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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Hatchet job for Chevron in this week’s Economist…

An article in the Economist this week totally misses the mark about Chevron's liability in Ecuador. Not only did the reporter fail Journalism 101 by failing to talk to ANYONE from the plaintiffs, he or she (Economist articles have no byline) repeated word for word Chevrons story. This is the response by one of the lawyers working on the case – it gives some perspective on what was missing from the Economist fable:

This article buys into almost all of Chevron's misleading talking points and does your readers a huge disservice. Further, the article has numerous factual inaccuracies that hide the fact Chevron believes no court, government, or law has a right to hold it accountable for creating a humanitarian crisis in the rainforest. Perhaps the most important fact is the obvious one – the article repeats Chevron talking points, while a Chevron advertisement intermittently sits above the article on the Economist website.

This is some of what you got wrong or was taken out of context, from the perspective of a lawyer working on the case:

It is indisputable that Texaco used the Amazon as a trash bin for the 26 years that it operated a large oil field in Ecuador. The company admits to dumping more than 16 billion gallons of toxic "water of formation" into Amazon waterways and leaving over 900 toxic waste pits that leach toxins into soils and groundwater to this day. Several independent, peer-reviewed studies (as opposed to Chevron's financed studies) show a strong elevation in cancer rates in the oil-producing region that are correlated to hydrocarbon contamination. There is indisputable evidence that the practices Texaco used in Ecuador had been outlawed for decades in the U.S. Texaco's practices violated Ecuadorian law, U.S. law, industry custom, the company's contract with Ecuador's government, and basic human decency. More than 1,400 people have died of cancer, according to empirical data based on a court survey. Several indigenous groups have had their cultures decimated. The lawsuit, filed in U.S. court in 1993, is about seeking compensation from the company for these damages.

You totally missed Chevron's bad faith in the litigation. Chevron fought for nine years to move the trial to Ecuador from U.S. courts. It submitted 14 expert affidavits praising Ecuador's courts as fair and adequate. It agreed to submit to jurisdiction in Ecuador and be bound by any ruling there as a condition of the case being transferred. Only when the trial evidence in Ecuador began to point to Chevrons' culpability did those same courts suddenly become unfit for Chevron. The company tries to delay, attack, and distract because the evidence shows 100% of the former Texaco sites are highly contaminated with cancer-causing carcinogens. Chevron also has launched lobbying campaigns in Washington and Quito to help it accomplish in the political arena what it cannot accomplish under the rule of law – namely, engineer a victory via political pressure. What bothers Chevron about Ecuador's President is that he won't do its bidding, he won't interfere in the litigation, and he won't cut a side deal with the company unlike other Presidents from years past that allowed Texaco to run roughshod over the country's citizens.

Chevron's remediation, the basis of its "defense" at trial, was a total sham. At 100% of the so-called "remediated" sites inspected during the trial, high levels of toxins in soil and water have been confirmed by independent laboratories. Chevron created bogus laboratory results to "certify" the pits as cleaned, leading to a criminal indictment of two former Texaco lawyers. The "release" received by Chevron for the so-called remediation excludes the private claims of the type being litigated in the lawsuit. Chevron is lying to shareholders and journalists when it claims it was "released" – no court in the world has ever accepted Chevron's argument on this point, despite being presented countless times over the last 13 years.

Finally, the court-appointed expert maligned in your article is one of the most respected environmental consultants in Ecuador. He is so good that Chevron paid him as its expert in an earlier phase of the case. He worked with a team of 14 independent scientists to come up with a damages assessment. More than 25 scientists have reviewed the assessment and found its conclusions reasonable and the damages figure consistent with other large environmental clean-ups. Your claim that Texaco made less than $500 million profit is preposterous and illustrates your shoddy research. That amount was made by Texpet, Texaco's fourth-tier subsidiary in Ecuador. Texaco itself made an estimated $25 to $30 billion in profit in Ecuador.

Let's be clear – the Economist approached this story with a bias, and never contacted a representative of the communities. Chevron is a leading advertiser for the Economist. You owe your readers an explanation.

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Chevron caught manipulating media…

By the New York Times no less…the paper today picked up how Chevron has tried to manipulate the media: When Chevron Hires Ex-Reporter to Investigate Pollution, Chevron Looks Good.

But the times missed the real story and lets Chevron off the hook about how the company totally and completely fails to disclose that they paid for the piece in any aspect of the "report" put out by local Chevron pet reporter Gene Randall. Take a look at this press release describing the real story here:

Chevron Produces Phony Online News Coverage to Spread Misinformation about Ecuador Disaster

Oil Giant Fails to Disclose That It Paid for "News" Video Narrated by Former CNN Correspondent Gene Randall

Amazon Defense Coalition
3 May 2009 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at 703-798-3109 or karen [at] hintoncommunications.com

To obtain additional background about Chevron's oil contamination in Ecuador, click here to download a press kit

Washington, D.C. (May 3, 2009) –To promote a misinformation campaign about its role in the oil contamination of a pristine area of the rainforest in Ecuador, Chevron recently produced a video that copies the format and style of television news shows and portrays Texaco, now owned by Chevron, as completely blameless in the dumping of billions of gallons of toxic waste into the Amazon jungle.

Chevron has bought online advertising on Google to promote the 13-minute video ahead of the airing tonight of a 60 Minutes segment, reported by Scott Pelley, that is expected to expose the company's complicity in what is considered the world's worst oil-related contamination. Chevron never reveals it paid for the video, which is designed to look like an "objective" CNN news report and is narrated by former CNN correspondent and current corporate consultant Gene Randall.

Two environmental groups are blasting Chevron and Randall for engaging in the deceptive practice of producing a corporate news video that looks like a news broadcast. They called on Chevron to stop airing the video until the company makes a full disclosure.

"Chevron is using false information in this deceptive video to mislead the public, its own shareholders, and Chevron employees about its responsibility for an environmental disaster of epic proportions," Mitch Anderson, Corporate Accountability Campaigner at Amazon Watch, an environmental advocacy group in San Francisco.

"Randall should be ashamed to lend his credibility built up over years as a legitimate journalist to an oil company trying evade accountability for a disaster that is literally killing off indigenous groups and destroying the rainforest," added Anderson.

"If I were CNN, I would be furious because Randall essentially is getting paid by Chevron to use and dilute CNN's brand without permission."

Click here to view the video.

Chevron faces a potential civil liability of up to $27 billion for the Ecuador contamination in an epic 15-year trial in Ecuador's courts brought by dozens of indigenous groups and farmer communities. The damages assessment was produced by a team of 15 experts and is contained in a 4,000 page court report that analyzed the evidence in the case and places blame squarely on Chevron for the problems.

A final decision on the case is expected later this year.

The trial is taking place in Ecuador at Chevron's request after it was transferred from U.S. federal court in 2002. At the time, Chevron submitted numerous sworn affidavits praising the fairness of Ecuador's courts, although with a decision in the case imminent the company now claims those same courts are treating it unfairly.

The Chevron corporate video uses paid Chevron consultants and employees who cite discredited information consistent with the company's talking points on the case, said Karen Hinton, a U.S.-based spokesperson for the rainforest communities. Randall advertises himself as a producer and narrator of corporate videos with a "news flavor". (For more information about Randall, click here)

The Ecuadorian man who has led the communities in the battle against Chevron said the company should either pull the ad or inform viewers it produced it.

"Telling the truth isn't easy for Chevron because the company has put out much misinformation about the harm Texaco did to my country and its people," said Luis Yanza, President of the Amazon Defense Coalition, an Ecuadorian group that represents the plaintiffs in the lawsuit.

The hiring of Randall is not the first time Chevron has tried to use the veneer of the news media to promote its misinformation campaign. Chevron paid a little-known San Francisco-based online newspaper publisher, Pat Murphy, to write positive news article about Chevron in Ecuador without revealing Murphy was paid. Collaborating with Murphy has been the online blogger Zennie Abraham, known as Zennie 62, who parrots Chevron's talking points in his blogs. (For more information regarding Chevron's use of Pat Murphy and Zennie Abraham as proxies to dissiminate the company's propaganda, click here and here

Chevron has not denied charges that it funnels money to seemingly independent journalists, including Murphy and Abraham, to post what appears to be editorial content that is actually paid advertising.

The Chevron video misleads viewers on several important elements of the lawsuit, as demonstrated by evidence in the 4,000-page report prepared by a team of court experts, said Anderson. Some of the misleading facts are as follows:

• The video quotes Pedro Alvarez, a Chevron consultant, as saying the contamination in Ecuador poses no risk to public health. In fact, several parties – including Chevron – have found dangerous contaminants and carcinogens such as Chromium VI at levels thousands of times higher than allowed by law in Ecuador.
  
• The video falsely claims Texaco earned $490 million in profits from Ecuador. In reality, Texaco earned between $25 billion and $30 billion; Texaco's fourth-tier subsidiary, Texpet, earned $490 million.
  
• The video falsely claims the case was brought under law passed in 1999, after Texaco left Ecuador. In fact, it was brought under a provision of Ecuador's civil code dating to 1861 – a fact Chevron has admitted in court.
  
• The video claims Ecuador's courts are "unfair" but fails to reveal that the charge was made only after the evidence at trial started to point to Chevron's culpability. It also fails to disclose that Chevron argued as recently as 2007 in another case that Ecuador's courts are an adequate forum.
  
• The video claims that Ecuadorian lawyer Pablo Fajardo, who has won a CNN "Hero" Award for his work on the case, tried to stop Ecuador's state-owned oil company from cleaning Texaco's contaminated sites. In fact, Fajardo tried to get that company to clean the sites properly rather than just cover them with dirt.
  
• Chevron tries to claim the health impacts such as cancers are caused by fecal matter in the water. There is no scientific evidence to support the claim that fecal matter causes cancer.
  
• The video lies when it claims that the billions of gallons of water of formation dumped by Texaco were "treated" before discharge. In fact, Chevron's own environmental audits, in evidence in the case, show the water contained carcinogens and was not treated.
  

Click here for more information:

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And probably worth mentioning…

That Chevron's actions in Ecuador were highlighted in a piece on 60 Minutes Sunday night:

Watch CBS Videos Online

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Interesting Story on NPR

http://www.npr.org/templates/story/story.php?storyId=103233560

While Juan Forero does a nice job of recounting the horrific environmental contamination in Ecuador's Amazon, his reporting of President Rafeal Correa's comments on the humanitarian crisis afflicting the region wrongly imply that President Correa has somehow influenced the trial in Ecuador. This is an inaccurate and misleading construction of Correa's comments, which were taken out of context, and buys directly into Chevron's propaganda about the case.

Politicians comment about trials all the time in countries around the world for a variety of political reasons. It doesn't mean they are "interfering" with the trial which takes in the judicial branch, independent of the executive branch. President George W. Bush's administration commented frequently about ongoing trials, from issuing statements on the lawsuits against insurance companies in the aftermath of the Katrina disaster to commenting on the urgency of intervention in the Terry Schiavo "right to life" cases. President Obama comments all the time about the behavior of banks and insurance companies in the economic crisis, while many of those institutions are targets of litigation. No serious person alleges that public comments of either of these Presidents somehow has biased those legal actions and made the judiciary incompetent. Any suggestion from Chevron that Correa's comments make the courts in Ecuador partial underlies a certain colonial-tinged racism regarding the competence of the Ecuadorian judiciary, despite the fact that U.S. courts have frequently found Ecuadorian courts to be perfectly competent courts to hear these cases. In fact, the exact case against Chevron started in a U.S. court and was only transferred to Ecuador at Chevron's request, over the objection of the plaintiffs, after the U.S. judge found Ecuador's courts to be a competent venue for hearing the case.

Beyond offering a few statements by Correa that express sympathy for the victims of this environmental crime, and outrage at the perpetrators of it, neither Forrero nor Chevron can point to a single instance of executive interference with the court hearing the case. In fact, every piece of evidence points to the opposite: Correa has personally, on several occasions denied any interference in the Aguinda trial, and has continually reasserted that the Ecuadorian courts are free from interference by the Executive or Legislative branches. The Attorney General of Ecuador has repeatedly and publicly defended the independence of the judiciary in Ecuador against attempts to interfere in the lawsuit against Chevron by – surprise – Chevron itself, which has lobbied government officials in Quito and Washington to quash the case via political pressure. Evidence has emerged that the very first day of the trial in Ecuador – October 21, 2003 – Chevron pressured Ecuador's then Attorney General to request that the trial judge illegally dismiss the case. Perhaps most telling, Chevron itself, as recently as 2006 (after Correa came to power) has asked U.S. courts to transfer other, unrelated cases about the health impact of oil contamination to the very same courts in Ecuador that they claim are so biased against them.

A comment by a President expressing sympathy for a group of his constituents suffering from a humanitarian crisis of epic proportions is entirely appropriate. These expressions of support have are entirely appropriate, and have nothing to do with an ongoing litigation that deals with complex factual and legal matters. Don't be fooled by Chevron's propaganda – the company is getting the fair trial they said they would when they argued to have the case transferred out of U.S. federal court and into Ecuador.

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Mickey Kantor Has an Ethics Problem

Mickey Kantor, normally an impressive individual, has a major ethics problem.

Kantor, as Peter Stone reports in The National Journal is taking money from Chevron to defend an American oil company responsible for what is probably the worst human rights problem in the world related to environmental degradation –the deliberate dumping of 18 billion gallons of toxic waste into the Amazon by Texaco (now Chevron) from 1964 to 1992 in Ecuador, all to keep production costs to the bare minimum. This dumping – and the separate abandonment of 916 unlined waste pits that for decades have been leaching toxins into soils and groundwater – has over the last four decades caused cancer rates to skyrocket, decimated indigenous cultures, and despoiled an area of the rainforest the size of Rhode Island. The entire catastrophe is at least 30 times larger than the Exxon Valdez spill, and thousands of people in this part of Ecuador are living in and around the contamination with no access to clean water or adequate health care. Chevron would never have done this type of thing in the U.S. where it would be called to account; it was done in an isolated part of the rainforest because the company calculated it could get away with it. To understand the issue, take a look at this short memorandum and this Q&A. And to understand how Chevron has treated this crisis, take a look at this document about Chevron's Top 10 Lies about Ecuador.

So Kantor is now trying to rescue Chevron from what is fast becoming a public relations and financial crisis of epic proportions. (Chevron, perhaps not coincidentally, has other human rights problems – it employs one of the six "torture lawyers" subject to possible investigation and prosecution. His name is William Haynes, the former general counsel for the Pentagon under Donald Rumsfeld.) Kantor is taking Chevron's money to help lobby the executive branch agency he used to head, the office of the United States Trade Representative. His objective is to persuade the USTR to "punish" Ecuador for letting indigenous tribes and farmer communities in the Amazon bring a lawsuit over this mess in Ecuador's courts. With this single representation, Kantor is violating both the spirit of the new ethics rules put forth by the Obama Administration and providing cover for a company involved in what the lawsuit claims is a massive human rights violation affecting tens of thousands of people. There is no evidence that Kantor or any of Chevron's other A-list lobbyists have even visited the affected region, read the studies about increased cancer rates, or talked to any of the thousands of victims. Yet they ply their trade with no moral sensibility about the consequences of their actions.

Chevron should be paying Kantor at least ten times his normal rate to take this on. The company spent $6.8 million on lobbying in the first quarter of this year (about $27 million on an annualized basis), not including the 20 or so people on the company's permanent government relations staff in Washington. Some significant portion of this spending relates to the Ecuador lawsuit, where the company faces a possible judgment of $27 billion for clean-up. Separately, two Chevron lawyers and seven former government officials are under indictment for lying about the results of an earlier clean-up that was appears to have been a fraud.

In a nutshell, Kantor has been hired by Chevron to undermine the legal rights of thousands of people to sue the company and hold it accountable. Rather than letting the trial finish, he is trying to shut the trial down. His job is to pressure Ecuador's President to violate his country's Constitution, interfere with his country's independent judiciary, and extinguish the legal claims held by thousands of his own citizens who are trying against all odds to address a life-threatening situation. What audacity these indigenous groups have. Last year, a Chevron lobbyist was quoted anonymously in a Newsweek story written by Michael Isikoff as saying, in reference to the Ecuador case: "We can't little countries screw around with big companies like this – companies that have made big investments around the world."

This quote reflects Chevron's attitude about the rule of law. The "little" people should not be allowed to sue big American companies. But big American companies should be allowed to sue, harass, and violate the rights of the "little" people if it's necessary to protect their bottom line.

Kantor wants Ecuador's government to behave like a "Banana Republic" and corrupt the legal process of its own country. This is a shameless attack on the rule of law. It is also dishonest. In 2002 Chevron consented to jurisdiction in Ecuador before a U.S. federal judge as a condition of the case being transferred out of U.S. federal court where it had originally been filed. At the time, Chevron submitted 14 expert affidavits praising the courts there as fair and adequate.

Kantor wants the USTR to decide the issue based on what is good for Chevron. In that vein, he claims in The National Journal story that the potential $27 billion in damages has "no logic", as if he is in a position to know. There is a 4,000-page report explaining those damages, based on 200,000 pages of trial evidence and more than 62,000 chemical sampling results that show contamination at 100% of Texaco's former production sites in Ecuador. I doubt Kantor has even seen the front page of this report, much less the executive summary or annexes. (This report has been reviewed by 25 respected scientists in the U.S., Ecuador, and Spain who have found its conclusions reasonable and the damages figure roughly in keeping with the cost of clean-up of other large environmental disasters.)

Kantor should recuse himself from the issue by virtue of his former work as the USTR ambassador, if nothing else. I also assume he has made enough money in his years as a lobbyist that he doesn't have to serve as a hired gun for Chevron defending a massive human rights violation that besmirches the image of the U.S. in Ecuador and the rest of Latin America.

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Chickens. Home. Roost.

It appears that William Haynes is probably getting familiar with those words – since it was announced today that the National Lawyers Guild San Francisco Bay Chapter (NLGSF) filed a complaint with the California State Bar against former Department of Defense General Counsel William Haynes. The complaint against Haynes, who now works for the Chevron Corporation in San Ramon, states that he "breached his duty as a lawyer and advocated for harsh tactics amounting to torture in violation of U.S. and international law … advocacy that directly lead to detainee abuses at the Guantanamo Bay and Abu Ghraib facilities." The complaint seeks to have Haynes held accountable for advising his clients (the Department of Defense) to take unlawful actions by engaging in torture by having his status as a "Registered In House Counsel" revoked – costing him his job as Chevron's deputy in-house counsel. And this is just the first wave – there is a real chance that Haynes will be called before Senator Patrick Leahy's burgeoning "Truth Commission," which could be America's very own Nuremberg trial to deal with the aftermath of the Bush wars.

This is hugely embarrassing for everyone at Chevron – but particularly for Charles James, Haynes' Bush-administration buddy who is Chevron's general counsel. James was the guy who hired Haynes when Haynes was radioactive after leaving the DoD under a cloud because of his torture connections. James made (another!) horrible judgment call in hiring Haynes, a potential war criminal, just as Chevron was facing a rising tide of human rights problems (Nigeria, Ecuador, Burma, now Cambodia) around the world. And like so many of James' other recent calls, this one is leaving him with egg on his face. It's pretty easy to imagine that the P.R. department over at Chevron is pretty pissed at James right about now for dragging their company into the same sentence as "torture" and "war criminal."

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Lay Down With Dogs and You Get Fleas

As the saying goes, good help is hard to find – so Chevron has found some bad help, and that help may be causing the company some problems in the days to come. We've already written about the controversial and ill-conceived hiring of William Haynes by Chevron (who was just described in a NY Times article as radioactive- the paper described him as searching for a job for more than a year before Chevron agreed to take him in). The Amazon Defense Coalition named a high-level public relations gun-for-hire, James Craig, who has been hired by Chevron to manipulate, delay, and obstruct the trial in Ecuador, calling Craig a "hit man" working for the corporation. According to the organization's press release:

James Craig, an American public relations official with Chevron affiliated with the J. Walter Thompson advertising agency, for undermining a long-running environmental trial in Ecuador where the oil giant faces a $27 billion liability for dumping toxic waste into the rainforest.

"Chevron is using James Craig as a hit man to sabotage a trial in Ecuador because it expects to lose and be on the hook for billions of dollars," said Luis Yanza, a representative for the dozens of communities and indigenous groups that brought the lawsuit.

"James Craig's behavior is unethical and shows a profound disregard for the law," added Yanza, a recent winner of the Goldman Environmental Award, considered the "Nobel" prize of the environmental movement.

The interesting thing is that Mr. Craig is apparently no stranger to working for reckless and controversial companies – a quick Google search found that Craig's last position as a p.r. mercenary was with the infamous Refco, a financial trading company that collapsed in October 2005 costing investors hundreds of millions of dollars, long before imploding financial institutions was chic. James Craig helmed the public relations ship throughout Refco's collapse, working to hide the truth from investors and leading to the massive losses.

When you add in the Darth Vader-esque hiring of William Haynes, you've got an interesting human resources strategy - apparently Chevron tries to hire the most controversial guys around, hoping that their wealth of knowledge of the seedy underside of the world will help Chevron intervene in the trial.

But is hiring these mercenaries worth it? The Amazon Defense Coalition has indicated that complaints are being filed against Craig for interfering in Ecuador's judicial process. Haynes' "War On Terror" excesses inside of the Department of Defense may have him drawn up before Senator Leahy's burgeoning "Truth Commission" committee, and have him branded as a war criminal at home and abroad (better cancel that European vacation, Mr. Haynes…). And all of this gets imputed onto Chevron, damaging their public image, forcing the company to defend these employees, and making it harder for the company to work moving forward – these rogue operators may be causing more problems than they're solving.

I guess Chevron is probably used to having to deal with the fallout of hiring the radioactive and controversial – after all, as the saying goes, if you lay with dogs, you get fleas.

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A Multinational Oil Company: the Real Victim?

Chevron is looking for something new from America: sympathy. According to a blog following Latin American issues – The Latin Americanist – Chevron has issued a new press release claiming that the company is the true victim in the long-running dispute between it and 30,000 indigenous people of the Amazon rainforest region. Forget the fact that the people in the area are living in conditions similar to a toxic waste dump after more than 25 years of shoddy and unsafe oil drilling. And forget the fact that the people are dealing with a huge health impact from incredibly high cancer rates. And forget the fact that Chevron abandoned its responsibility to clean up the toxic waste it left behind. No, Chevron, a company that just booked a record $23.8 billion profit in 2008, is the victim – because the court-appointed independent expert thinks that it may cost $27 billion to repair the damage that the company left behind.

This isn't the first time Chevron has played this card. They first tried claiming they were the victim after two of the organizers for the plaintiffs – Luis Yanza and Pablo Fajardo – won the Goldman Award (basically the Nobel Prize for the environmental industry). And it didn't fly anymore than then it does now. Sourcewatch captured some of the public reaction to the last time chevron tried to play victim:

"For shame! Caught red handed perpetrating one of the worst environmental disasters in history, Chevron now goes on the offensive, calling itself the "victim" and blaming everybody but itself: the Ecuadoran government and courts, the indigenous people themselves, other oil companies, and "trial lawyers" (an irony for a hatchet job written by the company's general counsel, who oversees a huge litigation budget),"

"Scapegoating activists who won an international prize for pointing out the pollution you swept under your rugs and stacked in your closets is poor form and unworthy of the company your advertising insists you are,"

"Public relations can save you for the moment but you will end up as just another chapter in the history books of Corporate Criminality. Hope your grandchildren are better than you are."

But this reaction didn't stop Chevron from claiming that it was a victim again, this time whining that the court-appointed expert, Prof. Richard Cabrera, was unfair because his report found that the evidence supported what the plaintiffs were alleging. Chevron's infamous chief lawyer Charles James even has the gall to say that Cabrera has an "undeniable disdain for science." Pretty rich coming from a guy who hires the scientists who did the Tobacco industry stuff as his main advisors (Exponent Consulting is an infamous "product defense" science and engineering firm – but more on this another day). Not to mention the fact that Cabrera, the 14 other scientists on his team, the university where he is a tenured professor of geology, the 10 American scientists who have reviewed and confirmed the findings of the report, and the Court itself, may take issue with James' assertions that he has a disdain for science.

It seems clear that Chevron has taken the tact that anyone who thinks they did anything wrong in Ecuador is victimizing them – no matter how much evidence they have backing them up.

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Chevron Bribing Becomes SOP?

We've written before about Chevron's willingness to jump into the bribing business, where expedient, paying soldiers, auditors, etc. But now it appears this is just becoming a day-to-day thing for the company. According to the Asia Times, Chevron has refused to disclose how much the company paid officials in Cambodia to secure the rights to drill in the area.

''[Chevron has] yet to respond to our detailed questions in a letter written to the company in October 2008,'' said Gavin Hayman, campaigns director for Global Witness (GW), a London-based anti-corruption watchdog. ''It is not in favor of supplying information about what it pays foreign governments to secure rights for oil exploration.''

Chevron's attitude towards disclosure ''will be telling'', he said in an interview, since revelations could help measure the scale of ''under-the-table payments'' involved in a country where a small and powerful elite has ''captured the country's emerging oil and mineral sectors'' for personal gain.

According to the article, Cambodia lacks a well-functioning anti-corruption regime and is susceptible to "the powerful few filling their personal coffers" from the extractive industry. This is a perfect situation for Chevron and is very reminiscent of Ecuador circa 1964 or so. After all, the company has already been awarded part of the mining contract, with oil to start flowing in 2011 to the tune of $174 million annually, with oil production probably reaching $1.7 billion annually at its peak.

Hey Cambodia, be careful – I know this oil deal-with-the-devil thing seems like a good idea now, but you may want to take a look at how this same dance worked out for Burma, Ecuador and Nigeria. You may figure out that you don't want to be dealing with cancer, human rights violations, and the wholesale destruction of your country 20 years down the line.

Just a thought.

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WTF is going on? Is Chevron just evil?

News out of San Francisco today: Chevron, which posted a record profit of $23.8 billion in 2008 is suing a group of Nigerian villagers for almost $500,000 in legal costs resulting from a embarrassing legal case (Bowoto v. Chevron) that Chevron narrowly survived this past November. This was the legal case in which a group of unarmed Nigerian villagers were shot and killed during the oil-derrick version of a sit-in protest. The villagers sought to hold Chevron responsible since it paid for, housed, fed, and directed the Nigerian military forces who shot the protestors. While Chevron prevailed during the trial, the entire episode was seen as a public relations disaster as a high-profile human rights trial took place just miles from Chevron's San Ramon, CA headquarters, further tarnishing Chevron's already shoddy image. Take a look at Dan Firger's blog on the Huffington Post - Landmark Human Rights Trial Bowoto v. Chevron Set To Begin October 27 for a short recap.

Well, now Chevron has added insult to injury, seeking $500,000 from the villagers who sued the company. So, people on Chevron's payroll literally shot the villagers, and now Chevron wants the villagers to pay the corporation for daring to take the company to trial over the shootings. Now, I don't have a ton of experience in this area, but I was always of the mindset that if you shoot someone its bad form to ask them to pay for the bullet. I mean damn, is Dick Cheney running Chevron now? Who shoots someone and then tries to make them pay for the fact that you shot them? And even Cheney only made his friend apologize for getting shot...I mean, this just reeks of heartless evil. According to the L.A. Times:

Laura Livoti, founder of Bay Area-based Justice in Nigeria Now, said the $485,000 sought by Chevron, California's largest company, would constitute a fortune for the Nigerians. That sum would be enough to sustain at least four villages in the Niger Delta for a year, she said.

"Chevron's attempt to squeeze nearly half a million dollars out of poor villagers who don't even have access to clean drinking water and who had wanted jobs with the company is a dramatic illustration of Chevron's heartlessness," she said.

In its claim, Chevron is seeking reimbursement from 19 plaintiffs and 30 former plaintiffs who dropped out of the case before it went to trial. At least a dozen of those named are children, Livoti said.

So this is perfect: Chevron is now suing children for enough money to support their entire village (and their neighbors!) for an entire year. Suing children? What, were all the puppies and kittens already claimed by Halliburton? I mean, this is getting almost comic book supervillain-y - with the lawsuits against children after Chevron shot their parents - did Lex Luthor take over this company?

And it's not like Chevron needs the money. Chevron made $23.8 billion profit last year. That means Chevron was making $65.2 million per day, $2.7 million per hour, and $45,251.56 per minute. At that rate it would take Chevron all of 10.72 minutes to make the $485,000 they're suing the villagers for. And these numbers are based on Chevron's profits, not their revenues, even though the $485,000 Chevron is seeking would all be tax-deductible business expenses anyway, meaning it would probably take the company about 5 minutes to generate that revenue. But Chevron isn't one to pass up an opportunity to sue children and the downtrodden, so here we are.

Even if you buy Chevron's argument that they're just trying to dissuade future lawsuits like the Bowoto case, the whole idea of suing Nigerian villagers and children is just horrible. Don't they have a single public relations professional in San Ramon? I have to imagine that a company posting $23.8b profits can afford to hire someone who is savvy enough to say "um guys, maybe we shouldn't shoot unarmed and impoverished villagers. And if we do, let's just sort of pretend it didn't happen, say we're sorry and we didn't mean to and hope the bad p.r. goes away – let's not go sue the people we shot for more money than any of them will ever make in their lifetimes. Ok guys? Because it looks really bad when a company making billions and billions of dollars is suing poor people because they stood up to us. Ok? And, by the way, can someone open a window? It's beginning to smell like sulfur in here again…"

But I guess no one in Chevron cares. Or maybe they just can't see the folly of their actions through all the smoke from the fire and brimstone filling up their big offices.

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Director of Crude Points Out Lies

Interesting letter to the editor in today's Washington Times. Apparently filmmaker Joe Berlinger wasn't thrilled with Chevron's misinformation about the production of the documentary. Read on:

In his article about the ongoing legal battle against Chevron Corp. in the Ecuadorean Amazon ("Chevron urges U.S. to revoke Ecuador trade," Nation, Thursday), Tom LoBianco mentions that Chevron "has been bombarded with negative stories surrounding the lawsuit and is the target of a new documentary produced in part by the plaintiffs in the lawsuit." I assume that the documentary Mr. LoBianco refers to is my film "Crude," which premiered to great critical acclaim at the Sundance Film Festival last month. Contrary to your article, "Crude" was in no way produced by the plaintiffs or anyone affiliated with either side of the lawsuit. The film is a wholly independent production and was made with the cooperation of representatives of both the plaintiffs and Chevron, including Kent Robertson, the Chevron spokesperson quoted in Mr. LoBianco's article. In fact, I invited Kent Robertson to participate in the film's premiere in Park City, Utah - which was attended by the festival's founder, Robert Redford - but Mr. Robertson declined my invitation.

Making "Crude" was an intense, often grueling three-year process, and we worked extremely hard to ensure that the film presents an accurate portrayal of this highly controversial and complicated case. Following the screenings at Sundance, the film was widely praised by critics and journalists not only for its artistic merits, but also for its editorial balance and fairness to all sides of the lawsuit. For example, James Nelson of Agence France-Presse wrote, "Berlinger clearly knows about balance in covering an important issue." David Germain of Associated Press calls the film "a fairly balanced portrait of the case, with Chevron's side well represented."

To my knowledge, Mr. LoBianco has not yet seen the film, so his characterization of the film as a partisan attack on Chevron is troubling and makes me wonder where his information is coming from. Unlike my film, the writer of your article did not seem to think it was important to either see the film or to research the false claim of the film's partiality.

JOE BERLINGER

Director/producer, "Crude"

Hmmm. Looks like the Washington Times has egg on their face on this one. I bet they're not super thrilled with the Chevron PR guys right about now - looks like they trusted what this "Kent Robertson" told them about the production of the film and then they got burned.
I guess that's one newspaper that won't be rushing to do Chevron any favors anytime soon.

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Great posting over at the DailyKos

Bob Zimway over at the DailyKos has posted a fantastic series of commentaries on Chevron's Amazon disaster. I think he summed up Chevron's plight quite well:

News: Chevron Faked Lab Results in Spill Trial

This news comes on the heels of two diaries I published in the last week, about the Chevron case, and about Yasuni National Park and Ecuador's new constitution.

The caca's really hitting the ventilidor for Big Oil. If this case goes against them, every third world country with a trans-national corporation drilling in its back yard has suddenly been dealt the upper hand.

I love it when a writer can be both snarky and accurate - if Chevron eats a $27 Billion judgment, such as they're facing in Ecuador, it will set a precedent that could lead to people all around the world suddenly having the right to sue companies for years of mistreatment. Suddenly we would be looking at a world where people who feel that they've been oppressed would actually have a way to fight back - they could go to court and try to prove their case, even if the company that destroyed their lands is far away. So, as Bob summed up so well, the caca is really hitting the ventilidor.

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Good comment on the Washington Times Story

Oh yeah, also – I saw this comment on today's Washington Times story about Chevron in Ecuador. Thought it did a good job laying out the factual problems with the story.

Take a look:

The article clearly shows how weak Chevron has become in Washington. Even the U.S. Chamber of Commerce seems to be down about the company's prospects. That said, there is inaccurate information that needs to be clarified:

*The article reports that Chevron says the legal case was moved from U.S. court (where it was filed in 1993) to Ecuador at the request of the plaintiffs. This is incorrect. The case was moved to Ecuador at Chevron's request after the company submitted ten sworn affidavits from experts claiming the courts in Ecuador were fair. Aguinda v. Texaco, Inc., 142 F.Supp.2d 534 (S.D.N.Y.2001). Once the evidence started to show Chevron's culpability, the company began to claim the Ecuador courts it had previously praised as fair were suddenly unfair.

*The article indicates that the plaintiffs "produced" a documentary film (called Crude, by Emmy award-winning director Joe Berlinger). The plaintiffs had nothing to do with the production of the film, which was made independently.

*The article indicates that lawsuit was filed by only 50 Ecuadorean residents. These individuals, however, represent a class of 30,000 Ecuadorean residents. The damages are almost entirely for environmental clean-up of what many experts consider the worst oil-related contamination on earth – one that resulted from the dumping of 18 billion gallons of toxic waste into the rainforest.

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Chevron’s Washington Tricks Exposed

The Washington Times ran an article today exposing Chevron's strategy for dealing with their huge legal liability in Ecuador: try to get the U.S. government to force the government of Ecuador to sweep the case under the rug. Apparently, Chevron has decided that they can't win the lawsuit and so they're trying the good ol' extortion strategy: threaten Ecuador's economy to force the Ecuadorean government to kill the case. Basically, Chevron is trying desperately to get the U.S. to cancel (or not renew) the Andean Trade Preferences Act unless the Ecuadorean government forces the court system to dismiss the lawsuit. So much for corporate responsibility, the rule of law, or having your day in court: around here, if Chevron doesn't think they can win, they just try to cheat.

Thankfully, as the Washington Times article clearly illustrates, nobody is buying what Chevron is selling (well, other than oil and gas – the company had a record year last year, making over $24 billion in profit. Unfortunately, while they were making money hand over fist the contamination they left behind was just getting worse, and causing more people to get sick). The oil company already tried this political tactic once - and failed miserably, losing a huge lobbying battle in Washington and diminishing whatever credibility the company had in Washington. And this time, even Chevron's allies, such as the Chamber of Commerce and Sen. Charles Grassley (R-Iowa), aren't defending the company, distancing themselves from the company and saying that this tactic just isn't going to work.

So why is Chevron trying to get the U.S. government to strong-arm the Ecuadorean government for them? Well, it looks like they're just getting desperate. The Chevron officials admitted that they expect the Ecuadorean court hearing the case to "file a judgment against them on behalf of tens of thousands of Ecuadorean Indians." And since the best estimate of what that judgment will be is the $27 billion assessment of damages made by the independent expert appointed by the court in the case, it's no wonder that Chevron is starting to panic.

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