Wednesday, April 06, 2011

Amazon: Claims Chevron Selling Assets to Escape Enforcement of $9.5 Billion Judgment in Ecuador

Source: Amazon Defense Coalition

Chevron is divesting itself of overseas assets that could be used to enforce the $9.5 billion legal judgment against the oil giant for massive contamination of the Ecuadorian rainforest, lawyers for the Ecuadorian plaintiffs stated in a legal brief submitted to the Southern District of New York last week.

The plaintiffs requested U.S. Judge Lewis Kaplan increase a Chevron bond of $21.8 million bond to reflect the value of the assets recently sold, which surpasses at least $1.7 billion. The court filings are part of a motion to stay a preliminary injunction issued by Judge Kaplan pending an appeal to the U.S. Second Circuit Court of Appeals.

Kaplan's preliminary injunction order purports to prevent the Ecuadorian plaintiffs and their counsel from taking any steps to enforce a $9.5 billion legal judgment against Chevron issued on February 14, at the conclusion of an eight-year civil trial in Ecuador. The 188-page judgment against Chevron in Ecuador was based on a 200,000-page trial record of more than 64,000 scientific sampling results and inspections of more than 100 former oil production sites.

Before issuing his order, Judge Kaplan did not review the Ecuador trial record or even read the Ecuador trial court decision, said Karen Hinton, the spokeswoman for the plaintiffs. "We find Judge Kaplan's apparent bias against Ecuador shocking to the say the least," said Hinton, noting that Ecuador's U.S. Ambassador expressed "concern" over the ruling.

Kaplan required Chevron to post a $21.8 million bond as a condition of granting the preliminary injunction. The amount pales next to the potential $9.5 billion judgment the company is facing in Ecuador.

"While the Ecuadorian Plaintiffs and their counsel may be unable to take any steps to even prepare for (separate from initiating) enforcement proceedings, the preliminary injunction allows Chevron a generous window of time within which to divest itself of overseas assets that might be used to enforce the Ecuadorian Judgment," wrote Julio C. Gomez of Gomez LLC and Carlos A. Zelaya, II of F. Gerald Maples PA, representing the Ecuadorian plaintiffs.

In a sworn declaration to Judge Kaplan, Gomez said Chevron has reached an agreement to sell $1.7 billion in assets located in the United Kingdom and that, during the past year, Chevron has made plans to divest of assets in over 20 other countries, including 174 gas stations, an equity interest in a refinery and aviation and industrial fuels assets in parts of the Caribbean and Central America.

"Chevron appears to be taking advantage of Judge Kaplan's favorable ruling to divest itself of assets in countries that it fears would treat the Ecuadorian judgment with the respect due to a sovereign nation's courts," said Hinton, the spokesperson for the Ecuadorian plaintiffs.

"If Chevron's actions are standard business transactions and are not related to its legal liabilities – as the company has indicated – than the company should be amenable to posting a bond consistent with the size of the assets it has liquidated to provide some security that it is not attempting to escape its legal obligations," Hinton added.

Chevron's liquidation of international assets is particularly notable given the company's blatant efforts over recent years to strip all of its assets out of Ecuador in anticipation of an adverse judgment in that country. Given Chevron's legal maneuvering, the Ecuadorian plaintiffs will have to enforce the $9.5 billion judgment in countries where the company does have assets once the judgment is appealed in Ecuador.

The case is being tried in Ecuador at Chevron's request after it was originally filed in 1993 in U.S. federal court. The company argued for years that Ecuador's court system was fair and transparent; it was only when the trial started in Ecuador and evidence pointed to Chevron's guilt did that the company start began attacking Ecuador's court system as unfair, said Hinton.

"Chevron's legal strategy is cynical to say the least, but what we might expect from a big oil company that is trying to cut and run from a country where it poisoned the rainforest," she said.

The plaintiffs have accused Chevron of engaging in a massive, multi-decade racketeering scheme in Ecuador that led to the intentional dumping of billions of gallons of toxic waste into the rainforest, the decimation of indigenous groups, an epidemic of cancer and other oil-related health problems, and various frauds to cover up the company's liabilities from its shareholders and the public. Two Chevron officials, and seven former Ecuadorian government officials, are under criminal indictment in Ecuador for committing fraud during a purported remediation in the mid-1990s.

Chevron's claim that it will not pay any judgment in Ecuador contradicts express promises the company made in U.S. federal court to have the case moved to Ecuador. In a related case, the Second Circuit of Court of Appeals recently ruled that Chevron will be bound by its earlier promises in any enforcement action or other litigation.