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Stakes huge in oil giant's Ecuador trial

By Tom Knudson - Bee Staff Writer

Published Sunday, October 19, 2003

Until now, few people outside of South America have ever heard of Lago Agrio -- a crime-ridden oil boomtown in Ecuador's Amazon rain forest, near the Colombia border.

That is likely to change this week as lawyers from the United States and Ecuador gather in the ramshackle community for one of the biggest oil pollution trials in history, a case that is being watched closely by legal scholars, environmentalists, human rights advocates and multinational corporations.

The trial, scheduled to begin Tuesday, pits California-based ChevronTexaco against 30,000 rain forest residents who allege that from 1971 to 1992 a subsidiary of Texaco dumped massive amounts of oily wastes in the region. Those wastes, they claim, caused illnesses ranging from skin rashes to cancer and contributed to the destruction of biologically rich lands inhabited by indigenous cultures.

Occurring just as U.S.-based energy companies across Latin America face growing anger over their environmental and social performance, the case is more than a test of one oil company's track record in a small Andean nation. It is a drama that some say has the potential to recalibrate how major corporations do business throughout the region.

The case dates back a decade, when a lawsuit was filed in federal court in New York. What followed were nine years of legal wrangling over which nation -- the United States or Ecuador -- was the proper location for the trial. Last year, a federal appeals court made the call: Ecuador.

Today, both parties say they are ready for a legal rumble in the jungle.

"This trial is historic," said Steven Donziger, one of six lawyers representing rain forest plaintiffs. "This is the first time that a small developing country has power over a multinational American company in its own court system."

ChevronTexaco, which flatly denies any wrongdoing, also is eager for its day in court.

"The past 10 years have not addressed the merits" of the case, said company spokesman Chris Gidez. "That doesn't do anything for the people seeking relief. It doesn't do anything for the corporation with this shadow hanging over it. It's in the best interest of all sides to see some sort of resolution."

Like major trials everywhere, this one is rife with spectacles outside the courtroom, including the recent trip of international human rights activist Bianca Jagger to Ecuador.

"None of my past experiences prepared me for the environmental devastation ... I witnessed," she said in a statement issued after she toured the Amazon region. "What Texaco did constitutes a new concept of crimes against humanity."

Asked about Jagger's comments, Gidez said: "She is entitled to her opinion. We're not going to respond."

The next big splash, plaintiff lawyers say, will occur Monday -- the day before the trial -- when they promise to reveal secret Texaco and U.S. government documents in the Ecuador capital of Quito. Those documents, they claim, will show close ties between the U.S. State Department, its Quito embassy and Texaco.

What makes the case especially important is that the 2nd U.S. Circuit Court of Appeals not only said the proper venue for the case was Ecuador but added that a ruling in that South American nation would be enforceable by U.S. courts.

Both parties now must deal with a foreign judicial system that, like the Amazon rain forest itself, is filled with risk and surprise.

"The (Ecuador) constitution provides for an independent judiciary," said a 2002 U.S. State Department report on human rights. "However, in practice the judiciary was susceptible to outside pressure and corruption."

On Oct. 7, Cristobal Bonifaz, a lawyer for the plaintiffs, wrote to Secretary of State Colin Powell to ask him to send a federal monitor to observe the trial.

"Our clients have well-founded fears of the potential of foul play by ChevronTexaco," Bonifaz wrote. As of Friday, the State Department had not responded, Bonifaz said.

Gidez reacted angrily. "Any suggestion that this company ever conducted or would conduct foul play is absolutely outrageous," he said.

Neither side is certain what to expect in Lago Agrio, which in Spanish means Sour Lake and takes its name from Sour Lake, Texas -- the site of one of Texaco's early gushers.

"This isn't like a Perry Mason courtroom," said Gidez.

"People will be coming from all over," said Donziger. "There are going to be hundreds of Indians gathering. They are going to be in their traditional dress. Many will be in court."

The trial itself is expected to be brief -- three to six days. Unlike civil trials in the United States, in Ecuador lawyers do not cross-examine witnesses. Instead, they present questions to a judge who probes and parries from the bench.

The courtroom is tiny -- about 20 feet by 20 feet, according to Bonifaz. And it likely will be crammed. "This is what we've been preparing for -- for years," he said. "Just as trade is global, we want justice to be global."

A ruling is not likely for months, during which time the judge is expected to investigate the case firsthand. "There will be judicial visits to the (oil) pits, judicial visits to rivers and swamps," said Bonifaz.

Lago Agrio -- the heart of Ecuador's oil country -- is an unlikely and dangerous place to have a trial. Just 12 miles from the Colombia border, it is the capital of Sucumbios province, a dense green riot of vegetation that has been called one of Latin America's "ungoverned" regions.

Arms trafficking, drug running, kidnapping, murder and other crimes tied to nearby Colombia's civil war have prompted the State Department to warn Americans not to visit. Since 1998, eight U.S. citizens have been kidnapped in the region. One was murdered.

The original case accused Texaco of dumping toxic "production water" and other oil wastes into hundred of unlined pits across the region, allegedly causing skin diseases, cancer and other ailments. Bonifaz, 69, said the case began with a simple visit to the rural home of an indigenous woman, Maria Aguinda.

"I walked into her house in 1993 and I swore to God I was going to do something for her," Bonifaz said. "I saw this poor woman with her feet full of tar, this woman who had to wash her feet with gasoline."

Today, the case bears her name: Maria Aguinda et al., v. ChevronTexaco.

Texaco has long maintained it behaved properly in the Amazon. Gidez has defended the dumping of petroleum wastes into unlined pits.

"During that period, the '70s and '80s, it was generally accepted operating practices for these conditions, where you have a dense, claylike soil," he said. "Produced water was put into the pits, the oil skimmed out and then the water discharged."

Bonifaz, though, said the pollution was far-reaching, oozing into swamps, seeping into rivers and eventually contaminating some 30,000 indigenous people and peasant settlers -- and their crops -- across hundreds of square miles of rain forest.

"The court will have to make one decision and one decision only: if ChevronTexaco has to clean it up or not," he said.

"If the court orders them to clean the pits only, it's going to be one value," he added. "If the court orders them to clean up the pits, swamps and rivers, it's going to be an astronomical value."

In Lago Agrio, Bonifaz and his colleagues will have a tool they lacked in the U.S.: a 1999 Ecuadorean "law of environmental matters," which Bonifaz said holds corporations accountable for past spills, similar to the federal Superfund law in the U.S.

The case also unfolds against rising anger about U.S. energy projects in Latin America, including a huge new natural gas field in Peru and the recently completed Oleoducto de Crudos Pesados pipeline in Ecuador, which is expected to double oil production in the region.

Fueling the boom is demand for energy in the United States, particularly California, a state known for passionately protecting its own coastline from oil drilling. That theme was explored by The Bee in April, in a series of articles called "State of Denial."

So far this year, nearly 25 million barrels of Ecuadorean oil have been shipped by tanker to California -- making the South American nation second only to Saudi Arabia, with 56 million.

Plaintiffs' lawyers say the Lago Agrio trial is a legal bellwether that could change the way energy exploration is carried out.

"This case has the power to set the tone for a new way of doing things in Latin America, vis-à-vis American oil companies," said Donziger.

About the Writer

The Bee's Tom Knudson can be reached at (530) 582-5336 or


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