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Christopher Cundy

Christopher Cundy

Christopher is a writer for Environmental Finance.Environmental Finance is the leading global publication covering the ever-increasing impact of environmental issues on the lending, insurance, investment…

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Investors Unconcerned with Chevron's $8.6 Billion Pollution Fine

An Ecuadorian court has a slim chance of enforcing an $8.6 billion pollution fine against Chevron, according to one lawyer, and investors seem unconcerned with the development.

On Monday, a provincial court in Lago Agrio ordered the US oil giant to remediate contaminated land and compensate for damage to human health caused by the disposal of sludge by the Texaco oil company, which Chevron acquired in 2001.

“Chevron has spent the last 18 years waging unprecedented public relations and lobbying campaigns to avoid cleaning up the environmental and public health catastrophe it left in the Amazon rainforest,” said NGOs Amazon Watch and the Rainforest Action Network. The verdict “sends a loud and clear message: it is time Chevron clean up its disastrous mess in Ecuador.”

Chevron vigorously disputed the ruling and has launched an international legal effort, with a US federal court and a European arbitration panel issuing temporary orders blocking enforcement of the judgement. The company is understood to have no assets in the country and is said to have spent $40 million on an earlier clean-up operation.

“The Ecuadorian court's judgment is illegitimate and unenforceable,” Chevron said. “It is the product of fraud and is contrary to the legitimate scientific evidence. Chevron will appeal this decision in Ecuador and intends to see that justice prevails.”

“Given the orders of the United States federal court and the arbitral tribunal, the plaintiffs will have an extraordinarily difficult time executing judgment,” said Roger Alford, professor of law at Pepperdine University in California in his blog. “If they do, I would strongly suspect that the federal court would hold the plaintiffs in contempt of court and the arbitral tribunal would hold Ecuador liable for any damage Chevron suffers in paying on the judgment.”

Chevron investors did not take flight after the ruling. The firm’s stock price rose slightly on Monday, closing at $96.95 on the New York Stock Exchange, compared with the previous Friday’s close of $96.45, although the increase lagged its peers. The closing price yesterday was $96.72.

The order is among the largest ever levelled at a company for environmental damage. It is almost double that spent by Exxon for the Valdez oil spill in Alaska in 1989 ($4.3 billion in compensation, fines and clean-up).

By. Christopher Cundy

Source: Environmental-Finance




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