Chevron Paid Thousands to Influence Government Trade Talks

Washington, DC–(ENEWSPF)–February 24, 2012.  Chevron Corp. paid thousands of dollars to sponsor an exclusive corporate reception today in Washington, DC, which will be attended by foreign ambassadors and U.S. state governors, in an effort to influence ongoing talks of the Trans-Pacific Partnership (TPP).  This influence peddling occurs on the heels of Chevron’s latest attempt to evade justice in a historic Ecuadorian Amazon contamination case by using extreme foreign investor rights in a little-known investment treaty—rights which would be expanded to eight new countries under the TPP.   

Last Friday, Chevron used this arcane provision in the U.S. Ecuador Bi-Lateral Trade Agreement (BIT) to ask a secret foreign tribunal to allow them to avoid complying with a court judgment to pay $18 billion in environmental cleanup costs. The controversial legal instrument, known as ‘investor-state’ enforcement, allows corporations to sue nations to avoid regulations and potentially even overturn national court rulings. After 18 years of litigation in U.S. and Ecuadorian courts, Chevron was ordered to pay $18 billion to cover the cleanup costs in the Amazonian region of Lago Agrio. For over three decades of oil drilling in Ecuador’s Amazon, Chevron dumped billions of gallons of toxic waste into waterways, left toxic pits of sludge in the open air and created a humanitarian crisis that affected thousands of local people.  

“Chevron won’t pay to clean up the 18 billion gallons of toxic oil waste it deliberately dumped in the Ecuadorian Amazon, which has resulted in a human health crisis for the people living in the region. But it will pay thousands to lobby state leaders and ambassadors to extend its extreme investor rights, and continue to evade justice elsewhere,” said Ginger Cassady, campaign director at Rainforest Action Network. “The expansion of the ‘investor-state’ system to eight more countries would allow companies like Chevron to continue to disregard the environment and public health, knowing they have this trade provision to protect them against liability.”

“Chevron’s own misuse of ‘investor-state’ arbitration is proof that this system should not be allowed in any new trade deal, despite what corporate lobbyists for Chevron or Phillip Morris may say,” said Robert Collier, Corporate Campaigns Director for Amazon Watch. “Today it’s the Ecuadorian Amazon rainforest inhabitants who are getting the shaft from the investor-state system. Tomorrow, it may be U.S. environmental protections and court rulings that are vetoed by these international corporate star chambers, which is probably why Chevron sees sponsorship of the Trans-Pacific Partnership event as such a great opportunity.”

The TPP is being negotiated behind closed doors. Members of the press, the public and even elected officials in Congress are forbidden to see any of the draft agreement. However, the process is open to 600 official U.S. corporate “trade advisors,” including the companies sponsoring Friday’s soiree. The next round of the talks will be in Melbourne Australia the first week of March.  


Chevron- Ecuador Case:

In 2002, to avoid a trial in U.S. federal court, Chevron selected Ecuador as the venue to resolve the legal claims of indigenous groups and farmer communities affected by the company’s oil operations in the Amazon region of that country. Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand; during this time it admitted to dumping more than 16 billion gallons of toxic “water of formation” into the streams and rivers used by local inhabitants for their drinking water, decimating indigenous groups and causing dramatically increased rates of cancer.

In 2011, after conducting an eight-year trial that generated over 220,000 pages of evidence, the Ecuador court ordered Chevron to pay $18 billion for a clean-up.  An Ecuadorian appellate court affirmed the decision on January 3, 2012.  Anticipating an adverse judgment, Chevron had stripped its assets from Ecuador.  Its executives vowed never to pay despite having promised U.S. courts that it would abide by the decision as a condition of moving the trial to Ecuador.

Arbitration as Escape Hatch:

Having lost on the merits, Chevron sought to escape its liability by commencing a private arbitration to shift the clean-up costs to Ecuador’s government.  Essentially, Chevron – one of the wealthiest corporations on the planet with revenues of $240 billion in 2011 – sought a taxpayer-funded bailout in Ecuador where the per capita income is $4,000 per annum.  In other words, it wants the victims of its contamination to pay for the clean-up of their ancestral lands – sort of like executing someone before a firing squad and sending their family an invoice for the bullets.

U.S.-Ecuador Bilateral Investment Treaty:

 The tool for Chevron’s latest maneuver is to convene a secret investment arbitration panel under the U.S.-Ecuador Bilateral Investment Treaty, or BIT.  The U.S.-Ecuador BIT allows U.S. investors to seek monetary damages from the government of Ecuador if they can show unfair treatment.  In this case, Chevron has turned the treaty on its head to use it as a tool to try to immunize itself from liability in a private litigation.  Further, the BIT should not even be available to Chevron given that it took effect in 1997, five years after the oil company abandoned its Ecuador operations.  Interestingly, Chevron has retained as a consultant to its legal team the former Ecuador foreign minister (Benjamin Ortiz) who negotiated the BIT that the company now uses to evade its legal obligations.

The investor arbitration is a grossly unfair process.  The panel of three arbitrators – all private sector lawyers – meet in secret.  They reap enormous sums of money so they are incentivized to assert “jurisdiction” over any claim, regardless of how trivial or abusive.  Members of the panel claim the outrageous power to override decisions of any public court system of any sovereign nation.  Rules prohibit third parties who are the most affected (such as the rainforest communities) from even appearing.  Chevron essentially gets a private “court” where it has no effective opposition.  In reality, the arbitration panel in this instance is functioning as a “kangaroo court” that violates any notion of due process and flouts the fundamental human rights of thousands of Ecuadorians to seek legal redress for the contamination. 

Last Friday, the secret ‘investor-state’ tribunal ordered the Ecuadorian government to stop its courts from enforcing the $18 billion penalty. Essentially, the tribunal demanded that the Ecuadorian executive branch violate its own constitution and tell the independent judiciary to stop enforcement. This would be like President Obama telling the Supreme Court not to rule on something. 


Rainforest Action Network runs hard-hitting campaigns to break North America’s fossil fuels addiction, protect endangered forests and Indigenous rights, and stop destructive investments around the world through education, grassroots organizing, and non-violent direct action. For more information, please visit: www.ran.org

Source: ran.org