How Low Can Chevron Go?

Written by Mike G

Topics: Oil

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Humberto Piaguaje

Humberto Piaguaje and Guillermo Grefa (from left) traveled to DC to speak out against Chevron's kangaroo court earlier this month.

How low can Chevron go? It seems the company is determined to find out.

Having lost a major environmental lawsuit in both US and Ecuador courts based on the merits of the case, Chevron has resorted to a secret international arbitration panel to evade paying an $18 billion judgment in Ecuador. Apparently the way Chevron works is: If you can’t beat ‘em, find a new legal process that they’re locked out of.

But after Chevron’s kangaroo court issued a ruling last week that sought to order an Ecuadorean court to stop the plaintiffs from pursuing enforcement of the verdict, the Ecuadorean court responded that it would not be complying:

“A simple arbitral award … cannot force judges to infringe the human rights of our citizens,” said the court, adding that abiding by the panel’s order would be unconstitutional and would lead to the breach of international human rights conventions.

Yes, you read that right: As incredible as it seems, Chevron apparently thinks that the rule of Constitutional law and even international human rights standards should be put aside in order to protect the company’s bottom line.

Chevron leadership continues to insist it will fight “until hell freezes over.” But the company’s board of directors and executive and legal teams are increasingly alone in that determination. Chevron shareholders are coming forward in droves to push the company to settle the ongoing litigation and take responsibility for its oil pollution in the Ecuadorean Amazon:

For Chevron, which had $244 billion in revenues last year, the [$18 billion] payment is manageable. But the board has decided neither to pay nor to settle with the Ecuadoran plaintiffs — a choice that doesn’t sit right with some shareholders. Instead, Chevron is appealing to a three-man arbitration panel in The Hague to overturn the Ecuador court ruling. Several institutional investors and observers believe the 13-person Chevron board just doesn’t get it.

“In most instances, the board should not get involved in the handling of litigation,” says Arthur Miller, a professor and authority on civil procedure at New York University School of Law. “[But t]he Ecuador situation may well be an example of a case that obliges the board to be proactive. It has enormous scale, and the public policy issues concerning human life and environmental damage are very, very serious.”

The consequences for Chevron could be grave too. Pressure from investors is intensifying for the board to get a better handle on risk oversight, and some are suggesting that the company has not been forthcoming with disclosure about potential losses from the Ecuador case. At least 25 pension funds with a combined $300 billion in assets under management have asked Chevron’s leadership to negotiate a settlement with the Ecuadorans. In a letter last spring, 22 of them, including the International Brother of Teamsters, accused Chevron leadership of “poor judgment” and damage to shareholders over the “endless litigation.”

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