N.Y. Comptroller says Chevron should settle Ecuador lawsuit

Jessica M. Karmasek Oct. 5, 2011, 11:42am


NEW YORK (Legal Newsline) - New York State Comptroller Thomas DiNapoli is urging Chevron to "do what's right for its investors" and "its future viability," and negotiate a fair settlement with a group of Ecuadorians suing the company.

"Chevron, its shareholders and the general public have not and will not benefit from a never-ending courtroom drama," DiNapoli wrote in a guest column on the Huffington Post's website last week.

As comptroller, DiNapoli serves as trustee of New York's $146.9 billion Common Retirement Fund, which holds nearly $780 million worth of Chevron stock and benefits more than 1 million public workers, retirees and their beneficiaries.

DiNapoli says he fears the case could have an impact on the pension fund.

"The fund benefits when its portfolio companies remain profitable by pursuing responsible and sustainable business policies in the communities in which they operate. Chevron is no exception," he wrote.

The comptroller is the highest-profile shareholder to make such a call.

And the timing couldn't come at a worse time for Chevron.

Last month, the oil giant suffered what some consider to be a major setback in a federal appeals court.

The U.S. Court of Appeals for the Second Circuit ordered that a preliminary injunction blocking worldwide enforcement of a multibillion-dollar judgment against Chevron be vacated.

The Second Circuit also stayed an upcoming November trial by U.S. District Judge Lewis Kaplan that Chevron sought on the enforceability of the judgment.

In February, an Ecuadorian court found Chevron liable for dumping billions of gallons of toxic waste into the Amazon, causing an outbreak of disease and decimating indigenous groups. Damages were found to be up to $18 billion.

Chevron, which has vowed never to pay the judgment, filed a racketeering lawsuit, alleging that the Ecuador suit has been used to threaten the oil company, mislead U.S. government officials, and harass and intimidate its employees -- all to extort a financial settlement from the company.

In March, Kaplan issued an injunction blocking enforcement of the judgment.

While Chevron says it is "disappointed" that the November trial has been stayed, the company says it remains committed to its "consistent goal" -- obtaining judicial review on the merits of the Ecuadorian plaintiffs' lawyers' fraud before they are allowed to attempt enforcement of the Ecuadorian judgment.

Chevron says it remains confident that once the full facts are examined, the judgment will be found unenforceable and those who procured it will be required to answer for their misconduct.

The Ecuadorians deny all of the charges Chevron has made about fraud in the case.

DiNapoli says the appeals court's decision makes it "more likely than ever" that Chevron will be forced to make a massive payout to the people of the Ecuadorian Amazon.

The comptroller says the once prosperous base for Amazonian drilling operations for sulfur-rich "sour crude" petroleum is now "the center of what amounts to an industrial cancer zone," larger than the state of Rhode Island.

"Its population is surrounded by poisoned farmland and heavily polluted waterways and burdened with elevated rates of disease," he wrote.

DiNapoli says he has asked Chevron to appoint an independent board member with expertise in environmental matters to prevent such disease and devastation from ever happening again.

The comptroller also points to last year's Gulf oil spill.

An explosion and fire occurred on Transocean's drilling rig Deepwater Horizon, licensed to BP, on April 20, 2010, killing 11 workers and resulting in the largest offshore spill in U.S. history.

"The conclusion to draw from Chevron's case in Ecuador, and BP's $20 billion fund to compensate those victimized by the Deepwater Horizon disaster, could not be more clear: short term profits at the expense of environmental protection and human rights often cost companies more in the long term," he wrote.

DiNapoli says it's time for the energy industry to "start afresh" with a new approach to environmental responsibility and risk management, both domestically and internationally.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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