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Ecuador Farmers Say Chevron Award Too Small

Date: 16-Feb-11
Country: ECUADOR
Author: Victor Gomez

Ecuador Farmers Say Chevron Award Too Small Photo: Reuters/Guillermo Granja
Ecuadorean workers clean up an oil waste pit owned by state petroleum company Petroecuador in Shushufindi, some 410 km (254 mi) east of Quito December 8, 2009.
Photo: Reuters/Guillermo Granja

Ecuadorean farmers who accuse Chevron Corp of polluting the Amazon will appeal for more damages after a local judge ordered the firm to pay them $8.6 billion, a sign the 17-year legal saga will drag on.

The indigenous farmers have decided the award is not enough and will present their case to a provincial court in the heart of the polluted jungle region later this week.

"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. "Our families have died, and our rivers have deteriorated."

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. Chevron denies responsibility for any damage.

"We will present the appeal on Thursday," the plaintiffs' lead lawyer Pablo Fajardo told reporters. He did not reveal details of the appeal but his team had been seeking at least $27 billion and may seek to seize Chevron assets overseas.

Chevron has also vowed to keeping fighting the lawsuit, and has claimed fraud on the part of the plaintiffs and their lawyers. A resolution could take years.

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

Zambrano told Reuters both sides have until Thursday to present appeals against his ruling.

Chevron, which made $19 billion in net profit last year, has no assets in Ecuador and believes it is unlikely ever to pay. It plans to block enforcement in U.S. courts.

The San Ramon, California-based company denies any health problems in the region are its fault and says it cleaned up any pollution for which it was responsible.

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.

'OIL IN THE RIVERS'

Despite disagreeing with the size of the award, some of farmers were nevertheless pleased Chevron was found guilty.

"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," Piaguaje said.

Zambrano's ruling specifies the damages should be put in a trust fund managed by an independent body. The money would not be given directly to the 40 plaintiffs representing the affected region's Indian communities. Instead it would be used to clean up the environment and pay for health care.

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.

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.

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 and say compensation should be higher.

"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."

(Editing by Frank Jack Daniel, Kieran Murray and Richard Chang)

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