Chevron and its CEO John Watson now face potentially catastrophic difficulties given critical setbacks in 2015 suffered by the oil giant both in and out of the courtroom. That's the word from a devastating new press release about Chevron's declining prospects put out by the villagers.
Here are the five main reasons (although there are many others) that explain why Chevron and Watson are moving closer to being forced to pay the full amount of the $10 billion environmental judgment in Ecuador:
- The oil giant faces a "litigation catastrophe" in Canada due to a blockbuster 7-0 decision by the country's Supreme Court that issued in 2015. The decision rejected all of Chevron's jurisdictional arguments and gives the green light to the villagers to seize company assets to pay for their clean-up. Chevron has $15 billion of assets in Canada.
- A unanimous 5-0 decision in favor of the villagers by Ecuador's Supreme Court also makes the Ecuador judgment enforceable against Chevron assets in dozens of countries around the world, posing huge risk to company shareholders.
- Chevron must deal with the negative fallout from the complete collapse of its star "racketeering" witness, Alberto Guerra. Guerra admitted to lying on the stand after being paid $2 million by Chevron and coached for 53 consecutive days by company lawyers; he is also the company's most important witness in the Canada enforcement action.
- Chevron also must overcome highly embarrassing and rock solid video proof that company scientists tried to defraud Ecuador's courts by hiding massive oil pollution during judicially-supervised field inspections. The videos were disclosed by a company whistleblower.
- A stunning new independent evidentiary report by a team of prominent American scientists yet again validates the overwhelming scientific proof that Chevron dumped billions of gallons of toxic waste into the rainforest, decimating indigenous groups and farmer communities.
All told, 2015 was a disastrous year for Chevron in the Ecuador pollution case and 2016 might be even more challenging for the company as it tries to dig out of its ever-deeper hole. Make no mistake about it, Chevron is now moving backwards in its abusive campaign to evade the Ecuador judgment despite spending massive sums of shareholder money on an unethical, illegal, devious, and ultimately futile jurisdictional shell game.Steven Donziger, the longtime U.S. legal advisor to the affected communities and a target of a desperate company espionage campaign, criticized CEO Watson for "marching the company so far out onto a limb it appears there is no longer a viable path to turn back without Watson himself losing face and possibly his job." Donziger said it was clear the company has no coherent exit strategy with Watson at the helm.
That might explain why Chevron under Watson's misguided leadership refuses to cut bait and deal with the obvious risk its reckless scorched-earth strategy has created. The company's Ecuador liability grows larger by the day due to statutory interest while Watson seems to have little clue on how to reverse course. As usual, Chevron's notoriously callow Board of Directors with Watson as "Chairman" does nothing.
Aside from the problems mentioned above, Chevron also faces a shareholder revolt over the pollution liability; new computer forensic evidence from noted authority J. Christopher Racich that puts the lie to the company's claim the Ecuador judgment was "ghostwritten"; increasing protests by environmental groups over the company's human rights abuses in Ecuador and elsewhere; and evidence that Chevron lawyer Andres Rivero tried to bribe the Ecuador trial judge.
In addition, Chevron General Counsel R. Hewitt Pate has been hit with accusations of market manipulation over the Ecuador judgment. That was after a private panel of three arbitrators rejected Chevron's primary defense to the environmental claims. Also in 2015, Chevron's main outside law firm (Gibson Dunn) on the Ecuador case again was blasted by a federal judge for its ethical lapses.
To put it mildly, 2015 was a very bad year for Chevron on the Ecuador pollution case despite the use of 60 law firms and 2,000 lawyers to try to shake the rainforest villagers. Making a bad situation even worse: cratering oil prices have shaved billions of dollars off of Chevron's book value.
Again, all of the juicy details of Chevron's Ecuador setbacks are in the latest press release.
Note to Chevron's Board: figure out a way to get Watson and his team under control or Chevron shareholders will face even greater wrath from the Ecuador judgment in 2016.