Deep in the Amazonian rainforest yesterday a court reached a judgment that will resonate through the boardrooms of some of the world's richest and most powerful companies. A judge in the northern Ecuadorean city of Lago Agrio ruled that Texaco was responsible for dumping billions of gallons of toxic waste in the rivers of the Amazon rainforest between 1972 and 1992 and that Chevron, which merged with Texaco in 2001, is liable for an $8.6bn (£5.3bn) fine.
The pollution of the Ecuadorean Amazon was a dirty business. And Chevron has fought dirty over the past 18 years in an attempt to evade responsibility for the crime. The oil giant has gone to enormous lengths, and considerable expense, to undermine the Ecuadorean legal system and to intimidate the lawyers representing the 30,000 Ecuadoreans bringing the case.
And, to no one's surprise, Chevron has not accepted yesterday's verdict gracefully. The firm has described the lawsuit as an "extortion scheme" and refused to pay the fine. It points to the fact that Texaco spent $40m cleaning up the area during the 1990s and signed an agreement with the Ecuadorean government in 1998 absolving it of any further responsibility. But the clean-up was a sham.
An Ecuadorean scientific team took water and soil samples after Texaco departed in 1998 and found petroleum hydrocarbons at unsafe levels in almost half. There are echoes here of the 1984 Union Carbide disaster, which killed 15,000 people when a chemical plant near the Indian city of Bhopal exploded. Union Carbide did a deal with the Indian authorities limiting compensation and was subsequently taken over by a larger firm.
In both instances, the new companies have fought demands for them to pay the full costs of the clean up and have denied their responsibility to compensate those people whose lives have been permanently blighted.
This is part of a malign pattern of behaviour from Western multinationals operating in developing countries. These firms exploit the lower environmental protection standards in poor nations which allow them to work with corrupt local middle-men to cut costs on safety and waste disposal.
We saw this in the 2006 Trafigura case, where toxic waste belonging to the multinational oil trading company ended up dumped, by a contractor, in the Ivory Coast capital, Abidjan. And this newspaper reported two years ago that thousands of tonnes of hazardous electronics are being shipped to Africa by recycling subcontractors commissioned by UK councils.
Large firms cannot get away with behaving in such a reckless fashion in rich countries. For BP, the financial consequences of last year's Gulf of Mexico oil spill – a consequence of the company's disregard for safety – were severe. Yet this ruling in Ecuador could be a sign that poorer countries too are no longer prepared to be the Western world's dumping ground, or to sign deals that deny their people the compensation that they are due.
This is the highest award of damages ever issued in an environmental lawsuit: bigger than what followed Bhopal, the 1989 Exxon Valdez disaster and last year's emergency in the Gulf of Mexico. This is also the first time that indigenous people have successfully sued a multinational corporation in the country where the pollution took place. Crucially, the plaintiffs had the support of the Ecuadorean president, Rafael Correa.
Whether or not Chevron can be forced to pay up – and the rest of the world should demand that it do so – this judgement is welcome. Multinational firms need to be made to understand that, wherever in the world they operate, they will be required to pay the full costs when they wreck environments and destroy lives.Reuse content