Ecuador’s Campaign: “The Dirty Hand of Chevron“

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Ecuador’s president has launched a call for people around the world to boycott Chevron products, in rejection of the company’s evasion of responsibility for oil contamination in the Amazon basin. In recent months, Chevron has targeted Ecuador with a barrage of defamatory publicity questioning the country’s legal system, in an attempt to elude the sentence under which it is ordered to pay out almost $19 billion to clean up the area and provide health care and clean drinking water for the affected population.

Ecuador’s campaign titled, “The dirty hand of Chevron,” was presented by President Rafael Correa on September 17, in a visit to a contaminated pit near the Aguarico 4 oil well, operated decades ago by Texaco. The company, which merged with Chevron in 2001, left behind almost one thousand of these pits over three decades of oil exploitation in the Amazon rainforest (1964-1992), covering an area of more than a million acres, where an estimated 18 billion gallons of water, contaminated with oil, has continued to seep from unprotected pits or to overspill during heavy rains. The seepage has contaminated the streams and rivers used by the local population for drinking water, destroyed wildlife and negatively affected agriculture.

Correa estimated the damage to be far greater than either the Exxon Valdez Alaska oil spill or the Mexican Gulf BP spill. “This is one of humanity’s most serious disasters,” he announced.

Texaco failed to use adequate technology, available at the time, to seal the pits and clean up another 17 million gallons of direct oil spills. This practice saved production costs of $2 to $3 per barrel, thus increasing the company’s profits. A total of 54 production sites inspected by the trial court of Lago Agrio in Ecuador all showed levels of oil contamination that violate legal norms and international standards. At the time of the Texaco operation, the Ecuadorian norm for total petroleum hydrocarbons in soil and water was 10 times more lax than the US standard, but even so, the average contamination found was 20 times the Ecuadorian norm, and at some sites, up to 900 times.

According to President Correa, “To evade their responsibilities, Chevron has spent more than $400 million, has dozens of lobbying firms and some 900 lawyers.” He called on the company’s shareholders not to be “indirect accomplices of a company that has not only demonstrated absolute irresponsibility but is now seeking impunity.”

Also present at the launch of the Ecuador campaign was Gayle McLaughlin, mayor of Richmond, California, who denounced similar “dirty play” by Chevron to evade responsibility following the fire at its Richmond refinery in 2012, which affected more than 11,000 inhabitants.

An Unjust International System

The lawsuit against Chevron was filed privately by a group of citizens victimized by contamination, representing the interests of some 30,000 local inhabitants, mostly natives, who have suffered severe health problems, including more than a thousand deaths from cancer. Yet Chevron has taken the case to an international arbitration court in The Hague, invoking a supposed violation of Ecuador’s Bilateral Investment Treaty with the United States.

The treaty was in effect in 1997, while Texaco left Ecuador in 1992. Moreover, it only covers disputes with the state, and therefore, Ecuador argues, should not be applicable to a private lawsuit. Nonetheless the tribunal not only declared its authority to take on the case – applying the treaty retroactively – but it ordered the government to take the necessary measures to obtain suspension of execution of the sentence, inside or outside Ecuador, thus disregarding the independence of the justice system.

Chevron, whose principle concern is to prevent seizure of its assets in other countries to obtain the payment due, claims that settlements signed with Ecuador’s government in 1995 and 1998 (a period when most Latin American governments were more interested in attracting investment than defending their sovereignty) releases the company from any further claims, and they are seeking to hold the Ecuadorian state liable for any consequences arising out of the Lago Agrio proceeding. But the same day the campaign was launched, the tribunal in The Hague issued a partial verdict in which it concluded that the release does not prevent private claims with respect to individual rights, though it could bar “diffuse” or “collective” claims. It does not, however, pass judgment on whether this applies to the Lago Agrio proceedings. The hearings will resume in January.

“This is an emblematic case that demonstrates the injustice and immorality of the international order, where there is total supremacy of capital and the transnationals over peoples, societies or nations,” said Correa. Ecuador is demanding a reform of the arbitration tribunal system for investment treaties and has proposed the creation of a regional tribunal under the Union of South American Nations (UNASUR) that would operate by more just rules.

The private claim by the affected population was initially presented in New York, in 1993, where for nine years, Chevron sought court dismissal of the case and to have it sent to be judged in Ecuador. When the company finally achieved this, the condition was that it accept the verdict of the Ecuadorian court. But when this turned out to be unfavorable to them, in successive rulings in 2011 and 2012 in Lago Agrio, company officials stopped at nothing to prevent a final ruling. They are now pursuing a new lawsuit in a New York federal court, alleging that the Ecuadorian judgment was obtained illegitimately.

Whatever the final legal outcomes, this case is a clear illustration of how powerful transnational corporations use their financial and political clout to flout legal norms, human rights and environmental protection, especially when dealing with poor countries and marginal populations. Texaco got away with ignoring its responsibilities in the Amazon rainforest for decades, and Chevron is now trying to force Ecuador to disburse the $19 billion for its clean-up operation. According to Chevron’s 2012 financial report, the company’s sales and other operating revenues for 2012 amounted to $230 billion. Ecuador, with 13 million inhabitants, has a total annual fiscal budget of barely $26 billion.