UPDATE 2-Argentine court upholds freeze on Chevron assets

Wed Jan 30, 2013 8:59pm GMT

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* Argentine suit stems from $19 bln ruling against Chevron
    * Chevron says pollution judgment fraudulent, unenforceable
    * Two-decade legal dispute has spread to several countries


    By Guido Nejamkis
    BUENOS AIRES, Jan 30 (Reuters) - An Argentine appeals court
has upheld a freeze on up to $19 billion worth of assets held by
U.S. oil major Chevron Corp in Argentina as part of an
environmental lawsuit by Ecuadorean villagers, one of the
plaintiffs' lawyers said on Wednesday.
    An Ecuadorean court last year ordered Chevron to pay the
enormous sum for contamination of watersheds over nearly 30
years that the plaintiffs say sickened indigenous tribes people
and farmers in the Ecuadorean Amazon.  
    Chevron, which vowed to fight the latest ruling, has refused
to make any payments and accuses Ecuadorean courts of fraud.
Because the company has few assets in Ecuador, the plaintiffs
are seeking enforcement of the ruling in other nations including
Argentina, Brazil and Canada. 
    The two Chevron subsidiaries targeted by the freeze, Chevron
Argentina and Ing. Norberto Priu, asked the court in November to
lift the asset freeze on the grounds that they were not directly
owned by Chevron. The court rejected their appeal unanimously,
lawyer Enrique Bruchou said. 
    "We are very pleased with the resolution of the Court of
Appeals, which is well founded," Bruchou said in a statement
sent to Reuters.
    
   
    California-based Chevron said it would "pursue all available
legal remedies to reverse the interim measure."
    "Chevron's view of the situation remains unchanged; the
precautionary embargo is unfounded and based on a judicial fraud
in Ecuador. If the plaintiffs' lawyers believed they had a
legitimate judgment they would seek to enforce it in the United
States, where Chevron Corporation resides," a company spokesman
said in an emailed comment.
    The plaintiffs' lawyers estimate that Chevron's assets in
Argentina are worth about $2 billion and that they could obtain
some $600 million a year if the ruling were enforced. 
    Chevron argues that the company has no direct assets in
Argentina because its operations in the country are conducted by
subsidiaries.
    Chevron signed an accord with state-controlled YPF,
Argentina's No. 1 energy company, in December that aims to pave
the way for major investment in the country's shale oil
resources. 
    Bruchou said Chevron should acknowledge the potential
liability in company financial reports. It is due to report
fourth-quarter earnings on Friday.
    "In the immediacy of Chevron submitting its fully audited
2012 financial statements, we hope this will help the company,
and in particular its Audit Committee and its auditors, focus on
the need of recognizing and accruing the loss contingency in
their 2012 financial statements, in compliance with clear
guidelines of the SEC rules," he said.
    "According to such rules, if a loss is 'probable' and the
amount of loss can be 'reasonably estimated' the company must
recognize and accrue it in its financial statements."
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