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The Chevron case and Ecuador’s peculiar justice system

It’s not easy to portray an international oil company in a sympathetic light, but Ecuadorean President Rafael Correa has managed to pull it off. At first blush, an Ecuadorean court’s recent $8.6 billion dollar judgment against Chevron for environmental damages — which made headlines around the world — appears to be something out of an ...

RODRIGO BUENDIA/AFP/Getty Images
RODRIGO BUENDIA/AFP/Getty Images
RODRIGO BUENDIA/AFP/Getty Images

It's not easy to portray an international oil company in a sympathetic light, but Ecuadorean President Rafael Correa has managed to pull it off. At first blush, an Ecuadorean court's recent $8.6 billion dollar judgment against Chevron for environmental damages -- which made headlines around the world -- appears to be something out of an anthropology major's most garish fantasy: a multinational company despoils a pristine rain forest, sickening its indigenous residents, refuses to pay, and then receives its comeuppance in a court of law.

However, as one begins to strip away the layers, the case resembles more a shady attempt to shakedown a large multinational that says infinitely more about the shortcomings of Ecuadorean justice than it does about who did what to whom and who is responsible.

It would be impossible in this space to recount all the twists and turns in a case that has been in litigation for the past 18 years, but the basic facts are these: From 1964 to 1992, Texaco, which Chevron acquired in 2001, operated in northeastern Ecuador in a minority partnership with the state-owned oil company, Petroecuador. When the concession expired, Texaco left the country, but not before reaching a $40 million agreement with the government to clean up a portion of the area. It was then released from all future liability. Petroecuador has continued to operate in the area up until this day.

It’s not easy to portray an international oil company in a sympathetic light, but Ecuadorean President Rafael Correa has managed to pull it off. At first blush, an Ecuadorean court’s recent $8.6 billion dollar judgment against Chevron for environmental damages — which made headlines around the world — appears to be something out of an anthropology major’s most garish fantasy: a multinational company despoils a pristine rain forest, sickening its indigenous residents, refuses to pay, and then receives its comeuppance in a court of law.

However, as one begins to strip away the layers, the case resembles more a shady attempt to shakedown a large multinational that says infinitely more about the shortcomings of Ecuadorean justice than it does about who did what to whom and who is responsible.

It would be impossible in this space to recount all the twists and turns in a case that has been in litigation for the past 18 years, but the basic facts are these: From 1964 to 1992, Texaco, which Chevron acquired in 2001, operated in northeastern Ecuador in a minority partnership with the state-owned oil company, Petroecuador. When the concession expired, Texaco left the country, but not before reaching a $40 million agreement with the government to clean up a portion of the area. It was then released from all future liability. Petroecuador has continued to operate in the area up until this day.

Chevron, which inherited the lawsuit when it acquired Texaco, has argued that Texaco met its obligations under the previous agreement and that any further remediation is the responsibility of Petroecuador. The plaintiffs have disavowed the agreement and assert Chevron owes billions more on behalf of Texaco, even though neither has drilled in Ecuador in almost twenty years. (Competing websites on the case can be found here and here.)

Yet for all the hoopla surrounding the case, it is unlikely that the plaintiffs will receive one cent from the judgment. It’s not just that Chevron owns no assets in Ecuador, but that no responsible court anywhere in the world is likely to support seizing Chevron assets based on a verdict tainted by such flagrant political interference, judicial and plaintiff misconduct, and double standards of justice. (This week, a federal judge in New York extended a temporary order banning any collection of the judgment.)

Particularly damaging to any sense of due process in the case has been the actions of the Correa government. According to Investor’s Business Daily, not only have "the plaintiffs been repeatedly caught in embarrassing acts of fraud and collusion with the Ecuadorean government and its courts," but, "It’s been so bad — an Ecuadorean judge was caught on candid camera telling plaintiffs the fix was in on his future ruling, and an ‘independent assessor’ was caught on film outtakes colluding with plaintiffs — that the entire court system is clearly compromised."

President Correa himself has been waving the bloody shirt, declaring Texaco guilty of "crimes against humanity," threatening judges with prosecution if they don’t support the government’s position, and offering the plaintiffs state resources to pursue their case.

Indeed, as if such flagrant trampling on the rights of the defendants were not enough, contrast the Correa government’s untoward behavior in the Chevron case with that of another environmental crisis in a different part of Ecuador.

In the town of Tenguel, in the banana-growing province of Guayas, a local environmental activist, Esther Landetta, has been waging a lonely — and dangerous — battle against the ongoing contamination of four rivers as a result of irregular and unmonitored mining activities that have been discharging toxic waste into the waters, endangering the health of the local population and threatening their agricultural livelihoods.

Amnesty International has profiled Ms. Landetta’s case as a result of the intimidation and death threats she has received for her campaign to get the government to stop the contamination of the region’s rivers. Her pleas have fallen on deaf ears, however, primarily because she says the processing plant causing most of the pollution happens to be owned by a close advisor to President Correa, Galo Borja, a former Coordinating Minister for Strategic Industries and former Undersecretary of Foreign Trade.

Ms. Landetta told the Ecuadorean magazine Gestión, "I always said that, while this man (Borja) is high above in power, it will be difficult to have our rivers free of mining." She also said she secured a meeting with President Correa to discuss the matter, but that as she began to explain the problem, "He just got up and left, right in the middle of conversation. He would not hear anything."

Clearly, in Ecuador, such double standards indicate that the Correa government is less interested in seeking justice than it is in making sure the most expedient ox is gored. Attacking a huge oil multinational like Chevron makes for great politics at home and allows Correa to deflect scrutiny of his own state oil company’s culpability in the matter. But turn the spotlight of justice around on the radical populist and all of a sudden they have another appointment that they forgot about. Of course, scapegoating has always been an essential part of the populist toolkit. But while targeting alleged, high-profile culprits may be entertaining to some, the resulting damage to rule of law and the interests of all Ecuadoreans is no laughing matter.

José R. Cárdenas was acting assistant administrator for Latin America at the U.S. Agency for International Development in the George W. Bush administration.

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