Chevron Investors Seek SEC Probe Over $19B Ecuador Battle

The Amazon Pink Dolphin’s Voice-27/05/2013

Chevron Investors Seek SEC Probe Over $19B Ecuador Battle

 

A coalition of Chevron Corp. shareholders asked the U.S. Securities and Exchange Commission on Thursday to investigate the oil giant over allegations it has misled investors about the potential impact of a bitterly contested $19 billion Amazonian pollution judgment.

The 14 shareholder groups claim Chevron’s management and board of directors may have violated securities law by failing to disclose the risks associated with the judgment, which has spawned a transnational enforcement battle and a bare-knuckled fight in New York court in which both sides have swapped allegations of fraud, bribery and corruption.

The petition comes as Chevron gears up for its annual shareholder meeting on May 29 in San Ramon, Calif. Representatives for the Ecuadoreans seeking to collect the unprecedented pollution award said in a conference call Wednesday that they will be on hand for the meeting alongside members of indigenous Amazonian communities, and will demand answers from company CEO John S. Watson and the Chevron board of directors.


“Chevron still has not fully disclosed the implications of having an enforceable $19 billion judgment in Ecuador lodged against the company,” the investors’ letter said. “There appears to be numerous material misrepresentations by the company that warrant investigation.

Chevron has said it will fight “until hell freezes over” to prevent enforcement of the award, which concerns crude oil purportedly dumped in the Amazon by Texaco Inc. in the 1970s and 80s that caused residents to develop cancer and destroyed natural resources. Chevron acquired Texaco’s liabilities when it bought the company in 2001.

In a proxy statement issued ahead of the annual meeting, Chevron maintained that the Ecuador litigation was a product of fraud and extortion and dismissed shareholder proposals suggesting otherwise as false or misleading.

“We do not believe that the interests of the vast majority of the company’s stockholders are well served when a small group of stockholders (or nonstockholders working through their stockholder allies) attempt to pressure the company into settling litigation or paying judgments that are the product of fraud and bribery,” the statement said.

Shareholders have been asking the SEC to look into Chevron’s disclosures for several years running, and last year their efforts received the support of House Energy and Commerce Committee member Rep. Jan Schakowsky, D-Ill., who in June 2012 asked the agency to review whether Chevron had misrepresented the legal and factual merit of the case.

Last year’s annual meeting also saw shareholders undertake efforts to cite Watson for failing to properly handle the case and urging the company to settle the dispute.

A resolution at the company’s 2012 shareholder meeting to separate the roles of CEO and chairman — effectively demoting Watson, who currently holds both roles — won the support of 38 percent of investors. A similar resolution will be off the table this year after the company successfully petitioned the SEC in March to block it.

“Investors are growing less willing to swallow Chevron’s version of events,” Simon Billeness, a representative of the signatory shareholder groups said in a statement Thursday. “The Lago Agrio plaintiffs are aggressively pursuing Chevron assets abroad in order to enforce the judgment. It’s becoming harder to convince shareholders that the company won’t be hurt by Chevron’s deceit and irresponsibility.”

Those international enforcement efforts, which seek to effectuate the judgment through asset attachments in nations where Chevron does business around the globe, have been met with mixed results.

In November, the Ecuadoreans successfully secured a freeze on the assets of two Chevron subsidiaries in Argentina under a 1979 Latin American treaty specifically designed to facilitate cross-border judgment enforcement, and that order was upheld in January by an Argentine appeals court.

Earlier this month, however, an Ontario judge halted efforts to pursue the assets of Chevron Canada after determining that the oil giant’s Canadian subsidiary is sufficiently independent and not party to the dispute. The Ecuadoreans’ Canadian representative said Wednesday that an appeal of that ruling is underway.

Meanwhile, legal representatives for the Ecuadoreans in Brazil are undertaking efforts to seek recognition of the judgment in that country, where Chevron produces 33,000 barrels of crude oil and 13 million cubic feet of natural gas per day on average.

In the U.S., Chevron is aggressively pursuing a New York Racketeer Influenced and Corrupt Organizations Act suit accusing the Ecuadoreans and their attorney, Steven Donziger, of securing the award through extortion. Donziger and the Ecuadoreans have denied those allegations and shot back with fraud counterclaims of their own.

Chevron has unsuccessfully attempted to shield Watson and company general counsel and Vice President Edward B. Scott III from being forced to testify in that suit. The courtdetermined they possessed relevant information that was significant enough to overcome the extra scrutiny typically required of requests for depositions from high-ranking corporate officials.

The New York suit is scheduled to head to trial on October 15.

Donziger Loses Bid To Delay $19B Chevron Case

 

A federal judge on Thursday refused to delay Chevron Corp.’s case against Steven Donziger, the lawyer accused of using fraud to win a $19 billion pollution judgment against the oil company, despite Donziger’s pleas for more time.

U.S. District Judge Lewis Kaplan refused Donziger’s request for an adjournment to work on his defense against Chevron and look for new lawyers.

Donziger’s old defense lawyers, Keker & Van Nest LLPgot permission to drop out of the case last week after complaining they were no longer being paid, leaving Donziger to represent himself in his fight against Chevron. The oil company alleges he and several Ecuadoreans, who have also been sued, used dirty tricks to win a $19 billion judgment against it in Ecuador.

Donziger asked the judge for a pause of up to three months in the case, which is scheduled to go to trial in October.

“I do not think this is justified at all,” Judge Kaplan said of Donziger’s request. “I’m not persuaded this application was made in entirely good faith, and I’m not certain we’ve been told the whole truth about it.”

The judge made his remarks at a hearing in Manhattan federal court. Donziger appeared via video-conference from London, where he said he is trying to raise money to fund his defense.

Chevron and Donziger, a Harvard-trained lawyer, have long been at odds over Donziger’s involvement in a massive environmental case brought against the oil giant in Ecuador.

A court in that country ruled that Texaco, a Chevron predecessor, heavily polluted the country’s Lago Agrio region while extracting oil there. Chevron maintains that the ruling is tainted by fraud and judicial corruption, and sued in New York to block enforcement of the $19 billion judgment.

A lawyer for Chevron, Randy Mastro of Gibson Dunn & Crutcher LLP, said the company opposed Donziger’s request for an adjournment. His attorneys had assured the judge that their departure from the case would not delay things, Mastro said.

Prior to their departure, Donziger’s lawyers blamed Chevron’s aggressive litigation tactics for making the case too expensive to pursue — the company has said it will fight the judgment “until Hell freezes over.”

Donziger said Thursday that he felt he was not prepared to go to trial on the current schedule.

“I wish I could say I could do it myself as a pro se litigant by the Oct. 15 trial date,” he said. “I don’t think I can without suffering prejudice.”

About 12 depositions are left pre-trial. But finding new lawyers has been complicated, Donziger said. Attorneys he has approached to represent him have expressed nervousness about going up against the well-heeled oil company, fearing they might be sued as Donziger was.

While the U.S. suit before Judge Kaplan is pending, the Ecuadoreans have tried to enforce their judgment outside the U.S., with mixed results.

Chevron is represented by Gibson Dunn & Crutcher LLP.

Donziger is representing himself. Two Ecuadorean clients are represented by Julio C. Gomez of Gomez LLC.

The case is Chevron Corp. v. Donziger et al., case number 2:11-cv-00691, in the U.S. District Court for the Southern District of New York.

Source: Law 360

 

Editorial: SELVA-Vida Sin Fronteras

Selvavidasinfronteras.wordpress.com

Editorial Committee

David Dunham

Arno Ambrosius

Gustavo López Ospina

Mariana Almeida

Frank Brouwer

Pieter Jan Brouwer

Assistant: Emilia Romero

The Amazon Pink Dolphin’s Voice is associated with the International Environmental Mission, a grass roots citizens movement created by Chilean Senator Juan Pablo Letelier.

SELVA Vida Sin Fronteras acknowledges Kevin Schafer’s important contribution towards protecting the highly endangered Amazon pink fresh water dolphin. Title photographs of our “The Amazon Pink Dolphin’s Voice” were taken by Mr. Schafer. 

~ by FSVSF Admin on 27 May, 2013.

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