Chevron Eyes Misconduct in Official’s Ecuador Ties

ALBANY, N.Y. (CN) - New York's comptroller has heaped public pressure on Chevron to help his supporters extort a multibillion payout, the oil giant told the state ethics board Tuesday.

In shareholder letters sent in November 2008, May 2011 and May 2012, New York State Comptroller Thomas DiNapoli urged Chevron to settle with a group of Ecuadoreans who say that decades of oil exploration ravaged their rainforest community.

A judge in Lago Agrio, Ecuador, ordered Chevron to pay $19 billion to remediate damage allegedly caused by Texaco, which drilled there for decades before Chevron acquired it.

Both sides have decried the other's actions in the far-flung litigation as extortionate. In its latest example of such claims, filed Tuesday with the New York State Joint Commission on Public Ethics, Chevron accuses DiNapoli of "misconduct."

New York lawyer Steven Donziger and other attorneys and consultants for the Ecuadoreans allegedly "targeted" DiNapoli, "and have succeeded in getting his support apparently through an illicit and unethical quid pro quo arrangement," the complaint states.

"Donziger and his associates have given DiNapoli consideration not available to the general public, including large monetary contributions to DiNapoli's campaign in excess of $60,000 - a move that Donziger himself worried 'might not be a great idea,'" Chevron added, quoting from a Donziger email that the oil giant apparently won in discovery. "In apparent exchange for this consideration, Donziger and his associates have received the unwavering support of DiNapoli and his office."

Though DiNapoli did not return a request for comment, he called allegations "without merit" in a statement on his website.

"This is a baseless attempt by big oil to intimidate me and it won't work," DiNapoli said. "The allegations are without merit."

Chevron says DiNapoli's public denouncement of Chevron is especially "inappropriate" because he serves as trustee of the $150.3 billion New York State Common Retirement Fund, which owns an estimated $700 million of Chevron stock.

But DiNapoli emphasized that very relationship in a May 30, 2012, statement about a shareholder vote of certain resolutions at Chevron's annual meeting in San Francisco.

"A resolution which asked Chevron to separate the positions of chief executive officer and chairman of the board of directors received 38 percent of votes in favor, more than double the amount that it received the last time it was on the ballot in 2008," according to the statement. "A resolution sponsored by the fund calling on Chevron to appoint an independent director with environmental expertise to its board received 23 percent of the vote. A third resolution asking the company to lower the threshold for calling special shareholder meetings received 30 percent of the vote."

In the Tuesday statement, DiNapoli said his letters with other investors are "about protecting shareholder value and fulfilling my fiduciary responsibility to the New York State Common Retirement Fund."

"Instead of owning up to its corporate responsibility, time and again Chevron has denied its responsibility, distorted the facts and ignored the ruling of a court of law," DiNapoli said. "I am confident that JCOPE will see through this blatant attempt to intimidate responsible shareholders who dare to question Chevron's actions." Chevron requested documents under the Freedom of Information Act in October 2011 about the relationship between DiNapoli's office and the representatives for the Ecuadoreans.

Ongoing discovery and other investigations have revealed the benefits DiNapoli reaped to exert pressure on Chevron, the oil giant said Tuesday.

"The apparent reason for DiNapoli's actions is simple: the perpetrators of the Lago Agrio fraud (Donziger and his associates) have given DiNapoli tens of thousands of dollars in campaign contributions and other consideration not offered to the general public," according to the complaint (parentheses in original). "Such an exchange is an apparent breach of DiNapoli's ethical and legal duties as a state government official. As comptroller, DiNapoli cannot have financial interests that conflict with the exercise of his duties, cannot use his office to gain an advantage for himself at the expense of the public, and cannot give the appearance that he may be improperly influenced in the exercise of his duties. Here, it appears that he has violated each of these obligations.

"Moreover, DiNapoli's actions are an apparent breach of his fiduciary duties as sole trustee and manager of the New York State Common Retirement Fund."

Chevron notes that its stock "has significantly outperformed the fund as a whole" since DiNapoli replaced Alan Hevesi as comptroller in 2007.

"Attacking Chevron at the behest of the LAPs and Donziger does not serve the fund's beneficiaries," Chevron's complaint states.

It says DiNapoli's conduct is proscribed by New York Public Officers Law, which prohibits public officials from having "any interest, financial or otherwise ... which is in substantial conflict with the proper discharge of his duties in the public interest."

In addition to financial support, Chevron says DiNapoli also let the Ecuadoreans woo him to get close to their celebrity contacts, such as Sting and his wife, Trudi Styler.

Though a meeting between the comptroller and the environmentally conscious celebrities was in the works in 2007, Chevron says it is not sure whether that meeting ever actually occurred.

Chevron attorney David Grandeau signed the 51-page complaint.

An attorney for the Ecuadoreans meanwhile called Chevron's ethics complaint "the height of hypocrisy."

"Chevron is one of the biggest corporate contributors to political campaigns in the U.S. and exercises its political and legal muscle not only in Washington but in other capitals across the world to get what it wants," attorney Graham Erion said in a statement. "Mr. DiNapoli is carrying out his responsibilities as a caretaker of New York state funds and has every right to question Chevron's actions."

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit