Chevron Spared Of $9.5B Fine In Ecuador Case By US Court

Integrated energy giant Chevron Corporation (NYSE:CVX) welcomed the recent verdict of the U.S. Supreme Court. The ruling immunized Chevron from the payment of a landmark $9.5 billion fine for a pollution related case in Ecuador.

Flashback

Residents of Ecuador alleged that Texaco – subsidiary of Chevron – let out wastewater into open pits across vast swaths of Lago Agrio region. A case pertaining to the same was filed in the U.S. However, the same was dismissed and Ecuadorian plaintiffs and the American lawyer Steven Donziger had to refile the case in 2011 in Ecuador wherein Chevron was ordered to cough up $9.5 billion as a penalty.

Chevron believed that the judgment in the Ecuador court was a result of fabricated evidence and fraudulence. The company alleged that Donzigerand his associates have fabricated the writing of a key environmental report.

U.S. District Judge Kaplan in Manhattan did not implement the judgment in 2014 on grounds of bribery. The New York-based 2nd U.S. Circuit Court of Appeals upheld Kaplan's decision last year, citing "a parade of corrupt actions" by Donziger and his associates.

Present Scenario

Donziger claimed that a federal court has exceeded its authority by letting Chevron use a U.S. racketeering law to block enforcement of Ecuador's $9.5 billion award.

However, the U.S. top judges turned down the appeal by the Donziger sustaining the prior U.S. court ruling.

Former Ecuadorian judge Alberto Guerra – an important witness of Chevron – claimed that the Ecuadorian plaintiffs and Donziger had offered him bribes to announce the verdict in their favor.

Donziger views the US Supreme Court decision a “grave mistake and a sad reflection on the US judiciary in the eyes of the world.”

Donziger and Ecuadorian plaintiffs’ hope of receiving the $9.5 billion fine suffered a huge set back as Chevron has refused to pay the penalty on the back of the Supreme Court decision.

Zacks Rank and Key Picks

Headquartered in California, Chevron is one of the largest publicly traded oil and gas companies in the world, based on proved reserves. It is engaged in oil and gas exploration and production, refining and marketing of petroleum products, manufacturing of chemicals and other energy-related businesses.

The company posted a positive earnings surprise of 65.88% in the last quarter. Moreover, in the trailing four quarters it has reported average positive earnings surprise of 32.36%.

Chevron Corporation Price

Original post

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Written By: Zacks Investment Research