Eye on the Amazon

Countdown Begins for Chevron in Canada

Photo from Crude Reflections

After months of suspense, the Ecuadorian rainforest communities have finally opened up the first front in what is likely to be a worldwide legal battle to force Chevron to pay its $18 billion ruling for environmental devastation in the Amazon.

On May 30, the Ecuadorians' Canadian lawyer, Alan Lenczner, filed suit in Ontario provincial court in Toronto, asking the court to seize the company's subsidiaries, Chevron Canada Ltd. and Chevron Finance Canada Ltd. These two companies' assets include offshore oil production in Newfoundland, tar sands operations in Alberta, and a refinery and gasoline stations in British Columbia.

Here is the filing, and here is a Q&A issued by the legal team.

Lenczner, one of Canada's most prominent litigators, asked the court to appoint a receiver over Chevron's assets, which would then be sold to pay the Ecuadorian ruling.

Legal observers quoted in media reports said Canada's courts generally defer to foreign courts' judgments. Unlike the United States, where unilateralism and America-first "exceptionalism" dominate debates over international issues, Canadian political and legal culture is generally respectful of international law.

The Ecuadorians are expected to file similar motions in other nations, seeking to add to the pressure on Chevron. Plaintiffs' attorney Pablo Fajardo has mentioned Venezuela (home to huge Chevron oil production operations) and Panama (where Chevron tankers often transit the canal) as likely targets.

The upshot is that Chevron's octopus-like worldwide presence has gone from being a strength to a critical weakness for the company. A legal sword of Damocles is swinging in the air, but where it will fall next, nobody outside the legal team knows. The company is embroiled in bitter controversies in many nations, including Australia, Angola, Brazil, Nigeria and Kazakhstan. Will one of those countries finally say "enough"?

For a summary of this rogue's gallery of misconduct, see the True Cost of Chevron report.

In the meantime, Chevron may face trouble much closer to home. On June 6th, Rep. Jan Schakowsky, D-Ill., wrote a letter to Mary Schapiro, chair of the Securities and Exchange Commission, asking her to investigate whether Chevron has concealed from the investment community the danger of its potential multi-billion-dollar liability in Ecuador.

Schakowsky referred to a recent report by Graham Erion, one of the Ecuadorians' attorneys, Chevron's Misrepresentations in Public Filings Regarding its $18.1 Billion Environmental Liability in Ecuador.

Schakowsky wrote: "Chevron may have failed, over a period of years continuing through the present time, to disclose material information to investors concerning the likelihood, scope and impact of its potential liability for massive environmental damage to a large part of the Ecuadorian rainforest and the associated health and other negative effects of that damage upon tens of thousands of indigenous farmers and individuals."

Legal nightmares in Canada and possible SEC investigations at home are part of the ever-mounting pressures facing Chevron CEO John Watson. These pressures – and the danger for company shareholders – will keep rising until Chevron owns up to its responsibility to clean up its shameful mess in Ecuador.

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