When a legal case becomes complicated, it’s important to stick to the basic issues. In the case of the Ecuadoran Amazon communities versus Chevron, the questions boil down to the following.
- What is the extent of the oil pollution?
- What damage has the oil pollution had on the health and livelihoods of the people?
- To what extent is Chevron responsible and liable for that oil pollution?
These are the key questions that shareholders have continually posed to the management of Chevron. For part one of this piece, let’s focus on the first two basic questions.
Despite two decades of litigation, there are still no clear answers. In his ruling in the RICO against the Ecuadoran plaintiffs and their lawyers, U.S. District Court Judge Lewis Kaplan did not dispute the existence of the oil pollution. According to Kaplan’s judgment:
The Court assumes that there is pollution in the Orienté. On that assumption, Texaco and perhaps even Chevron – though it never drilled for oil in Ecuador – might bear some responsibility. In any case, improvement of conditions for the residents of the Orienté appears to be both desirable and overdue.
A recent research report backs up the contention that the oil pollution in Ecuador remains extensive and damaging to the health and livelihood of the Amazon rainforest communities. According to a recent press release by Hinton Communications, a PR firm for the Ecuadoran communities:
A new report prepared by a team of prominent American scientists after the end of the Lago Agrio trial found that Chevron caused “widespread” toxic contamination to indigenous ancestral lands in Ecuador’s rainforest that persists to this day, directly contradicting the company’s defense in the Ecuador environmental litigation and providing a new boost to efforts by villagers to seize Chevron’s assets abroad.
The report – published by the Louis Berger Group (LBG), a consultancy that has worked for several U.S. government agencies – also found that Chevron engaged in an elaborate cover-up to hide the information from the Ecuador court during the Lago Agrio trial, which lasted from 2003 to 2011. The report has the potential to shake up the long-running case in favor of the rainforest villagers as they pursue Chevron’s assets in Canada, Brazil and Argentina to pay for a clean-up.
The LBG scientists who wrote the report spent several weeks in Ecuador in 2013 to inspect 18 of Chevron’s former well sites, which are spread out over a 1,500 sq. mile area of rainforest just south of the Columbia border. The report was prepared at the request of the American law firm Winston & Strawn for a private international arbitration where Chevron is seeking – thus far without success – to shift the clean-up liability to Ecuador’s government.
It is reports of this kind that reinforce the fact that Chevron’s lingering liability in Ecuador is still far from being resolved. As such, it underscores risks to shareholders that Chevron’s management has downplayed but has still not effectively disclosed or managed.