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THE VILLAGE VOICE - FEBRUARY 1997

FOOL'S GOLD
In Ecuador's Rain Forest, the Case Against Texaco is Clear-Cut
By Matthew Yeomans

LAGO AGRIO, ECUADOR--At first sight, it didn't seem that bad. Yes, Lago, as everyone calls it, in the heart of the Oriente, is a dusty, tough-looking oil town. But it was hardly the apocalyptic nightmare I had been led to expect. Where were the rivers of crude running down the main street, the burly, threatening oil workers hanging out on every corner?

I had come to the rain forest just last week, as Ecuador's Procurador (Attorney) General, Leonidas Plaza Verduga, was raising the stakes in a long, drawn-out environmental and legal battle against the Texaco Corporation. For more than 20 years, Texaco had drilled for oil in the Oriente, one of the most ecologically rich and diverse regions in the world. And by all accounts, save those of Texaco, the drilling has left an enormous mess. The company, it has been widely alleged, spilled 16.8 million gallons of oil (one and a half times that of the Exxon Valdez) from ruptured pipelines, discharged 19 billion gallons of highly toxic water into waterways and the soil, conducted massive deforestation, and left more than 600 toxic pits uncovered.

In 1993, three years after Texaco withdrew, a coalition of Oriente indigenous groups and colonists numbering some 30,000 filed a $1.5 billion class-action lawsuit in New York, seeking compensation for the widespread environmental atrocities committed by the company. Now the Procurador, in a move considered cavalier even by the outlandish standards of Abdala ''El Loco'' Bucaram's new government, had ripped up a 1995 cleanup agreement Texaco had made with the previous administration and was angling to join the suit against the oil company.

It was a move that delighted environmental groups, horrified Texaco--''We're a little perplexed and surprised'' is how its spokesman euphemistically put it--and provoked a fierce dispute with the United States embassy in Quito. The mission's deputy chief, after visiting Verduga on Texaco's behalf, was accused by the Procurador of threatening him in order to have the suit dropped.

Heading out of Lago and passing over the Rio Aguarico, we come to Campo Lago Agrio, one of Texaco's original areas of exploration. ''Please keep an open mind in Ecuador,'' the company's spokesman had implored me a couple of days before. ''I don't think that Texaco has done anything wrong in that country.'' Fifteen kilometers down a service road that Texaco had carved out of the Amazon, the real story becomes a little more apparent. We stop at the iron gates of Estacion Guanta, an original Texaco site now operated by the state oil company, Petroecuador. During the majority of its time in Ecuador, Texaco worked in a consortium with the government and Petroecuador. The two state entities remained majority shareholders, but it was Texaco that was responsible for day-to-day operations. Today, Petroecuador continues to drill, mostly using the same techniques introduced by Texaco in the 1970s (the company says it's in the process of updating these methods).

Estacion Guanta is also home to a small group of settlers, lured from other parts of Ecuador by the dream of a secure future and cheap land. When Texaco first began working the Lago area back in 1967, the Cofan Indians called it home. But despite a sacred connection between Ecuador's indigenous groups and their tribal lands, the government gave foreign oil companies full access. Within a few years, the Cofans had been mostly driven away, and today only colonists live next to the plant.

Guillermo Maldonado, a 47-going-on-60-year-old day-worker for Petroecuador, walks us over to a toxic water pool dug by Texaco to be used as part of its petroleum separation process. The pool lies just 100 meters behind the wooden shack he shares with 12 members of his family. Inside the station's perimeter fence, a gas flare burns with an intense heat, releasing invisible fumes that send my head spinning and leave me feeling physically sick. The pool is filled with black slimy water, and is lined with a single layer of black plastic--standard Texaco and Petroecuador operating procedure. It has ruptured and the water has leaked through the soil and into a nearby stream--the only local source of drinking water. ''We have bad headaches, stomach pains, and our skin looks like this,'' says Maldonado. His body, like that of every member of his family, is covered in white pustulated boils. It could be a hereditary disease, except that nearly everyone around here has a similar affliction.

It is just this type of horror scene that has formed the basis for the litigation against Texaco. The company, during the course of extracting some 1.5 billion barrels of oil from the region, has left behind a scene of mass environmental destruction. Texaco insists it always operated using the highest technological standards of the time. However, the suit calls for the company to cover the costs of modernizing outdated and contaminated equipment left by the company in Ecuador, of paying for a full cleanup, and of compensating those affected by Texaco's actions.

''Texaco has committed a crime here in the Amazonas'' says Luis Yanza, a founding member of El Frente por la Defensa de Los Amazonas, a coalition of colonists and indigenous groups formed three years ago to fight the transnationals. Together with the Quito-based Accion Ecologica, along with the Rainforest Action Network, and the Center for Economic and Social Rights in the states, El Frente is spearheading the fight against oil destruction in Ecuador. But despite the new impetus brought by the Ecuadorean government, the arguments being waged in the Federal Court in White Plains have nothing to do with Texaco's guilt or innocence. Instead, they revolve around whether the case should even be heard in the U.S. On November 12, Judge Jed Rakoff dismissed the case on the grounds of international comity (where one jurisdiction yeilds to another out of respect) and forum non-conveniens, the legal doctrine that allows a case to be dismissed when another forum would be more convenient - i.e., Ecuador. Rakoff also dismissed the suit because of the plaintiff's failure to name as a defendant the government of Ecuador, whom the court described as an indispensable party to the suit.

According to Henry Dahl, the Dallas-based lawyer retained by the Ecuadorean government, a new law--nullifying any suit returned to its courts because of forum non-conveniens--should remove one obstacle to the case proceeding. And with Verduga's controversial decision to enter the fray--one that forced Rakoff to consider new motions and marked a swift about-face from the stance of the previous administration--the case against Texaco is again very much alive.

Sitting in his spacious, if sterile, office at the U.S. embassy in Quito, Deputy Chief of Mission Curt Struble takes a deepish breath and fixes an amused smile as I read to him comments from the Procurador's New York press conference the day before. According to Verduga, on November 26 (the day after he voided a cleanup agreement the previous administration had made with Texaco and announced his decision to join the suit), Struble, along with a representative of Texaco, demanded a meeting with the Procurador. In that meeting, Struble threatened Verduga and insisted that he abide by the existing agreement made with the company. If not, Verduga said, ''the American government would take appropriate measures of an economic nature against my country.'' The Procurador has also alleged that Struble pressured him to drop the suit.

This perceived slight--that the U.S. might pressure another government to drop a lawsuit against an American company--has outraged many people. ''The U.S. embassy has explicitly prioritized environmental affairs, but the reality is that it continues to put its weight solidly behind even the most egregious environmental criminals,'' says Chris Jochnick of the Center for Economic and Social Rights. Given the exposure to foreign-born lawsuits (and large dollar settlements) that U.S. multinationals could face should the Texaco case go ahead in New York, was the decidely probusiness Clinton administration trying to bully the Procurador? His lawyer certainly thinks so. ''They have the cheek of pleading for a U.S. company with a plaintiff against it in a U.S. court ,'' Dahl says. ''Why does a U.S. diplomat try to put pressure on Ecuador?''

According to Struble, the answer is simple: he didn't. ''I think that Dr. Plaza Verduga has consistently and intentionally misrepresented what has gone on,'' says Struble, who admits that he visited the Procurador on behalf of Texaco but denies that he was ''carrying Texaco's water'' or that an oil company representative was present at the meeting (Texaco also denies it was at the meeting).

Struble says that the embassy does not hold a position on the lawsuit in the states and says he called the meeting with Plaza for one reason: to protest the voiding of the cleanup contract that Texaco had almost completed. This is just the latest, he says, in a pattern of valid contracts the Bucaram government has broken with U.S. companies. Rather than threatening economic sanctions, Struble says he simply pointed out ''that you can't attract new investors at the very same time that the government of Ecuador is illegally voiding contracts with these companies.'' Struble does admit that he lost his temper in the meeting, but only when he was told that Verduga had canceled the Texaco contract because of ''domestic political pressure.'' (The day after the suit was dismissed in the U.S., local activists staged a sit-in at Verduga's office. There, he pledged his support for their fight.)

The contract in question was made in 1995 between Texaco and the former government of Sixto Duran Ballen, and was roundly criticized both in Ecuador and abroad. Texaco argued that, as a minority shareholder in the consortium, its liability was diminished and agreed only to a limited cleanup of 139 of the more than 600 toxic pits it had dug. No provisions were made to remedy the hundreds of oil spills caused by the company or to monitor the health of the communities affected by Texaco's operations. In September 1996, the Bucaram administration suspended the cleanup pending an official investigation. At the time, it was disclosed that contractors hired by Texaco were negligent in their remediation practices, allowing contamination levels to remain high.

Whether the U.S. embassy did try to strong-arm Verduga or whether the Procurador is simply grandstanding to place greater pressure on Texaco makes little difference to those who support the suit. What matters is that he has made this issue a personal crusade and seems intent on making life as uncomfortable as possible for the company.

''It's an unpredictable government,'' says Accion Ecologica's Paulina Garzon, but ''it's one of the few good things it has done. It has to be supported.'' Even so, the introduction of the Ecuadorean government as a plaintiff in the case is bizarre to say the least. This is, after all, the same government that continues, through its ownership of Petroecuador, to destroy the Oriente with the same refining methods taught by Texaco. While Verduga may want retribution from Texaco, the state oil company, as partners with the company, could also be found liable in the suit.

The unpredictable nature of the Bucaram government also should give supporters of the suit cause for concern. Last August, Bucaram won election on an unashamedly populist platform. Now, his so-called party of the poor has introduced an austerity program so severe that it has provoked three weeks of violent street demonstrations throughout the country. A national strike is planned for February 5, and while the price of bread, gas, transport, and electricity skyrockets, Bucaram tries to placate the people with cheap popularity tricks: First he made himself president of Guayaquil's Barcelona football club, and presently he is trying to coax disgraced soccer legend Diego Maradona out of retirement and into the services of the club. Despite all this lunacy, the plaintiffs realize the government represents the best hope of getting their case heard.

Ten miles out of Coca, over the Rio Napo and up the crude-soaked Yuka road of Petroecuador's Auca development sector, sits Paroquia Taracoa. In this colonist community of about 50 homes, settlers eke out an existence as day workers for the state-run company and as subsistence farmers. Fifteen years ago, 46-year-old Vincente Alban came to Taracoa in order to make his fortune.

Today, he has 10 children and works a small piece of land right next to a toxic pit. It was ''cleaned'' only last week by one of Texaco's subcontractors. The cleanup consisted of filling the pit with earth, a process that flooded Alban's land with crude oil and toxic water. It's nothing new; according to Alban, the pit has been leaking into the nearby water supply ever since Texaco dug it 10 years ago. ''All the water in this town is contaminated,'' says Alban, pointing out that only rainwater here is drinkable. It's collected, ironically, in old Texaco oil drums.

And while the town must scrounge for rainwater, just 10 kilometers away, a Petroecuador water pump sends filtrated water to employees at the local refinery. Alban digs down with his machete into the sodden land he uses for grazing cattle and pulls up a thick clump of black crude. ''I've lost between 25 and 30 cows during the time I've been here,'' he says matter-of-factly.

It's the same story played out over and over again throughout the Oriente. On the surface everything looks normal, but dig a little deeper and the truth oozes out.