Tuesday, December 20, 2011

Crude Politics: Is Chevron Involved in a Billion Dollar Bait-and-Switch in Ecuador?

As the Yasuni-ITT Initiative deadline approaches, did its chief negotiator make a deal with the devil?

With Chevron running out of legal options in its attempt to avoid its $18 billion liability in Ecuador over egregious environmental crimes and rights abuses, the company may have turned to its longtime government insider Ivonne Baki to help it out of a multibillion dollar jam, taking corporate malfeasance and greenwashing to a whole new level.

Baki is the head of Ecuador's Yasuni-ITT Initiative, the pioneer proposal that has captured the world's imagination by seeking to keep close to one billion barrels of crude permanently underground in exchange for payment. The ITT fields (Ishpingo, Tambococha, Tiputini) sit underneath the Yasuni National Park, a UNESCO World Biosphere Reserve widely considered to be one of the most bio-diverse places on the planet. The Park is also home to two nomadic indigenous groups living in voluntary isolation.

President Rafael Correa set Dec. 31, 2011 as the deadline to obtain $100 million – a down payment that would give the government more time to raise the $3.6 billion ($350 million annually over 10 years) it needs to offset forgone revenues for leaving the oil untouched. If the money isn't raised, drilling would ensue.

But there hasn't exactly been a stampede of donors knocking down Ecuador's door. The government has fought an uphill battle since the proposal's inception in 2007. In a recent interview with Al Jazeera, Baki admitted that the world financial crisis has taken a toll on donor government enthusiasm. Additional challenges to Yasuni fundraising have included lingering concerns about Ecuador's history of political instability, the proposal's initial lack of political and financial guarantees, and a reluctance from industrialized countries to donate to forest protection without receiving carbon offset credits.

With the clock ticking – and both the proposal's and Baki's future on the line – Baki told the Financial Times in a Nov. 28 article that the Initiative donation total was $70 million, the bulk of which was a $35 million debt cancellation deal with Italy. She went on to declare that, "I think in the next month we are going to have more than $100 million."

However, the Yasuni Trust Fund administered by UNDP shows a mere $2 million in actual funds. Unfazed, Baki affirmed to the Miami Herald and several Spanish language newspapers on Dec. 5 that the $100 million mark had been met, saying an "appeal for private sector donations, has been paying off." Another article describes the unnamed private donations as "flooding in." Correa has yet to make an official announcement on the fate of the proposal and whether the fundraising goal has indeed been met.

If one takes Ms. Baki at her word that $70 million is at least pledged (though not physically in the bank), the question is: where did the additional $30 million come from in a week's time?

Sources close to the project have confirmed that meetings between Baki and Chevron regarding a possible "donation" to the Yasuni-ITT initiative have occurred, according to environmental organization Amazon Watch, who has been working for over a decade to hold Chevron accountable for a massive environmental disaster in Ecuador. Word on the street is that Chevron authorized Baki to propose the idea of a $500 million "donation" to the initiative in exchange for quashing the case. Though a very handsome quid pro quo, it's a drop in the bucket if this subterfuge helps the company thwart the $18 billion legal case.

Sound far-fetched? This April 2008 cable courtesy of Wikileaks between the U.S. Ambassador in Quito and the State Department shows that Chevron has been plotting something similar for years:

"Meanwhile, Chevron had begun to quietly explore with senior GOE officials whether it could implement a series of social projects in the concession area in exchange for GOE support for ending the case, but now that the expert has released a huge estimate for alleged damage, it might be hard for the GOE to go that route, even if it has the ability to bring the case to a close."

"Given Chevron's toxic legacy and the debt it owes the people and rainforests of Ecuador, the fact that this 'bribe' is even on the table is an aberration of justice," said Kevin Koenig, Ecuador program coordinator for Amazon Watch. "This is a multi-billion dollar bait and switch, it's illegal, and can't be allowed. We're calling on Ms. Baki to disclose any meetings held between herself and Chevron, the terms and conditions of any offer from the company, and full disclosure of all private sector donations."

A look back at Baki's history reveals a long list of favors for Chevron while she held official roles within the Ecuadorian government:

  • In 1998, as Ecuador's Ambassador to the United States under the rightist government of Jamil Mahuad, she signed an official letter to a U.S. federal judge in New York seeking dismissal of the environmental lawsuit against Chevron.
  • Throughout 2004, Baki, then serving as Ecuador's Trade Minister, helped organize and participated in several meetings between Chevron and high level Ecuadorian officials – including the Attorney General – which sought strategies to end the case, according to discovery documents produced recently in the United States. During one of those meetings, rainforest residents staged a sit-in in her offices and demanded she stop efforts to undermine the legal case against the company.
  • In 2008, Baki, then serving as president of the Andean Parliament, organized and participated in a meeting with Chevron and Gustavo Larrea, Coordinating Minister for Internal and External Security who at the time was an influential member of Correa's Cabinet. The contact led to several other meetings between Chevron and Larrea in Ecuador and Washington, DC.
  • Baki also has been active in Chevron's lobbying efforts in the United States to cancel U.S. trade preferences for the country in retaliation for the lawsuit. A cancellation of the preferences would cost Ecuador upwards of 300,000 jobs, according to Ecuador's government.

"We are not about to give Chevron a get-out-of-jail-free card by 'donating' to the Yasuni," said Esperanza Martinez, a founder of Accion Ecologica, a leading Ecuador environmental organization and key backer of the project. "Not only would such a donation violate the rights of thousands of Ecuadorians who are victims of Chevron's misconduct, it would also violate the very spirit of the initiative."

"In short, we are not interested in Chevron's blood money," she added.

Chevron itself has been accused of numerous acts of corruption in its attempt to sabotage the case. These include: lying about the results of a fraudulent remediation in the 1990s to secure a government release; fabricating evidence during the trial to minimize evidence of contamination; using a hidden video recorder to try to entrap a judge who Chevron thought would rule against it; threatening judges with jail time if they failed to grant Chevron's motions to delay the trial; and permitting the lawyers for the plaintiffs to be victimized by death threats and mysterious robberies of their offices.

The case is currently on appeal in Ecuador after a judge ruled against the company on Feb. 14, 2011 for up to $18 billion. Because Chevron has refused to respect the judgment, the rainforest communities are being forced to prepare legal actions against Chevron's assets in the dozens of countries around the world where the oil giant does business.

For years, Chevron has publicly lambasted the Ecuadorian government with false accusations of siding with the plaintiffs in the case. In actuality, it appears that Chevron, once again with Baki's help, is behind the scenes secretly pressuring government officials to intervene on its behalf to kill the lawsuit.

Given Ms. Baki's long standing ties to Chevron and her previous efforts to help the company quash the Aguinda v. Chevron litigation or end run it entirely, it appears she again could be using her position to help Chevron evade its liability in Ecuador – at the expense of justice, her own people, and the potentially historic Yasuni proposal.

– Mitch Anderson

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