Amazon shakedown artists

I was in a hotel room in Mexico City when I watched the Tokyo fight in which Buster Douglas beat Mike Tyson 22 years ago. The result seemed so bizarre that I wondered if I might have stumbled into a parallel universe. That is not an unusual feeling in Latin America. The decision by an Ecuador appeals court to uphold a US$18-billion judgment against petroleum giant Chevron was perhaps less surprising, but hardly less surreal.

For the second time in a week, a corrupt, leftist South American government appeared to have gained a legal "victory" over Big Oil. The Chevron decision followed hard on the announcement that the government of Venezuela had to pay only a fraction (under US$1-billion) of Exxon Mobil's demands (US$7-billion) related to expropriation of the company's assets.

Any case involving Venezuelan strongman Hugo Chavez is likely to be weird and wonderful. However, the Chevron case in Ecuador - which is ruled by another socialist mobster, Rafael Correa - looks like a plot by Gabriel Garcia Marquez, not just because it features incriminating outtakes from documentaries, payoffs to Ecuadorian court officials and evidence that court decisions were ghostwritten by the plaintiffs, but because it has recently been linked with an even more shameless shakedown: the "Yasuni ITT Initiative."

The Chevron case goes back almost 20 years, to accusations that Texaco, which Chevron acquired in 2001, had failed to compensate adequately for its pollution of the Amazon while in partnership with state oil company PetroEcuador. This despite having paid for a cleanup that was certified by the Ecuadorian government. The case has - with the help of radical NGOs and U.S. lawyers, and the prospect of a bonanza payday - dragged on. A year ago, an Ecuadorian court ordered Chevron to pay US$8.6-billion, a sum that would double if it was not joined by an apology. No apology was forthcoming.

Despite this week's ruling, Chevron certainly doesn't appear to be heading for the canvas. "Today's decision," it noted in a statement on Tuesday, "is another glaring example of the politicization and corruption of Ecuador's judiciary that has plagued this fraudulent case from the start.- Chevron does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law. The company will continue to seek to hold accountable the perpetrators of this fraud."

The plaintiffs' notion that Chevron might post a US$18-billion bond is pure fantasy. However, their ever-reasonable lead Ecuadorian lawyer, Pablo Fajardo, suggested that a mere US$3billion might do the trick. After all, shakedown artists are usually prepared to negotiate, which is where we come to the Yasuni Initiative.

Under Yasuni, which was announced in September, 2010, Ecuador would agree not to develop part of an Amazon national park in return for a modest US$3.6-billion from the international community (names to follow). In fact, there is already drilling in Yasuni by PetroEcuador, whose record of oil spills makes it the Inspector Clouseau of oil companies. Meanwhile, a much bigger problem for Yasuni is illegal logging.

The Seinfeldian concept of monetizing eco-virtuous nonactivity was pioneered by Canada's own "World's Leading Environmentalist," Maurice Strong. Since then, some governments (Norway) have actually paid other governments (Indonesia) not to chop down trees.

Under The Yasuni Job, not only would sacred biodiversity be preserved, but hundreds of millions of tons of carbon dioxide would be kept out of the environment. The cash would be laundered via the United Nations toward alternative-energy projects and helping indigenous peoples. If at least US$100-million hadn't been coughed up by the end of last year, then the self-immolation would begin.

According to an Amazon activist with access to The Huffington Post, Chevron may have been involved in dastardly negotiations to put cash into the floundering Yasuni initiative as the price of making the bogus court case go away. Where this gets a bit complicated is that it involves Chevron allegedly attempting to corrupt the woman running the Ecuador side of Yasuni, a former trade minister named Ivonne Baki.

Since Ms. Baki is front and centre of a scheme blatantly to extort cash, the notion that Chevron might have been trying to corrupt her is a bit of a stretch. Nevertheless, an alleged smoking gun is an April 2008 cable from the U.S. embassy in Quito - released by Wikileaks - noting that "Chevron had begun to quietly explore with senior GOE [Government of Ecuador] officials whether it could implement a series of social projects in the concession area in exchange for GOE support for ending the case."

This hardly amounts to an astonishing revelation. The most fascinating aspect of the allegation, however, is that private shakedown artists are accusing Chevron of trying to corrupt government-appointed shakedown artists. Obviously, Ecuador likes to keep its shakedowns neatly compartmentalized. One thing is for sure, the Yasuni shakedown is not going well. Ms. Baki claims that the US$100-million target has been reached, but the names of the donors have still to appear. Chevron isn't among them.

It is problematic enough that oil companies support petrotyrannies. The notion that they might pay off ecotyrannies is worse. Still, it's not as bad as taxpayers being lumbered with the bill, which is at the heart of the moribund climate scam. Fortunately, taxpayers are paying a little more attention to where their money is going these days. The Amazon, it seems, is about as popular a destination is Kyoto.