chevron-ran-clean-up-ecuador-oilIn 2005, religious shareholder activists of various stripes jumped aboard the bandwagon filing resolutions against Chevron for an environmental disaster it allegedly caused. Chevron asserted its innocence, but the activist shareholders put the squeeze on:

Chevron’s Ecuador environmental disaster, considered by experts to be the worst oil-related ecological problem on the planet and currently the subject of a high-stakes law suit estimated to cost the company upwards of $6 billion, will be high on the agenda of the company’s 2006 annual shareholder meeting with the filing of three new resolutions asking Chevron’s management to take various steps to protect human rights, the environment and shareholder interests.

The resolutions were filed by institutional and socially responsible investors, including the New York State Common Retirement Fund, Trillium Asset Management, Amnesty International USA and members of the Interfaith Center on Corporate Responsibility (ICCR), which together own more than $1 billion in Chevron shares. The resolutions increase the pressure on the California-based oil major to address the widespread toxic contamination left by Texaco (now Chevron) in the Ecuadorian Amazon during a 20-year period that began in the early 1970s.

This story has a twist, however. Over at the National Review, Kevin Williamson reports Chevron beat the rap on the $6 billion judgment rendered against it by an Ecuadorean court several years ago. Seems the judge who established the original fine was in cahoots with a cadre of nasty elements. Writes Williamson:

Not only has Chevron rejected the specific claims against it, it has maintained that the case is the result of a criminal conspiracy involving those same lawyers and environmentalists, corrupt judges, bribery, and more. The company’s general counsel, Hewitt Pate, said today: “The case against Chevron was the result of fraud, bribery, and other crimes, and its aim was extortion.”

The story might have struck many as too implausible even for a B movie, but a U.S. district court today issued a remarkable opinion confirming that the judgment against Chevron is indeed the result of fraud.

U.S. District Court Judge Lewis Kaplan noted in his opinion:

This case is extraordinary. The facts are many and sometimes complex. They include things that normally come only out of Hollywood – coded emails among [lead attorney for the plaintiffs Stephen] Donziger and his colleagues describing their private interactions with and machinations directed at judges and a court appointed expert, their payments to a supposedly neutral expert out of a secret account, a lawyer who invited a film crew to innumerable private strategy meetings and even to ex parte meetings with judges, an Ecuadorian judge who claims to have written the multibillion dollar decision but who was so inexperienced and uncomfortable with civil cases that he had someone else (a former judge who had been removed from the bench) draft some civil decisions for him, an 18-year old typist who supposedly did Internet research in American, English, and French law for the same judge, who knew only Spanish, and much more. The evidence is voluminous. The transnational elements of the case make it sensitive and challenging. Nevertheless, the Court has had the benefit of a lengthy trial. It has heard 31 witnesses in person and considered deposition and/or other sworn or, in one instance, stipulated testimony of 37 others. It has considered thousands of exhibits. It has made its findings, which of necessity are lengthy and detailed.

One can almost hear the nasty intonations of the sinister antagonists: “Nice little oil company ya got there. Shame if something happened to it.” Chevron, to its credit, challenged the Ecuadorean court’s decision. ICCR and Trillium didn’t, instead choosing to take at face value the assertions of a conspiracy of corrupt and often incompetent court officers. Chevron, according to our guilty until proven innocent activists, was Tony Montana, Michael Corleone, Tony Soprano and Walter White all rolled into one environmental wrecking  machine:

A class-action lawsuit currently on trial in Ecuador accuses Chevron of having deliberately dumped 18 billion gallons of toxic waste – or 30 times the amount of oil spilled in the Exxon Valdez disaster – directly into the rainforest to save money. The lawsuit alleges that two indigenous groups are on the verge of extinction because of the pollution, and that cancer rates in the area have skyrocketed. The company operated a concession in Ecuador’s rainforest from 1964 to 1990, and withdrew from Ecuador in 1992.

The first resolution, filed by Trillium Asset Management and co-filed by the New York State Common Retirement Fund, Amnesty International USA, Boston Common Asset Management on behalf of its client Brethren Benefit Trust and ICCR members, accuses Chevron of being more concerned about its image than the grave human suffering it caused in Ecuador, and questions the logic of the corporation’s costly rearguard battle to evade responsibility. It notes that:

  • “Numerous types of infection and cancers” have been caused in Ecuador by Texaco’s contamination of the water table;
  • Eight different types of cancer have now been recorded in a single village near Texaco’s wells;
  • Children aged 14 and under are three times more likely to develop leukemia in Texaco’s former concessions than elsewhere in the Amazon.

The resolution calls on Chevron to provide an itemized report by October 2006 with details of the corporation’s legal bills, lobbyists’ fees and public relations costs from 1993 to 2005 that resulted from Chevron’s willful refusal to accept responsibility for the Ecuador disaster. Chevron currently employs two large corporate law firms in the United States (Jones Day, and King & Spaulding) and a team of eight Ecuadorian lawyers to defend itself, costing several million dollars per year, according to estimates from the plaintiffs.

“According to the plaintiffs”? Since when does a shareholder assume the position of the plaintiff in ongoing litigation against the company in which the shareholder invests? “Willful refusal to accept responsibility”? Defending a company against false accusations and an unjust $6 billion judgment amounts to nothing more than corporate obstinacy?

The resolution concludes: “Chevron is addressing these issues as a public relations problem rather than a serious health and environmental problem. We believe this damages Chevron’s reputation and credibility as an environmentally responsible corporate citizen, jeopardizes our ability to compete in the global marketplace, and may lead to significant financial costs.”

The second resolution, filed by the Domestic and Foreign Missionary Society of the Episcopal Church and co-filed by Catholic Health Care Partners and Bon Secours Health Care Systems, accuses Chevron of environmental negligence in developing nations, specifically naming Ecuador, Angola and Nigeria. It also notes that Chevron’s Corporate Policy 530 “commits Chevron to comply with the spirit and letter of all environmental, health and safety laws and regulations, regardless of the degree of enforcement”, a commitment that Chevron has woefully failed to live up to in Ecuador….

Filed by the Society of Jesus-Wisconsin Province and co-filed by 16 ICCR members, the third resolution deals with human rights and also accuses Chevron of failing to live up to its own heavily-touted claims of corporate responsibility. It calls on Chevron to implement a “comprehensive, transparent, verifiable human rights policy” by October 2006.

“Well,” readers might ponder, “2006 wuz a long time ago.” Imagine that you’re in the legal fight of your life, and your company’s investors pile on in the boardroom while your corrupt opponents conspire against you in the courtroom. Exactly how does your rush to judgment assist your fellow shareholders, the company and the people it employs and benefits in other ways? Perhaps this is what contemporary religious shareholders should consider when submitting resolutions before they possess all the facts.

 

A Theory of Corruption

A Theory of Corruption

There is no greater scourge that affects the proper functioning of any economic system than corruption. The effects of corruption also have legal ramifications, often undermining the rule of law. This monograph offers a theological and economic examination that puts into question many of the uncritically accepted assumptions held about corruption.

Visit the official website at www.causesofcorruption.com

$6.00