Jon Entine investigates the long-running saga about the environmental impact of Texaco’s oil operations in Ecuador 20 years ago and who is to blame
Jon Entine investigates the long-running saga about the environmental impact of Texaco’s oil operations in Ecuador 20 years ago and who is to blameThe US federal courts have not been kind to Steven Donziger. The New York lawyer has spent 17 years trying to prove that Texaco, and the company that it merged with in 2000, Chevron, are solely responsible for what everyone agrees is an ecological disaster in north-east Ecuador. But now he faces judicial accusations of fraud that may ensure that the only clear losers in this momentous case could be the desperately poor Amazon villagers.
Donziger helped organise the Amazon Defence Council, an Ecuadorian NGO that filed the original suit in the United States in 1993 on behalf of the local people. The plaintiffs claim Chevron turned Lago Agrio into a cancer death zone. They originally estimated damages of $6bn – widely considered inflated at the time – but now claim it may be as much as $113bn. If the case is successful, it would be the largest tort award in history. A substantial amount would go to Donziger and hundreds of other contingency-fee lawyers and consultants.
“This is a simple case,” Pablo Fajardo, a former oil worker and Donziger’s legal partner in Ecuador, has said in court. “We ask, is there damage or not? If there is damage, who pays? And if there is payment, how much and to whom?”
Texaco began producing oil in Ecuador’s Amazon jungle in the early 1970s as minority partner with what today is known as PetroEcuador, the state oil company. Facing an unstable political situation in the early 1990s, Texaco pulled out at the end of its contract. Ecuador received 95% of the proceeds. Texaco’s cumulative profits totalled $490m.
By the time PetroEcuador assumed full control in 1990, the environmental situation was a disaster. Oversight had been lax, although it comported with Ecuadorian law. Crude oozed from the ground. Petroleum-polluted wastewater had accumulated in pits that often leaked into water supplies already contaminated by raw sewage. A government-ordered audit resulted in Texaco agreeing to remediate 133 of 321 drill sites, proportionate to its share of the project, which absolved it of future liabilities. It cost Texaco $40m. Not chump change, but not a whole lot, considering what it would have cost to fully address the environmental and health damage – at least a few billion dollars.
Whatever liability should have fallen to Chevron/Texaco, PetroEcuador’s hands are dirtier. The government-owned company, which has a horrendous environmental record, committed to remediating the remaining sites, but hasn’t. Since 1990, it’s had 1,200 spills totalling more than 4m gallons of crude.
Appropriate venue
The American lawsuit was eventually thrown out, based on Texaco’s argument that the more appropriate venue was a court in Ecuador. It was a good strategy – until 2006, when hard-left populist Rafael Correa, was elected. Correa immediately lambasted Chevron’s for its “atrocities”, calling for an investigation of Ecuadorian officials who had negotiated the 1998 settlement with Texaco.
The Ecuadorian prosecutors had dropped the complaint, but it was formally filed at the president’s insistence. Seven former Texaco officials and two Chevron officials were indicted. Meanwhile, PetroEcuador got a free pass – Correa is betting the house that Chevron will lose the case in the courts that he oversees.
Donziger and company appeared to have clear sailing with the Ecuadorian courts and the international media. But over the next two years, thread by embarrassing thread, the carefully woven media campaign against Chevron has unravelled. The company has continued to pursue a number of cases in the US courts, partly to target Donziger, who has no legal standing in Ecuador but remains a highly-paid adviser to the ADC.
In a scathing summary of the case issued shortly before this article went to press, US district judge Lewis Kaplan accused Donziger of “political activity, intimidation of the Ecuadorian courts, attempts to procure criminal prosecutions for the purpose of extracting a settlement, and presenting a message to the world media” in an attempt to undermine a fair case. The ruling could result in Donziger’s forced removal from the case and possibly his disbarment. If Chevron is found guilty in Ecuador’s courts, they would then be pursued for damages elsewhere including the US.
“Chevron wants to make this about me,” says Donziger, speaking to Ethical Corporation. “Whether I made a handful of inappropriate comments or not in working on this case over 17 years, whether they have been able to present to the court a few out-of-context statements, is ultimately irrelevant. It doesn’t change the underlying facts of the case.”
But what are the facts in this case? Neither side, it appears, has clean hands. We’ll examine them in greater detail in our next issue.
Jon Entine is founder of ESG MediaMetrics and a member of Ethical Corporation’s editorial advisory board.