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September 12, 2013

Chevron Drops Damage Claims Against Ecuadorians
    by Robert Kropp

The oil company also requests that Judge Lewis Kaplan and not a jury decide its RICO lawsuit, and that defendants be barred from introducing evidence of environmental destruction in Ecuador.

SocialFunds.com -- The lengths to which Chevron will go to avoid a $19 billion judgment against it for environmental destruction in Ecuador must have at least some sustainable investors reconsidering their commitment to corporate engagement over divestment. The company's current strategy consists of a RICO lawsuit against Ecuadorian villagers and Steven Donziger, their attorney, in which it has asked for $60 billion in damages.

The trial, which is scheduled to begin on October 15th, will be heard by Judge Lewis Kaplan, who has consistently ruled in favor of Chevron. Kaplan himself will be the subject of a petition for recusal that will heard by an appellate panel later this month. “The scheduling of such an argument just before trial is a rare occurrence and suggests the higher court is watching Kaplan with great scrutiny,” stated the law firm of Chris Gowan, which is advising the defendants in the lawsuit.

Chevron's most recent maneuver in the RICO case “suggests it does not believe its own allegations,” Gowan's law office stated in a press release. Chevron told Judge Kaplan that it was willing to drop the damages claim against the Ecuadorians if he agreed to deny the defendants a jury trial. Defendants in US courts are entitled to a jury trial when monetary damages are at stake.

“Chevron also demanded that federal judge Lewis A. Kaplan bar all evidence of the company’s extensive record of environmental pollution in Ecuador and that he conduct secret proceedings for certain witnesses where the defendants will be booted out of the courtroom,” the press release continued.

“Chevron has shown over and over that its only legal strategy is to outspend everyone and continue to run from the law for another twenty years,” said Chris Gowen. “When a litigant tries to avoid a jury, you can be certain that litigant knows it has no case.”

Despite having originally requested that the case against it for environmental destruction be heard in Ecuador, Chevron has consistently argued that that the $19 billion judgment in favor of the Ecuadorian villagers was fraudulent. “Chevron has uncovered extensive evidence that the 2011 Ecuadorian judgment was fraudulently obtained by the Lago Agrio plaintiffs,” Bloomberg reported a company spokesperson as stating. “The equitable relief Chevron continues to seek against the Lago Agrio plaintiffs will enable us to protect our assets, and those of our subsidiaries, from being seized by the Lago Agrio plaintiffs or in their name.”

Chevron has used its allegations of fraud as justification for misrepresenting to shareowners the judgment's impact. "CEO John Watson and his senior management have chosen to keep their shareholders and the financial markets in the dark by misrepresenting basic facts in its public disclosures," a a report by attorney Graham Erion states, "perhaps to artificially prop up its share price, or, in the case of John Watson, to keep his job."

In 2012, three sustainable investment organizations—the Unitarian Universalist Association (UUA), Zevin Asset Management, and Newground Social Investment—wrote to the SEC earlier this year, requesting that it launch an investigation into "evidence that the company is violating securities laws by repeatedly making misrepresentations and material omissions regarding its adverse judgment in Ecuador of $18.1 billion for despoiling the environment."

In retaliation, Chevron's lawyers served shareowner advocate Simon Billenness, Trillium Asset Management, and others with subpoenas requesting access to all correspondence relating to their shareowner advocacy practices.

That Chevron is using shareowner funds to take action against its own shareowners is practically unprecedented, Billenness told SocialFunds.com last year.

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