Ecuadoreans Sue In Canada To Force Chevron To Pay $18 Billion

 
on May 31 2012 1:32 PM
  • A Ecuadorean Cleans Up The Amazon
    Ecuadoran workers clean up an oil waste pit owned by state-owned company Petroecuador in Shushufindi. Reuters
  • Ecuador Chevron
    Humberto Piaguaje, a tribal leader of the indigenous Secoya people of Ecuador, holds up a letter to the American people, in Washington in May 2011. The letter denounces environmental damage caused by Texaco, now owned by Chevron. Reuters
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Thousands of Ecuadoreans this week are trying to force Chevron Corp., the second-largest U.S. oil and gas company, into complying with a verdict and paying billions in environmental fines resulting from a decade-long pollution case.

On Wednesday, plaintiffs representing Ecuadorean villagers from the Amazon filed a suit in Canada's Superior Court of Justice in Ontario, seeking to enforce a $18 billion Ecuadorean judgement rendered against Chevron (NYSE:CVX) in February 2011.

They are targeting Chevron's assets and subsidiaries, asking that they be seized if the initial February judgment is recognized in Canadian court. Those could include Chevron's 20 percent interest in the 255,000 barrels-per-day Athabasca oil sands project, its interest in the Hibernia project, an offshore drilling field, and the Ells River exploration, which covers 75,000 acres and contains an estimated 7.5 billion barrels of oil.

The company's 161 service stations, Burnaby refinery and 130 Town Pantry convenience stores could also be at risk of seizure.

The enforcement action stems from a decade-long case in which villagers living in the Ecuadorean Amazon are trying to hold Texaco responsible for polluting tracts of the rainforest when it operated there for almost a decade. Chevron merged with Texaco in 2001, and inherited the legal case, which Chevron has tried to have dismissed, calling it fraudulent.

We plan to exercise our legal right to collect every penny of the legitimate judgment from Ecuador, even if we have to drag Chevron kicking and screaming into courts around the world, said Pablo Fajardo, the lead lawyer for the Ecuadorians.

Chevron maintains the ruling is illegal and still has a pending appeal in Ecuador's high court. A racketeering case being brought by Chevron against the Ecuadorean plaintiffs is in New York court.

Chevron officials have said Texaco has cleaned up properly and had its contractually-obligated cleanup efforts certified by the Ecuadorean government.

If the plaintiffs' lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States - where Chevron Corporation resides, Chevron said. In the U.S., however, the plaintiffs' lawyers would be confronted by the fact that seven federal courts have already made findings under the crime/fraud doctrine about this scheme.

Chevron has had injuctions against the judgement overturned in New York and a similar move was shot down by Ecuadorean courts ealier this year.

The plaintiffs said they are targeting the company's Canadian assets because Canada's court system has ruled favorably on international court decisions in the past. They also said Chevron has a significant portion of its assets spread throughout the world and that they have a list of 70 other Chevron subsidiaries in other countries that could face similar court action to ensure the company pays the $18 billion in full.

The enforcement action comes after New York State Comptroller Thomas DiNapoli, trustee of the $150 billion New York State Common Retirement Fund, which owns 7.24 million shares of Chevron worth more than $700 million, urged the company to stop contesting the legality of the judgement, and pay the fine to stop damaging its reputation and shareholder value.

Some shareholders have also asked that the Securities and Exchange Commission investigate claims Chevron has not properly informed them of the risk to the company tied to the $18 billion Ecuadorean judgment.

In Thursday trading in New York, Chevron shares were down 53 cents to $97.

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