"We certainly recognize that Chevron does not make a sympathetic
victim here," company spokesman Kent Robertson told me over the telephone.
In May, "60 Minutes" ran a TV report on Ecuadorans in the Lago
Agrio area with graphic video of foul-looking petroleum waste pits who
are suing Chevron for damages and to clean up toxic oil waste in their
village. One of the plaintiffs, Emergildo Criollo, showed up last month at
Chevron's shareholder meeting, where he said he had lost two children and an
aunt to health problems he blames on oil-field contamination, as The
Chronicle's David R. Baker reported. "We don't want to keep dying," Criollo
said through an interpreter.
Oh yeah, and because Chevron lawyers convinced a federal judge
in New York that Ecuador had legal jurisdiction, the trial will be in
Ecuador, where Chevron now says it does not expect to get a fair trial. A
court-appointed expert has assessed the oil giant's damages at a whopping
$27 billion. It's like Bingo.
I can't think of an American who would find it acceptable to
live near the contaminated pits of toxic oil waste shown on "60 Minutes."
Sierra Club Executive Director Carl Pope put the natural
reaction to Chevron's plight simply at a June 10 Commonwealth Club event
with Chevron CEO David O'Reilly: "If I spill my milk and I didn't mean to, I
still have to clean it up."
But 20-plus years later and after a predecessor paid for a
cleanup? That's not cleaning up it's extortion.
That's why Chevron has a case.
Chevron inadvertently bought this nightmare when it purchased
Texaco in 2001. Texaco had held a 37.5 percent interest in a consortium with
the state-run oil company Petroecuador from 1964 to 1992, when it turned the
whole operation over to Petroecuador. In the 1990s, Texaco and Ecuador
reached an agreement, under which Texaco spent $40 million cleaning up some
of the sites (because the company owned only a portion of the venture).
"In return for that" $40 million cleanup, "60 Minutes" reporter
Scott Pelley asked attorney Steven Donziger, who represents Ecuadoran Amazon
residents who filed suit against Texaco in 1993, "the Ecuadoran government
signed off and said you're released of liability. How can you have a lawsuit
To which Donziger replied, "Well, our clients never released
Mitch Anderson of Amazon Watch an independent human rights
and environmental organization that supports the Amazonians' lawsuit
argues that Chevron should settle because this 16-year-old litigation has
turned into "a legal Vietnam."
But in Donziger's answer, you see the very reason why Chevron
has no incentive to settle.
For starters, Chevron execs can argue that Petroecuador owns the
pits and that Ecuador should have cleaned up the mess years ago. And rightly
so. They can point to a similar but separate lawsuit against Chevron, which
a federal judge in San Francisco dismissed because the attorneys for those
Ecuadoran plaintiffs "manufactured" cancer claims.
But the main reason why Chevron can't settle is that any deal it
makes with the villagers of Lago Agrio could only serve to encourage more
Indeed, when I asked Amazon Watch's Anderson if other Ecuadorans
should sue Chevron if the corporation reaches a settlement with the Lago
Agrio residents, he would not answer yes or no. He said, "We think that
Chevron is entirely responsible for environmental disaster and the human
rights problems in Ecuador." Which sounds like: Yes.
And that certainly lets Petroecuador and Ecuador's President
Rafael Correa off the hook, doesn't it? His government can fail to clean up
oil waste, fail to clean up drinking water, and human rights groups blame a
company that left the country two decades ago.
The villagers must figure that they stand to make out better
with a foreign big bad oil company than with their own elected government.
In December, Ecuador defaulted on its foreign debt which
Correa called "immoral and illegitimate."
With Correa's track record for not honoring his country's
obligations, and not honoring its agreement with Texaco, Chevron's Robertson
asked, "How do you get a government that has a track record of not honoring
contracts to honor contracts?"
It's been my experience that large corporations prefer settling
lawsuits that make them look bad. And Chevron does not look good when
spokesmen make claims like this one from Robertson: "The idea that oil is
making people sick is something that has yet to be substantiated." Chevron
argues that fecal matter and bacteria have poisoned the water. Maybe, but
even if you boiled it for days, you couldn't get me to drink that stuff.
Still, I have to agree with Robertson's point that if Chevron
loses, then "You're going to have American companies that are getting taken
to the cleaners over and over again not on the basis of evidence, but on the
basis of emotion and populism and near-term political gain."