2nd UPDATE: Chevron Files Ethics Complaint Against N.Y. State Comptroller

Date : 11/20/2012 @ 5:21PM
Source : Dow Jones News
Stock : Chevron Corp. (CVX)
Quote : 114.72  0.01 (0.01%) @ 12:05AM
Chevron share price Chart

2nd UPDATE: Chevron Files Ethics Complaint Against N.Y. State Comptroller

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--Chevron accuses N.Y. State Comptroller Thomas DiNapoli of breach of ethics

--Oil company claims he improperly sided with Ecuadorean plantiffs in long-running environmental suit

--Mr. DiNapoli calls the allegations baseless

(Adds details, quotes and background throughout.)

   By Debbie Cai and Angel Gonzalez 

Chevron Corp. (CVX) accused New York State Comptroller Thomas DiNapoli of unethically siding with Ecuadorian plaintiffs fighting the oil company in a multibillion-dollar environmental case in return for political contributions and other benefits.

In a complaint filed before the New York State Joint Commission on Public Ethics, the second-largest U.S. oil company said the comptroller and his staff breached their fiduciary and ethical duties in their positions with the New York State Common Retirement Fund, which is overseen by Mr. DiNapoli and owns more than $800 million in Chevron shares.

Chevron alleged that the plaintiffs' supporters contributed more than $60,000 to Mr. DiNapoli's political campaign. In return, the comptroller allegedly used his public office to explicitly push the company to settle the lawsuit via shareholder resolutions and public statements, Chevron said.

The comptroller, in a statement, called the allegations baseless and an "attempt by big oil to intimidate me."

"It won't work," he added.

He said the retirement fund and investors have called on Chevron to settle its nearly two-decade-long legal battle for about eight years.

"Instead of owning up to its corporate responsibility, time and again Chevron has denied its responsibility, distorted the facts" in the Ecuadorean suit, Mr. DiNapoli said. In his statement, Mr. DiNapoli didn't address specific allegations by Chevron, such as the campaign donations.

The complaint is Chevron's latest move in a long-running, globe-spanning legal saga that pits the company against residents of Ecuador's Amazon, who allege that U.S. oil company's Texaco operations caused harmful pollution there. Chevron, which denies the allegations, inherited the lawsuit when it bought Texaco in 2001.

Last year, a court in Ecuador found Chevron liable and levied an $18.2 billion judgment. In July, an Ecuadorean judge raised that amount to $19 billion. Chevron has said the ruling is the result of fraudulent evidence and has sought to block its enforcement in U.S. and international courts. Plaintiffs, who deny the fraud accusations, have responded in kind, filing fraud claims against Chevron and seeking to seize Chevron assets in Canada, Brazil and Argentina. Earlier this month, an Argentine judge ordered a freeze of Chevron assets and receivables in that country.

The U.S. oil company is alleging that Mr. DiNapoli "used his office to support the Ecuadorian plaintiffs' lawyers' scheme to pressure Chevron into settling the lawsuit in exchange for benefits received from the plaintiffs' representatives."

Chevron said Steven Donziger, a U.S.-based legal adviser to the plaintiffs, as well as several associates, made campaign contributions to Mr. DiNapoli exceeding a total of $60,000 between late 2008 and early 2012.

The oil company also argued that Mr. DiNapoli'S staff met with plaintiffs' allies at activist organizations such as Amazon Watch, which invited Mr. DiNapoli and staffers to Ecuador. Chevron also alleges that Amazon Watch also plied Mr. DiNapoli and staffers with invitations to the site of the environmental dispute--and for a meeting between Mr. DiNapoli and the pop star-activist Sting.

Chevron said one staffer visited the area, with the trip paid for by the New York state government, but met only with plaintiffs and their allies; the company added that it was unclear whether any of the other invitations were accepted.

Kevin Koenig, the Ecuador program coordinator for Amazon Watch, said Chevron's complaint amounted to a distraction to take attention away from the company's problems in Argentina, where its assets and receivables have been frozen. Mr. Donziger couldn't be reached for comment.

In the complaint, Chevron said Mr. DiNapoli breached the law whereby public officials are prohibited from having "any interest, financial or otherwise...which is in substantial conflict with the proper discharge of his duties in the public interest."

Plaintiffs' attorney Graham Erion said that for Chevron to accuse anyone of ethics violations or improper influence "is the height of hypocrisy" and the move is part of an intimidation campaign.

"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. Mr. DiNapoli is carrying out his responsibilities as a caretaker of New York state funds and has every right to question Chevron's actions," Mr. Erion said.

Chevron's third-quarter earnings fell 33%, missing expectations as its oil-and-gas production was disrupted by maintenance, legal issues and storms, and a refinery fire in California caused a sharp drop in fuel sales.

Shares finished Friday's session down 79 cents at $103.56. The stock is down 2.7% so far this year.

Write to Debbie Cai at debbie.cai@dowjones.com and Angel Gonzalez at angel.gonzalez@dowjones.com

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