Ecuadorians Move to Block Chevron-Texaco Merger
Copyright 2001 Inter Press Service
August 16, 2001
By Danielle Knight
WASHINGTON, Aug. 16 - Ecuadorian communities are taking to the U.S. airwaves in a bid to thwart the merger of oil companies Chevron and Texaco.
The groups also hope to draw attention to their multi-billion- dollar lawsuit against Texaco for alleged environmental abuses on indigenous lands in the Latin American country's Amazon rainforest.
In a television advertisement appearing here and in San Francisco and New York, an oilman in a Texaco uniform drives up to a well-manicured suburban home and sprays dark crude oil over the lawn as parents and children watch in horror.
"This is what Texaco did to thousands of people of color in the rainforest in Ecuador," the ad asserts.
Texaco -- which has not operated in Ecuador since 1992 -- has repeatedly denied all charges that it polluted the Amazon.
The advertisement is part of a campaign warning the shareholders of San Francisco-based Chevron that if the two oil titans merge, Chevron could be forced to pay billions of dollars.
Attorneys representing the Ecuadorians also have filed a complaint has with the Securities and Exchange Commission (SEC). The document claims that when Chevron applied for the merger, it failed to disclose the Texaco liability to the agency and company shareholders.
"Our hope is that Chevron and the SEC will pressure Texaco to clean up this mess before letting the merger go through," says Luis Yanza, president of the Frente para la Defensa de la Amazonia, or Amazonian Defence Front, an organization representing affected communities.
If regulators approve the merger, Chevron-Texaco will become the second largest U.S.-based oil company after ExxonMobil.
Fred Gorell, a spokesman for Chevron, told IPS that the SEC has never raised the lawsuit with the company during discussions about the proposed merger, which, if approved, would take place in early October.
He said the company has not "particularly highlighted" the lawsuit to shareholders because it did not believe it was necessary.
"But, as a matter of due diligence in the course of the merger, we certainly have reviewed the case as we have other matters," said Gorell.
The class action suit against Texaco charges that during two decades of oil drilling in the Amazon, the company dumped more than 3,000 gallons of crude oil into the rainforest. The plaintiffs also claim that the company ignored oil industry standards and, instead of re-injecting the waste back into the ground, dumped a toxic cocktail of chemicals into unlined pits that eventually leached into streams and rivers.
The resulting contamination of streams and lakes killed off fish and wild game on which indigenous communities relied for food, claims the suit.
"While Texaco continues to try to hide from its liability, our people are getting sick and dying," says Yanza.
Lawyers for the plaintiffs estimate that Texaco saved $ 3 to $ 4 per barrel -- or a total of $ 6 billion over the company's 20 years operating in Ecuador -- by dumping the waste water rather than re-injecting it beneath the earth's surface.
The plaintiffs estimate damages allegedly caused by the New York-based oil company at more than $ 1 billion and, in a statement, warn that "if the case goes to trial, punitive damages against Texaco could increase that amount significantly."
Texaco has maintained that the current lawsuit has no basis and should be heard in Ecuador, not the United States.
"Texaco was firmly committed to the protection of people and the environment in those areas where we operated," the company says in a written response to the lawsuit.
In 1995, Texaco subsidiary TexPet agreed to clean up contamination from oil spills that had affected indigenous communities. The company said it paid about $ 40 million in clean-up costs.
According to the plaintiffs, however, the agreement did not compensate the affected communities.
The case has been pending in the United States since November 1993. An initial ruling that allowed the case to proceed was reversed when the judge who issued it died and Federal Judge Jed Rakoff took over and dismissed the suit.
In 1998, the U.S. Court of Appeals reversed Rakoff's dismissal. But in June, Rakoff dismissed the case again, arguing that it should be heard in Ecuador.
Lawyers for the plaintiffs are appealing the ruling and say the case could not be heard in Ecuador because the legal system there was not sufficiently independent and impartial. They also claimed that the judiciary did not recognize class-action suits or tort claims, in which compensation is sought for damages caused by a breach of duty.
The Ecuadorians' lawyers accuse Rakoff of bias. Several years ago, they asked the judge to remove himself from the case after he confirmed that he had attended an expenses-paid seminar in 1998 at which a former Texaco chairman spoke. Last September, Rakoff denied the motion.
Steven Donziger, a lawyer representing the plaintiffs, says that even if the current appeal is denied, the lawsuit will not be dropped and will be pursued in Ecuadorian courts.
"Whatever happens, the case is moving forward," he says.
Donziger says the cost of the television ads is being covered by a legal defence fund made up of contributions from a number of benefactors but will not discuss the amount of money involved, except to say that broadcasters airing the TV spots have charged their standard rates. He adds that he and the Ecuadorians' other lawyers will only get paid if they win.