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21 Aug 2018

Simon Taylor, Co-founder and Director, Global Witness

Who Really Pulls the Strings - Where Does the Buck Stop?

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I have been investigating and exposing corruption and other crimes of extractive industry companies (the Organisation for Economic Cooperation and Development (OCED) determined this sector as the most corrupt on the planet[1]) for more than two decades.  In any ranking of malfeasance, my feeling is “Big Oil” gets pole position.  The crimes are varied, and taking the period post-World War 2 through to present day, would have to include grand corruption, pillage, human rights abuses, coups d’état, fomenting conflict, complicity in looting of states, corrupt manipulation of policy, and the dodging of taxes.  Perhaps the greatest crime of all - one still underway – is the cover-up, denial, obfuscation and political capture around climate change, leading us inexorably to a place of existential crisis, and possibly soon past the point of no return.  Given these companies have known about the consequences of continued emissions of Carbon Dioxide into the atmosphere for decades, which potentially threatens all life on earth, this last category, like a slow train crash, is surely a crime to match any thrown at us by the best despots of the twentieth century.

But who is responsible?  Given the myriad crimes and cases I refer to above, this is a complicated matter, with each case being different.  In my experience, for the vast majority, the decision-making and hence responsibility for inadequacies, or very often complicity in the subsequent mess, lies with the highest levels of management in the parent company.  In these cases, the subsidiary has usually played the role of a vassal, bereft of nearly all decision-making, at the beck and call of the parent.  This role is to enable the parent corporation to reap all the benefits, whilst the subsidiary plays “patsy” when/if it all goes wrong, as the parent pleads ignorance or lack of any role.  Accountability is thus usually a far distant proposition:  a quickie settlement out of court, a “cost-of-doing-business” penalty.  No-one goes to jail, and hence, with no disincentives, the process repeats.

But the real victims in these cases, who pay the price for others to reap their profits, will not accept this any longer – here is a good example:

In Ecuador, Texaco’s appalling waste management systems left hundreds of poorly maintained waste pits, leaking their toxic content, leading to a legacy of cancer clusters, polluted waterways and land, and devastation for the indigenous and poor farming communities in the region.  They sued, but instead of seeking to clean up this environmental disaster, Chevron (which assumed the responsibility for Texaco’s liabilities when it took over the company), promised a lifetime of litigation and said that it would “fight this until hell freezes over, and then we’ll fight it out on the ice!”[2]

Chevron has lost this fight.  It has lost the legal fight in Ecuador (the jurisdiction it fought to be heard in, but which it now denigrates), where multiple courts have re-affirmed the judgement against Chevron and the multi-billion-dollar compensation penalty it must now pay.  It has also lost the fight in the public domain, where its legal strategy seems to be a vindictive effort, by all means, to attack its opponents rather than be held accountable for its liabilities.  This charade recently continued with a legal attack, via the New York Bar Grievance Committee, which then applied to court, succeeding in suspending the law licence for the Ecuadorian community’s US lawyer, Stephen Donziger – a process which took place like a summary execution, with no hearing, and no opportunity for the provision of evidence.  The bar designated Donziger an “immediate threat to the public order”[3] – this about a man who graduated in the same law school class as President Barack Obama, and in his 25 years of law practice, has never received a single complaint.

This is embarrassing, because the basis for this summary decision to suspend Donziger’s license was the conclusion of an earlier Civil RICO case, mounted by Chevron and its lawyers Gibson Dunn in the United States, in which the judgement found that Mr Donziger and the affected communities had bribed the Ecuadorian trial judge, in order to ghost write his judgement against Chevron.  But the credibility of this RICO judgement is now in tatters, given overwhelming forensic evidence supporting the Ecuadorian trial judge as the real author of the judgement, and given that the central plank underpinning the RICO judgement was the testimony of a corrupt and disgraced former Ecuadorian judge, who has been paid more than a million dollars by Chevron (together with other benefits), and who, under deposition, has admitted that he lied in his testimony to the RICO case.[4]  There should now be a public enquiry into these matters, including how the U.S. trial judge, Lewis Kaplan, let this happen – nothing less than the global reputation of New York as an anti-corruption fighter is at stake.  Donziger has filed a complaint, on behalf of himself and his clients, the impacted communities in Ecuador – but from the U.S. Department of Justice, as yet, only silence.

It is clearly the moment to call time on corporate abuse.  US Senator, Elizabeth Warren, just announced the creation of a Bill, requiring greater emphasis from company boards on the interests of all company stakeholders (including impacted communities), as opposed to the current single-minded fixation on profits for shareholders.  The Bill – Anti-Corruption and Public Integrity Act –  could also see the removal of corporate charters for persistent offenders.  This is right.  We, global citizens, are not there to be abused so others can make a profit.  As our predatory capitalist system continues to deny the majority in favour of a shrinking few, more and more of us will stand up and fight, like the brave communities from Ecuador who have fought a massive asymmetry of power for more than two decades.  Chevron may epitomise an attitude where to fight for their pound of flesh seems worth it – but if I had a message for their leadership, I would urge them to rethink – you will lose!

[1] See OECD:  Scale of international bribery laid bare by new OECD report,” 2 Dec 2014

The OECD analysed 400 cases of international bribery, finding that in the majority of the cases, bribery took place with the knowledge of senior management.  From this study, with 19% of the cases, the extractives sector was determined to be the worst offender.

[4] See complaint from Steven Donziger & his Ecuadorian clients, the impacted communities, 9 November 2017, to the US Department of Justice