Under Pressure From First Nations, Chevron Faces Major Test in Canada As Critical Court Hearing Over $12b Ecuador Pollution Judgment Gets Underway

TORONTO - Chevron faces a wave of cascading pressures in Canada – including new evidence of a multi-billion dollar tax avoidance scheme – as a critical court hearing gets underway that could determine whether the oil giant is finally forced to comply with a $12 billion environmental judgment owed to Indigenous peoples and farmer communities in Ecuador’s Amazon. 

The two-day hearing before the Ontario Court of Appeal, which kicks off this morning in Toronto, will determine whether the assets of Chevron’s wholly-owned Canadian subsidiary – called Chevron Canada -- can be used to pay the Ecuador pollution judgment. Chevron reaps billions of dollars annually in profits from its Canadian subsidiary, but claims that the same subsidiary should be shielded from any of Chevron’s liabilities to the Ecuadorians.

(See this short memo on the Canadian court action and a longer briefing memo. See this press release on the arrival of Ecuadorian Indigenous leaders in Canada. )

“What principle of justice is advanced that allows Chevron parent’s shareholders to collect at least US $25 billion in dividends and yet excludes the enforcement of a judgment against Chevron Canada, 100 percent owned by Chevron parent?” said the legal brief of the Ecuadorians, signed by Alan Lenczner, considered one of Canada’s top litigators. Lenczner (see here for background) will be arguing the matter for the Ecuadorians along with Peter Grant, a noted aboriginal rights lawyer from Vancouver.

Chevron has vowed never to pay the Ecuador judgment and promised to fight the case “until hell freezes over”.  A company official also threatened the Ecuadorian indigenous groups with “a lifetime of litigation” if they persisted in pursuing their claims, which were originally filed in 1993 in U.S. courts before being shifted to Ecuador at the oil major’s request. Chevron has collected more than US $25 billion in dividends from its Canadian subsidiary since the enforcement action was filed in Canada in 2012, according to Lenczner. 

In the meantime, in the Amazon rainforest, the Ecuadorians continue to suffer from a well-documented wave of cancers and other public health problems due to Chevron’s dumping of an estimated 16 billion gallons of toxic waste water onto indigenous ancestral lands when it operated in the country under the Texaco brand from 1964 to 1992. (See this summary of the overwhelming evidence against Chevron that led to the pollution judgment.) The company also abandoned roughly 1,000 unlined toxic waste pits that continue to contaminate soils and groundwater on ancestral lands.

“This is a critical showdown between a corporate powerhouse oil company that wants to evade a major environmental liability and Indigenous peoples who have won the right to compensation to clean up their ancestral lands in the Amazon,” said Phil Fontaine, the former Canadian National Chief of the Assembly of First Nations (AFN), who will be attending the hearing along with a delegation of Ecuadorian leaders from the Amazon Defense Coalition of Ecuador (FDA), the non-profit entity that along with 47 named plaintiffs brought the lawsuit and is leading the enforcement effort.

Facing a $12 billion damages award to Amazon communities in age of shrinking profits and structural change in the oil industry is only one of Chevron’s growing problems in Canada.  Other Chevron challenges include: 

• The Ecuadorians have won three straight unanimous appellate court decisions in Canada, despite the fact Chevron has hired at least 60 law firms and used an estimated 2,000 legal personnel in what is widely considered the most expensive corporate legal defense in history. The Supreme Court of Canada ruled in favor of the Indigenous peoples in a unanimous 2015 decision.
• In a move that raises potential corruption issues, Chevron has been using Chevron Canada to funnel billions of dollars in annual payments to the governments of Nigeria and Indonesia. The payments – disclosed weeks ago under a recently passed Canadian transparency law – have raised a host of concerns among a anti-corruption authorities in the United States and Australia. They also undermine Chevron’s main argument in the appeal that Chevron Canada only does business in Canada.
• On the tax front, it turns out Chevron pays almost no taxes in Canada despite reaping almost $5 billion in profits per year from its Canadian subsidiary while trying to stiff the Ecuadorians out of their environmental judgment, said Rex Weyler, a co-founder of Greenpeace who denounced the company for having committed “ecological crimes” in Ecuador after touring the area of Chevron’s operations last year. Chevron recently was fined $1 billion in Australia for paying no tax despite makings billions in profits from its operations in the country. (See here for background.) 
• Chevron is also under increasing pressure from the Canadian Broadcasting Corporation and environmental groups to lift a sweeping confidentiality order that it has imposed on the court docket in the Ecuador pollution case. Among other problems, the Chevron order prevents scrutiny of the sworn testimony of a Chevron Canada corporate official about the large payments from the subsidiary to foreign governments. “Lifting this confidentiality order could potentially blow the lid off of Chevron’s attempt to hide its efforts to evade taxes in Canada and avoid the scrutiny of anti-corruption authorities in the United States,” said Weyler. (Here is the CBC article about unsealing the documents.) 
• Chevron also faces increasing opposition from Canada’s AFN and several prominent environmental groups in the United States and Canada led by Oakland-based Amazon Watch. Current AFN National Chief Perry Bellegarde yesterday tweeted his support for the Ecuadorian Indigenous peoples and plans to talk about Chevron’s pollution judgment today in New York at the United Nations Permanent Forum On Indigenous Issues. Bellegarde also wrote a letter to Canada’s Attorney General, Jody Wilson-Raybould, urging consideration of new legislation providing for more “expeditious” enforcement of foreign judgments in Canada. 
• Chevron is also under increasing pressure from some of its own institutional shareholders over its failure to settle the case. Two such shareholders – Zevin Asset Management and Newground Social Investment – are pressing resolutions at the company’s annual meeting in May calling out company management for its “material mishandling” of the Ecuador litigation. Last year, the same resolutions received roughly 40% support from all Chevron shareholders, an almost unheard-of level of backing for a resolution actively opposed by company management. 
• In the United States, Chevron’s “racketeering” judgment has almost completely collapsed with the revelation that the company paid at least $2 million to its star witness, Alberto Guerra, who later admitted lying in court. (See this detailed summary of Chevron’s fraud in the U.S. court case and this account of a criminal referral letter of Chevron to the U.S. Department of Justice over the illegal witness payments.) One Chevron lawyer, Larry Lowenstein, came under harsh criticism recently from the Ecuadorians for trying to mislead Canadian judges about Chevron’s fraud in Ecuador and the United States. 

No fewer than 21 separate appellate judges in Ecuador and Canada have either rejected or ignored the findings of a sole U.S. trial judge who ruled in Chevron’s favor in the racketeering case. “If Chevron is forced to present the same corrupt evidence it presented in U.S. courts before a neutral judge in Canada, there is little doubt the company’s false narrative of ‘racketeering’ will blow up in its face,” said Anton Tabuns, a Canadian lawyer who represents the FDA. “That’s why Chevron is fighting desperately to dismiss the enforcement action on technical grounds. If it is forced to trial in Canada, there is little doubt Chevron will settle this case.” 

Attending the court hearing in Ontario will be several Ecuadorian Indigenous and community leaders, including Jamie Vargas, the President of Ecuador’s national indigenous federation (CONAIE); Rafael Pandam, an Achuar who is the President of the Indigenous Amazonia Parliament of Ecuador, which has 325 parliamentarians; Janeth Cuji, a longtime woman’s leader and a Kichwa; Hugo Camacho, a community leader and FDA activist from the town of Pimampiro; and Domingo Peas, a historic leader of Ecuador’s Amazon indigenous federation, which includes 11 nationalities.

In its motion to lift the confidentiality order, the CBC argued that documents in the enforcement action containing “confidential information” were sealed by Chevron in two orders without any notice to the media as required by law and that the orders have prevented public access to the entirety of the evidence. “There is not evidence that any of the proceedings, documents, evidence, or information covered by the sealing orders are in fact confidential,” said the motion, which is to be decided after a hearing on June 20.

For more information, please contact:

Karen Hinton
Phone: 703-798-3109