Ecuador’s Pricey PR Fuels Fight Against Chevron in Pollution Case – Businessweek
Parables help us make sense of a mysterious world. Slow and steady, the tortoise teaches the hare a lesson in overconfidence. David has a surprise for towering Goliath. Lawyers and environmental activists fighting Chevron (CVX) in a closely watched oil pollution case in Ecuador invoke an inherently appealing theme of poor, rural underdogs taking on a rich, cosmopolitan foe. Fresh filings with the U.S. Department of Justice provide a reminder, however, that the rain forest-contamination conflict is more complicated than a fable.
Filings under the Foreign Agents Registration Act (FARA) by two U.S.-based public-relations firms reveal extensive support the government of Ecuador is providing the plaintiffs’ side in a long-running legal campaign to hold Chevron liable for pollution in the Amazon. During just a one-year period ending in April, Ecuador paid more than $6.4 million for the services of two U.S. PR firms, “a stunning figure in the niche business of foreign government lobbying,” according to a June 10 report by The Hill, a Washington publication expert in such matters.
The filings by PR firms MCSquared and FitzGibbon Media came in the wake of my earlier dispatches (here and here) about dubious anti-Chevron protests. TheWashington Free Beacon subsequently reported on June 17 that the justice department hadn’t been notified under FARA of these foreign-funded advocacy efforts.
In FARA filings dated July 3 and 7, the two PR firms indicated that their work for related to advocacy that Chevron ought to pay a multibillion-dollar judgment imposed by an Ecuadorian court in February 2011. Led by New York lawyer Steven Donziger, a team representing rain forest residents is trying in courts in Canada, Argentina, and Brazil to collect on a verdict now valued at $9.5 billion. Chevron has refused to pay in Ecuador, where the company has no assets to speak of.
The main obstacle to Donziger’s collecting in third countries is a ruling in March by U.S. District Judge Lewis Kaplan in New York who, at Chevron’s behest, found that the American attorney obtained the pollution verdict by orchestrating a vast extortion racket. Kaplan ruled that Donziger fabricated evidence, bribed judges, and used coercion. Donziger denies those findings and is appealing.
In papers filed with the U.S. Court of Appeals for the Second Circuit, Donziger portrays himself as an underfunded idealist confronting a company willing to spend any amount to avoid losing in court. There’s some truth to the latter part of that portrayal; Chevron has certainly gone to great lengths, no matter the expense, to prove it was the victim of a massive fraud in Ecuador.
What the FARA filings show, though, is that Donziger is anything but a lonely warrior. Rather than a battle pitting indigent farmers and tribe members against an omnipotent oil producer—which is how Donziger and his celebrity cheerleaders portray the confrontation—this conflict involves a sovereign nation seeking to shift the cost of a complex problem to the balance sheet of a foreign corporation. Viewing the clash realistically doesn’t answer the question of who’s ultimately culpable for a history of environmental devastation. It does broaden the circle of potentially responsible parties in a way not captured by simplistic morality tale.
Beginning in the 1960s, Ecuador invited foreign oil companies to drill for oil. The country retained the vast majority of the proceeds from sale of that oil, via taxes and royalties. The Quito government certified cleanups as adequate and committed by contract to remedy polluted sites, which, in fact, the Ecuadorian national oil company only recontaminated when it assumed control in the 1990s.
Texaco, which Chevron acquired in 2001, left a legacy of shoddy corporate conduct in the rain forest. Chevron maintains that on its way out of Ecuador, Texaco was released from any further legal obligations by the Quito government. Moral obligations might be another matter.
Overall as a nation, Ecuador profited from Texaco’s misconduct, even as some of its poorest citizens, who lived in close proximity to the oil operations, suffered terribly. For a quarter century, Ecuador has made environmental matters worse in its oil zone while insisting that only Chevron is to blame. The FARA filings show Quito spending millions to promote anti-Chevron protests and issue anti-Chevron press releases in what looks to be a campaign to distract attention from that country’s duty to help its own people.