Klementyna blog

Chevron penalty is $9.5 bln for cleanup in Ecuador

QUITO (AFP) – US oil giant Chevron's court-ordered indemnification of Ecuadoran communities for environmental pollution increases 10 percent to $9.5 billion under a provision in Ecuadoran law, a lawyer for the plaintiffs said Tuesday.

The $8.6 billion penalty announced Monday did not include an additional 10 percent allowed under the law for environmental management costs, according to Pablo Fajardo, attorney for the Amazon communities that sued Texaco in 1993.

It is believed to be the largest fine imposed on an oil company resulting from an environmental lawsuit.

Chevron, which inherited the lawsuit when it purchased Texaco in 2001, blasted the court's decision as a "product of fraud" and said it will challenge it.

Despite the victory, the plaintiffs also plan to appeal, saying the penalty is insufficient compared to the health and environmental damage caused by caused by Texaco's oil extraction between 1964 and 1990.

They say soil and rivers were contaminated and that local residents reported higher rates of cancer. They were seeking more than $27 billion.

"We have instructed our lawyers to file the appeal for the judge to reconsider the figures," Luis Yanza, director of the Assembly of People Affected by Texaco, said Tuesday.

The ruling came from a court in the town of Lago Agrio in the province of Sucumbios, near the Colombian border.

Chevron claims it was absolved of liability because Texaco paid $40 million in cleanup efforts, approved by the government, before it was bought by Chevron.

Chevron said the judgment "is illegitimate and unenforceable. It is the product of fraud and is contrary to the legitimate scientific evidence."

This fine passes the record of $5 billion initially imposed on ExxonMobil Corp. for an oil spill off the coast of Alaska in 1989. But that amount was later reduced to $500 million after a series of appeals by Exxon.

Last year, British oil giant BP contributed $20 billion to a compensation fund for cleanup efforts and victims of its massive oil spill in the Gulf of Mexico.