Chevron Loses Environment Case Appeal
"The judgment is enforceable, and in fact is being enforced simultaneously in Canada, Brazil, Argentina and Colombia."
January 30, 2013 | Jude Webber | Source: The Financial Times
Buenos Aires, Argentina – Chevron has lost its appeal in Argentina against asset freezes to enforce an Ecuadorean judgment for the oil major to pay record $19bn damages for environmental pollution and must spell out the impact in its results statement on February 1 or risk violating SEC rules, a lawyer for the Amazonian plaintiffs said.
Enrique Bruchou, an Argentine lawyer for the plaintiffs, said the three-judge appeals panel in Buenos Aires made public their unanimous ruling on January 30.
"In the immediacy of Chevron submitting its fully audited 2012 financial statements, we hope this will help the company, and in particular its audit committee and its auditors, focus on the need of recognising and accruing the loss contingency in their 2012 financial statements, in compliance with clear guidelines of the SEC rules and US GAAP," Mr Bruchou said in a statement.
Those rules, he said, required that a company factor into its financial statements a loss if it is "probable" and can be "reasonably estimated".
"We see here much more than a mere "probable" negative outcome of a pending litigation. We have here a litigation which resulted in a $19bn judgment against Chevron, issued by the jurisdiction (Ecuador) chosen by Chevron . . . The judgment is enforceable, and in fact is being enforced simultaneously in Canada, Brazil, Argentina and Colombia," he added.
The Argentine asset freeze, which affects 100 per cent of Chevron Argentina's stock, worth some $2bn, all of its dividends, its entire 14 per cent stake in an oil pipeline company, 40 per cent of revenue from oil sales and 40 per cent of its Argentine bank accounts, followed similar action to enforce the judgment in Canada and Brazil in May and June respectively.
The enforcement order for Argentina also included Colombia, Mr Bruchou said, and similar action would follow soon in Asia, Oceania and Europe. There was no immediate word from Chevron about how the asset freeze would be accounted for on Friday.
Chevron, which has signed a $1bn deal with Argentine oil company YPF to develop vast shale reserves, says its Argentine units have nothing to do with the Ecuador ruling and there was no legal right to embargo assets in Argentina.
"Chevron respectfully disagrees with the court's decision. Chevron Argentina intends to pursue all available legal remedies to reverse the interim measure," said James Craig, a spokesman for Chevron Corp.
"Chevron's view of the situation remains unchanged; the precautionary embargo is unfounded and based on a judicial fraud in Ecuador. If the plaintiffs' lawyers believed they had a legitimate judgment they would seek to enforce it in the United States, where Chevron Corporation resides. It's precisely because of the plaintiffs' lawyers' fraud that they are now in Argentina instead of the United States," he said.
Chevron says a sworn statement filed in a federal court this week by a disgraced former Ecuadorean judge, Alberto Guerra, in which he admitted being paid thousands of dollars by the plaintiffs' lawyers and a later judge for illegally ghostwriting judicial orders and steering the case in the plaintiffs' favour, proved its point that the Ecuadorean trial was fraudulent.
"Chevron urges additional whistleblowers in Ecuador, the United States, and elsewhere to come forward," the company said in a statement. "It is never too late to tell the truth."