Chevron Facing More Trouble in Ecuador, Judge Orders Seizure of Assets

In a collection victory for plaintiffs who won a $19 billion judgment against U.S. oil supermajor Chevron, an Ecuadorian judge has ordered the company to turn over its assets in the Andean nation.

Judge Wilfrido Erazo of the provincial court in the northeastern Amazon province of Sucumbios on Monday ordered the seizure of the accounts receivable of Chevron and its subsidiaries in Ecuador, Pablo Fajardo, an attorney for the plaintiffs in the suit for environmental damage, told Efe.

James Craig, a spokesman for the company in Latin America and Africa, slammed the Sucumbios court and the plaintiffs’ attorneys and termed Erazo’s ruling “illegal.”

In a February 2011 ruling, that same court found Texaco – which Chevron acquired in 2001 – guilty of irreversible environmental damage between 1964 and the early 1990s.

Chevron was eventually ordered to pay more than $19 billion in damages.

The court in Lago Agrio, Sucumbios, ruled in favor of 47 named plaintiffs representing 30,000 Amazon rainforest villagers and Indians who say Texaco spoiled their lands and damaged their health by dumping billions of gallons of toxic drilling waste in a 480,000-hectare (1,850-sq.-mile) area of the Amazon jungle.

Erazo’s order said the 2011 judgment is “enforceable against all of Chevron’s assets” to ensure full payment of the damages award and given the fact the company has refused to pay the massive fine.

The asset seizure includes a more than $96 million fine imposed by the World Bank’s International Center for the Settlement of Investment Disputes, or ICSID, on the Ecuadorian government in a separate lawsuit filed by Chevron.

The order also covers licensing fees for lubricants, which Ecuadorian distributors pay for the use of Chevron trademarks such as Texaco, Ursa, Havoline, Doro, Geotex, Meropa, Motex, Multgear, Regal, Taro, Texatherm and Thuban.

Fajardo said the judge’s ruling means that “any economic benefit Chevron derives from the sale of products” in Ecuador “is to be immediately seized” and deposited in an account held by the Sucumbios court.

Lawyers for the Lago Agrio plaintiffs also have sought to enforce the ruling in Canada and Brazil.

Fajardo noted that the U.S. Supreme Court last week refused to consider Chevron’s petition to reinstate an injunction preemptively blocking efforts to enforce the Ecuador judgment.

That high court ruling means there is no “legal impediment blocking collection” of the damages award “in any part of the world, including the United States,” he said.

Chevron has only “minimal assets” in Ecuador owned by its subsidiaries, Craig said, although he acknowledged that the fine imposed by the ICSID on the Ecuadorian government could be seized.

The pollution case was initially filed in New York in 1993, but Chevron succeeded in having it moved from the United States to Ecuador in 2003, four years before President Rafael Correa came to power amid voter anger at corruption and traditional politicians.

But Chevron now says that the case has become politicized under the leftist Correa and that it cannot receive a fair trial.

Although the oil company maintains that Texaco was cleared of any liability for damages, plaintiffs say that agreement with the government did not release it from third-party claims and that Chevron is reneging on its pledge to abide by whatever decision was handed down by Ecuadorian courts.

Chevron said on its Web site after the 2011 verdict that Petroecuador should be the target of local communities’ legal action, noting that Texaco ceased operating in Ecuador in 1992 and that the Ecuadorian state oil firm has been “the sole and exclusive owner and operator of greatly expanded operations in the area from (that year) to the present.”

It has appealed the Ecuador pollution verdict to the ICSID.

The San Ramon, California-based company also has brought legal action in a U.S. federal court in New York against the plaintiffs’ U.S. and Ecuadorian lawyers, including Fajardo, for violations of the federal racketeering statute, accusing them of trying to extort a financial settlement from the company.

Published in Notitas de Noticias

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