David, Goliath and Chevron

How is little Ecuador going to collect from big Chevron?

In 2007, investigative reporter Greg Palast posed the question to Ecuador’s president Rafael Correa regarding the $27 billion environmental remediation lawsuit against the American oil giant.  The president’s answer: “The international community should impose upon Chevron-Texaco the moral duty to pay this money,” he said while showing his support to a group of indigenous Amazonian Ecuadorians suing Chevron in a national court.  Go to Correa’s Interview

The Chevron-Texaco case made headlines in the American media in recent weeks and became a hotter issue last Sunday when CBS ran a story segment on its 60 Minutes news program.  Watch 60 Minutes segment on the Chevron case

No matter how or from where you learn about this story, it plays like a David and Goliath tale.  Who David and Goliath depends on public perception, however.  On the one hand, it is easy to believe that Chevron is Goliath because it is the second-largest oil company in the United States after Exxon-Mobil.  But “little Ecuador” recently re-elected an aggressive and powerful leftist populist president who enjoys a 70 percent approval rating—and a supermajority in the unicameral congress.

As I noted today in a letter to the Washington Post titled Ecuador’s Attack on Foreign Companies:

Chevron is correct to argue that it won’t be treated fairly as long as Mr. Correa runs Ecuador. In fact, fewer and fewer firms will. Mr. Correa has halted foreign mining operations, raised telecommunication firms’ fees, attacked the media and defaulted on the country’s external debt. His recent reelection should allow him to put aside his “permanent campaign” style and play fair with foreign companies. Whether he actually will do so remains to be seen.

Nonetheless, Chevron’s Global Issues and Policy manager, Silvia Garrigo, seems to be aiding public perception that Goliath is, in fact, the oil giant.

“I have makeup on my face and there’s naturally occurring oil in my face.  That doesn’t mean I’m going to get sick from it,” she said on 60 Minutes, mocking the suit that argues for damages caused by three decades of environmental pollution.

Garrigo aims and scores quite low comparing her makeup with the oil disaster in a rural area in Ecuador’s Amazon region, where poverty reaches 90 percent and no running water save for rivers is available.  Was she really talking about her makeup?

Chevron’s representative was of little help to her company, losing her composure and asserting that “…corruption and fraud is perpetrated against an American company in Ecuador in this corrupted and politicized judicial system.”

Garrigo is fortunate that 60 Minutes airs in America, a country where the first amendment protects freedom of speech.  The same charge made in Ecuador would have meant trouble for her.  President Correa often attacks his country’s media establishment and imprisons journalists when he believes they have committed libel.  The most recent victim – who is in hiding – is columnist Romulo Lopez Sabando.  Lopez, a free market analyst and commentator, faces a warrant for speculating about Correa de-dollarizing Ecuador’s economy.  Read FreeMarketeros’ Correa Calls for Arrest of Journalist and CATO’s Freedom of Speech Under Attack in Ecuador

Ms. Garrigo’s performance in 60 Minutes may be steering public opinion in the direction of Ecuador being little David, deserving a $27 billion windfall from Goliath Chevron, and actually aiding environmentalist NGOs to satire the oil giant.  Read Chevron Lawyer Stumbles in 60 Minutes Interview over Ecuador Oil Contamination