It's been a rough week for Chevron. First, there was the 60 Minutes public relations disaster on Sunday. Now, as reported by Bloomberg and AP, New York State Attorney General Andrew Cuomo has expressed concerns that the country's second-largest oil company may be making false or incomplete statements to investors.
For nearly 16 years, Chevron has been fighting a landmark oil pollution lawsuit brought by more than 30,000 residents from rainforest communities in Ecuador. More than 18 billion gallons of oil were spilled; a court-appointed team has concluded that the contamination led to 1,401 cancer deaths and damages of up to $27.3 billion.
In a letter to Chevron CEO David O'Reilly on Monday, Cuomo explained that the New York Attorney General's office has responsibility under the Martin Act to investigate potential "financial fraud and material misstatements in connection with publicly traded companies." The New York State and New York City public pension funds have significant holdings of Chevron stock: other New York state shareholders include Amnesty International.
Cuomo also challenged Chevron's claim that Ecuador lacks jurisdiction in the case, writing:
Wall St. Journal reported that major pension funds holding $1 billion in Chevron stock were growing increasingly alarmed that the company wasn't prepared for an unfavorable verdict in the case. In a letter to Chevron, Maryland Comptroller Peter Franchot said that his state's pension fund was,
"it is our understanding that Chevron has repeatedly stated in its public filings that, 'the company believes that the court [in Ecuador] lacks jurisdiction over Chevron.' However, our review of filings in Aguinda v. ChevronTexaco seems to state that Chevron consented to the jurisdiction of that very Ecuadorian court. "
"particularly concerned that a potential liability in Ecuador...represents a significant threat to shareholder value."