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September 24, 2010
Ecuador:An Attempted International Ripoff Dissolves in Farce
A stupid American movie star, an ambitious plaintiff's counsel, a corrupt leftist government and a U.S. oil company star in a morality play in which an attempted ripoff turns into a farce, and the good guys who stood their ground (Chevron) appear to be gaining ground and maybe even winning.
The Wall Street Journal:
What do you get if you cross a South American republic and crusading environmental groups with an American oil company?
If that sounds like a joke, consider Ecuador, where American plaintiff attorneys and green activists are trying to wring Chevron for the biggest environmental verdict in history. In a case that's before an Ecuadorian court, Chevron faces a possible $113 billion verdict-it was a mere $27 billion until last week-to clean up a mess almost certainly created by the government's own oil company, PetroEcuador, which has presided over 1,200 spills in the past decade alone.
The drama began in the 1970s, when Texaco and government oil company PetroEcuador drilled some 321 wells in Ecuador. In the early 1990s, Texaco decided to end its operations and worked out an environmental remediation plan with the government that assigned Texaco responsibility for 133 sites-proportional to the company's share in the project. The company spent $40 million on the cleanup, and in 1998 the government and PetroEcuador legally released Texaco, which merged with Chevron in 2000, from further claim or liability.
So much for that. Environmental group Amazon Defense Front, an NGO formed in Ecuador and the sole (listed) financial beneficiary of the lawsuit, has been leading a relentless campaign against Chevron in Ecuador courts and the Western media. Actress Darryl Hannah had herself photographed dipping her hands into a fresh oil slick, supposedly evidence of Texaco's malfeasance. The suit also enjoys the none-too-subtle support of Ecuadorian President Rafael Correa, a Hugo Chávez clone who's blasted Texaco for its "atrocities." Ecuador's prosecutor general has said that the government would take 90% of any payout by Chevron.
Now, however, the whole tale is falling apart under intense legal scrutiny in multiple jurisdictions. In May, U.S. District Judge Lewis Kaplan granted a request by Chevron demanding the release of hundreds of hours of additional footage from the 2009 documentary "Crude," which purports to be an even-handed account of the legal battle but is closer to a piece of pro-plaintiff agitprop. He also granted discovery relating to plaintiffs attorney Steven Donziger, the scope of which Mr. Donziger will ask Judge Kaplan to limit in a hearing today.