareholders’ meeting, he said, volunteers of the USPX obtained and reviewed a number of sets of proxy credentials presented for admission. Some of these were presented by individuals who were admitted. Others were presented by individuals who were denied admission. The latter included the credentials of four of the individuals who were denied admission and were arrested:

All credentials we reviewed were legitimate and should have been sufficient to gain admission to the meeting. As far as we can determine, Chevron enforced no consistent standard for admitting or not admitting individuals based on their credentials. Admission decisions appear to have been made either arbitrary or based on criteria unrelated to the credentials presented. We found instances where two people presented identical credentials; one was admitted, and the other was not.

He gave some examples, including this one:

The Missionary Oblates of Mary Immaculate beneficially own 7,628 shares of Chevron stock in an account with Manufacturers and Traders Trust Company. Manufacturers and Traders Trust Company executed a legal proxy appointing the “Missionary Oblates of Mary Immaculate (beneficial owners) Represented by Henry Clark” proxy for those shares, “with full power of substitution”. The Missionary Oblates of Mary Immaculate combined this with their own legal proxy also naming a Henry Clark to represent them at the annual meeting. Clark presented them at the annual meeting and was denied admission. His credentials were among the strongest we reviewed.

Chevron did not address the individual examples cited by Mr Holton. It only said:

We stand by the protocols we have established related to our Annual Meeting. Chevron is transparent about the legal requirements needed to gain entry to the meeting and consistent in our enforcement of those requirements.

A trial might have been good to settle the issue once and for all. Without it, it seems, Chevron may have won the battle, with the guilty pleas, but it may well still lose the war of public opinion. For just one of those arrested must stick to the sidelines during the upcoming shareholders meeting. And, with the Ecuador situation still unresolved, something tells me this meeting will be just as aggressive – if not more so – than the last.

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Chevron Facing Potential Shareholder Revolt Over Ecuador

This press release was online today about Chevron's liability and how pissed some shareholders are about it. Take a look:

Chevron Management Dealt Major Blow with CalPERS Announcement on Ecuador

California Pension Fund Voting for Resolution Stemming from Chevron's $27 Billion Ecuador Liability in Rainforest

Pressure Grows as Funds from Connecticut, Philadelphia, Detroit Defy Recommendation of Chevron Management

SAN FRANCISCO--(BUSINESS WIRE)--Chevron is facing a shareholder rebuke at its annual meeting next week over the company's $27 billion Ecuador liability with the announcement that the nation's largest public pension fund in California is defying the recommendation of company management and voting for a resolution on the issue.

CalPERS, which owns an estimated $600 million of Chevron stock and controls $170 billion in assets, announced on its website today that it will vote for a resolution calling on Chevron to examine whether it complies with host country laws and environmental regulations. Chevron has been heavily criticized for violating such laws in Ecuador, leading to a humanitarian crisis among indigenous and farmer communities in an area of rainforest where Texaco admitted to dumping billions of gallons of toxic waste from the mid-1960s to the early 1990s.

New York State Attorney General Andrew Cuomo has also opened an investigation of Chevron to determine if it is misleading shareholders about the financial risks the company faces in Ecuador.

"The CalPERS vote is a significant announcement that puts enormous pressure on Chevron's management in the investor community," said Dan Orlow, a private American investor who is advising the Amazonian communities. "It demonstrates that important pension funds are now lining up against Chevron on Ecuador."

CalPERS and the two New York funds – the state's Common Retirement Fund and the Employees Retirement System of New York City -- are three of the largest public pension funds in the U.S. and together control more than $1 billion of Chevron stock. Other public pension funds that have announced their support of the resolution include those of Connecticut, Pennsylvania, Maryland, and the pension funds of firefighters and police in Detroit and other large cities.

Funds from three large unions -- the AFL-CIO, Teamsters, and AFSCME -- have announced their support of the resolution along with several smaller private funds, such as Trillium Asset Management in Boston.

The Ecuador liability, featured earlier this month on 60 Minutes in an unflattering report for Chevron, stems from the dumping by Texaco (now Chevron) of billions of gallons of toxic waste in the rainforest when it operated an oil concession from 1964 to 1990. Thousands of rainforest residents have been fighting a legal battle against the company for clean-up since 1993.

The case is in Ecuador at Chevron's request after it was initially filed by the communities in U.S. federal court. The company agreed to be subject to jurisdiction and be bound by any ruling in Ecuador as a condition of the case being transferred out of U.S. court, which makes the enforceability of a judgment out of Ecuador likely despite what the company is saying to shareholders, said Steven R. Donziger, an American legal advisor to the Amazonian communities.

The liability appears to be the largest ever faced by an oil company for environmental damage, and almost surpasses the $31 billion price tag paid by Chevron to purchase Texaco in 2001. Chevron's management has announced it expects an adverse judgment in the case but has said it would appeal, while the plaintiffs have announced they plan to ask the court to hold the amount of any judgment in escrow pending appeals – a move that could severely hinder the company's cash position in a time of relatively low oil prices, according to analysts.

Previously, the Securities and Exchange Commission denied an attempt by Chevron management to prevent the Ecuador resolution from coming to a vote.

The announcement by CalPERS comes the same week that Chevron's management filed with the SEC an open letter to shareholders urging them to vote against the Ecuador resolution. That letter – signed by Chevron Corporate Secretary Lydia I. Beebe – contains incorrect and misleading information and appeared to backfire, said Donziger.

"Each assertion in the Beebe letter is either false, materially misleading, or incomplete except for the part where the company admits it might lose the legal case," said Donziger.

"Our team is being contacted repeatedly by shareholders and analysts who are concerned that Chevron management is not fully and honestly disclosing the company's exposure in Ecuador," said Orlow. "There is a real concern that Chevron is not playing it straight and that it might have overpaid for Texaco."

The Cuomo investigation is being brought under New York's Martin Act, which allows for both civil and criminal liability for fraud. Several New York-based shareholders, including Amnesty International, had requested the probe to determine if the company's public disclosures complied with securities regulations.

The annual meeting is scheduled for May 27 at Chevron headquarters in San Ramon, CA. Indigenous leaders from Ecuador's Amazon are expected to attend and confront Chevron's management about Ecuador.

In past annual meetings, Chevron CEO David O'Reilly occasionally has treated the Ecuadorian visitors with a discourteous tone and shut down the microphone when they attempted to speak, said Donziger.

About the Amazon Defense Coalition

The Amazon Defense Coalition represents dozens of rainforest communities and five indigenous groups that inhabit Ecuador's Northern Amazon region. The mission of the Coalition is to protect the environment and secure social justice through grass roots organizing, political advocacy, and litigation.

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