CRF Blog

A Way to Clean Up Ecuador’s Oil Mess

by Bill Hayes

In A Way to Clean Up Ecuador’s Oil Mess for Bloomberg Businessweek, Paul M. Barrett looks at how to resolve the decades-long dispute.

A brief recap of the Chevron case: In 1993 a group of U.S. plaintiffs’ lawyers filed a class action in New York on behalf of Ecuadorean farmers and indigenous tribe members against Texaco, which had produced oil in the Amazon in the 1970s and 1980s. After nine years of procedural skirmishing — nine years! — U.S. courts dismissed the case, saying it belonged, if anywhere, in Ecuador. Along the way, Texaco brushed off an offer to settle for $140 million.

In 2001, Chevron acquired Texaco, giving scant attention to the Ecuador mess. The company underestimated an enterprising New York attorney named Steven Donziger, who shouldered aside older colleagues to grab control of the case. He proved a wizard at attracting celebrity support (Sting, his wife Trudie Styler, Bianca Jagger), sympathetic media coverage (Vanity Fair, CBS’s 60 Minutes, CNN), and financial backing from hedge funds and an online poker tycoon he met at Harvard Law School. Restarted in Ecuador in 2003, the pollution suit led eight years later to a $19 billion verdict against Chevron — real money, even for the third-largest U.S. corporation. [more]