Chevron Faces Asset Seizure In Brazil Over $18 Billion Ecuador Judgment, Says Amazon Defense Coalition

BRASILIA, Brazil, June 28, 2012 /PRNewswire-USNewswire/ -- Villagers from Ecuador's rainforest who won a landmark court judgment against Chevron for causing massive environmental and health damage filed suit Wednesday to seize the oil giant's assets in Brazil to generate funds to remove cancer-causing toxins and oil sludge from their ancestral homelands. 

The legal action, made necessary by Chevron's refusal to comply with an $18 billion court judgment in Ecuador that was affirmed on appeal, is the second filing to force the company to pay for the clean-up of a disaster that decimated indigenous groups and caused an outbreak of cancer and other oil-related diseases that have killed or threaten to kill thousands of men, women, and children, according to various court findings in Ecuador. See here.

The villagers took their first step toward enforcing the judgment in Canada, where they filed a suit May 30th intended ultimately to garnish various revenue streams and assets held by Chevron through two subsidiaries in that country.  In Brazil, they are asking the country's highest civil court to recognize the Ecuadorian judgment so seizure actions can take place.

Filed in the Superior Tribunal of Justice in Brazil's capital of Brasilia, the suit targets Chevron operations that produce a daily average of 33,000 barrels of crude oil and 13 million cubic feet of natural gas.  Brazil, which has the sixth largest economy in the world, is considered a major strategic play for Chevron's long-term growth.

See the official complaint in Portuguese here and the unofficial English translation here.

Noted Brazilian litigator Sergio Bermudes represents the Ecuador rainforest communities. Bermudes founded his own law firm in 1969 and has successfully represented clients ranging from Fortune 500 companies such as Citigroup to political prisoners jailed during his country's military dictatorship in the 1970s. See here.

"I am honored to have been chosen by the indigenous peoples of Ecuador to help correct a gross violation of fundamental human rights visited upon them by Chevron," said Bermudes.  "After reviewing the lengthy trial record, I have no doubt the Ecuador judgment will be enforced in Brazil."

Bermudes added: "After an eight-year trial, Chevron's extreme recklessness and the grave damage it caused to the environment in Ecuador will not be reviewed by Brazilian courts.  The Superior Tribunal of Justice will only analyze whether the Ecuador decision meets the requirements of Brazilian law for enforcement of foreign judgments."

Brazil and Ecuador are signatories to a treaty that facilitates reciprocal enforcement of judgments among countries in Latin America, potentially streamlining the enforcement process and limiting the ability of a defendant to re-litigate issues already decided by the court that conducted the trial. Brazil allows interest to run on a foreign judgment during the pendency of the enforcement process, potentially adding substantial costs to Chevron should it adopt its traditional strategy of trying to delay the proceedings. 

Brazil has one of the largest proven oil reserves in the world and produces 2.3 million barrels daily. The country is Chevron's second largest production market in Latin America and one of the top ten markets in the world for the oil giant's capital spending. Chevron announced in 2011 that it planned to invest an additional $3 billion in Brazil by 2014.

Chevron already faces $22 billion in possible civil and criminal penalties in Brazil related to an offshore spill and related cover-up last November in the Frade field, a $3.6 billion deep water oil project that is one of Chevron's biggest capital investments in the world.  The Frade field is majority-owned and operated by Chevron, and has an estimated 300 million barrels in reserve.

Chevron also has two other significant offshore oil projects in development in the country, a large lubricant manufacturing plant, an industrial greases plant, and other smaller properties.

Pablo Fajardo, the 39-year-old lead lawyer for the Ecuadorians and the recipient of both the CNN "Hero" Award and the prestigious Goldman Environmental Prize (considered the "Nobel" of the environment), has said the Ecuador rainforest communities intend to file actions in a small number of countries to collect the entire amount of the judgment.

"We fought for almost two decades in court to win a legitimate judgment against a large American oil company that continues to treat Ecuador and its people as second-class citizens," said Fajardo, who grew up in poverty working in Ecuador's oil fields.

"While Chevron might think it can ignore court orders in Ecuador, it will be impossible for Chevron to ignore court orders in countries like Brazil and Canada where it maintains substantial assets," he added.

The judgment in Ecuador resulted from an eight-year trial that produced more than 64,000 soil and water samples that pointed to extensive contamination at hundreds of Chevron oil production sites in a large swath of Ecuador's Amazon, known as the Oriente.  The area was once one of the most bio-diverse ecosystems on earth.

Fajardo said that during the trial Chevron proposed that the Ecuador court use an arbitrary clean-up standard roughly 100 times more lax than required by law in the U.S., leading to charges it was discriminating against Ecuadorians. The company also threatened one judge with a criminal prosecution, tried to bribe another judge, lied about its scientific sampling results, and reportedly offered $1 billion to Ecuador's government to quash the case.  See here. (A video that explains Chevron's substandard operational practices in Ecuador and efforts to corrupt the trial can be seen here.)

Representatives of the affected communities, who meet every two months in the rainforest in a body called the Assembly of the Affected Ones (Asamblea de Afectados), praised the filing of the action in Brazil. Citizens of Ecuador have suffered from high rates of cancer, spontaneous miscarriages, and oil-related diseases due to Chevron's substandard production practices. See here, here, and here.

"The time has come to use the force of law to make Chevron clean up its pollution," said Luis Yanza, a rainforest community leader who has been battling Chevron over the issue since the early 1990s.  "No company, even one as rich and powerful as Chevron, is above the law."

The filing of the second enforcement action also comes at a time when Chevron shareholders are rebelling against company management over the risk posed by the Ecuador court judgment.

Last month, Chevron CEO John Watson suffered a stunning reprimand when investors holding over 38% of the company's shares (representing $73 billion worth of stock) voted for a resolution that directly challenged his authority because of the Ecuador case. Recently, 40 institutional shareholders representing $570 billion under management – including the New York state pension fund – urged the company to settle the Ecuador litigation.

Contact: Karen Hinton at 703-798-3109 or [email protected] 


SOURCE Amazon Defense Coalition