Hagel’s Chevron Does Big Business with Pentagon

Hagel's position on Chevron Corp. board may be a conflict of interest

January 28, 2013

Obama’s nominee for secretary of defense Chuck Hagel sits on the board of Chevron Corporation, an organization that has received millions of dollars in Department of Defense contracts.

Chevron has been criticized by environmental and human rights activists for a litany of practices, yet Hagel’s position on the board has garnered little attention.

A recent article in the San Francisco Chronicle noted the absence of attention.

Hagel has served on Chevron’s board of directors since 2010. Chevron received nearly $1.2 billion in contracts and grants from DOD during fiscal years 2010, 2011, and 2012.

Chevron Energy Solutions worked with Marine Corps Logistics Base (MCLB) on the Navy's first landfill gas cogeneration plant in 2011. According to a press release, "Chevron Energy Solutions developed, designed and managed construction of the plant," and continues maintenance for much of the facility and equipment. Chevron Energy Solutions arranged financing of the project in conjunction with MCLB’s "avoided energy costs."

Chevron has received many contracts from the Defense Logistic Agency for fuel services. There are at least four contracts worth a maximum of more than $780,000,000 since 2010. Chevron Americas Products was awarded contracts in January and May of 2012, and Chevron Global Aviation received contracts in October and December of 2010. Both entities are based in Houston, Texas.

Chevron also received one of five contracts for "the purchase of renewable electrical power through power purchase agreements at Naval and Marine Corps installations" in various Southwestern states. The contracts amounted to $25,000,000, across all five contractors.

Each of these contracts were categorized as IDIQ contracts. An IDIQ, or Indefinite-delivery/indefinite-quantity, contract is given when an agency "can’t determine, above a specified minimum, the precise quantities of supplies or services that the government will require during the contract period."

Chevron made over $501 million in government sales in the 2012 fiscal year, according the to San Francisco Chronicle. The majority of that money reportedly came from fuel sales to the Pentagon.

As the San Francisco Chronicle mentioned, Hagel would need to leave this position should he be confirmed as secretary of defense.

Secretary of State nominee John Kerry had to clarify his business associations. Kerry agreed to "divest shares" of nearly 100 investments within 90 days of taking his post in order to avoid potential conflicts of interest.

Hagel has not yet commented on his position with Chevron, but the association would likely be a conflict of interest.

Additionally, some of Chevron’s business practices are seen as controversial. The company was criticized for doing business with the government of Turkmenistan, a country that has repeatedly been labeled as one of "the world’s most repressive societies." Many individuals denigrated the organization for "refusing to pay a $19 billion judgment" in Ecuador.

Politico reported:

The case stems from a class action suit brought by well-connected U.S. trial lawyers on behalf of 30,000 Ecuadoreans alleging that from 1964 to 1990, Texaco — which was purchased by Chevron in 2001 — dumped billions of gallons of toxic waste into Ecuador’s Amazon rain forest, leaving behind an unprecedented environmental and public health disaster including a wave of cancers, birth defects and miscarriages.

Chevron reportedly tried to circumvent the judgment by lobbying Congress to revise Ecuador’s trade preferences. The lobbying efforts were "designed to win powerful allies in Congress and the Obama administration as well as to shape public opinion and calm shareholders."

Before announcing his candidacy for the presidency, then-Sen. Barack Obama cowrote a letter with Sen. Patrick Leahy (D., Vt.), in support of the plaintiffs.

Just Foreign Policy’s Robert Naiman denounced Chevron for these behaviors saying, "It would seem that Chevron could afford to compensate Ecuadoran peasants for toxic dumping in the Amazon[,]" when they had just announced $6 billion in quarterly profits.

David Fenton was also a vocal opponent of Chevron. Fenton said of Chevron's CEO John Watson in a December 2012 article, "your comments on the lawsuit against you for your oil spills in Ecuador are yet another terrible example for our children."

Chevron's ethical issues have not stopped Naiman or Fenton from supporting Hagel’s nomination. Naiman called on "pro-Obama Jews" to actively support the nomination. As the Washington Free Beacon reported, Naiman and Fenton went as far as exchanging emails in a coordinated effort to discredit Hagel critics.

Chevron’s board of directors is comprised of twelve people. If Hagel is confirmed, he would reportedly step down.

"If a member of Chevron's Board of Directors is nominated for a cabinet position, the director could continue to serve as a member of the Board until confirmed by the Senate," said Chevron External Communications Advisor Morgan Crinklaw. "Once confirmed, the director would resign from the Board of Directors. The individual would be eligible to be considered for election back to the Board [by the Board of Directors or our stockholders] upon completion of public service if all membership criteria were met."

The Department of Defense did not return request for comment.