Wednesday, January 25, 2012

A Fortune Of Reversal

Eighteen years, for what?

For eighteen billion dollars.

"We can't let little countries screw around with big companies like this," is what a Chevron lobbyist told Newsweek in 2008.

This is the story of Chevron, the third-largest corporation in the United States, with annual revenue of around 200 billion dollars, versus Ecuador, whose entire economy is only about a quarter of that.

The issue is that Texaco, now owned by Chevron, began pumping oil from Ecuador's Amazon basin territory in 1967.

Fine so far.

That continued until 1992, when the company withdrew, allegedly leaving "hundreds of open pits full of malignant black sludge" and roughly eighteen billion gallons of toxic waste. The settlement thus amounts to a dollar a gallon.

The judgment came on February 14, 2011, at Lago Agrio in northeastern Ecuador, handed down by a local judge named Nicolás Zambrano. The ruling was the largest-ever in an environmental lawsuit.

Chevron has one last appeal, to the Ecuadorean Supreme Court, but to do that would have to first post a multi-billion dollar bond. And, since Chevron has no assets in Ecuador, you might think that the whole point is moot.

But the company does have huge assets elsewhere, all of which could be fair game for any cooperative government to seize and turn over to Ecuador.

Which makes the situation strange, especially considering that in 2001 Texaco could have settled the case for $140 million and walked away. This is about what Chevron is now paying every year in legal costs to fight the case.

At the New Yorker:

Reversal of Fortune A crusading lawyer helped Ecuadorans secure a huge environmental judgment against Chevron. But did he go too far? By Patrick Radden Keefe

Why Chevron Will Settle In Ecuador By Patrick Radden Keefe


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