Ecuador plaintiffs say Chevron ruling falls short

Tue Feb 15, 2011 11:02am EST

Related Topics

* Indigenous farmers say $8.6 bln in damages not enough

* Plaintiffs lawyers say will appeal to ask for more

* Chevron calls verdict 'illegitimate,' denies all charges

By Victor Gomez

LAGO AGRIO, Ecuador, Feb 15 (Reuters) - Ecuadorean farmers who accuse Chevron Corp of polluting the Amazon jungle are happy the U.S. oil giant was found guilty after a 17-year legal battle, but they say the $8.6 billion award is not enough.

In this hot and oil-rich region dotted with small subsistence farms, the days ahead will be marked by meetings with residents and their representatives to decide the details of their appeal of the damages amount named by the court.

"It's not fair to us because the tribes have suffered a lot," plaintiff Justino Piaguaje said of Monday's ruling by Sucumbios provincial court in the heart of Ecuador's Amazon.

A farmer, Piaguaje is a member of the Secoya indigenous group, which says there is a higher incidence of cancer in the Rhode-Island sized area and water supplies are polluted with oil.

"Our families have died, and our rivers have deteriorated," Piaguaje said. "But over and above the amount in damages, we believe that Chevron has been sanctioned. This is a hard blow to Chevron and an important step for the indigenous people of Ecuador."

The plaintiffs had been hoping for at least $27 billion, and their lead lawyer, Pablo Fajardo, said they will appeal the $8.6 billion damages figure later this week in Sucumbios court.

"We still do not know exactly what the content (of the appeal) will be," Fajardo said. "We are still studying the decision."

Chevron (CVX.N), which made $19 billion in net profit last year, is vowing to fight the lawsuit, which it says is riddled with fraud on part of the plaintiffs and their lawyers.

It denies any health problems in the region are its fault and says it cleaned up any pollution for which it was responsible. The San Ramon, California-based company has no assets in Ecuador and believes it is unlikely ever to pay.

Chevron shares rose 1.3 percent on Monday on higher oil prices as investors shrugged off news of the court ruling. Analysts said a final verdict in the case was probably years away. The stock dipped less than 1 percent on Tuesday.

Still, investors and the oil industry believe the Ecuador case could set a precedent leading to other large claims against companies around the world that have been accused of contaminating countries where they operate.

San Francisco-based Amazon Watch called the ruling unprecedented.

"It is the first time that indigenous people have sued a multinational corporation in the country where the crime was committed and won," the environmental group said.

Nicolas Zambrano, a judge of a provincial court in the jungle town of Lago Agrio at the heart of the case, said in his ruling that Chevron must apologize within 15 days for the contamination from oil wells dug decades ago, or face a doubling of the damages figure.

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'OIL IN THE RIVERS'

Piaguaje's farm, in an area called Shushufindi, produces yucca and corn for his family to eat as well as cocoa, which he sells in the local market.

He and other plaintiffs say that Texaco, which Chevron bought in 2001, polluted their Amazon lands and water with faulty drilling practices in the 1970s and 1980s.

"The amount in damages included in the judge's ruling are really minimal," said Ermes Chavez, president of the local environmental group Amazon Defense Front. "The damage cannot be repaired with this amount of money."

He was not alone in complaining about the award.

"It seems very little, considering that the whole eastern part of the country is contaminated," said Julio Jaramillo, another plaintiff. "How many people have died of cancer? The gringos pumped oil into the rivers without giving it a second thought."

The first level of appeal available to Chevron is the full provincial court in Sucumbios province, which has three judges. If that panel upholds the ruling, the company's next stop would be Ecuador's Supreme Court.

Texaco struck oil in Ecuador in 1967 and started pumping in 1972 as part of a consortium with the state. The company operated in Ecuador until 1990. Soon after, it turned its share of the consortium over to the Ecuadorean government.

State oil company Petroecuador has continued drilling in the area over the 20 years since Texaco pulled out.

Chevron says it cleaned up all the drilling waste pits that it was legally required to. Regardless of who is responsible, the dirt just under the surface around some former pits still has a black sheen and carries the eye-watering stench of oil.

Farmers say they cannot raise crops or livestock in these areas because of the contamination. (Additional reporting by Hugh Bronstein, Alexandra Valencia and Santiago Silva, Writing by Hugh Bronstein; Editing by Frank Jack Daniel and Kieran Murray)

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