NEW YORK (Legal Newsline) - New York Comptroller Thomas DiNapoli and a coalition of Chevron Corp. investors released a letter Wednesday urging the oil giant to settle its 20-year legal battle with indigenous populations in the Amazon rainforest.
"We urge Chevron to use the Aguinda v. Texaco verdict earlier this year to take a fresh look at its options to address Texaco's legacy in the Ecuadorian rainforest," the letter said.
The long-running case alleges that Texaco, which merged with Chevron 10 years ago, destroyed huge tracts of the rainforest by dumping billions of gallons of oil waste products over several decades.
Citing the "grave reputational damage" Chevron has suffered due to the lawsuit, DiNapoli and other investors called on the company to promptly negotiate a reasonable settlement to prevent further shareholder damage.
"It's time for Chevron to face reality," DiNapoli said in a statement. "The effects of this horrific, uncontrolled pollution of the Amazon rainforest are still being felt today. Investors don't derive any benefit from this never-ending courtroom drama.
"The entire case is looming like a hammer over shareholders' heads. Chevron should start fresh with a new approach that embraces environmental responsibility and risk management as part of its corporate culture. More legal proceedings will only delay the inevitable."
DiNapoli, as New York's comptroller, is the trustee of the $140.6 billion New York State Common Retirement Fund, which owns 7.5 million Chevron shares worth an estimated $780 million.
"In failing to negotiate a reasonable settlement prior to the Ecuadorian court's ruling against the company, we believe that Chevron displayed poor judgment that has led investors to question whether our Company's leadership can properly manage the array of environmental challenges and risks that it faces," the letter said.
"We call upon Chevron to fully disclose to shareholders the risks to its operations and business from the potential enforcement of the Aguinda verdict. We also call upon the Company to reevaluate whether endless litigation in the Aguinda case is the best strategy for the Company and its shareholders, or whether a more productive approach, such as reaching an equitable negotiated settlement, could be employed to protect shareholder investments and prevent any further reputational harm due to protracted litigation."
For nearly 25 years, beginning in 1964, Texaco and its joint venture partner Petroecuador dumped nearly 16 billion gallons of oil waste products into the Amazon rainforest. The two companies also spilled nearly 17 million gallons of oil from their trans-Ecuadorian pipeline operation between 1971 and 1991 -- 50 percent more oil than was spilled by the Exxon Valdez crash.
In a previous letter, sent in November 2008, DiNapoli called on Chevron's board of directors to come to an equitable settlement to avoid substantial penalties in an Ecuadorian court.
But Chevron refused to negotiate, and in February the Ecuadorian Provincial Court awarded plaintiffs nearly $18 billion in compensatory and punitive damages. The Ecuadorian court judgment is the second-largest of its kind, topped only by BP's $20 billion fund established to settle claims stemming from last year's Gulf of Mexico oil spill.
About the same time, Chevron filed a racketeering lawsuit, alleging that the Ecuador lawsuit 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 Chevron.
Those shareholders who signed the letter include: the American Federation of Labor-Congress of Industrial Organizations, Batierente (Canada), Boston Common Asset Management, Catholic Health Partners, Catholic Healthcare West, Christopher Reynolds Foundation, International Brotherhood of Teamsters General Fund, Mercy Investment Services, Missionary Oblates of Mary Immaculate, Oneida Trust, Oxfam America, Pinnacle Investment Advisors, School Sisters of Notre Dame Cooperative Investment Fund, SHARE (Canada), Sisters of Notre Dame of Toledo, Ohio, Sisters of St. Joseph of Springfield, Mass., Spring Water Asset Management, Trillium Asset Management Corporation, Unitarian Universalist Association, United Food and Commercial Workers International Union CLC and Zevin Asset Management LLC.
Also Wednesday, DiNapoli announced that he has co-sponsored a proposal calling for the appointment an independent board director with a high level of environmental expertise. Shareholders were expected to vote on the resolution at Chevron's annual meeting Wednesday.
From Legal Newsline: Reach Jessica Karmasek by e-mail at email@example.com.