No Concessions from Chevron on Ecuador or Anywhere Else
Among the developments at Chevron’s recent raucous annual shareholder meeting was the oil company’s stubborn refusal to settle an $18 billion lawsuit over oil pollution in Ecuador.
Chevron is on trial in Ecuador for widespread contamination of Amazonian land and water resources in the 1970s by Texaco, which Chevron purchased in 2001. Plaintiffs suing Chevron are challenging the adequacy of a remediation effort that Texaco completed in 1998. A court-appointed expert in the Ecuadorian litigation has recommended that Chevron be held liable for up to $27.3 billion in damages. In February, an Ecuadoran judge fined the San Ramon oil major $9.5 billion over oil-field contamination in a portion of the Amazon rain forest where Texaco used to drill, working as a partner with the government-run Petroecuador. The fine could increase to $18 billion.
A letter to shareholders from New York state comptroller Thomas DiNapoli and several investor groups urged Chevron to settle case, which has continued in various forms since 1993.
“Investors don’t derive any benefit from this never-ending courtroom drama,” DiNapoli said in a press release. “The entire case is looming like a hammer over shareholders’ heads.” The New York State Common Retirement Fund, which DiNapoli manages, is one of those investors, holding Chevron shares worth a about $780 million.
Chevron dismisses the lawsuit, calling a scam and a conspiracy to defraud the company. At the San Ramon meeting CEO John Watson told Atossa Soltani, director of the Amazon Watch nonprofit group, that the company is “victimized” by the other side’s lawyers. Chevron contends Petroecuador bears the main responsibility for the oil spills and other pollution in the jungle. Watson told the shareholders that Texaco cleaned up any contamination it caused.
But a recent independent report puts Chevron’s situation in a different light. Simon Billenness of Strategy for Corporate Responsibility and Social Investment, a co-author of the report, said:
“In sworn legal statements, Chevron has admitted that the company faces “irreparable injury to [its] business reputation and business relationships” from potential enforcement of the Ecuadorian court judgment. However, Chevron has failed to characterize these risks in its public filings. These choices may lead some shareholders to question the adequacy of Chevron’s public statements and disclosures and whether the board and management are fulfilling their fiduciary duties to properly manage this significant risk to the company’s business and value.”
Activists at the often acrimonious meeting also said Chevron has failed to live up to its responsibilities in various locations other than Ecuador, including Angola, the Niger Delta, the Philippines, Myanmar, Kazakhstan and Alberta, Canada.
Ginger Cassady, a campaign director with the Rainforest Action Network, said activists’ have launched a concerted effort to intensify the pressure on Chevron. “Our goal at these meetings is to put the spotlight on Chevron’s environmental crimes,” Cassady said.
“We want to be a force for good everywhere we operate,” Watson was quoted saying.
On shareholder proposals, Chevron share-owners voted with the company’s recommendations, rejecting proposals to elect a board member with a strong environmental background, link executive pay to environmental sustainability and report on the financial risks of climate change.
A proposal to report on the environmental risks of “fracking” – a controversial process for extracting natural gas from rock through hydraulic drilling – also failed, but garnered nearly 41 percent of shareholder votes, according to preliminary results. That’s somewhat of a surprise, but maybe not all that ground-breaking because fracking has generated so much attention in the national press. Also the proposal called for a report, not for substantive action, so the shareholders who voted for it can feel good about demonstrating their concern about the issue.
“The fact that 41 percent of Chevron investors voted in favor of more disclosure, an exceptionally high level of support for a first-year resolution, shows how seriously the company’s shareholders are taking this issue,” said Michael Passoff, senior strategist with the advocacy group As You Sow. Maybe someday there will even be a fracking report, but don’t hold your breath.
Chevron, while seemingly (or purposely) tone deaf, is expert at spin control, delaying tactics, deflecting opposition and making no concessions because that’s what multinational companies that make billions in profit every quarter at the expense of the environment and the average consumer do with impunity.