Environmental Irresponsibility, Corruption and Human Rights Abuse: Canada's EnCana Corporation's contribution to Ecuadorian Development


Canada's largest private oil company, EnCana Corporation, in their Ecuadorian operations is violating the very principles that it has sworn to uphold in their offshore business ventures. Not only is it causing severe environmental damage, it is violating democratic principles and human rights in the communities in which they work. For these reasons Accion Ecologica (Ecological Action) an Ecuadorian environmentalist organization,is calling upon EthicalFunds to disinvest in EnCana, whose business practices are clearly unethical.


EnCana is the largest foreign investor in Ecuador's oilfields with large land holdings in the Northern Amazonian region and a 31.4% share in the heavy crude pipeline (OCP) being built from the Amazon to the Coast. The OCP is slated to be finished in September of this year shipping 450,000 barrels of heated crude petroleum per day. ("In Whose Interests" Dr. Leslie Jermyn Global Aware Cooperative http://www.globalaware.org)

Through its longstanding operations in the Ecuador EnCana has gained a reputation for environmental contamination and social disruption. Despite its horrendous environmental record it was granted concession in the Tarapoa Block in Sucumbios Province in the late 1990s which has a surface of 36,000 hectares of which approximately 15,000 hectares fall within the unique and fragile Cuyabeno Wildlife Reserve. (Matthew McClearn "Down the Tube" Canadian Business Magazine February 17th, 2003).

The Present Situation

EnCana Corporation has a reputation for environmental and social consciousness within the investment community of Canada. The company claims to uphold certain values, one of which is to ensure that their activities are consistent with sound environmental management and conservation practices...

...However, a report released on September 13th, 2002, and written by the actual author of the World Bank's main social and environmental safeguard policies, Robert Goodland, substantiates the ways in which the OCP pipeline has violated World Bank environmental and social standards. The report concluded that alternative routes were not adequately considered, as it was decided on before the environmental impact assessment of the pipeline was even completed.

The chosen route of the pipeline has raised wide-spread opposition as it encroaches on indigenous territories, and cuts through 11 protected ecological reserves, among them the Mindo Nambillo Reserve, with its high concentration of endangered bird species. The OCP pipeline crosses 94 seismic fault lines and landslide areas making the possibility of oil spills extremely high. The Environmental Coordinator of the OCP estimates that a single rupture could spill 3050 barrels of oil before being controlled.

Just recently, on March the first the OCP consortium's environmental protection officer confirmed that the at the OCP's main Amazonian pumping station 60 barrels of crude petroleum were spilled during the TESTING PHASE of the station's operations. Communities that live along the pipeline's route are extremely worried about the threat it will pose when running at full capacity (El Comercio Monday 3rd of March, 2003).

EnCana is also in the process of developing its oil reserves in the Cuyabeno Wildlife Reserve. According to scientific study the Cuyabeno Reserve is one of great importance due to its high level of biodiversity. The reserve alone contains fourteen unique ecosystems, some of which are without par in the world. (Valencia, 1994). Cuyabeno plays an important role as a refuge to several endangered bird, mammal and fish species. The Reserve is so fragile that one spill could destroy the entire area.

EnCana is now in the process of seismic testing which consists of around 6000 dynamite detonations within the Reserve (Author's calculation). The detonations damage subterranean aquifers which are the fundamental source of water for the ecologically and biologically unique lake system of the region. The testing furthermore uses highly invasive technology, which requires clear-cutting of vast areas of forest, destruction of the delicate tropical topsoil, and vegetation. The seismic testing undertaken by EnCana is unconstitutional, since it undermines articles 86, 88 and 23 (6) of the Ecuadorian Constitution. It also infringes on Principles 3 and 15 of the Rio Declaration on the Environment and Development, to which Ecuador is a signatory.

EnCana vowes to ensure meaningful and transparent consultation with all stakeholders and to integrate their corporate activities with local communities as good corporate citizens...

...However, the company's presence has been detrimental in dividing native communities whose ancestral territory lies within the reserve. A document released to the press in January of 2003 by two of the four remaining Siona communities, Biana and Orahuaya, stated that they were not consulted in the negotiation process between The Organization of the Siona Indigenous Nation (ONISE) and EnCana. The contract between the two is therefore illegal according to Ecuadorian Constitutional Law which grants communities the right to consultation.

Complaints filed by residents living in Encana's oil concession blocks regarding recent contamination of water and severe air pollution that kills their crops as a direct result of Encana's activities have not been responded to (FOCAN: Federation of the Peasant Organizations of Aguas Negras).

Due to severely contaminated water supplies, residents in oil-producing areas report frequent skin problems, birth defects and the highest rate of cancer and malnutrition in the country.

Encana has furthermore stated its principle not to make improper payments and bribes and that it will refrain from participating in any corrupt business practices...

...But local groups claim that instead of providing social services the company has used it's Foundation Nanpaz (Road to Peace) as a means to buy off leaders of community organizations with jobs in the foundation, thus perpetuating the 'divide and conquer' techniques it is known for. On Saturday, January 25th the Ecuadorian press revealed that ONISE gave each member of only the two Siona communities that supported EnCana $1, 162 USD in exchange for their support. (El Comercio, January 25, 2003.)

EnCana claims to support and promote the protection of international human rights within its sphere of influence...

...Yet in the spring of 2002 a peaceful occupation of the treetops of Mindo by local residents as well as national and international supporters was broken up by police. The protests resulted in the arrest of 29 protesters both national and foreign who were transported to jail in OCP private buses, and the deportation of 17 activists, including Canadians, who blockaded the OCP pipeline route.

Over 200 affected people met with Ecuador congressmembers complaining of intimidation and imprisonment, police brutality, women and children being assaulted by police, battering with machine guns, and police throwing tear-gas canisters into occupied homes, provincial authorities and the Interior Minister claimed that he could not be held responsible for police actions because the police were under the control of, and paid by the EnCana-led OCP Consortium. ("Goodland Report," September 13, 2002.) It was later discovered that the same OCP security forces that detained the environmentalists were actively involved and later imprisoned for their involvment in drug trafficking (La Hora Thursday, January 30, 2003). Allegations have recently arisen that the judge in charge of handling the environmentalist's legal case against the OCP has received several threats both written and verbal (Accion Por La Vida, Mindo, Ecuador).

The tactics employed by the EnCana-led consortium to obtain illegitimate 'consent' for development on indigenous territories has divided families and communities. Added to this, the invasion of migratory workers and the loss of traditional land tenure systems leads to gross violations of the fundamental rights indigenous peoples hold under international agreements such as ILO 169 and the UN Declaration on Human Rights to which Ecuador is signatory.

For the above stated reasons, including disregard for environmental standards, the improper use of funds, manipulation, and violation of human rights, Accion Ecologica (Ecologica Action) believes that EnCana should not be listed as an an ethical fund in the investment market. Canadians need to become aware of the impact Canadian business has abroad and if their own money is fueling this process of abuse.


Please send appeals urgently in your own words calling of EthicalFunds to deinvest their shares in EnCana.


Robert Walker
Vice President, SRI Policy & Research
Ethical Funds Inc.
1441 Creekside Drive, 8th Floor
Vancouver, British Columbia V6J 4S7
Tel: 604 714 3833
Fax: 604 714 3861
Email: rwalker@credential.com

Copies to:

Margaret Yee
President and Chief Operating Officer
Ethical Funds Inc.
1441 Creekside Drive, 8th Floor
Vancouver, BC V6J 4S7

Gwyn Morgan
Chief Executive Officer
EnCana Corporation
1800, 855 - 2nd Street SW
PO Box 2850
Calgary, Alberta T2P 2S5
Phone: 403-645-2000
Fax: 403-645-3400