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May 25, 2011

 

DiNapoli to Chevron: Resolve Amazon Lawsuit

Standoff on Poor Ecological Record Bad for Business


New York State Comptroller Thomas P. DiNapoli and a coalition of investors today released a letter to oil giant Chevron urging the company to settle its 20-year legal battle with indigenous populations in the Amazon rainforest. The long-running court case alleges that Texaco, which merged with Chevron 10 years ago, destroyed huge tracts of the rainforest by dumping billions of gallons of oil waste products over several decades. Citing the “grave reputational damage” Chevron has suffered due to the lawsuit, DiNapoli and other investors called on the company to promptly negotiate a reasonable settlement to prevent further shareholder damage.  

“It’s time for Chevron to face reality,” said DiNapoli, trustee of the $140.6 billion New York State Common Retirement Fund (Fund), which owns 7.5 million Chevron shares worth an estimated $780 million. “The effects of this horrific, uncontrolled pollution of the Amazon rainforest are still being felt today. Investors don’t derive any benefit from this never-ending courtroom drama.

“The entire case is looming like a hammer over shareholders’ heads.  Chevron should start fresh with a new approach that embraces environmental responsibility and risk management as part of its corporate culture. More legal proceedings will only delay the inevitable.”  

For nearly 25 years, beginning in 1964, Texaco and its joint venture partner Petroecuador dumped nearly 16 billion gallons of oil waste products into the Amazon rainforest.  The two companies also spilled nearly 17 million gallons of oil from their trans-Ecuadorian pipeline operation between 1971 and 1991 —50 percent more oil than was spilled by the Exxon Valdez crash.

In a letter sent in November 2008, DiNapoli called on Chevron’s board of directors to come to an equitable settlement in order to avoid substantial penalties in an Ecuadorian court. Chevron refused to negotiate, and in February, 2011 the Ecuadorian Provincial Court awarded plaintiffs nearly $18 billion in compensatory and punitive damages. The Ecuadorian court judgment is the second-largest of its kind, topped only by BP’s $20 billion fund established to settle claims stemming from the 2010 Gulf of Mexico oil spill. DiNapoli is co-lead plaintiff in an ongoing class action lawsuit filed against BP last year.

In an effort to improve Chevron’s environmental policies, DiNapoli has co-sponsored a proposal calling for the appointment an independent board director with a high level of environmental expertise. Shareholders are expected to vote on the resolution at Chevron’s annual meeting today (May 25).

 

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