Monday, January 23, 2017

In Canada, Chevron Faces New Nightmare Scenario Over Ecuador Pollution Liability

A Canadian trial judge on Friday issued a ruling over the potential seizure of Chevron assets to pay for the clean-up of the billions of gallons of toxic waste the company dumped into Ecuador's rainforest. The ruling has enormous implications for Chevron shareholders and the corporate accountability movement on a global scale.

Judge Glenn Hainey of the Ontario Superior Court of Justice ruled that Ecuadorian indigenous groups from the Amazon rainforest can take the oil giant to trial as part of their effort to seize company assets to pay the $9.5 billion tab needed to remediate their ancestral lands.

The indigenous nationalities in 2011 won the largest environmental judgment in history in Ecuador but Chevron has refused to pay, selling off its assets in the country and hiding behind technical arguments. Chevron had insisted the trial be held in Ecuador and accepted jurisdiction there. The company also committed fraud by falsifying evidence and engaging in a sham remediation.

Here are some of the important implications from the latest Canada decision:

Chevron has definitively lost its bid to avoid an enforcement trial in Canada. Chevron used every technical defense in the book to avoid the trial. Even Canada's Supreme Court ruled against Chevron. Now it must face a terrifying day of reckoning over how its key witness, Alberto Guerra, has lied under oath and that its fundamental story about judicial bribery is false.

Chevron's U.S. lawyer Randy Mastro will face enormous risk. American lawyers Randy Mastro and Avi Weitzman of the U.S. law firm Gibson Dunn & Crutcher violated the law by arranging for Guerra to be paid $2 million for his false testimony in a farcical retaliation trial in the U.S. They coached Guerra for 53 consecutive days before he testified; Guerra later admitted lying on the stand. Gibson Dunn's obstruction of justice in the U.S. "racketeering" trial will be front and center in the Canada proceeding.

Look for Chevron's executives to try to settle before the trial: Chevron shareholders already are up in arms over management's mishandling of the Ecuador liability. Look for embattled CEO John Watson to order his lawyers to try to settle the case before Guerra is forced to take the stand and the company's entire narrative falls apart.

Chevron's strategy of perpetual delay just got shellacked. Trial judge Hainey tossed out two of the company's main defenses which already had been litigated and rejected by three layers of courts in Ecuador. The company will be kept on a short leash in Canada, undermining its strategy of delaying any judicial procedure that could hold it accountable on the merits.

Chevron is kidding itself if it thinks its Canadian subsidiary is immune from liability. The part of the Hainey decision that immunized Chevron's wholly-owned subsidiary from enforcement runs counter to logic, violates the spirit of a prior decision of the Canada Supreme Court, and is likely to be reversed on appeal.  Ten separate Canadian appellate judges already reversed this ruling when issued by a prior trial judge in 2013.

Karen Hinton, the spokesperson for the villagers, was eloquent in her response to the latest development. She called it a "resounding victory for Ecuadorian indigenous groups and farmer communities who have struggled for more than two decades to clean up its toxic waste."

Hinton added:
The court sent Chevron a powerful message that it can no longer ride the legal merry-go-round and re-litigate the same discredited defenses in different courts as part of its strategy of delay...The villagers expect to proceed later this year with their seizure of Chevron's assets to force the company to respect multiple court judgments that found it guilty of dumping billions of gallons of toxic waste into the waterways of Ecuador, causing an outbreak of cancer and other harms afflicting thousands of people. Ultimately, we are confident that Canada's courts will hold Chevron fully accountable for its outrageous and criminal conduct in Ecuador.
Carlos Guaman, an Ecuador community leader and the executive director of the coalition that brought the enforcement action, said he wanted to "thank" Canada's courts "for sending a strong message to Chevron that its outrageous strategy of blocking justice will soon end."

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