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11/09/2012 03:55 PM     print story email story  

Argentina Freezes Chevron's Assets

SustainableBusiness.com News

We thought it was it pretty impressive when an Ecuador judge ruled that indigenous farmers in the Amazon could seize $200 million in Chevron's assets - the first time an indigenous community has prevailed against a multinational corporation.

That's because Chevron refuses to pay a $19 billion judgement for 30 years of polluting rivers in the Amazon rainforest.

This is the world's biggest environmental lawsuit.

In 2011, Chevron was found liable in Ecuador for dumping billions of gallons of toxic waste into the Amazon rainforest, decimating indigenous groups and causing an outbreak of cancer and other oil-related health problems.

Now, the story gets even better. 

Plaintiffs are looking seize Chevron's assets in Brazil, Canada, Ecuador and Argentina.

And the first of those requests has prevailed – an Argentine judge signed an order freezing all Chevron's  assets in that country.  The freeze order applies to the entire $19 billon amount of the Ecuador judgment, and Chevron has at least $2 billion worth of assets in Argentina. 

That means Chevron will effectively be barred from investing further in Argentina unless it wants to risk seizure of those assets as well.

The seizure includes 100% of Chevron's capital and dividends in Argentina, its entire stake in pipeline operator Oleoductos del Valle SA, 40% of Chevron's oil sales to Argentine refineries, and 40% of the money Chevron has deposited in Argentine banks, says Enrique Bruchou, the lawyer representing indigenous communities in Ecuador who brought the lawsuit.

“We are now on the fast track to collection in our two-decade struggle to force Chevron to clean up its awful environmental disaster,” says Luis Yanza, the Ecuadorian community organizer behind the lawsuit originally filed in 1993.

“We are committed to holding Chevron fully accountable for the crimes it has committed against our indigenous peoples,” he says.

The move by the Argentine judge is the first time the plaintiffs have been successful in freezing assets outside their home territory of Ecuador.

This latest twist is made possible by an international treaty in Latin America, the Inter-American Convention on the Execution of Preventive Measures, which dates back to the late 1970s.

The treaty says a defendant's assets will automatically be frozen when it fails to pay a final judgment. It has been ratified by Argentina, Ecuador, Colombia, Peru, Paraguay, Guatemala, and Uruguay. Venezuela and Chile have signed the treaty but not ratified it.

The assets in four countries where enforcement requests are pending are worth $10 billion, according to plaintiff estimates. They have pledged to file additional requests in other countries until they get the full $19 billion.

The development in Argentina sends a signal to foreign investors that they should apply the same environmental standards they use at home to areas where vulnerable indigenous and farmer communities are located, says attorney Enrique Bruchou.

"We ask for no more than that and no less than that," he says. "We call it responsible foreign investment."

Oil companies are watching these developments closely and a a similar case is pending against Shell in Nigeria.

Background on the Case

The long and complicated Amazon rainforest pollution case was originally brought against Texaco in 1992. It since became Chevron's problem when it bought Texaco in 2001, making it became the world's third largest oil company.

In February 2011, an Ecuadorean judge imposed damages of $8.6 billion, finding the company guilty of polluting rivers with 16 billion gallons of oil sludge from 1964-1990.

The fine more than doubled after Chevron refused to make the public apology the court required.

The area of Ecuadore's rainforest affected by Chevron's toxic dumping was one of the most biodiverse ecosystems on earth. Home to hundreds of plant and animal species, it is now pockmarked by over 900 open-air toxic waste pits.

Chevron left massive quantities of cancer-causing hydrocarbons, according to soil tests in wells, sometimes hundreds of times higher than acceptable levels. 

"While Chevron might think it can ignore court orders in Ecuador, it will be impossible for Chevron to ignore court orders in countries where it maintains substantial assets," he added. "The decision of the Argentine judge proves that the sentence in Ecuador is legitimate and will be enforced in any country that observes the rule of law."

Chevron continues to fight the judgment every step of the way. It took it to the US Supreme Court, but it refused to hear the case. Shareholders that hold 38% of the company passed a resolution saying CEO John Watson has mishandled the case.

Chevron argues it has no direct assets in Argentina because its operations there are carried out by subsidiaries.

"Plaintiffs' lawyers have no legal right to embargo subsidiary assets in Argentina and should not be allowed to disrupt Argentina's pursuit of its important energy resources," says the company.

Hearings by an international trade arbitration panel are scheduled starting this month.



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