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VIDEOThe Bad Boys of Business: Chevron
Is "big oil" always synoymous with "guilty"?
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Chevron (CVX) may be about to fall down the rabbit hole -- Ecuadorian division.
That would suit some greenies and others for whom the sleazy, cheese-ball mendacity of Big Oil is a matter of faith.
The facts are a little more complicated and underscore a basic point: Turning gunky oil into smelly gasoline is a messy business.
There’s no doubt that the Ecuadorian rain forest has been damaged by oil exploration. Billions of gallons of toxic waste were illegally dumped into unlined pits. Rivers and streams reportedly glisten with shimmering layers of oil. Pasture land has been destroyed. The question is: Who’s responsible?
For some, the case is closed because “Big Oil” is synonymous with “Guilty!” But Chevron never drilled in Ecuador. The company acquired Texaco in 2001 and Texaco operated in Ecuador from 1964 to 1990. This means there’s zilch for the court to seize, should it rule against Chevron.
The class-action lawsuit also raises a basic question about the evidence, even for those who are ready to flog an oil company simply because it’s an oil company: Is it possible to determine Texaco’s culpability, if any, nearly 20 years after the company ceased operations in Ecuador?
The Ecuadorian court may slap Chevron with damages as high as $27 billion. After that, the case may come close to mugging logic.
“A personal injury law firm stands to make a significant windfall trying to force Chevron to clean up another company’s mess,” says Kent Robertson, a spokesman for Chevron. “The plaintiffs are choosing to ignore Petroecuador’s and the government of Ecuador’s role and obligation to perform their share of the cleanup. Texaco was assigned 37.5% of the work – and all work was performed between 1995 and 1998. We believe the case has become politicized and the remaining remedial work required is sole obligation of Petroecuador.”
Ecuadorians who need money to put their lives back together shouldn’t count on a quick payout because the case is likely to drag on for years after the court announces its decision. The 1989 Exxon (XOM) Valdez oil spill case in Alaska continued for about 20 years. After appeals and lengthy negotiations, the settlement totaled about $507.5 million, down from the $5 billion in punitive damages awarded by an Anchorage jury in 1994.
Relax, because the Chevron case gets kookier.
Chevron challenges the scientific evidence in the case and has been prevented from checking the credentials of those who prepared the report critical of the oil company’s actions in Ecuador.
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