Chevron Selling Major Oil Assets in Canada While Trying to Escape $9.5B Pollution Debt Owed to Rainforest Villagers
TORONTO - Ecuador rainforest communities trying to seize Chevron assets in Canada to enforce their $9.5 billion pollution judgment say they are “extremely concerned” that the oil giant is undermining the rule of law by selling off critical assets prior to a major court hearing in Ontario where the company faces the possible collapse of its main defense.
Patricio Salazar, the lead Ecuadorian lawyer for the affected communities, announced that new research demonstrates that Chevron has sold or been in talks to sell close to $6 billion in Canadian assets since the case to enforce the Ecuador pollution judgment was filed in Toronto in 2012. The Chevron asset sales come at a time the Ecuadorian villagers have generated significant momentum in Canada in their effort to seize company assets by winning three consecutive unanimous appellate decisions – including one from Canada’s Supreme Court -- and are close to forcing the oil giant into a trial where it will have to defend itself against credible allegations of fraud and witness bribery employed to evade paying the liability.
Salazar said lawyers for the communities are considering “all legal options” to prevent Chevron from further dissipating assets in Canada prior to the conclusion of the enforcement litigation. Chevron sold its remaining assets in Ecuador – mostly Texaco service stations -- during the eight-year trial that resulted in the pollution judgment, rendering the indigenous and farmer groups unable to collect damages in their own country even though Chevron had insisted the trial take place there.
“We are extremely concerned that Chevron’s extensive asset sales in Canada are of such magnitude and frequency that they are disconnected from any legitimate business purpose and are designed to evade a legitimate court judgment,” said Salazar, who works for the Front for the Defense of the Amazon (FDA), the grass roots coalition which brought the case against Chevron and is seeking the collection of the judgment on behalf of 80 indigenous and farmer communities in the affected area.
The Canadian appellate court decisions in favor of the rainforest communities not only have shaken Chevron’s confidence in the outcome of the enforcement litigation – providing a possible motive to sell assets -- but they come at a time when the company’s large team of lawyers must appear in the Ontario Court of Appeal on April 17 to defend a problematic issue in the presence of national indigenous leaders from Ecuador and Canada. The last court hearing against Chevron was attended by former Canada National Chief Phil Fontaine and Greenpeace co-founder Rex Weyler, both of whom were highly critical of the company’s toxic dumping in Ecuador.
The issue in the upcoming court hearing – whether the Ecuadorians can collect their debt from Chevron’s wholly-owned subsidiary in Canada – will be argued by noted litigator Alan Lenczner and aboriginal rights specialist Peter Grant. If the Ecuadorians win, Chevron’s main technical defense to the enforcement action would completely collapse, leading to substantial additional financial risk for the company, according to observers.
Chevron has sought impunity in the case by claiming all assets held by its wholly-owned subsidiary in Canada should be immunized from collection, said Salazar. Given that Chevron operates in Canada and around the world only through 1,500 wholly-owned subsidiaries, if the company’s argument is accepted then the 30,000 Ecuadorians who live in the affected area (called the “Amazon Chernobyl” by locals) will never collect even one dollar of their judgment anywhere in the world.
“This is the ultimate in a cynical litigation strategy on the part of Chevron compounded by its chicanery around the asset sale issue,” said Salazar.
“Our larger fear is that the Chevron asset sales are part of a broader strategy to inflict yet more harm on the company’s indigenous victims in the rainforest, just as it did in Ecuador during the trial when it sold off assets as the pollution evidence mounted,” Salazar added. “We are exploring all legal options to address our concerns while the Ecuador enforcement litigation is pending. At a minimum, Chevron should give notice to the Canadian court when it seeks to sell any asset so a determination can be made as to whether the sale has a legitimate purpose.”
Luis Yanza, a Goldman Prize winner and community leader in Ecuador who helped to found the FDA, said: “Chevron has a long history of fraudulent behavior in Ecuador so we are not going to just sit back quietly and let major asset sales happen again in Canada without seeking an appropriate remedy depending on what facts are found. The lives of thousands of Ecuadorian indigenous persons and colonists are far more important at this point than Chevron’s selfish interests in continuing to play tricks with court proceedings.”
Chevron also has tried to prevent Grant, the aboriginal rights lawyer for the Ecuadorians, from arguing in open court that the judgment enforcement case against Chevron should be seen through the prism of indigenous rights instead of just corporate law -- a point that has infuriated some Canadian aboriginal groups, who believe the outcome of the enforcement case will impact their own efforts to achieve accountability for environmental harms caused by oil companies in their territories.
Research by lawyers for the rainforest villagers shows what Salazar calls a “disturbing level” of low-profile asset sales in Canada by Chevron and its wholly-owned subsidiary, Chevron Canada. Just last week, news outlets reported that Chevron is in talks to sell its large stake in the Kitimat Liquified Natural Gas Project in British Columbia.
In 2017, Chevron sold a $1.5 billion stake in its Burnaby refinery along with 129 service stations. The company in 2017 also was reportedly seeking to sell a $2.5 billion stake in its Athabasca tar sands project. Chevron also has sold significant stakes in various storage facilities and service stations, as well as a second tar sands project, according to the research. Given that Chevron is a company known for a secretive culture, it is likely in talks to sell even more assets in Canada that are not publicly disclosed, said Salazar.
The Chevron asset sales are controversial because after an arduous eight-year trial in Ecuador, the affected communities won the damages judgment after the company had accepted jurisdiction in the South American nation to avoid a jury trial in the United States. Chevron then announced it would not comply with the judgment, which later was unanimously affirmed by Ecuador’s Supreme Court. Chevron’s posture undermines the rule of law and forced the villagers to seek relief in Canada, where the company has substantial assets, said Salazar.
After reviewing 220,000 pages of evidence and 105 technical evidentiary reports, Ecuador’s trial court in 2011 found that Chevron deliberately dumped billions of gallons of cancer-causing toxic oil sludge into the rainforest and abandoned more than 1,000 open-air waste pits, decimating indigenous groups and poisoning an area the size of the U.S. state of Rhode Island. (See here for a summary of the evidence and here for the cancer data.) Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand.
Since losing the trial in Ecuador, Chevron has engaged in a pattern of bad faith conduct and fraud to evade paying the Ecuador liability, according to the evidence. A top-level Chevron official threatened the villagers with a “lifetime of litigation” if they continued pressing their claims, while Chevron’s General Counsel said, “We will fight this until hell freezes over, and then fight it out on the ice.” One Chevron lobbyist was quoted in Newsweek as saying: “We can’t let little countries screw around with big companies like this.” In an internal email, the company also admitted its defense strategy was to “demonize” the U.S. legal counsel for the Ecuadorians, Steven Donziger.
Chevron’s outside counsel at the Gibson Dunn law firm – led by a former New York City deputy mayor Randy Mastro -- also paid an admittedly corrupt witness at least $2 million to claim that Donziger approved a bribe of the Ecuador trial judge to be able to ghostwrite the judgment. The Chevron witness later admitted he perjured himself while a forensic report proved the ghostwriting allegation was false. (See here for a 33-page detailed report on Chevron’s fraud and this criminal referral letter to the Department of Justice regarding misconduct by the company and its lawyers.) Donziger asserts Chevron's false allegations are part of the company's criminal conspiracy to evade paying the judgment.
Gibson Dunn reportedly has billed Chevron well over $1 billion for its work on the case, which including coaching Guerra for 53 days prior to letting him present his false testimony in open court. The company has used at least 60 law firms and 2,000 legal personnel to attack the indigenous groups and their lawyers since the inception of the case.
In what appears to be another effort by Chevron to undermine the Canada enforcement litigation, company lobbyist and former Trump campaign manager Paul Manafort – now under criminal indictment in the United States – secretly met with Ecuador’s newly elected President(Lenin Moreno) last May in Quito to lobby him to try to quash the case. That meeting happened just days after Moreno’s election and prompted the rainforest peoples to issue a stern warning to Chevron not to engage in further acts of corruption.
Salazar made it clear that any Chevron argument that the indigenous villagers and farmer communities cannot move to block company asset sales in Canada because they do not have a judgment is wrong. “We do have a judgment against Chevron from the court where Chevron chose to litigate and where it accepted jurisdiction,” said Salazar. “The peoples of Ecuador have fought Chevron for two decades to achieve the judgment that has been put before Canadian courts. And Canada's Supreme Court clearly has decided they have a legitimate right to be in Canadian courts to enforce their judgment
“We repeat that Chevron has no right to engage in yet more corrupt acts to dissipate its assets such that the enforcement of the Ecuador judgment will be rendered futile at the end,” Salazar added.
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