Chevron Facing $US8bn Fines Over Amazon Oil Spill

Steven Bobson, Europe & Americas Editor
February 15, 2011 /

Oil giant Chevron has borne the brunt of a court ruling penalizing its acquired company, Texaco, with more than $US8 billion in damages over the oil spill that contaminated the Amazon rain forest from 1964 to 1990.

The amount, however, is roughly $12 billion less than what BP oil has been obliged to pay last year to an account managed by the US government for redress of damages from the Deepwater Horizon explosion.

The Ecuadorean plaintiffs complained that the amount was not enough to compensate for the damages caused by Texaco’s operations into the livelihood of farmers in the areas affected, though they expressed delight at the court’s ruling.

The lawsuit initially filed in 1993 has indicted Chevron liable for the alleged environmentally destructive dumping of toxic waste in Amazon, and sought the company to pay a total of $US27 billion for water and soil damages, including its adverse effects to the health of residents in the areas affected.

But a court in Ecuador reduced the penalty to more than $US8 billion today, though reports vary in figures.

On the other hand, Chevron has raised doubts over the legitimacy and enforceability of the court’s decision.

Earlier this month, the oil company obtained a court order from New York, a preemptive step to counteract any actions forcing the company to pay for the damages caused by Texaco.

At the same time, Chevron has charged the Ecuadorean plaintiffs of violating the Racketeer Influenced and Corrupt Organizations Act by trying to allegedly extort money from the company.

Chevron claims the legal proceedings have long been fraught with irregularities, saying “it is the product of fraud and is contrary to the legitimate scientific evidence.”

In its counter affidavit filed in the US District Court for the Southern District of New York, Chevron alleged that the Ecuadorean plaintiffs, now defendants of its suit, have tried to taint the company’s name with prefabricated evidence and attempted to exert pressure on the US court to penalize the company big time.

But Pablo Fajardo, who stands as the legal counsel for the Ecuadorean plaintiffs, denied Chevron’s claims of conspiracy on their part. He said the embattled company is employing evading tactics to avoid paying for the damages and redressing the losses of the affected residents.

Once found guilty of the charges, Chevron will also take the responsibility of cleaning the Amazon spots contaminated with oil.

Meanwhile, US groups Amazon Watch and Rainforest Action Network commended the Ecuadorean court’s decision for being “historic and unprecedented.”

The groups accused Chevron of “lobbying campaigns” for the past 18 years to avoid liabilities of cleaning up what has been wrought by its acquired firm.


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