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Claimants to pursue Chevron's LatAm assets

The assets of US oil major Chevron could be frozen in Argentina and Colombia as plaintiffs seek to collect on a $19bn settlement ordered by a court in Ecuador in the world's biggest environmental damages suit.

Claimants filed similar suits this year in Canada and Brazil. The formal request to execute the freeze on Chevron assets in Argentina and Colombia will be filed "as early as tomorrow [Thursday]", said Enrique Bruchou, a lawyer representing plaintiffs, noting that the two South American countries and Ecuador were signatories to a treaty allowing assets to be seized abroad.

Chevron shares, dividends, bank accounts and proceeds from sales in the two countries can be attached under an order from the Ecuadorean court this month, Mr Bruchou said.

"This isn't a ruling against oil companies . . . we just ask that when international companies come to invest in Latin America . . . they do so responsibly. In the Amazon, they were irresponsible," he said.

Chevron has refused to pay the damages award.

The second-biggest US oil and gas group by market capitalisation slammed the Ecuador judgment as "a product of bribery and fraud and it is illegitimate".

"The company does not believe that the Ecuador judgment is enforceable in any court that observes the rule of law," Chevron said.

"If the plaintiffs' lawyers believed in the integrity of their judgment, they would be seeking enforcement in the US - where Chevron Corp resides. In the US, however, the plaintiffs' lawyers would be confronted by the fact that seven federal courts have made fraud findings related to the plaintiffs' lawyers' scheme."

The lead prosecution lawyer in Ecuador, Pablo Fajardo, told a news conference in Buenos Aires that the US Supreme Court had ratified that there was no legal obstacle to attaching Chevron's international assets.

The plaintiffs accuse Chevron of malpractice that has led to severe environmental damage and 306 cases of cancer in 227 families, as well as birth defects and other health problems.

Chevron, Argentina's fourth-biggest oil producer, has gained prominence in the country after signing a preliminary agreement to work with renationalised energy company YPF to develop vast shale oil and gas reserves. YPF, which needs a deep-pocketed partner, hopes to sign a formal deal with Chevron within weeks.

YPF, which is seeking to plough profits back into boosting Argentine production, had no immediate comment on how any asset seizure would affect any deal with Chevron.

Claimants to pursue Chevron's LatAm assets

Chevron has about $2bn in upstream assets in Argentina, while in Colombia, it produces 65 per cent of the country's gas and has dozens of service stations, Mr Bruchou said.

"I don't want them to stop doing business," Mr Bruchou told the Financial Times. "I want them to pay."

Once the Ecuador ruling has been formally recognised by an Argentine court - something he expected to take days or weeks - the Argentine judge can order execution of the asset attachment, without Chevron allowed to be present, he said.

That meant proceeds on sales from Chevron's oil to refineries in Argentina can be attached. Chevron can appeal in Ecuador.

Chevron inherited the two decades-old case in 2001 when it bought Texaco, which started Ecuador's oil industry in partnership with state-owned Petroecuador.

Petroecuador is now the sole operator in the area involved in the court case, which is near the town of Lago Agrio, named after Texaco's headquarters in Sour Lake Texas.

Chevron argues it fulfilled its clean-up responsibilities under a 1995 agreement with Ecuador.

[Source: Financial Times, London, 01Nov12]

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small logoThis document has been published on 05Nov12 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.