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Chevron Slammed With $8.6 Billion for Ecuador Spill

RP Siegel | Wednesday February 16th, 2011 | 2 Comments

This week saw another step towards a final resolution to an environmental drama that has been playing out in courtrooms, oilfields and indigenous villages across the Ecuadorian Amazon Basin for over eighteen years. Judge Nicolás Zambrano in the tiny oil town of Lagos Agrio ordered Chevron to pay $8 billion in damages for environmental devastation in the region that came about due to faulty drilling practices going back as far as the 1970’s. The judgment also orders the company to publicly apologize for its actions or face higher fines.

According to the plaintiffs, the now-defunct Texaco, which was purchased by Chevron in 2001, took shortcuts, eliminating the costly deep injection of oil contaminated wastewater, opting instead to simply dump billions of gallons of toxic sludge into hundreds of shallow pits that invariably leaked over time into the ponds and streams that in many cases served as the water supply to thousands of villagers..

According to Rainforest Action Network, more than 1400 Ecuadoreans have died as the result of the spills and 30,000 more continue to be at risk. Texaco first struck oil in the region in 1967 and began drilling in 1972 in partnership with the local company PetroEcuador.

Amazon Watch, who supported the plaintiffs said of the verdict, “Today’s case is historic and unprecedented. It is the first time Indigenous people have sued a multinational corporation in the country where the crime was committed and won.”

Chevron promptly issued a statement, calling the verdict “illegitimate and unenforceable.” They intend to appeal and apparently have no plans to pay the fine.

Quietly, though, they were probably celebrating. Not only have they managed to postpone accountability for these alleged actions for close to twenty years, but they have also seen the dollar amount of the judgment against them fall significantly from the $27 billion that was sought in the original action. Chevron shares rose $1.22 on the news to $96.95. Chevron earned a net profit of $19 billion last year.

They might have been a little surprised to learn that the plaintiffs were also planning to appeal the verdict. Pablo Fajardo, attorney for the plaintiff told the BBC, “this is an important step but we’re going to appeal this sentence because we think that the damages awarded are not enough considering the environmental damage caused by Chevron here in Ecuador.”

The case was the subject of a story on 60 Minutes in 2009 and was also the basis for the documentary film Crude by Joe Berlinger, which refers to the spill as the “Amazon Chernobyl.” Berlinger found himself harassed by Chevron representatives demanding that he hand over material used in making the film in an apparent effort to suppress the film’s distribution.  These events in Ecuador have also been the subject of some interest to me personally ever since I read the book Savages by Joe Kane back in 1995, and inspired portions of the novel Vapor Trails that I co-authored with Roger Saillant.

In the past couple of years, Chevron has taken to playing hardball in the case, secretly filming meetings and interviews in hopes of exposing corruption among the plaintiffs and suing a large number of witnesses for conspiracy to extort money from the company. They did manage to get one judge to resign, but their legal counter-insurgency fell apart when it was revealed that the man behind the secret recordings was a convicted drug trafficker.

In the wake of the BP spill, it is becoming increasingly clear that pressure on oil companies to respect the environments they operate in is increasing and that massive lobbying, PR campaigns and legal bullying are no substitute for responsible behavior throughout the process and accountability when things go wrong.

RP Siegel is the co-author of the eco-thriller Vapor TrailsLike airplanes, we all leave behind a vapor trail. And though we can easily see others’, we rarely see our own.

Follow RP Siegel on Twitter.


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  • Maggie Brown

    Obama is surprisingly silent, or maybe not such a surprise.No British company is involved.

    • Jarda

      Obama is useless, he’s there to cast smiles at the masses, that’s all. Look, how after his promises to withdraw from wars he only allowed increased military spendings. He got a Nobel price for peace because he promised to solve problem between Palestine and Israel (nowadays Nobel prices are rained at presidents just for promises). What is he doing about it? Nothing.

      Anyway, lets be realist: the US president is just a smiling gadget delivering nice speeches. It’s the corporations who rule through congressmen which are corrupted to the bone marrow.