Ogilvy Government Relations Loses Chevron Over Client Conflict

Was WPP Firm's Third Largest Account

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This story now includes a comment from Chevron

Chevron Corp. fired Ogilvy Government Relations as its U.S. lobbyist after a person affiliated with the firm spoke to a group advocating for residents of the Ecuadorean rainforest in a multibillion legal fight with the oil company, a person familiar with the matter said.

On May 9, Felipe Benitez of Ogilvy's PR branch gave a presentation to San Francisco-based Amazon Watch on "strategic communications for environmental defense and protection on human rights," according to that group's website.

Lloyd Avram, a spokesman for Chevron, which was Ogilvy's third-largest lobbying client last year, said the company discovered a serious conflict recently. He initially declined to comment about the nature of the issue or the date Chevron ended its relationship with Ogilvy. "Chevron discovered a material conflict of interest with Ogilvy," Chevron's Mr. Avram later said in an e-mailed statement to Bloomberg News. "It could not be resolved and made our relationship with them untenable. Under the terms of our agreement, we terminated the relationship."

Another person, speaking on the condition of anonymity due to the sensitivity of the matter, said the conflict concerned Mr. Benitez and his talk to Amazon Watch, which advocates on behalf of indigenous tribes in the Amazon basin and has called damage from oil drilling in Ecuador "Chevron's Chernobyl."

Ad Age learned that the perceived conflict also threatened Chevron's long and established relationship with WPP sibling agency Y&R, according to an executive familiar with the matter. It's unclear whether Ogilvy PR's new relationship with Yasuni National Rainforest, which has publicly opposed oil drilling, was also a factor fueling the conflict. But for the time being, the relationship with Yasuni has come to a halt, according to industry executives.

Additionally, Ad Age learned that Chevron ended its relationship with both Ogilvy Government Relations and Ogilvy PR on the West Coast. Y&R could not immediately be reached for comment.

A spokeswoman from Ogilvy PR said that Yasuni is not a contracted client of Ogilvy Washington. She would not comment further.

"Chevron discovered a material conflict of interest with Ogilvy," Chevron's Mr. Avram said in an e-mailed statement to Bloomberg News. "It could not be resolved and made our relationship with them untenable. Under the terms of our agreement, we terminated the relationship."

Ogilvy received $600,000 from Chevron in 2011 to lobby on energy, environmental, tax and financial policies in the U.S., according to federal lobbying records, making the oil company its third-biggest client by revenues, according to the Center for Responsive Politics, which tracks political and lobbying spending.

Ogilvy, the sixth-largest U.S. lobbying firm by revenue, according to the center, had represented Chevron since at least 2004, public records show. Ogilvy PR purchased the government lobbying firm, formerly known as Federalist Group, back in 2005. Ogilvy's various units are owned by the world's largest holding company, WPP.

Mr. Avram declined to comment on Chevron's plans to replace Ogilvy.

While Chevron, based in San Ramon, Calif., doesn't operate in Ecuador, it has become embroiled in a lengthy legal fight over the alleged disposal of toxic wastewater from drilling operations by Texaco, which used to operate in the country and was acquired by Chevron in 2001.

Previously, Mr. Benitez worked for Fenton Communications, and had helped Ecuador improve its global image, according to his page on LinkedIn, a social-networking website.

"Chevron informed Ogilvy & Mather of its decision to end its relationship with Ogilvy Government Relations because of a perceived conflict with Ogilvy PR," Rachel Ufer, a spokeswoman for Ogilvy public relations, said in an e-mailed statement to Bloomberg News, referring to the parent company. "As this is primarily a personnel matter, we are unable to provide further detail."

Amazon Watch didn't return a phone call seeking comment. Chevron is fighting an $18 billion judgment from an Ecuadorean court finding the company was responsible for damage. The company argues that Texaco performed all the environmental remediation under the terms of its contract with Ecuador.

It has accused the plaintiffs' lawyers and Ecuadorean officials of fraud and misconduct in the case.

Ecuadoreans filed a lawsuit yesterday in the Superior Court in Ontario targeting Chevron assets in Canada as a way to begin collecting on the judgment, because the oil company has few assets in Ecuador.

In Washington, Chevron spent more than $9.5 million on lobbying last year and keeps a team of outside firms to lobby on a variety of issues.

More than 70 companies and trade groups paid Ogilvy Government Relations more than $20 million to lobby on their behalf in 2011, according to the Center for Responsive Politics, which is based in Washington.

--Bloomberg News with additional reporting by Ad Age

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