Chevron, Ecuador, and the Organized Shake-Down, Part I

Chevron holds its annual shareholders meeting in San Ramon, Calif., tomorrow, and a well-organized alliance is attempting to hijack the meeting for pecuniary and political purposes. Trillium Asset Management — part of the activist “social investment industry” — is taking the lead in pushing a shareholder resolution that would require Chevron to conduct a study of its overseas operations as they relate to the host country’s health and environmental laws.

The resolution itself is an attack on Chevron’s reputation, part of a coordinated campaign meant to bully the company into settling a multibillion dollar lawsuit brought by U.S. trial lawyers; the suit, Aguinda v. Chevron/Texaco claims that Texaco (which Chevron bought in 2001) caused environmental damage in Ecuador that still harms the health of local residents. We’re written about the issue before, and Chevron has facts on its side as detailed at the company’s Chevron in Ecuador site.

But there’s a lot more at stake than just Chevron’s operations and the $26 billion in damages being demanded from the company. ($26 billion!) The proposal and protests at the shareholders’ meeting tomorrow represent U.S. trial lawyers make common cause with foreign governments, NGOs and activist groups to shake down American companies. In the United States legal system, the rule of law, standards of evidence and absence of corruption protect the interests of U.S. companies and their shareholders, but in the less developed world where anti-Americanism is potent? Pursue your case there and use it as leverage here.

As Charles James, Chevron’s general counsel and executive vice president, described the dynamic in a conference call with bloggers* today, “They take your professional reputation hostage and they try to ransom it back to you for money.” The activists groups led by Amazon Watch have scheduled a protest, and you’ll have your usual visuals of Amazonian Indians and celebrities to attract the TV cameras. An umbrella group of left-wing groups will release what they call an alternative annual report, “The True Cost of Chevron.” It’s certainly well-packaged (lots of money having been spent) accusing Chevron of environmental crimes all over the world, not just Ecuador. The attacks are becoming even more shrill.

James from the blogger call:

It’s sort of an unprecedented, new way in which the trial lawyers are trying to play the game. It’s got nothing to do with what’s happening in court, and it’s got everything to do with trying pressure companies into settling these cases and in doing so in these big, broad coalitions with people who have a community of interests — Third World, developing world governments, who are trying to bolster their image as being anti-corporate, anti-U.S., and also trying to excuse a lot of their own failings; trial lawyers, who want money; lobbyists, who want money; and NGOs who make sport out of these campaigns.

Unless people start asking about that and how it’s done, you’re just going to see more and more of it continuing into the future.

*Disclosure: Chevron is paying for several bloggers, including me, to visit the former Texaco/Petroecuador sites in the Ecuador Amazon sometime in the future. The company is not making any demands on what we write as a result. Chevron is a member of the NAM.

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