The curious case of the Amazonian Chernobyl

May 27, 2011 3:34 PM

An Ecuadoran court has issued a landmark $8bn judgement against Chevron Corporation.

The lawsuit over devastation from of a decade of faulty drilling practices sought to redress harm to indigenous Amazonians. Chevron has branded the verdict "illegitimate".

The LA Times and NPR both reported the original claim was for $27 billion. Chevron insists that the claim was for $113 billion and the finding "lacks scientific basis". This in spite of overwhelming evidence to the contrary, including the 2009 documentary Crude. Chevron attempted to use the film as evidence of the plaintiff's malfeasance. Its strategy was thwarted by the U.S. 3rd Circuit Court. Chevron presses on with its appeal nonetheless.

To bring attention to the case, the Rainforest Action Network suspended a 15 meter banner beneath San Fransisco's San Rafael Bridge, using activists as anchor weights.

posted by clarknova (40 comments total)

Yeah, good luck collecting that.
posted by empath at 3:34 PM on May 27, 2011 [3 favorites]

Hmmmm, would Ecuador go the patient bureaucratic route or the military seizing your assets route...
posted by Slackermagee at 3:44 PM on May 27, 2011 [1 favorite]

This in spite of overwhelming evidence to the contrary, including the 2009 documentary Crude.

Presenting a documentary as fact evidence is, in my professional opinion, inappropriate in nearly every conceivable circumstance. If the filmmakers have raw, unedited video that might be relevant, than that's the evidence. An edited documentary should not be admissible in most circumstances.
posted by The World Famous at 3:53 PM on May 27, 2011 [1 favorite]

What's $8 billion to Chevron? Two weeks profits? Last month's executive bonuses?
posted by maxwelton at 3:57 PM on May 27, 2011 [1 favorite]

About half of their cash on hand.
posted by empath at 4:00 PM on May 27, 2011 [1 favorite]

8 Billion dollars is enough that they'd pay to have your government overthrown, first.

Never threaten to cost someone more than it would cost to have you killed.
posted by empath at 4:01 PM on May 27, 2011 [9 favorites]

Rainforest Action Network suspended a 15 meter banner beneath San Fransisco's San Rafael Bridge, using activists as anchor weights

I bet the enormous cojones helped a little bit with that weight.

I may not agree with every form of civil disobedience (particularly when it's holding up traffic and I'm running late), but it sure is fun to watch sometimes from afar.
posted by MrFTBN at 4:07 PM on May 27, 2011 [2 favorites]

Hmmmm, would Ecuador go the patient bureaucratic route or the military seizing your assets route...

Chevron hasn't operated in Ecuador since 1990. Ecuador would have to go aboard to collect and they aren't going to get any help in the US courts. Maybe they could find friendly courts in other Latin American countries that have a Chevron presence.

I wonder if these kinds of verdicts will be more common as formally undemocratic third world countries become democracies and are finally able to take a hard look at the environmental damage that authoritarian regimes have allowed as long as the elites have clean water and food. Every Latin American country except Cuba is democratic now, and Africa is ever so slowly getting there. Ecuador had a military government in the 70s, and I can't believe that Chevron's drilling practices didn't have the junta's full blessing. Maybe it's telling that Chevron left Ecuador around the time that the country's democracy started to stabilize.
posted by riruro at 4:15 PM on May 27, 2011 [1 favorite]

I may not agree with every form of civil disobedience (particularly when it's holding up traffic and I'm running late), but it sure is fun to watch sometimes from afar.

Sometimes. It wasn't so fun when I saw my cousin on the news after she and some other protesters hung a Free Tibet sign from the Golden Gate Bridge protesting the Olympic torch relay in China. She got stuck up there and needed a rescue. Oi, how embarassing.
posted by Hoopo at 4:18 PM on May 27, 2011 [2 favorites]

The original suit was filed against Texaco in 1993 in a New York court. But Chevron argued that the case be moved to Ecuador, saying Ecuadorian courts were impartial and professional.

...

Craig, the Chevron spokesman, says Correa's comments show the company can't get a fair hearing — even though it was Chevron that originally petitioned to have the case transferred from the U.S. to Ecuador.


Heh. "Your Honor, we'd like to petition the Court that the case be moved to Mars, as a fair hearing cannot be found in any court on Earth."
posted by 2N2222 at 4:28 PM on May 27, 2011 [8 favorites]

riruro, I wouldn't take that for granted. It was Chevron that originally wanted the case to be heard in Ecuador, which means a huge component of getting foreign judgments enforced in American courts (whether there was notice, whether the foreign court had jurisdiction over the matter, whether the parties could get a fair hearing there) is waived. It's Chevron's fault the case went there, they vouched for the fairness of the forum, don't see why an American court wouldn't give them the logical conclusion of what they asked for.
posted by 1adam12 at 4:35 PM on May 27, 2011 [3 favorites]

this case has been going on for ages. if anything, the team of Ecuadorian lawyers and their US advisors have shown resilience. after winning this judgement, they will get paid. when or how, that's now the next part of the saga. dont assume the legal team didnt foresee that potential logistical hurdle.
posted by liza at 4:42 PM on May 27, 2011

Every Latin American country except Cuba is democratic now

You cannot seriously claim Venezuela is a democracy in any meaningful sense.
posted by smoke at 5:26 PM on May 27, 2011 [3 favorites]

don't see why an American court wouldn't give them the logical conclusion of what they asked for.

You don't? You really don't? Here's a hint: MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY MONEY.
posted by No-sword at 5:31 PM on May 27, 2011 [1 favorite]

It was Chevron that originally wanted the case to be heard in Ecuador

What was up with that? Was the government of Ecuador in 1993 a lot less left wing than the current government, and Chevron expected a friendly court?

I remember hearing about this case in February, when the plaintiffs were looking for $27 billion in damages and Chevron was able to convince US judge to block Ecuador from trying to enforce any ruling months before the Ecuadorian court actually was expected.

The cynic in me expects the US courts to support Chevron. I mean, with Exxon barely having to open its checkbook for the Exxon Valdez spill after dragging it through the courts for 20 years, and the shit BP was able to pull after Deepwater Horizon, I can't believe someone seeking compensation for something that happened in a foreign country is going to get any help in a US court.

You cannot seriously claim Venezuela is a democracy in any meaningful sense.

I despise Chavez, and one of the most left wings kids I knew in college was from Venezuela and didn't like him either, but the people are voting him into office, aren't they? Is there any reason to believe he's rigging elections?
posted by riruro at 5:37 PM on May 27, 2011 [1 favorite]

You cannot seriously claim Venezuela is a democracy in any meaningful sense.

Except for the part where they have elections? The fact that a country votes for people who don't like us doesn't make them not a democracy.
posted by delmoi at 5:47 PM on May 27, 2011 [11 favorites]

I mean, really, fuck south america. How do they get away stealing our name like that?
posted by kaibutsu at 6:15 PM on May 27, 2011 [1 favorite]

The fact that a country votes for people who don't like us doesn't make them not a democracy.

America's reaction when faced with countries that vote for people who don't like them doesn't make America look particularly pro-democracy either.
posted by mhoye at 6:22 PM on May 27, 2011 [8 favorites]

I mean, really, fuck south america. How do they get away stealing our name like that?

We'll leave Australia, though, right? Wouldn't wanna hurt no kangaroo.
posted by gauche at 8:44 PM on May 27, 2011 [1 favorite]

Except for the part where they have elections? The fact that a country votes for people who don't like us doesn't make them not a democracy.

Great. Elections with no international observers were allowed in a technical capacity, and those allowed in were warned in advertisments in the paper ffs not to interfere with the country's domestic politics, elections where the entire opposition boycotted the election in 2005, elections where opposition candidates are arrested on corruption charges and forced into exile, elections where the huge govt-run media is allowed to give the incumbent large coverage and a huge number of free kicks.

I'm no fan of Chavez - and I'm not much of a fan of most of his opposition, either, to be honest - but to act like Venezuela is a democracy in the sense that most of Europe for example is, is frankly really ignorant, and anyone reflexively kicking against criticisms of the Venezuelan politics should educate themselves, even a little bit, before chucking off about it.
posted by smoke at 9:06 PM on May 27, 2011 [2 favorites]

We'll leave Australia, though, right? Wouldn't wanna hurt no kangaroo.

They've got surfing, too!
posted by Devils Rancher at 9:10 PM on May 27, 2011 [1 favorite]

It's like that one time, when that guy lost the election. And they made him president anyway.

Oh, wait. That was in the US.
posted by chasing at 9:48 PM on May 27, 2011 [5 favorites]

but to act like Venezuela is a democracy in the sense that most of Europe for example is, is frankly really ignorant,

The Economist Intelligence Unit ranks Venezuela 95 out of 169 on its "democracy index." Not great, but not the pit of hell either. To quote:

Venezuela is well-placed within the "hybrid regimes" categorisation and would have to deteriorate sharply across most categories to be ranked as "authoritarian". Its highest score is in the electoral process and pluralism category, where it ranks higher than most other "hybrid regimes" and even some "flawed democracies," the category up from "hybrid regimes". However, its scores for functioning of government and political culture are much lower. This relates to centralisation of power, weakening accountability of the executive and concerns about rising corruption.
posted by blucevalo at 10:10 PM on May 27, 2011 [1 favorite]

are election observers "allowed in a technical capacity" in US elections, smoke?

Oh, and advertisements warning observers not to interfere in the country's domestic politics, what tyranny! It's not like Venezuela has any experience with outside intervention in its domestic politics or anything...

and yeah, the opposition boycotted 2005 (three years after their coup attempt), but they took part in the 2010 elections, and made solid gains. I guess Chavez was asleep at the election-rigging wheel, like when his constitutional referendum was defeated.


Speaking of Wikipedia, your claim that observers were not "allowed in a technical capacity" is marked as [citation needed] in the article, so if you got a citation, I suggest you add it.
posted by moorooka at 1:54 AM on May 28, 2011

We'll leave Australia, though, right? Wouldn't wanna hurt no kangaroo.

you do realise that Australia is not part of South America, right?
posted by moorooka at 1:58 AM on May 28, 2011

Your standard for democracy is obviously lower than mine. I note you missed a snappy comeback regarding the corruption charges against opposition figures.

Blucevalo's assessment is fair. "Hybrid regime" is not democracy. Separation of executive and judiciary is especially problematic.

are election observers "allowed in a technical capacity" in US elections, smoke?

I'm talking about Venezuela, not the United States.
posted by smoke at 2:19 AM on May 28, 2011 [1 favorite]

This article indicates that $8.6 bn was for damages mostly to decontaminate soil and a further
$860,000 to plaintiffs and a further $8.6bn in punitive damages.
Chevron's earnings were $6.2bn in the first quarter of 2011, up from $4.6bn last year.
What is interesting is that the company is coming under pressure from its shareholders to settle the case.
posted by adamvasco at 2:47 AM on May 28, 2011

Maybe you can tell me which exact non-corrupt opposition figures you're talking about. I know Venezuela is not a perfect democracy, but to say that it's not a democracy in "any meaningful sense" would mean that the you're holding Venezeula to a higher standard for democracy than most parts of the world (and certainly Latin America).

I'm talking about Venezuela, not the United States.

I'm talking about what you mean by "any meaningful sense". Would you regard the US, where an election loser gets installed as President by his partisans on the Supreme Court, as a democracy in "any meaningful sense"?
posted by moorooka at 2:47 AM on May 28, 2011

My guess is that given another decade or two and this will be settled for a lot less than the $8 billion awarded.
I'd like to see the money actually go towards the clean-up though, rather than paying legal bills.
posted by arcticseal at 2:49 AM on May 28, 2011 [1 favorite]

Why do I feel like Freaking Ecuador has a more advanced culture and legal system than the United States?

Oh yeah...because in the states, we would be sucking Chevron's dick rather than issuing judgments against them.

LONG LIFE ECUADOR!
posted by hal_c_on at 4:39 AM on May 28, 2011

Moorooka: the 'Australia' quote is from Randy Newman's 'Political Science'.
posted by Infinite Jest at 4:44 AM on May 28, 2011

Never threaten to cost someone more than it would cost to have you killed.

Thats the coward's way out.
posted by hal_c_on at 4:45 AM on May 28, 2011 [1 favorite]

Notice the way Chevron's lawyers word the opening of their press release: "The Ecuadorian court's judgment is illegitimate and unenforceable."

That pretty much sums it up; it's "nu-uh" and "you can't make me" rolled into one
posted by ankurd at 8:50 AM on May 28, 2011

What's $8 billion to Chevron? Two weeks profits? Last month's executive bonuses?

Here's how I saw the situation from a counter party risk point of view about two months ago. I haven't looked at them 1Q11:

In FY10, Chevron Corp’s sales increased over 19% year on year to USD 204,928m, and operating profits increased 73% year on year to USD 32,055m with operating margins increasing nearly 5% year on year to almost 16%. Net profits for the year were up over 81% to USD 19,024m with the Downstream segment providing USD 2,478m and the Upstream segment providing 17,677m with operations in the US contributing USD 4,122m and international operations contributing USD 13,555m to the Upstream segment in FY10.

EBITDA of USD 45,168m increased over 47% year on year, and EBITDA margins increased just under 4% year on year to 22%. Cash flow on operations remained strongly positive at USD 31,359m, up almost 62% year on year. The company was once again positive on a free cash flow basis (USD 6,073m), indicating that, over all the company’s underlying operations were profitable even taking into account CapEx and dividends outflows. Clearly, Chevron Corp showed a strong recovery in FY10 after a disappointing (but still profitable) 2009 during the worst of the latest global recession.

The latest balance sheet information for Chevron Corp is also from 31 December 2010. Liquidity was strong with a current ratio of 1.68 and a working capital surplus of USD 19,829m representing current assets of USD 48,841m (including USD 14,060m in cash) and current liabilities of USD 29,012m. Operating cash flow covered interest payments 628 times, so clearly debt, from a short-term point of view, was a non-issue.

Likewise, solvency was sound with a gearing ratio of 0.11 representing long-term debt of USD 11,003 compared to shareholders’ equity of USD 105,081m. Net fixed assets, mainly PP&E, was almost 9.5 times long term debt. Chevron Corp’s solvency was nearly unquestionable at the end of FY10.
posted by digitalprimate at 3:08 PM on May 28, 2011

[Also, forgot to add, that of the remaining "majors" Chevron Corp has by far the best margins. That said, Petrobras is going to eat everyone alive within the next ten years.]
posted by digitalprimate at 3:11 PM on May 28, 2011

An edited documentary should not be admissible in most circumstances.

The Judge can perhaps rule that the editing is redacted from consideration, but the footage is admitted.
posted by StickyCarpet at 4:46 PM on May 28, 2011

How do you redact editing?
posted by The World Famous at 5:10 PM on May 28, 2011

How do you redact editing?

You strike it from the record.
posted by StickyCarpet at 5:24 PM on May 28, 2011

What? I'm a commercial litigator and that makes no sense.
posted by The World Famous at 6:27 PM on May 28, 2011 [1 favorite]

I'll allow it, but watch your step counselor. You're already on thin ice.
posted by hal_c_on at 11:50 PM on May 29, 2011