It's almost James Bond, Latin American style.
Regarding a lawsuit that could possibly cost Chevron
The tapes were made secretly and without Chevron's knowledge by Diego Borja, a contractor for Chevron, and Wayne Hansen, an American businessman. The pair, who used cameras hidden in a pen and a watch during meetings in Ecuador, were apparently seeking clean-up contracts that might stem from the suit. The suit relates to claims that Texaco severely polluted the Amazon basin before that company was bought by Chevron.
Borja and Hansen apparently met on several occasions with the judge, or with a political party official, Patricio Garcia, or both. Garcia allegedly was seeking $3 million in bribes for delivering the contracts. During one meeting not attended by the judge, Garcia reportedly informed Borja that the money would be divided equally among the judge, the "presidency," and plaintiffs in the lawsuit.
In response, the Ecuadorian government will investigate the matter. They are requesting the unedited version of the tapes from Chevron, while at the same time referring to the translated Spanish as "misleading." At the same time, the plaintiffs' attorney suing Chevron on behalf of the indigenous Ecuadorians said the video "certainly looks like a dirty trick."
I've watched the tapes, and they're well worth the time spent. One meeting was summed up with the confirmation that a decision would likely be rendered by the judge in October or November and that the punitive amount "might be less, and it might be more" than $27 billion. At that point, one of the attendees chimed in, "Well, sell your shares in Chevron."
Doing business in Latin America is becoming more difficult for Western oil companies. You are, of course, aware of Hugo Chavez's nationalization of the industry in Venezuela, which affected the likes of ConocoPhillips
And Brazil's president has now proposed a series of measures that would increase Petrobras'
So how should we treat Chevron now? The company stated on Tuesday that it had no intention of paying $27 billion in damages and has sent the tapes to the U.S. Justice Department. My take, then, is that Chevron has benefited dramatically by the release of these tapes and therefore, it may not be wise to "sell your shares in Chevron" yet.
Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He does welcome your comments. Petroleo Brasileiro and Total SA are Motley Fool Income Investor selections. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool doesn't have cameras or microphones hidden in its disclosure policy.
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