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ECUADOR
Chevron Texaco cornered
Luis Ángel Saavedra*
10/19/2006
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Ecuadorian government sues US oil giant for fraud, and has the best winning chances.

ChevronTexaco is still embroiled in a more than 10-year-old suit with 30,000 indigenous and campesinos in Ecuador for having spilled 18 billion of toxic water in the country’s Amazon. Now the Ecuadorian government has accused the US oil company of fraud for having allegedly sent out a false report stating that it had cleaned up the damage it caused in the area for the 28 years it has operated there.

ChevronTexaco scored a first victory in 2003, when US courts ruled that the suit filed in 1993 must be heard by the tribunal in the jungle city Lago Agrio in the eastern Ecuadorian province Sucumbios,. So, the company — formed after a 2001 merger between Chevron and Texaco — expected that it could get a favorable decision in that remote court.

But the Lago Agrio court has not favored the California-based oil company, as its maneuvers have been blocked by the plaintiffs’ lawyers, and it has been unable to hide the damages it caused for using obsolete technology and for not re-injecting the contaminated water into the oil fields, as the industry already did in the 1970s.

Shocking results

Of the 252 water samples the company itself took from supposedly clean pools and abandoned oil fields on indigenous and campesino lands, 249 contained toxins exceeding the legally permitted amount.

"Texaco is giving us the proof we need to win this trial," said Luis Yanza, of the Amazon Defense Front, or FDA, an umbrella group that has coordinated the legal proceedings against the oil company.

The results do not only violate national regulations, but US regulations as well, which are even stricter.

"A soil sample from a Texaco oil pit in Lago Agrio showed a presence of toxins 3,250 times what is allowed in the United States," said an analysis by the National Sovereignty Defense Coalition, a grouping of human rights and environmental organizations backing the FDA suit.

"The transnational says that the amount of toxins is fine for Ecuadorians, while this level is criminal in its own country," Yanza said, referring to a US regulation that says the maximum number of hydrocarbon particles (oil, contaminated water and hydrocarbon waste) is 100 per million particles of clean water or soil.

ChevronTexaco has chosen to prolong the suit by asking for 100 new site inspections. The Lago Agrio court has ordered the inspection of 42 of the company’s production sites, and 35 of them have already reported their results to the court. In all of them, both ChevronTexaco’s experts and those from the affected communities have found toxicity levels above the legal limit, and that also exceed the reported levels that the company reported after its supposed clean up in the 1990s.

Talking around the problem

ChevronTexaco admitted to spilling 18 billion gallons of toxic water, but maintained that it did not pose a risk.

"Texaco’s lawyers spoke a lot of nonsense at the trial," said FDA lawyer Pablo Fajardo. "First they said that the water didn’t damage the environment because it was absorbed. When it was demonstrated that it was extremely dangerous, they said that they thought no one lived there, which is to say, they ignored the indigenous and campesino communities there."

With total defeat on the horizon, ChevronTexaco is trying now to pass responsibility to the Ecuadorian government, alleging that the company already cleaned up the area after signing an agreement with the government in 1995 freeing the company from any other responsibility in its hydrocarbon operations as long as the company conducted an environmental cleanup for the damage it caused.

But ChevronTexaco deliberately hid the true magnitude of the disaster by omitting figures in its damage inventories, while government officials, conspiring with the company, declared clean and safe areas that were still contaminated.

Ecuador decided to start a new trial last July against the oil company, accusing it of fraud for not clearing up the agreed upon area. But this time the trial will be heard in the United States, by the Federal District Judge Leonard Sand in New York.

It will be the first time a sovereign country accuses a large oil company of fraud in a US court.

"The oil company wants to hand over the environmental cleanup responsibility to the Ecuadorian government," Fajardo said. "The government’s answer has been to counter-act, accusing the company of fraud, and it has all of the evidence to win this new trial."

With two rulings against them and few possibilities for its defense, ChevronTexaco’s Vice President Reis Veiga, the general counsel for Latin America, desisted organizing a press conference in the wake of the new accusations.

"Now Texaco can only act under the table and try to buy consciences," Fajardo said.


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