Chevron Providing Misleading Information to Shareholders about Failed Remediation

Amazon Defense Coalition

FOR IMMEDIATE RELEASE

2009-06-04

Karen Hinton at 703-798-3109 or karen [at] hintoncommunications.com

Chevron Providing Misleading Information to Shareholders about Failed Remediation

Evidence Shows Oil Giant Continues to Deceive Shareholders

Quito, Ecuador (June 4, 2009) – Battered by negative publicity and shareholder pressure over a potential $27 billion environmental liability in Ecuador, Chevron's legal team is mischaracterizing the scientific evidence in a lawsuit to try to claim billions of gallons of toxic waste it dumped in the Amazon pose no risk to human health, representatives of the Amazon communities charged today.

"Chevron is again distorting the scientific evidence as part of a public campaign to mislead the public and shareholders about material information," said Julio Prieto, a lawyer in Ecuador who represents farmer and indigenous communities that have brought the lawsuit against Chevron.

Texaco (now Chevron) is accused in the lawsuit of dumping 18 billion gallons of toxic-laden waste water into the Amazon and abandoning more than 900 unlined waste pits which continue to leach toxins into fresh water sources and soils. The pollution has decimated the traditional lifestyles of six indigenous groups and caused 1,400 excess deaths from cancer, according to a team of 15 scientific experts assigned by the court to review the evidence in the case.

The 4,000-page expert report found that Chevron could owe up to $27.3 billion in damages, an amount that analysts believe would create solvency problems for the company. A final decision by the court is expected later this year.

Separately, New York Attorney General Andrew Cuomo has launched a probe of Chevron management - done at the request of Chevron shareholders – to determine if the company is putting out misleading information to downplay the Ecuador liability.

On Wednesday, Chevron claimed in a Dow Jones report that results collected during a final series of eight judicial inspections in March of this year demonstrate that a remediation performed in the mid 1990s by Texaco was effective. The assertion - made without any supporting documents – contradicts the evidence in the case as confirmed by independent laboratories and seems bizarre given that only two of the final eight sites inspected had been "remediated" by Texaco.

At the March inspections themselves, oil was visible on the ground and Chevron's lawyers exploded in anger when a court-appointed expert began to take soil samples that clearly contained oil contamination, according to news reports. The evidence from the March inspections has yet to be released officially to the court by a technical expert, so it seems "suspicious" that Chevron is making pronouncements about it, said Prieto. All 94 sites previously inspected as part of the trial, in a process that began in 2004, found extensive levels of toxic contamination at Chevron's former sites. Numerous results were thousands of times higher than Ecuadorian norms that establish when human health is at risk.

For example, Chevron claimed to have remediated a well site called Lago 2 to less than 5,000 parts per million of Total Petroleum Hydrocarbons (TPHs), which measures oil contamination in soils (Ecuadorian law stipulates that TPH contamination cannot be higher than 1,000 ppm). Yet evidence taken in 2006 at the trial found TPHs at the same site at 325,000 ppm, or hundreds of times higher than maximum tolerances under U.S. law and far above what Chevron had certified to Ecuador's government to get the remediation approved.

A similar pattern was found at 100% of Texaco's formerly "remediated" sites, according to the expert court report. Two Chevron lawyers and seven former Ecuadorian government officials are now under indictment for lying about the results of the remediation so the company could obtain a release from government claims.

The Dow Jones report quoted a Chevron press release claiming that all water samples of the region taken by the company during the trial show there is no risk to human health. In fact, roughly nine out of ten water samples taken by scientists for the communities show levels of hydrocarbon contamination that threaten human health, according to the court report.

"Chevron's mischaracterization of the evidence against it in Ecuador is a clear example of insensitivity to human suffering and a failure to comply with the company's legal obligations," said Pablo Fajardo, the lead lawyer in Ecuador for the Amazon communities.

Chevron's purported remediation also covered only 16% of the total number of waste pits that it built, according to the court report.

"It has become a pure money game for Chevron," Fajardo added. "Chevron has decided it is cheaper to let poor people die from cancer than pay for a clean-up, but they are running a major risk because ultimately the liability issue will be decided by the courts."

Chevron's latest mischaracterization of the evidence follows a stunning rebuke last week of Chevron management over growing human rights problems in Ecuador, Burma, and Nigeria. Three stockholder resolutions questioning the company's handling of these problems garnered the support of shareholders holding more than $79 billion in Chevron stock at the company's annual meeting.

It is likely that more than half of Chevron's $133 billion in outstanding shares voted to defy company management on one or more of the three human rights-related shareholder resolutions, said Mitch Anderson, who monitors Chevron's human rights record for Amazon Watch, an environmental group based in San Francisco. Those voting against Chevron's management included some of the nation's largest pension funds, including two from Chevron's home state of California

"Chevron's management is reeling from increased media focus on the Ecuador humanitarian disaster and a general worsening of Chevron's human rights record," Anderson said. "As a result, [Chevron CEO] O'Reilly just suffered a major vote of no confidence from a good portion of his own shareholders."