Lobbyists and P.R. Firms Attack Ecuador to Evade $18 Billion Judgment As Chevron Lawyers Suffer Setbacks in Courts Around the World
WASHINGTON, Oct. 10, 2011 -- Chevron is paying U.S. lobbyists and public relations firms millions of dollars to foment open conflict with Ecuador's government as part of a global strategy to evade paying an $18.2 billion court judgment for environmental contamination, according to public spending records and legal documents.
Chevron's reported U.S. lobbying spending – one of the highest among U.S. companies -- has created the unusual specter of a major American oil company deliberately provoking a diplomatic row with an oil-producing Latin American country that is a key U.S. trading partner because it believes it is good for business, said Karen Hinton, the U.S. spokesperson for thousands of Ecuadorian plaintiffs in the environmental case.
"Chevron has declared open political war on the government of Ecuador as part of a strategy to evade its clean-up obligations," said Hinton.
To help implement this strategy, Chevron increased its U.S. lobbying expenditures from $12.8 million in 2009 to $20.8 million in 2010, according to published reports. Chevron also has contributed over $10 million to congressional candidates during the span of the lawsuit and was the top giver in 2009 and 2010 to nonprofits associated with Members of Congress and the Administration.
The stepped-up political strategy comes at a time when Chevron's legal prospects in the case, which is being heard in the Amazon town of Lago Agrio, have considerably weakened. Ecuadorian citizens originally filed the claims in 1993 in New York but a U.S. judge shifted the case to Ecuador in 2002 at Chevron's request. At the time, Chevron heaped lavish praise on Ecuador's court system.
In September, a U.S. appeals court blocked Chevron from using an injunction from a U.S. trial judge to enjoin enforcement of the Ecuadorian judgment in any of the dozens of countries where the oil giant operates. Separately, the Ecuador court in February found Chevron liable and imposed $18 billion in damages, which the plaintiffs are appealing as too low for a disaster that experts consider worse than BP's Deepwater Horizon spill.
A related legal action in California suggests Chevron used a prominent U.S. law firm, Jones Day, as a conduit to funnel money and other benefits to a company operative, Diego Borja, who had threatened to expose Chevron's "dirty tricks" operation in Ecuador.
Chevron's global strategy is to create leverage to pressure Ecuador President Rafael Correa to violate his country's Constitution -- which guarantees Separation of Powers and an independent judiciary -- and reach into the courthouse in Lago Agrio to quash the lawsuit, Hinton added.
Chevron's strategy is uncertain because for years Ecuador's government has refused to buckle to company pressure. Ecuador's government has a firm policy of defending the legally guaranteed right of its own citizens to seek private redress through their own court system for environmental harms.
After an eight-year trial, the Ecuador court found Chevron responsible for the systematic dumping of billions of gallons of toxic waste into the Amazon from 1964 to 1992, when Texaco operated a large oil concession with more than 375 wells and production stations. The dumping decimated indigenous groups and created a spike in cancer rates and other oil-related illnesses, according to evidence before the court.
Chevron inherited the lawsuit when it bought Texaco in 2001.
While the Ecuador trial decision is under appeal, Chevron has continued to use high-profile lobbyists such as Mac McLarty, former chief of staff to President Clinton, to end-run the legal result in Ecuador. Chevron's strategy includes:
- Pressuring the office of the U.S. Trade Representative to cancel Ecuador's trade preferences in retaliation for letting its citizens sue the oil giant in their own courts. Ecuador has estimated it would lose upwards of 300,000 jobs if Chevron's effort were to succeed, with potentially disastrous results for the economy and dramatically increased poverty rates.
- In addition to McLarty, Chevron has used two former U.S. trade ambassadors -- Democrat Mickey Kantor and Republican Carla Hills -- to open doors at the USTR, which thus far has rebuffed the oil giant. In 2006, then-Senator Barack Obama, in response to Chevron's lobbying efforts, asked the agency to stay out of the litigation.
- Filing multiple lawsuits against Ecuador's government in international courts while trying to prevent the plaintiffs from being heard. Chevron maintains a private arbitration against Ecuador's government for the entire amount of the damage. Ecuador is paying millions of dollars in legal fees to defend the case, cutting into funding for social programs in the country.
- Brought under the U.S.-Ecuador Bilateral Investment Treaty, the case is highly controversial in that Chevron is seeking an unprecedented order forcing Correa to end the legal case -- a remedy that would turn international law on its head, according to several experts. The private arbitral panel thus far has refused to accept jurisdiction, while the plaintiffs in Ecuador maintain any decision in the case would have no binding impact on their claims.
- Mounted a propaganda campaign to cast Ecuador's government as a rogue state despite the fact the country enjoys diplomatic relations with the U.S. and ranks better than most countries in the world in terms of freedom, according to Freedom House. In U.S. courts, Chevron lawyer Randy Mastro compared Ecuador's judicial system to that of Iran even though various surveys rank it far higher than most countries in Latin America.
Chevron's Political Action Committee also has contributed $10 million to 60 House candidates and 11 Senatorial candidates, 75% of whom were Republican, according to Open Secrets.
Chevron also is one of the top contributors to the U.S. Chamber of Commerce, which has been heavily involved in pressuring its affiliate in Ecuador to back Chevron's efforts to cancel the trade preferences even though most of the Ecuadorian business community is hesitant to do so, said Hinton.
Rep. Linda Sanchez, in 2009, called Chevron's lobbying style "clumsy" and "heavy-handed" and said its efforts to pressure Ecuador's government amounted to "extortion."
