Shareholder Shocker: Chevron's Assets Frozen in Argentina

Reposted from Eye on the Amazon

If you're a Chevron shareholder, you must be wondering at this point WTF is going on over at corporate headquarters. The internet exploded Wednesday with news that an Argentinian judge ordered seizure of Chevron's in-country assets in what could be the first of many rulings enforcing a $19 billion judgment from an Ecuadorian court on behalf of indigenous and farmer communities who have suffered decades-long contamination, health problems, and rights abuses stemming from the company's Amazon drilling operations. Chevron shares closed down $1.64 on Thursday and may keep nose-diving over the long term.

Judge Adrian Elcuj Miranda froze 100% of Chevron's capital in Argentina, 100% of dividends, all of its share in pipeline operator Oleoductos del Valle SA, 40% of Chevron sales to Argentine refineries, and 40% of Chevron bank accounts in Argentina. The move was a major victory for the 30,000 plaintiffs who have been forced to scour the planet seeking Chevron assets because the oil giant has refused to pay the $19 billion damage award ordered by Ecuadorian courts after it was found guilty for spilling over 18 million gallons of crude and dumping billions of gallons of toxic waste water into the fragile rainforest ecosystem, poisoning local indigenous and farmer communities. The verdict was handed down by a court of Chevron's own choosing and based on much of the company's own evidence after almost two decades of litigation which includes some 64,000 soil and water samples.

For any Chevron shareholder, the news must have been shocking, because senior management has long downplayed – or outright failed to disclose – the potential financial impact of the verdict. Since 2008 the company has recycled the same language in its 10-K, misleading shareholders on the legal and factual merits of the case, selectively disclosing only favorable court rulings, and refusing to disclose material impact of enforcement actions against its assets in multiple countries. In essence, downplaying and dismissing any impact the case could have financially on the company.

However, in a sworn affidavit presented to the New York's Second Circuit Court, Chevron Deputy Comptroller Rex Mitchell stated that efforts by plaintiffs to recognize and enforce the judgment would cause "significant, irreparable damage to Chevron...irreparable injury to Chevron's business reputation and business relationships," and that "seizure of Chevron assets, such as oil tankers, wells, or pipelines, in any one of these countries, would disrupt Chevron's supply chain and operations; and seizures in multiple jurisdictions would be more disruptive."

Randy Mastro, Chevron's hit man from the legal firm Gibson, Dunn & Crutcher pleaded to a New York judge at a February 2011 hearing, "It seems obvious to us that there will be irreparable harm from seizing boats, seizing ships, seizing tankers, disrupting the distribution stream of Chevron that will affect it not only in the one jurisdiction but around the world…[It] could end up being one of the biggest forced asset seizures in history and could have a significant disruptive impact on the company's operations…Your Honor, it is obvious [that Chevron will suffer] irreparable harm both in terms of disruption of operations, business reputation and good will, and an inability to ever get that money back…So we are definitely right now in a position of that nightmare is here, irreparable harm is imminent…[We] are facing the ultimate Sword of Damocles, and it is over our heads…The Sword of Damocles is not over our heads, it's touching our foreheads.”

If you are a Chevron shareholder, don't you want to know that? Don't you have the right to hear that? So which is it Chevron – an irreparable threat, or a non-issue? Chevron is either lying to its shareholders, or the New York judiciary. Is Chevron committing perjury or investor fraud? Either way, someone at Bollinger Canyon Road has some explaining to do.

The long arm of the law is finally catching up to Chevron, and its executives and legal team knew it was coming. The company even argued before the same judge in New York that the communities may use the Inter-American Convention on the Execution of Preventive Measures, a treaty that allows for the automatic freezing of assets of a defendant that fails to abide by the law and refuses to pay a final foreign judgment. Indeed, this treaty from the 1970s, is exactly what Judge Miranda used as the basis of his order. Seems that would have been important information to tell your shareholders.

Several other Latin American countries have signed the treaty and may present new vulnerabilities for Chevron across the region. The communities have already filed enforcement and seizure motions in Brazil and Canada, with more to come. And, despite Chevron claims to shareholders that it has no assets in Ecuador, a judge recently awarded what plaintiffs believe to be up to $200 million in company assets in the country.

Even more stunning is the reaction of Chevron spokesman James Craig to the Argentine embargo, who feigned ignorance saying that he was "unaware of a filing by the plaintiffs or a court order in Argentina," but if there was one, it wouldn't be applicable to Chevron's subsidiary assets. Craig is either lying through his teeth, or so woefully unaware of the fate that is befalling his own company that it's astounding he still has a job. Of course, Chevron continues to reward the laundry list of folks who have managed to put the company in this position.

The order from Judge Miranda is just that – similar to an order to garnish the wages of a deadbeat dad. There wasn't a hearing, or a retrial of the case, and there won't be. The case has happened. Chevron was found guilty, and the judgment was upheld on appeal. Despite having every opportunity over 19 years of litigation to defend itself in a forum of its own choosing, Chevron thumbed its nose at the verdict, and simply refuses to pay, forcing communities to go anywhere and everywhere to collect funds they desperately need for an environmental clean up, clean water, and health care.

Even more ridiculous was Craig's statement that the plaintiffs had no right to go after Chevron's subsidiaries. Of course they do. The embargo order from the Ecuadorian court clearly states the plaintiffs' right to seek Chevron subsidiary assets, and explicitly mentions its Argentinian assets. More than 80% of Chevron's assets are subsidiaries, which is why the company counts them and their revenues as part of the parent company. See here and here. Maybe Craig contracted Romnesia after Chevron's $2.5 million donation to a GOP SuperPAC.

It's hard to tell who is more out of touch with reality – Chevron management or advisors and pundits that guaranteed a Mitt Romney victory. But as we saw with Tuesday night's election and Wednesday's Argentinian announcement, reality has come crashing down on insular, inside-the-bubble mentality.

There are only two explanations – and neither provides confidence for Chevron shareholders. Company management is either in total denial, living blissfully with its collective heads in the sand, and got caught with its pants down after underestimating the resolve and mettle of the rainforest residents. Or, there is a concerted effort to keep shareholders in the dark about the true fallout the company faces as the Ecuadorians move country by country to collect what is rightfully theirs.

As we've suggested here before, this $19 billion liability is the giant albatross around CEO John Watson's neck, and it's of his own making. After all, he oversaw the purchase of Texaco and its Ecuador's liability as head of Mergers and Acquisitions. His poor handling of the case is now a major threat to his legacy, and to the survival of his company.

Chevron spokesperson Donald Campbell infamously said in 2009 that the company would fight the case "until hell freezes over, and then we'll fight it out on the ice." Sounds like John Watson should start looking for his skates.

– Kevin Koenig

Don't Cry for Me, Argentina

Reposted from Eye on the Amazon

It's been another rough week for Chevron, the second largest U.S. oil company. The San Ramon oil giant reported this morning that its third quarter earnings had dropped by a third. But that's not the worst of it.

Chevron got a rude awaking Wednesday morning with news that Ecuadorian indigenous and farmer communities will seek to freeze some $2 billion of the company's assets in Argentina. This latest legal action is part of the communities' efforts to force Chevron to pay a $19 billion damages award handed down from Ecuadorian courts that found Chevron guilty of massive environmental contamination and rights abuses in the country's Amazon rainforest.

Ever since the 2011 decision – from a court of Chevron's choosing and based on much of the company's own evidence – Chevron has been on the lam, running from the law, and forcing some 30,000 Amazonians to go global to get the long fought justice they deserve. Between 1967 and 1991, the company deliberately dumped more than 4.3 billion gallons of toxic waste water, 18 million gallons of crude, and left behind some 1,000 super fund style sludge pits full of carcinogens. The result? Indigenous communities and their rainforest lands devastated, a public health crisis with no clean drinking water, and an epidemic of cancer and other ailments that have plagued the region for the last three decades. The communities are seeking a full environmental clean up, potable water, and funds for health services.

Adding insult to injury, Chevron deployed every legal tactic in the book to kill the case, and then extra judicial Michael Clayton-style tactics like threatening the judge, intimidating witnesses, and collaborating with Ecuador's military to stop inspections on contaminated sites. But, the global dragnet to hold Chevron accountable is closing in.

Unfortunately for the company, its assets are hiding in plain sight. Armed with an order from Ecuador's appellate court demanding Chevron pay up and comply with the sentence, the communities have filed in Canada, Brazil, and now Argentina to enforce the judgment, which could freeze bank accounts, dividends, oil sales income, or other assets as a way of meeting part of the $19 billion damage award. According to lead Ecuador lawyer Pablo Fajardo, winner of a CNN Hero Award and Goldman Environmental Prize, the process is more advantageous in Argentina due to the Inter-American Convention on the Execution of Preventative Measures, which allows for the automatic freezing of assets of a defendant that fails to abide by the law and refuses to pay a final foreign judgment. A judge can authorize seizure without even a hearing for Chevron.

As Enrique Bruchou, the highly regarded Argentine council for the Ecuadorians explains, "We will win this case. And it's going to set an example for the world that we in Latin America have grown up now and that we need to be treated as equals."

Left with little wiggle room, Chevron has signed a MOU with state run YPF to explore for unconventional crude, a move many see as a way to curry favor with the government of Cristina Fernandez.

Bruchou continued, "We don't want this politicized. This has nothing to do with the Republic of Argentina. This is the communities of Ecuador going against Chevron," he said. "I don't think we will see interference because frankly this is a civil matter, combined with the human rights abuses, which is an issue very dear to the heart of the Argentines."

What is shocking is the egregious mismanagement of the case by Chevron executives, who instead of resolving the issue years ago – to great relief of communities and company shareholders – has doubled down on a losing litigation strategy, even rewarding counsel with millions in bonuses after losing the case. While Chevron cared little about Ecuador because it is no longer producing petroleum here (though the courts gave the communities their first victory in ordering some $200 million of Chevron assets in country be turned over), the company has major upstream and downstream assets in Canada, Brazil, and Argentina, as well as other countries that communities may attempt to confiscate Chevron holdings.

The global enforcement efforts of the communities are now jeopardizing major Chevron growth plans, access to future reserves, and putting the company at a competitive disadvantage. Which is why outraged shareholders are urging the company to resolve the issue, and lambasting senior management for its bungling of the case. The company's public response to the Argentine filing was laughable: a few targeted purchases on Google news to try to offset the negative headlines and press stories, and a whiny statement attempting to claim that the judicial systems of countries like Canada, Brazil, and Argentina were inferior to those of the United States. What Chevron doesn't seem to realize is that the law is on the side of the communities, and there are more than 180 countries around the world where Chevron assets are now liabilities.

In this global game of cat and mouse, the playing field favors the plaintiffs, where Chevron must bat 1000%, and it's already 0 for 1. And, in a recent blow, the U.S. Supreme Court recently refused to hear a Chevron appeal to block Ecuadorian efforts to enforce the judgment around the world.

However, it has been a long and winding road toward justice, and many of the afectados-those affected by Chevron's reckless drill and dump practices – have lost their lives in the fight. Today in Ecuador is Dia de los Difuntos, or Day of the Dead, and tomorrow marks the 19th anniversary of the year the case was first filed in New York courts. To remember and celebrate the lives of those who have passed away, and commemorate their historic David vs. Goliath struggle, the communities will be holding a memorial in the town cemetery of Enokanqui.

– Kevin Koenig

U.S. Supreme Court Squelches Chevron Appeal on Ecuador Case

Reposted from The Chevron Pit

The U.S. Supreme Court today rejected Chevron's latest attempt to block global enforcement of a historic $19 billion environmental judgment from Ecuador's courts, removing another hurdle for rainforest indigenous groups as they continue their efforts to seize billions of dollars of Chevron assets around the world.

Chevron's losing petition was prepared and signed by Ted Olson, one of the top Supreme Court litigators in the country and the former Solicitor General of the United States under the last Bush Administration. Olson works at Gibson Dunn & Crutcher, Chevron's lead outside law firm on the Ecuador matter and itself the subject of judicial rulings that it has committed ethical violations on behalf of the oil giant.

Jim Tyrrell of Patton Boggs and John Keker of Keker & Van Nest signed papers for the Ecuadorian rainforest communities and their counsel.

The Supreme Court decision represents the latest of numerous courtroom setbacks for Chevron as the company tries to evade paying the Ecuador judgment, which was issued in early 2011 after an eight-year trial found that the oil giant deliberately dumped more than 16 billion gallons of toxic waste into the Amazon. A three-judge appellate panel in Ecuador later affirmed the decision, criticizing Chevron harshly for threatening judges and filing frivolous motions to delay the proceedings.

Several pro-business groups who are funded in part by Chevron, including the U.S. Chamber of Commerce and National Association of Manufacturers, had weighed in on the oil giant's behalf before the Supreme Court.

When Chevron refused to pay the Ecuador judgment, lawyers for the 30,000 affected villagers this summer hired prominent law firms to file seizure actions targeting billions of dollars of Chevron assets in Canada and Brazil. They have promised to file more seizure actions soon in other countries, potentially creating significant operational problems for the oil giant, according to Chevron's own court filings. See here.

Chevron's use of substandard operational practices in Ecuador – it operated there from 1964 to 1992 under the Texaco brand – decimated indigenous groups and caused an outbreak of cancer that has killed or threatens to kill thousands of people, according to findings of the court. A summary of the evidence against Chevron can be found here, a video about the case can be seen here, while a summary of the cancer deaths can be found here.

Independent journalists, such as 60 Minutes and a prominent Australian news show, also have confirmed Chevron's extensive pollution in Ecuador.

Chevron had asked the Supreme Court to salvage an unprecedented injunction imposed in March 2011 by New York federal judge Lewis A. Kaplan purporting to bar worldwide enforcement of the Ecuador judgment. That injunction provoked outrage in much of the legal community and was overturned unanimously in September 2011 by the Second Circuit Court of Appeals, the ruling the Supreme Court declined to review.

Over the last two years, federal courts at every level in the United States – trial courts, intermediate appellate courts, and now the Supreme Court – have now rejected Chevron's attempts to block or undermine the Ecuador judgment. The oil giant claims the judgment was procured by fraud, a charge the villagers and their lawyers say is a smokescreen invented by Chevron to cover-up its own criminal behavior in Ecuador as found by various courts.

"Chevron's latest loss before the Supreme Court is an example of the company's increasingly futile battle to avoid paying its legal obligations in Ecuador," said Aaron Marr Page, a lawyer for the Ecuadorians.

"Chevron is running from justice while its toxic dumping continues to create an imminent danger of death to indigenous peoples in Ecuador," said Page.

Chevron's losses in U.S. courts on the Ecuador case are mounting fast.

In the last two years, 18 U.S. trial courts and four appellate courts have either rejected or declined to consider Chevron's campaign to paint the Ecuador judgment as a product of "fraud", according to an analysis of court data by representatives of the rainforest communities. That analysis can be read here.

Even Judge Kaplan, who has been subject to withering criticism for his biases against the Ecuadorians, further gutted Chevron's strategy when he dismissed or stayed three of Chevron's fraud claims and its unjust enrichment claim against the rainforest communities in a racketeering case pending against them in New York.

In its public relations materials, Chevron continually tried to claim U.S. courts have found "fraud" in the Ecuador proceedings. In reality, three different Ecuadorian courts have heard Chevron's allegations and rejected them, while no U.S. court has found fraud on the merits after an evidentiary hearing or trial.

In the handful of courts where judges made such a preliminary finding, it was done in the context of simple discovery proceedings and later was overturned by federal appellate courts.

A panel of federal appellate judges in Philadelphia, for example, blasted Chevron for attacking Ecuador's courts – calling its comments "disparaging". Another federal judge in New Orleans accused the oil giant of using "hyperbole" and trying to make "a mountain out of a molehill." See here.

This was the second time in the long history of the Ecuador lawsuit that the Supreme Court declined to hear a Chevron petition for review. In 2009, the court declined to review a decision that denied Chevron's attempt to force Ecuador's government into a private arbitration over who should pay for the clean-up in Ecuador.

For that petition, Chevron used high-profile lawyer Paul Clement, another former U.S. Solicitor General. Clement argued the losing side in the famous case last year over the Obama Administration's health care law.

Just last week, the Gibson Dunn law firm was criticized for overbilling Chevron by sending 11 lawyers to a relatively minor court hearing.

From Assets to Liabilities

Are CVX shareholders ready for global cat and mouse?

Reposted from Eye on the Amazon



Earlier this week, we reported on the extraordinarily vulnerable position that Chevron is in due to CEO Watson's poor oversight and mismanagement of multiple crises threatening the company's shareholder value. The Richmond refinery debacle. Millions in fines and suspended operations in Brazil. And a $19 billion damage award in Ecuador that has made Chevron a global fugitive, running from the law while its assets are hiding in plain sight.

Watson's bungling of these issues has caused major ripples among his own shareholders. At this year's Annual General Meeting, Watson faced a shareholder revolt spurred by the $19 billion guilty verdict and asset seizure efforts now underway by the Ecuadorian indigenous and farmer communities.

And understandably so. A report on the Ecuador litigation by prominent corporate accountability strategists details an eyebrow-raising web of financial and operational risks posed by the lawsuit – which seem to be either highlighted or downplayed depending on the company's audience.

In court filings in New York, representatives of Chevron gave sworn testimony that the case presented "irreparable injury to [its] business reputation and business relationship" and was a major threat to the company. However, its 10-K statements filed with the Security Exchange Committee (SEC) continue to downplay it. So which is it Watson? The company's doublespeak is misleading either the New York judiciary or its stockholders. Either way, executives are flirting with felonies or perjury charges, and an SEC investigation seems right around the corner. In fact, both shareholders and Congresswoman Jan Schakowsky (D-IL.) recently sent letters to the SEC asking the institution to determine whether Chevron is violating securities laws related to the court finding that it deliberately dumped billions of gallons of toxic waste into the Amazon rainforest. None of the above is good for business.

Another report documents Chevron's deceit of its own shareholders and outlines the misrepresentations that the company has made in its public findings.

At the company's annual stockholders meeting last May, shareholder resolutions requesting a separation between CEO and Chairman of the Board received 38%, and New York State Comptroller Thomas P. DiNapoli joined with 39 other investors, with a combined total of $580 billion in assets under management, in calling on Chevron to settle its two-decade-long legal battle in Ecuador.

Who would expose its company and its shareholders to this kind of risk? Why is CVX so entrenched? While the board may be guilty of turning a blind eye, it's elementary what's really going on here. Watson's dug in not to protect his company or its investors, but to protect his legacy and cover up his ignorant and/or arrogant botch of the Ecuador issue. The Ecuador liability is all on Watson. And he could have made it go away years ago for a lot less, or at least done his due diligence and discounted it from the inflated price he paid for Texaco. But instead, Watson chose to cover it up, cover his trail, and try to convince everyone that he's the smartest guy in the room. Ken Ley and Bernie Madoff would be proud.

Here's the backstory. Texaco came with what was originally seen as roughly a $1 billion liability – legacy issues in the Ecuadorian Amazon where the company designed, built, and operated an oil extraction system for close to three decades that led to the systematic contamination of the region and decimated local indigenous peoples and farmers.

The lawsuit, Aguinda v. Texaco (now Aguinda v. Chevron), was first filed in New York courts within a year after the company's departure from Ecuador where the company's headquarters in White Plains, New York, where the company made the criminal decision to use sub standard, cheap technology that had been outlawed in the United States since the early 1940s.

But, Texaco, who by all means was seen as the industry scoundrel, balked. It argued that Ecuador was the more proper forum, its courts transparent and independent, and that Texaco – now Chevron – would be bound by any decision rendered in Ecuador.

Fast forward to a warm, spring day at the downtown Los Angeles Marriot in 2001. The Executive Director of Amazon Watch and I physically handed Watson, as head of M & A, two massive binders filled with documentation of over 500 toxic sites left by Texaco. We warned Watson and the company that they were buying a problem. It's now a $19 billion problem. Oops.

While repo men have yet to descend upon the company's headquarters and start hauling out the furniture, one has to ask: Is the company really ready for a global game of cat and mouse? Chevron has been able to abuse to Ecuadorian legal system and thumb its nose at verdict and jurisdiction because it has no assets here. But it's a different ball game when the plaintiffs, armed with a verdict from a court of Chevron's own choosing and based on much of the company's own evidence, head to countries where the bulk of Chevron upstream assets are – which account for the great majority of the company's revenue stream. What were once major assets in 120 countries around the world are now liabilities, hidden in plain sight. Offshore, onshore, well sites, bank accounts, refineries. And the plaintiffs only need to win once, while Chevron must bat a thousand.

And that doesn't even get at competitive advantages issues, where Chevron is risking losing out to other companies on new opportunities (back to Drucker's Five Business Sins) not only because of its reckless treatment of Ecuadorian indigenous people and farmers, but for its abusive litigation and dragging Ecuador – the host country – to arbitration hearings and trying to pass the $18 billion clean up price tag on to the state. This could be incredibly damaging for future Chevron prospects. As Watson's predecessor, former Texaco CEO Peter Bijur said, "If you're not drilling now, you're bankrupt in ten years."

Chevron investors should be hoping that the Wall Street scrutiny that has befallen Jaime Dimon and Bob Diamond spreads to San Ramon. Certainly, the thousands of farmers and indigenous people that continue drink poison water and live amidst one of the worlds worst oil disasters are hoping for the same. Chevron has stated that they will fight the case until hell freezes over, and then fight it out on the ice. Doesn't seem a very strategic attitude when Chevron assets and bank accounts are what are on the verge of being frozen. Watson seems to be more interested in protecting his own hide than shareholder value, feeding the liability and starving opportunities. If Watson can't let go, maybe it's time shareholders let Watson go.


– Kevin Koenig

Way Down Watson

Reposted from Eye on the Amazon



Bad two weeks for Chevron and its head-in-the-sand CEO John Watson. First, last week the San Francisco Chronicle reported that Chevron is under criminal investigation by the EPA for intentionally flaring contaminants and deceiving regulators. No accidental discharge, Chevron literally built a separate pipeline designed to circumvent monitoring equipment, belching contamination into the airspace above the densely populated city of Richmond, CA.

Then, as the Chronicle reported, the initial investigation expanded. And both of these aren't even related to the Aug. 6 refinery fire, which has already produced civil suits, and sparked a new probe from California legislators.

To top it off, Chevron got hit with an injunction by Brazilian courts on Sept. 27 ordering the company to stop operations within thirty days until the investigations of two oil spills off the coast of Rio de Janeiro are resolved. The oil giant was forced to pay $17.3 million in fines last week, and still faces up to $22 billion in potential civil suits.

But the sand is only so deep. Normally, when an executive makes a major mistake that threatens shareholder value and the financial health of the company, they get fired. Just ask the former head of JP Morgan Chase's chief investment office after losing $2 billion in a May trading loss. And now that the loss is ballooning towards $9 billion, some are calling for CEO Jamie Dimon's head. We also saw the resignation of Barclay's chief executive who succumbed to intense shareholder and political pressure over an interest rate setting scandal, with questions about the bank's corporate culture in the daily headlines.

But, far from the cutthroat world of Wall Street in the idyllic valley of San Ramon, CA, things are apparently done differently. Here, at the Chevron Corporation (NYSE: CVX) if you make an $18 billion mistake, you get a promotion. What?

Just look at John Watson, Chevron CEO. Watson rose through the ranks of the US's second largest oil company, cutting his teeth as vice president charged with mergers and acquisitions. He orchestrated and oversaw what was thought to be a major coup for his career ascension and potential pillar of his legacy – the purchase and integration of Texaco for $36 billion.

But what Watson overlooked, underestimated, or outright ignored, was the ongoing litigation against Texaco brought by Ecuadorian indigenous people and settlers for egregious environmental crimes and rights abuses. With its purchase of Texaco, Chevron inherited this liability. And now, under Watson's watch as CEO, this legacy has turned into a $19 billion judgment against Chevron, with asset seizure efforts underway in Canada and Brazil, and potentially more to come.

Chevron management, entrenched as ever, has lost control of the case. The guilty verdict against the company has gone global, leaving the confines of a small Amazonian courtroom in Ecuador's rainforest (where Chevron has no assets) to countries critical to its existing production and upstream growth. Chevron's global reach has always been touted as an advantage, but the company suddenly seems very exposed as the rainforest residents contemplate actions in any number of the 120 countries where Chevron has assets. And yes, that's $19 billion – roughly half of what Chevron paid for Texaco. Talk about buyer's remorse.

You'd think someone like Watson would be familiar with Peter Drucker's "Five Deadly Business Sins." Drucker, who BusinessWeek dubbed the "man who invented management", lays out five business mistakes that can sink even the mightiest of companies. Sin #5 has Watson written all over it: Feeding problems, starving opportunities.

Watson, perhaps in a vain attempt to cover up his egregious error in not factoring in the litigation to Texaco's sale price and gross mismanagement of the case along the way, has doubled down. During his tenure, Chevron has employed some 39 law firms on the Ecuador issue – billing what one can only guess is in the hundred of millions a year, cutting checks to the tune of $75 million a year to DC lobbyists deployed to Capital Hill to persuade lawmakers to punish Ecuador and strip it of its unique trade preferences with the U.S. for allowing the case to proceed. The latter failed spectacularly.

In the meantime, experts have started to chime in. Fidel Gheit, the top energy analyst for Oppenheimer – after years of silence on the issue – has started to speak out. He made a personal visit to Chevron's San Ramon headquarters to meet with Watson. Speaking about recently setbacks the company has faced in the case, Gheit commented, "[Watson's] not a happy camper right now. It's not great news for Chevron..." Gheit also stated that he thought Chevron should seek to resolve the litigation through a settlement, because it has become a "distraction" and drag on Chevron's stock price. A New Yorker blog entitled "Why Chevron Will Settle in Ecuador" suggested the same. And, an influential investor website suggests a "hold" on Chevron stock due in part to its failure to resolve the issue.

What does this mean for CVX shareholders? Stay tuned for Part II...


– Kevin Koenig