Analysis

Chevron Defies Ecuador’s “Shake Down”
Ecuadoran lawyer Pablo Fajardo (right), legal representative of the Amazon Defense Front, shows the ratification of a court ruling ordering Chevron to pay an indemnity for environmental damage, during a press conference in Quito, on January 4, 2012. A court in Ecuador on January 3, 2012 fully upheld a 2011 ruling requiring Chevron to pay $9.5 billion for environmental damage in the Amazon rainforest. (RODRIGO BUENDIA/AFP/Getty Images)
February 9, 2012
| Energy
| The Americas
Summary
In a decision that could cost Chevron (CVX) $8.5 billion, the company ignored a February 3 deadline to apologize for its alleged responsibility for environmental damage in the Amazon River basin. By not apologizing, Chevron opens itself to criticism, not only from environmental activists, but also from its shareholders. Was this the right move?

On its face, saying the words “we are sorry” appears to be a fantastic bargain in exchange for a savings of $8.5 billion. But as it turns out, that deal is not so great after all. LIGNET believes that Chevron made the right decision in refusing to apologize for environmental crimes which it says it did not commit. To apologize now, after nearly two decades of litigation, would have amounted to an acceptance of the $9.5 billion primary award, and that humiliating surrender would have significantly weakened Chevron's chances of winning its inevitable appeal in U.S. courts. That appeal before American judges is the end game Chevron is focused on.

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