LTTE: Chevron's Costly Offense Will Fail
July 21, 2013, 3:34 p.m. ET
Chevron's Costly Offense Will Fail
Chevron's aggressive strategy in the Ecuador pollution case is costly and likely to fail..
Julian G. Ku and George T. Conway III's "When Corporate Defendants Go on Offense" (op-ed, July 5) about Chevron's CVX +1.15% hyperaggressive counterattack over the $19 billion Ecuador judgment ignores the considerable downside risk created by this strategy.
Let's tally the key results so far. Since 2010, Chevron has lost the underlying trial in Ecuador after a court found it had deliberately discharged billions of gallons of toxic waste into the Amazon. An appellate court affirmed unanimously and rejected all of Chevron's "fraud" arguments. Punitive damages were imposed based on findings Chevron tried to sabotage the proceedings.
The centerpiece of Chevron's defense—an unprecedented global antisuit injunction issued by a U.S. trial judge—was reversed unanimously last year. The U.S. Supreme Court refused to hear the appeal. Internationally, a Chevron comptroller testified that the company faces "irreparable harm" from asset seizure actions filed by the villagers in three countries. Recently, an Ecuador court froze $96 million in cash owed Chevron which might be used to launch yet more asset seizure actions. Shareholders have asked the SEC to investigate the company for failing to properly disclose the risk, while resolutions stemming from the case have garnered wide support.
As a lawyer representing the villagers, I have been the target of an extensive retaliation campaign. Chevron lawyers deposed me for a record-breaking 19 days. I have been spied on and followed. Chevron has turned over secret photos of our legal team meeting in Ecuador. This behavior, clearly intended to intimidate, makes Chevron look like a bully.
The best defense for a corporation in Chevron's situation is to address its ethical and legal responsibilities directly. The evidence suggests the Chevron litigation model is extremely expensive, causes reputational risk, impairs business operations and likely will force the company to pay the full amount of the judgment anyway.
http://online.wsj.com/article/SB10001424127887324448104578613631211219720.html
(Short article, no more at link.)
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