EXCLUSIVE: Documents Reveal Chevron’s Changing Tune In Ecuador Rainforest Destruction Case

Thu, 2011-03-17 05:45Brendan DeMelle
Brendan DeMelle's picture

EXCLUSIVE: Documents Reveal Chevron’s Changing Tune In Ecuador Rainforest Destruction Case

New documents uncovered in the ongoing legal battle over Chevron/Texaco’s destruction of the Ecuadorian rainforest show that, while Chevron recently labeled the guilty verdict and $18 billion fine leveled against its Texaco unit by an Ecuadorian court as “illegitimate and unenforceable,” it was in fact the oil company that lobbied fiercely to have the case moved out of U.S. courts to the Ecuadorian justice system.  

DeSmogBlog has reviewed corporate memos, letters and records of meetings documenting the oil giant’s efforts to have the case moved from New York - where it was originally filed by the plaintiffs - to Ecuador, where the company hoped to use its influential connections within the government at the time to have the case dismissed.

Further, Chevron’s accusation that the plaintiffs conspired with Ecuadorian judicial and government officials is quizzical in light of the documents revealing that, in fact, it was the oil company’s representatives who held ethically questionable meetings with government officials.

While the plaintiffs in the case did meet with Ecuadorian government officials, they did so to report a crime - the falsification of a remediation agreement based on test samples taken at the so-called “remediated” sites during the trial. 

The oil company’s secretive meetings with the Ecuadorian government served an entirely different purpose. The documents appear to indicate the company’s potentially corrupt tampering with international negotiations between the U.S. and Ecuador over which country’s justice system was the correct venue for hearing the case.

From 1993 until the case was moved to Ecuador in 2002, Chevron argued aggressively in U.S. courts that Ecuador was the preferred forum for the suit because the pollution occurred there.  It was the plaintiffs who first contended that the case should be heard in New York, where Texaco was headquartered, and away from the possible corruption in Ecuador.

Historically, the oil industry has had a tight grip on Latin American governments, enjoying immense control over their own destiny. Wheels were greased with bribes, and government officials were loyal to the companies’ interests. Ecuador’s government was not immune to this oil industry influence, as the documents reveal.

For example, a 1993 letter addressed to the State Department from the Ecuadorian ambassador to the United States was written with the help of Texaco government affairs official Michael Kostiw (who happens to be a former CIA operative dubbed “Bacon Guy” by the Washington Post for his infamous exit from the agency over the theft of a package of bacon, shortly before he was hired by Chevron).   

The letter that the company man helped to craft for the ambassador argues that the case should be tried in Ecuador, not the United States, because “only Ecuadorian authorities have the competence to pass judgment on such cases.” [PDF]

The hypocrisy of that statement is now stunning in the wake of Chevron’s reaction to the guilty verdict handed down recently by a competent Ecuadorian judge who originally fined the company some $8 billion for its destruction of the rainforest and local communities, an amount that later rose to over $18 billion due to Chevron’s failure to acknowledge and apologize for its pollution. Instead, Chevron immediately labeled the judgment “illegitimate and unenforceable” and seemed to suggest that Ecuador had committed “fraud” by leveling the guilty verdict against Texaco. 

That is in sharp contrast to the company’s earlier touting of the fairness and independence of the Ecuadorian court system in affidavits submitted to the court.  Chevron argued loudly that Ecuador was the correct venue to try the case(PDF pg 18).  In one affidavit, the company’s own hand-picked expert noted that the U.S. court “should not be concerned about the ability of the Ecuadorian courts to dispense independent, impartial justice…. Ecuador’s judicial system is neither corrupt nor unfair… Ecuador has a democratic government with an independent judiciary.” [PDF]

A 1994 internal memo from Texaco consultant Holwill & Company describes Texaco’s efforts to lobby the Ecuadorian government to convince the U.S. courts the case should be tried in Ecuador. The memo notes that:

“The top priority… must be to protect Texaco, Inc., from the lawsuit in US courts. To the extent that your [Chevron’s] litigators believe that an amicus brief by the [government of Ecuador] will be helpful to their efforts, we should first focus on getting that back on track. This can be done by working with certain opinion leaders in Ecuador to explain the implications of the law suit for investments in Ecuador.”

The memos also reveal some hints of the corruption among Ecuadorian officials that the oil company would later hope to leverage in order to derail the lawsuit. Long before the company’s lobbying efforts succeeded in winning a change of venue and shifting jurisdiction over the trial from New York to Ecuador – the company had identified allies in key positions of the Ecuadorian government ready to act in the company’s best interests.

A 1993 memo from Texaco consultant Holwill & Company details the lobbyists’ meeting with the Ecuadorian Minister of Energy, who told them he had “been tough on the company” in a press conference, but he then “winked” and said “it’s all politics.”

The memo goes on to reveal that the Minister of Energy had offered the job of sub-secretary for the environment to a former Texaco employee“a post important to Texaco.” 

A separate 1993 memo relays the results of an “extremely productive and cordial” meeting between Texaco officials and Ecuador’s Vice President at the time, Alberto Dahik, about efforts to reach a financial agreement with the Ecuadorian government to drop the government’s claims over the pollution. The memo reveals many instances in which Dahik went out of his way to help Texaco resolve the dispute quickly in order to keep the company interested in investing further in Ecuador, including at a fast-approaching round of oil leases.

According to the memo:

Dahik stressed again his desire to resolve the matter and to encourage additional investment in Ecuador by Texaco. …the resolution of the fiscal issues would permit the company to participate in the Seventh Round of Oil Leases. … (Comment: Dahik seemed as interested in touting Texaco’s interest publicly as he was in Texaco actually making new investments.)”

The memo author gloats on more than one occasion at the ease with which the company’s requests were handled by the vice president, who went around key ministers who might have objected, dealing with lower level staff to help the company.

“We felt that it was significant that Dahik by-passed finance minister Robalin and called a third level official instead…”

During the course of two decades of fossil fuel extraction and drilling activities, Texaco contaminated huge swatches of rainforest, displacing native peoples, threatening water supplies and public health and permanently altering the delicate jungle ecosystems that supported the indigenous population’s culture and way of life.  What remains of the proud local population faces a legacy of cancer and other health maladies.  They must also endure Chevron’s condescending assurances that their health problems are due to their poverty and lack of sanitation – as if they hadn’t coexisted with the land in fine health prior to the oilmen’s arrival.

As those who have seen the documentary Crude understand, there is no question that Petroecuador – which assumed some of the oil operations left behind when Texaco bailed from Ecuador in 1991 – is guilty of its own share of pollution and malfeasance, but Chevron’s attempts to hide behind the “consortium” that it built with the state-owned gas company are disingenuous.

Chevron’s culpability for its legacy of pollution is as clear as the rainwater the people now rely on for drinking and cooking since they can no longer safely use the contaminated groundwater and river water that supported their civilization prior to the oil company’s arrival.

Chevron should accept the Ecuadorian court’s verdict and apologize to the people of Ecuador.  But instead, the company will appeal, delay and deny responsibility until there are no victims left standing. With the oil industry, “it’s all politics.”