Oil Giant Is Gone, Legal and Environmental Mess Remains

WASHINGTON - The story began almost 40 years ago, but when filmmaker Joe Berlinger "saw villagers eating canned tuna fish because the fish in their rivers were too contaminated to eat, [he] knew [he] had to do something".

The product of that realisation is the new documentary "Crude", the latest weapon in an escalating PR war taking place alongside the equally contentious legal war over whether Chevron should be held responsible for the 916 waste pits of crude oil that dot the Amazonian region of northern Ecuador - and the cancer and other health problems that have plagued the Lago Agrio region.

Beyond these hard facts - that a crime was committed and that there are serious and long-lasting health hazards in the area - the rest remains to be definitively decided by the courts of public opinion and Ecuador.

This rest consists of determining whether, in fact, Chevron should or can be held legally responsible, how the damage done to the area and the people there might be remediated, and even whether there is any truth to the doubts that Chevron has tried to cast on there being a direct link between the contamination and disease.

"What happened with the Exxon-Valdez spill was an accident, but what happened in Ecuador wasn't - it was deliberate," said Luis Yanza, part of the Ecuadorian legal team representing the plaintiffs - villagers from the polluted region. He spoke at the Washington premiere of "Crude" on Oct. 23.

"We see the pictures, we see the pollution, it's just not ours," said incoming Chevron CEO John Watson at the U.S. Chamber of Commerce Tuesday. "These are preposterous claims with no basis in science."

In the 1960s, Texaco began drilling in a remote part of the Amazon rainforest, and in the 23 years that it operated the site it spilled 17 million gallons of oil and dumped 18 billion gallons of toxic wastewater, according to Amazon Watch, an organisation promoting the case of the Ecuadorian plaintiffs.

Texaco turned over its operations in the area to state-owned PetroEcuador in the early 1990s. PetroEcuador continues to operate in Lago Agrio today, and up until last year, according to the company, continued to dump wastewater in the surrounding environment.

Chevron, which acquired Texaco in 2001, says the gooey mess is largely PetroEcuador's fault. It says Texaco was absolved of responsibility when it completed, in 1998, a 40-million-dollar cleanup of some of the dump sites, which it had agreed with the Ecuador government three years prior.

But a 2003 report by government auditors said Texaco had failed to properly execute its side of the bargain. Chevron rejects those findings, but in "Crude" villagers describe how they built houses in clearings they later discovered were simply oil pits covered over with dirt.

Watson reiterated Tuesday that Texaco was assigned a share of the remediation and "got full sign-off from the government" that it was completed.

PetroEcuador, Watson said, not only never cleaned up its share but continues to pollute today.

"Many of the practices Texaco used continue to be used today, though PetroEcuador has made many changes since Texaco left in order to operate more responsibly," said Yanza.

"Texaco," he said, "was the sole designer of a system that was designed to pollute and they have the full responsibility."

Another of the plaintiffs' lawyers, Pablo Fajardo, mentions in the film that PetroEcuador is not innocent, however, and suggests they might be taken to court next.

Meanwhile, 1,401 cancer deaths in the region can be tied to the presence of pollution caused by Texaco from 1985 to 1998, according to a report by an independent panel that the court commissioned to assess Texaco's portion of the social and environmental damage in economic terms. The report concludes Chevron owes 27 billion dollars to clean up and compensate the affected communities.

This amount would make the case the largest environmental suit in history, and has thus brought out all number of legal strategies and ploys as one side fights for the money to pay for cancer treatments and clean drinking water and the other to avoid losing more than three billion dollars more than its 2008 profits.

"It will be very expensive to clean up," plaintiffs' attorney Steven Donzinger said Friday, "but far less than the profits they took out of Ecuador."

The legal battle has dragged on for 16 years.

In 2002, a U.S. court eventually agreed with Chevron's argument that the case should be tried in Ecuador's courts, though on the conditions that the company stop using an expiration of the statute of limitations as a defence and that any judgment be enforceable in the U.S.

In the concrete office buildings of Ecuador's courts, a tangle of espionage and accusations has developed in recent months - likely what Chevron had hoped for by sending the case to Ecuador in the first place, according to the plaintiffs' lawyers.

Recordings from bugging devices implanted in watches and pens appear to reveal a bribery scheme involving, at least indirectly, the judge overseeing the case, the sister of President Rafael Correa and an Ecuadorian man hoping to secure clean-up contracts for a U.S. businessman.

The judge, Juan Nunez, has since recused himself from the case, though he denies any wrongdoing.

The plaintiffs' lawyers contend this whole episode was a ploy by Chevron to distract from the central issues of the case and, especially, to undermine the Ecuadorean court system.

A motion by Chevron last week to annul the previous judge's decisions in the case was rejected by new judge Nicolas Zambrano.

While Nunez said last year that a decision was likely before the end of 2009, there remains no end in sight.

"If we lose and if enforcement is sought elsewhere, we will fight very vigorously," Watson stated Tuesday.

The issue of responsibility for the pollution is as sticky as the pollution itself. The case seems to reveal an inability of courts to deal with problems such as this, where a transnational corporation appears to be at least partly at fault and has the resources and will to easily fight a decades-long legal battle.

Chevron doesn't "want it in court at all", said Donzinger, referring to the company's efforts to move the case from the U.S. to Ecuador and then to raise questions about the legitimacy of the Ecuadorian courts. "They believe they're beyond the reach of any national system."

Meanwhile, the battle in the court of public opinion is all but won in Ecuador, where the immensely popular left-wing Correa has sided with the plaintiffs after years of more conservative governments in Quito. But Chevron retains its influence in the U.S, where it has worked to portray itself as the most socially conscious of the oil giants.

"At the end of the day, I don't think it's just a money question for [Chevron] but a reputation question," Donzinger said last week.

Chevron's efforts on the PR front, however, may wear down long before their legal efforts, as new campaigns, like that tied to the film, are being launched and awareness of the case is continuing to spread.

Star power, from Sting to Kerry Kennedy to politicians, has also been enlisted on what is being referred to as the David side of this David and Goliath battle.

U.S. Congressman Jim McGovern, a Massachusetts Democrat, who has visited Lago Agrio, said Friday, "As a congressman and an American citizen I feel ashamed."

Chevron owes the villagers a settlement, he said. "They have a moral and, I believe, legal obligation to settle this case."