Reposted from The Chevron Pit.
One thing clear from the wreckage that was Chevron's annual meeting this week: CEO John Watson is blatantly lying to his own shareholders over the disastrous handling of the company's $12 billion Ecuador environmental liability.
Putting out fake news is not working for Donald Trump and it will not work for John Watson either. But that is exactly what he is trying to do to obfuscate the company's responsibility for dumping billions of gallons of toxic oil waste into the waterways of indigenous groups in Ecuador's Amazon.
Chevron's liability stems from the findings by three layers of courts in Ecuador that the company deliberately discharged the oil waste over two decades and abandoned roughly 1,000 unlined oil waste pits gouged out of the jungle floor. The contamination decimated indigenous groups, causing an outbreak of cancer that has killed or threatens to kill thousands of innocent civilians. Chevron operated in Ecuador under the Texaco brand from 1964 to 1992.
(See here for a summary of the overwhelming evidence against Chevron. See here for a photo essay by journalist Lou Dematteis on the humanitarian catastrophe caused by Chevron's oil pollution in Ecuador.)
Worse, Watson and members of his legal team -- led by Chief Counsel R. Hewitt Pate and outside counsel Randy Mastro -- might face criminal prosecution for bribing a critical witness to try to evade paying the judgment. That's on top of Watson recently being caught red-handed trying to rip off Australia with a tax scheme related to the company's Gorgon natural gas project, costing Chevron shareholders about $300 million in addition to major reputational damage.
As we sit here today, after two decades of the historic battle in Ecuador between Big Oil and indigenous groups, Watson's biggest problem is that a legal case that the company probably could have settled for approximately $100 million in the mid-1990s is now worth $12 billion. That's on top of the estimated $2 billion Chevron has spent on 60 law firms and 2,000 lawyers to defend the case. And it doesn't include the $300 million in annual interest that accrues to the judgment.
The $12 billion figure is based on a final and enforceable judgment that was affirmed unanimously by Ecuador's Supreme Court in the venue where Chevron accepted jurisdiction. The company had filed 14 sworn affidavits praising Ecuador's judicial system when it insisted the trial be held in the country. Now, Watson refuses to pay the judgment despite overwhelming evidence of Chevron's toxic dumping, fraud, and other wrongdoing .
One might think that by now Chevron's massive expenditures should have achieved its obvious objective -- the killing off of the environmental claims of the villagers. Instead, the expenditures seem to be backfiring. The villagers simply won't go away. Despite some occasional setbacks through the years, the undeniable truth is that they are now gaining strength both in court and with the company's own shareholders.
In court, Chevron faces a critical hearing this October in Toronto as the villagers try to seize company assets in Canada to recover the full amount of their judgment. Already, two appellate courts in Canada (including the nation's Supreme Court) have ruled unanimously against Chevron as Watson continues to fail in his attempts to try to shut down the the asset seizure action.
Watson's effort to block a similar enforcement action targeting company assets in Brazil also has failed.
Among Chevron shareholders, several large institutional investors put the hurt on Watson at the company's annual meeting. They lined up behind a resolution that accused Watson of "materially mishandling" the Ecuador litigation. This is a startling public rebuke of a CEO that one rarely sees in annual meetings of large companies.
One shareholder resolution that sought Watson's removal as Chairman over the Ecuador disaster received a whopping 39% of all outstanding shares -- a huge level of support. Normally, a shareholder resolution that receives 10% support is considered fantastically successful. Two other resolutions challenging Watson over his mishandling of the Ecuador litigation also received significant support. One received 31%, the other 20%.
In the court of public opinion, Watson's position also seems to be deteriorating as he fails to address shareholder concerns over Ecuador.
After the slap down of Watson's leadership at the annual meeting, Watson made the extraordinary claim that the company's Ecuador policy actually "enjoys overwhelming support from shareholders." Watson later turned off the microphone when a shareholder challenged him over the Ecuador policy. He is burying his head in the sand.
In his terse statements about Ecuador at the meeting, where he looked visibly uncomfortable, Watson refused to acknowledge that 43 civil society groups sent him a letter criticizing the company's attempt to use "racketeering" laws in the U.S. to retaliate against the villagers and their lawyers. He also ignored the 17 environmental and human rights groups and 19 international law scholars who have backed the villagers in legal briefs.
Watson's so-called "disclosure" of the Ecuador liability at the annual meeting and in the company's public filings are part of an elaborately constructed lie.
Watson tries to claim a 2013 decision by a U.S. federal judge in a farcical non-jury trial that has no legal relevance somehow nullifies the entire Ecuador judgment. But even in that one-sided proceeding, called a Dickensian farce by a prominent trial lawyer, the judge said he was not exonerating Chevron from its responsibility for the environmental damage in Ecuador.
Further, the entire factual basis for that U.S. case has collapsed in spectacular fashion -- a reality that Watson also refused to acknowledge to shareholders or in the company's SEC filings. It turns out that Chevron bribed its admittedly corrupt star witness, Alberto Guerra, with $2 million in cash and benefits. That witness later admitted repeatedly lying in U.S. court about several key issues.
Worse, Guerra's lies were corroborated by a scientific forensic analysis that completely debunks Chevron's main defense in the case. This bombshell report also explains in detail how Chevron fabricated evidence to try to evade paying the Ecuador judgment.
Amazon Watch, the environmental group that has battled Chevron for years, posted a blog detailing how the company's illegal witness payments likely violate federal criminal law and could subject those involved to criminal prosecution. Another prominent U.S. environmental group, Earth Rights International, also posted a blog explaining how Chevron fabricated evidence.
We will give the final word to Carlos Guaman, the President of the Ecuador-based Amazon Defense Coalition, known more widely by its Spanish acronym FDA. The FDA is the group that has received international renown for courageously bringing the environmental lawsuit against Chevron on behalf of the affected indigenous and farmer communities.
Guaman warned Watson that the villagers are considering a new plan to file additional judgment enforcement actions in other countries to seize Chevron assets to force the company to abide by the rule of law. "Our people are dying because of Chevron's pollution, so we have no choice but to bring as much pressure to bear on the decision makers," he said.
That's putting it nicely. To Guaman and his followers, we say please continue to kick Watson's posterior until he and his cohorts are held fully accountable.
It is only a matter of time before Watson is either forced out of his job ,or forced to pay the full cost of the grotesque environmental catastrophe his company has visited on the people of Ecuador.