Chevron’s Amazon Disaster: Ecuadorians Tour Europe, Find Investors Concerned
Posted on April 19, 2012
I’d like to preface the below post, written in the late hours of the night here in London, with several quick humanizing observations and several questions, which I hope, you, the reader, will keep at the forefront of your mind…in the event you read the post.
First, London is cold, wet and grey. Very different from the hot, humid brightness of the Amazon. Humberto and Guillermo, whom I am traveling with, have cold swollen hands from the weather. As we walked between Westminster Abbey and the Palace of Westminster, Humberto, shivering, observed how the close geographical proximity of Church and State makes it easy for corrupt politicians to confess their sins. And later, crossing the street (and looking the wrong way!), Guillermo was almost hit by a car, and exclaimed: “Left handed country! Everything is backwards!”
And some questions: Do you think that efforts to educate large investors in Chevron about the human rights and environmental tragedy in Ecuador will/can exert any meaningful influence over the oil giant? Will justice for thousands of people in the Amazon be decided by a cost-benefit decision by senior executives at Chevron? Can there be justice in the affairs of humans?
London, England – Ecuadorian indigenous leaders Humberto Piaguaje and Guillermo Grefa began a one week European tour today, where they will be educating major institutional investors in Chevron Corporation, including prestigious funds such as the Church of England Investment Fund and the Central Finance Board of the Methodist Church, about the oil giant’s grim environmental and human rights legacy in the Amazon. The fact that European investors are concerned about the American oil major’s growing multi-billion liability over its Amazon disaster comes as no surprise.
Chevron was found guilty for environmental crimes in Ecuador in February of 2011 and fined upwards of $18 billion. Since that historic decision, Chevron’s litigation prospects in the long-running environmental trial have dimmed considerably.
On January 3, 2012, an Ecuadorian appeals court confirmed the $18 billion verdict against Chevron, and two months later, on March 12th, an appellate court declared that the judgment is final and enforceable. Chevron has appealed the ruling to the National Court of Justice in the Andean capital city of Quito, but simultaneously refused to post a bond that would be required to stop enforceability of the verdict. In sum, after 19 years of litigation, the plaintiffs (more than 30,000 indigenous peoples and campesinos of Ecuador) have won an internationally valid judgement that can be enforced in Ecuador or any other country across the globe.
The landmark litigation has now entered a critical final chapter. The end game in this marathon legal process is likely to be an accelerating race against the clock, as lawyers for the plaintiffs attempt to enforce the judgement by seizing Chevron’s key assets in Latin America (and elsewhere around the world), while Chevron desperately seeks legal stratagems to protect its tankers, oilfields and refineries from confiscation.
Of course, the huge financial stakes of this mammoth legal battle are not lost on Chevron investors. In 2011, only months after the historical $18 billion ruling, New York State Comptroller Thomas DiNapoli urged Chevron to settle the case:
“It’s time for Chevron to face reality,” said DiNapoli, trustee of the $140.6 billion New York State Common Retirement Fund (Fund), which owns 7.5 million Chevron shares worth an estimated $780 million. “The effects of this horrific, uncontrolled pollution of the Amazon rainforest are still being felt today. Investors don’t derive any benefit from this never-ending courtroom drama. The entire case is looming like a hammer over shareholders’ heads. Chevron should start fresh with a new approach that embraces environmental responsibility and risk management as part of its corporate culture. More legal proceedings will only delay the inevitable.”
At the same time a coalition of investors representing $156 billion in assets under management, which included the American Federation of Labor – Congress of Industrial Organizations, the International Brotherhood of Teamsters General Fund, as well as dozens of socially responsible and faith based investors, signed a joint public statement saying: In failing to negotiate a reasonable settlement prior to the Ecuadorian court’s ruling against the company, we believe that Chevron displayed poor judgment that has led investors to question whether our Company’s leadership can properly manage the array of environmental challenges and risks that it faces.
And now across Europe concerns about the American oil giant’s handling of the Ecuador disaster are being raised by investors and politicians alike. Recently Member of Parliament (MP) Martin Horwood wrote in a Huffington Post op-ed “ I’m taking the case to my colleagues on the All Party Parliamentary Group for Tribal Peoples, to see what we can do to highlight it and help the long-suffering indigenous peoples of Ecuador. Now is the time to call Chevron to account, not only in the Court of Law but also in the Court of Public Opinion and to rally all stakeholders – politicians, investors and the public – to pressure Chevron to do the right thing.”
Additionally, MP Zac Goldsmith recently requested that the Secretary of State for Work and Pensions in the UK disclose whether the Secretary has assessed the risks that the Ecuador litigation presents to the value of the Pension Fund’s significant holdings in Chevron.
What is clear is that as the long-running environmental trial in Ecuador enters its final chapter, and as Chevron’s legal prospects dim, many investors and politicians across the globe are wondering: Why does Chevron insist on such an expensive and bullheaded approach to the Ecuador disaster? These are questions, of course, that have puzzled (and at times outraged) American investors in Chevron for many years. And this week, with Ecuadorian indigenous leaders’ Humberto Piaguaje and Guillermo Grefa touring England and Norway, major European investors and politicians have begun to share in the bafflement and consternation of their American counterparts.
And the take away from all of this? Well, it’s a bit like Kansas (read: What’s the Matter with Kansas?) over at Chevron world headquarters in San Ramon. For a host of cultural and ideological reasons Chevron management is acting against it’s own self-interest — the interest of its shareholders…and in doing so, is driving the company off an $18 billion cliff.