Ecuador President Suggests Mediation Possible In Chevron Case

QUITO -(Dow Jones via CNN) 11 August 2008 - Ecuadorean President Rafael Correa said the government will remain at arm's length from a lawsuit that Ecuadorian Indians are involved in with Chevron Corp (CVX) but left open the possibility that he could serve as a mediator.

In his weekly radio address, Correa said that Chevron has asked for a meeting with the government.

"We can't become involved in the case because it is a judicial case and they ( Chevron) will say that the state was pressuring the judges," Correa said.

He added: "If we meet with Chevron, we will meet also with the Frente de Defensa de la Amazonia. If we can help, it will be based on justice, not on power."

Frente de Defensa de la Amazonia is a coalition of groups coordinating the lawsuit against Chevron.

The lawsuit alleges that contamination in the Amazon region was caused by Texaco, which Chevron acquired in 2001. The company is accused of having used out-of-date technology that led to environmental damage.

The complaint was first introduced in 1993 with a lawsuit in New York courts, where it was ruled that the case should be tried in Ecuador. In May 2003, several indigenous groups filed a lawsuit against the company in Lago Agrio, Nueva Loja.

The company had denied the allegations and said that it spent about $40 million meeting all requirements for the environmental cleanup procedures that were agreed upon with the Ecuadorian State oil company, Petroleos del Ecuador, or Petroecuador.

In 1998, Petroecuador released the U.S.-based company from any liabilities regarding cleanup efforts.

Recently, Richard Cabrera, a Nueva Loja Court-appointed expert, submitted a report recommending that Chevron pay at least $8.3 billion, and as high as $16 billion, in compensation for environmental damages in Ecuador.

Chevron has said Cabrera's report isn't impartial because, among other things, he has used technical equipment owned by the Frente de Defensa de la Amazonia.