Ecuadorean Groups Challenge Chevron-Texaco Merger

Ecuadorean communities have taken to the US airwaves since late last week to oppose the merger of Chevron and Texaco.

A coalition of environmental groups hopes that the campaign will also draw attention to a multibillion-dollar lawsuit against Texaco for alleged environmental abuses on indigenous lands in Ecuador's Amazon rainforest.

In a television advertisement appearing in New York, Washington DC, and San Francisco, an oilman in a Texaco uniform drives up to a well-manicured suburban home and sprays dark crude oil over the lawn as parents and children watch in horror.

"This is what Texaco did to thousands of people of color in the rainforest in Ecuador," the advertisement asserts.

Texaco – which pulled out of Ecuador in 1992 and has not been involved in any kind of activity in the Andean nation since then – has repeatedly denied all charges that it polluted the Amazon.

The advertisement forms part of a campaign warning shareholders of San Francisco-based Chevron that, if the two majors merge, Chevron could be forced to pay millions of dollars to settle environmental lawsuits.

Attorneys representing the Ecuadoreans also have filed a complaint with the US Securities and Exchange Commission (SEC). The complaint alleges that when Chevron applied for the merger, it failed to disclose the potential Texaco liability to the agency and company shareholders.

"Our hope is that Chevron and the SEC will pressure Texaco to clean up this mess before letting the merger go through," said Luis Yanza, president of the Amazon Defense Front, an organization representing the affected communities.

The merger would make Chevron Texaco the second-largest oil company in the US, after Exxon Mobil. The merger is due to be completed in early October.

Fred Gorell, a spokesman for Chevron, said the SEC had never raised the possibility of this kind of lawsuit against the company during discussions about the proposed merger with Texaco. “As a matter of due diligence in the course of the merger, we certainly have reviewed the case, as we have other matters," Gorell was quoted as saying.

The class-action suit against Texaco charges that during two decades of oil drilling in the Amazon, the company dumped more than 3,000 gallons of crude oil into the rain forest. The plaintiffs also claim that the company ignored oil industry standards. Instead of reinjecting waste back into the ground, the plaintiffs claim that Texaco dumped a toxic cocktail of chemicals into unlined pits that reached streams and eventually polluted major waterways.

The resulting contamination of streams has killed fish and wild game on which indigenous communities rely for food, claims the lawsuit.

"While Texaco continues to try to hide from its liability, our people are sick and dying," said Yanza.

Lawyers for the plaintiffs estimate that Texaco saved $3-$4/barrel – a total of $6 billion over the company's 20 years of operation in Ecuador – by dumping the waste into the water rather than reinjecting it.

The plaintiffs have assessed damages allegedly caused by the oil company at more than $1 billion. In a statement, they warned that, if the case goes to trial, “punitive damages against Texaco could increase that amount significantly."

Texaco has maintained that the current lawsuit has no basis and should be heard in Ecuador, not the US.

"Texaco was firmly committed to the protection of people and the environment in those areas where we operated," the company said in a written statement.

In 1995, Texaco subsidiary TexPet agreed to clean up contamination from oil spills that had affected indigenous communities. The company said it paid about $40 million in clean-up costs. According to the plaintiffs, the agreement did not compensate the affected communities.

The case has been pending in the US since November 1993.

Steven Donziger, a lawyer representing the plaintiffs, said the cost of the television advertisements is being covered by a legal defense fund made up of contributions from a number of benefactors.

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