Chevron fined $8 billion in Ecuador

QUITO, Ecuador (AP) - An Ecuadorean judge ruled Monday in an epic environmental case that Chevron Corp. was responsible for oil drilling contamination in a wide swath of Ecuador's northern jungle and ordered the oil giant to pay $8.6 billion in damages and cleanup costs.

The amount was far below the $27.3 billion recommended by a court-appointed expert. But whether the plaintiffs - who include indigenous groups who say their traditional hunting and fishing grounds were decimated by billions of gallons of toxic waste - can collect remains to be seen.

Chevron called the decision "illegitimate and unenforceable" and said it would appeal.

It has long contended it could never get a fair trial in Ecuador and has removed all assets from politically volatile Andean country, whose leftist president, Rafael Correa, had voiced support for the plaintiffs.

The high-stakes, high-profile case, fraught with corporate espionage and geopolitical intrigue, has been winding its way through U.S. and Ecuadorean courts for 17 years.

Even Hollywood had a role, with Chevron successfully forcing documentary filmmaker Joe Berlinger to surrender outtakes from his documentary "Crude" about the dispute, a decision upheld by a U.S. appeals court. Those outtakes were used in attempt to show that a plaintiffs' attorney, Steven Donziger, had both denigrated and unethically influenced Ecuadorean justice.

The plaintiffs' lead lawyer, Pablo Fajardo, called the 187-page judgment "a great step that we have made toward the crystallization of justice" but "we are not completely satisfied" with the amount of the fine. He told The Associated Press that the plaintiffs would probably appeal.

The suit was originally filed in a New York federal court in 1993 against Texaco and was refiled in Ecuador three years after Chevron bought the company in 2001.

Though the lawsuit had only 47 named plaintiffs, it sought damages on behalf of 30,000 people, including indigenous groups, for environmental contamination and illnesses that allegedly resulted from Texaco's operation of an oil consortium from 1972 to 1990 in a Rhode Island-sized oil patch dug out of virgin rain forest.

Monday's ruling was hailed by the environmentalist groups Amazon Watch and Rainforest Action Network as "proving overwhelmingly that the oil giant is responsible for billions gallons of highly toxic waste sludge deliberately dumped into local streams and rivers, which thousands depend on for drinking, bathing, and fishing."

"It is time Chevron clean up its disastrous mess in Ecuador," they said in a joint statement..

Chevron, which earned $5.3 billion in the last quarter of 2010, invested tens of millions of dollars in its legal defense as well as counterattacks against the plaintiffs and Ecuadorean officials. Texaco carried out a $40 million pollution remediation effort in the 1990s.

Chevron sought relief in a half-dozen U.S. federal courts and requested binding arbitration in an international tribunal in the Netherlands. The oil company even used corporate spies to clandestinely videotape meetings with Ecuadorean officials in which they posed as contractors seeking oil contamination cleanup contracts. The two even coaxed the trial judge - who later resigned as a result - into saying he expected to rule against Chevron.

Just last week, U.S. federal judge Lewis A. Kaplan in New York took the unusual step at Chevron's request of pre-emptively blocking any judgment for at least 28 days after concluding that attempts to collect assets could seriously disrupt the business of a company vital to the global economy.

Issued by Judge Nicolas Zambrano from a ramshackle courthouse in the provincial city of Lago Agrio, Monday's ruling gives Chevron 60 days to set up an escrow account in Ecuador through which the damages would be distributed.

It specifies that Chevron pay $6 billion for cleanup of soil and water, $1.4 billion to put build health care systems, $800 million for creating health care plans and attending to cancer patients - the court-appointed expert had calculated 1,401 pollution-cased cancer deaths.

The balance of the $8.6 million is earmarked for recovering native plant species, water distribution systems and repairing cultural damage.

Fajardo called on Chevron in a statement issued later Monday to comply with the ruling and halt its "campaign of warfare against the Ecuadorian courts and the impoverished victims of its unfortunate practices."

"We believe the evidence before the court deserves international respect and the plaintiffs will take whatever actions are appropriate consistent with the law to press the claims to a final conclusion," he added.

Among actions taken by Chevron against the plaintiffs is a civil lawsuit it filed on Feb. 1 against Donziger and other plaintiffs' lawyers, claiming they confected the contamination suit and accusing them of extortion and racketeering.

The San Ramon, Calif. company has long contended that the court-appointed expert in the case was unduly influenced by the plaintiffs. In a statement Monday, it called Zambrano's ruling "the product of fraud (and) contrary to the legitimate scientific evidence."

Chevron spokesman Kent Robertson said via e-mail that Chevron had presented evidence in various U.S. courts showing that the plaintiffs' attorneys and consultants had ghostwritten the court-appointed expert's report that recommended $27.3 billion in damages.

"The legitimate scientific evidence provided to the court, as well as scientific analysis performed by the government of Ecuador, proves Texaco's cleanup worked," he contended Monday.

Chevron contends that Texaco's former partner in the consortium, state oil company Petroecoador, kept polluting after Texaco pulled out. It disputes the findings of the expert, geological engineer Richard Cabrera, who concluded that Texaco left a mess when it departed in the early 1990s.

Wall Street analyst Fadel Gheit of Oppenheimer and Co. said he did not believe the plaintiffs would be able to collect.

"They think Chevron's a cash cow, so they thought they could get something, but it's not going to happen. If so, it would be unprecedented. Companies like Chevron have been accused of polluting for decades" without being forced to pay,

he told the AP.

The news hit during trading hours, and Chevron's stock was up $1.26 to $96.99, although the increase could have been more attributable to rising prices Monday of Brent crude oil.