Strategic CSR - Chevron

I will be traveling for the next week with only intermittent internet access. Apologies for the interruption in service. The Newsletters will resume on April 6. As always, your comments and ideas are welcome at any time.

The article in the url below reports on the recent court decision in Ecuador where Chevron was found guilty of pollution/environmental degradation and ordered to pay $8.6bn in fines and clean-up costs (possibly rising to over $9bn):

“The plaintiffs, residents of Ecuador's oil-rich Amazon rain forest, are seeking to hold Chevron accountable for environmental damage they say was caused by Texaco Inc., which operated in the country from 1965 to 1992. Chevron inherited the case when it acquired Texaco in 2001.”

The case is complex and, perhaps unsurprisingly, Chevron denies any wrongdoing or liability. What I thought was interesting about the decision, however, was the following:

“And if the U.S. oil giant doesn't publicly apologize in the next 15 days, the judge ordered the company to pay twice that amount.”

The intimacy of a public apology (and implied admission of guilt), together with the legal consequences of refusing to comply, was an interesting twist to the story. The judge seemed to be trying to make the legal transaction more human and personal. In the process, he is holding the firm to a level of accountability that exceeds the monetary value of the fine.

It is always interesting (depressing?) to see the reaction of the stock market to these kinds of decisions”

“Investors … shrugged off the ruling Monday. Chevron's shares rose 1.3% to $96.95 in 4 p.m. composite trading on the New York Stock Exchange.”

Take care

David

Bill Werther & David Chandler

Strategic Corporate Social Responsibility: Stakeholders in a Global Environment (2e)

© Sage Publications, 2011

http://www.sagepub.com/strategiccsr2e/

Instructor Teaching Site: http://www.sagepub.com/strategiccsr/

The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/

Chevron Hit With Record Judgment

By Ben Casselman, Isabel Ordonez and Angel Gonzalez

1025 words

15 February 2011

The Wall Street Journal

A1

http://online.wsj.com/article/SB10001424052748703584804576144464044068664.html

Additional information about this case can be found in this second article:

Chevron Is Ordered to Pay $9 Billion by Ecuador Judge

By SIMON ROMERO and CLIFFORD KRAUSS; Simon Romero reported from Caracas, and Clifford Krauss from Houston. John Schwartz contributed reporting from New York, and Irene Caselli from Quito, Ecuador.

1088 words

15 February 2011

The New York Times

Late Edition - Final

4

http://www.nytimes.com/2011/02/15/world/americas/15ecuador.html

Strategic CSR - Chiquita

The article in the url link below provides an update on the costs to Chiquita (Issues: Litigation, p245) resulting from the firm’s admission last year that it made protection payments to a Colombian paramilitary group:

“Although Chiquita voluntarily disclosed payments it made to a Colombian to the US Department of Justice in March 2007, the company paid a $25 million fine. It continues to face numerous cases in civil court from the families of victims allegedly murdered by the paramilitaries paid by Chiquita.”

Instead of being commended for their transparency, however, and in spite of being urged to come forward by the Department of Justice, it seems that the only prosecutions being made are against self-confessed transgressor firms. And, they are being hit hard:

“… the top five recent penalties levied in the US foreign corrupt practices act arena were in cases involving voluntary disclosure, including $44 million from Baker Hughes and $28.5 million from Titan Corporation.”

It is difficult to know what the ‘best’ course of action is. While it is fair to expect Chiquita to be punished for the bribes it paid, it is also clear that such punitive action by the government, compounded by the civil litigation Chiquita faces, will only serve to discourage others from coming forward. If the goal is to eradicate the practice (in this case, bribery), it is easy to see that this approach will likely result in less success, not more:

“But Alexandra Wrage, president of TRACE International, a non-profit membership association that specialises in anti-bribery due diligence reviews and compliance training, says many ultimately conclude it was the wrong decision to voluntarily disclose. Wrage says many self-reporters don’t believe they have received any kind of measurable benefit, while facing stiff downsides to the decision, including fines, remedial action and vast reputational damage.”

Take care
Dave

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

Chiquita – Voluntary disclosure’s banana skin
Coming clean on bribes doesn’t seem to really pay off for US companies
Lisa Roner, North America Editor
July 16, 2008
http://www.ethicalcorp.com/content.asp?ContentID=6011

Strategic CSR - 10 Worst Corporations of 2008

The article in the url link below undoubtedly presents a subjective view of the corporate world, but it also makes for interesting reading:

“As we compiled the Multinational Monitor list of the 10 Worst Corporations of 2008, it would have been easy to restrict the awardees to Wall Street firms. But the rest of the corporate sector was not on good behavior during 2008 either, and we didn't want them to escape justified scrutiny.”

Identifying the Top 10 firms in any category, by definition, reflects the biases of the people doing the ranking (and CorpWatch certainly has its biases), but it is also hard to defend the actions highlighted in the article. One example:

“In 2001, Chevron swallowed up Texaco. It was happy to absorb the revenue streams. It has been less willing to take responsibility for Texaco's ecological and human rights abuses. In 1993, 30,000 indigenous Ecuadorians filed a class action suit in U.S. courts, alleging that Texaco over a 20-year period had poisoned the land where they live and the waterways on which they rely … . Chevron had the case thrown out of U.S. courts, on the grounds that it should be litigated in Ecuador, closer to where the alleged harms occurred. But now the case is going badly for Chevron in Ecuador -- Chevron may be liable for more than $7 billion. So, the company is lobbying the Office of the U.S. Trade Representative to impose trade sanctions on Ecuador if the Ecuadorian government does not make the case go away.”

Have a good weekend
David

Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006

The 10 Worst Corporations of 2008
January 9th, 2009
What a year for corporate criminality and malfeasance!
http://www.corpwatch.org/article.php?id=15275