The U.S. District Court for the Southern District of New York today ruled that the $9.5 billion judgment against Chevron Corporation in Ecuador was the product of fraud and racketeering activity, finding it unenforceable.
The nearly 500-page ruling finds that Steven Donziger, the lead American lawyer behind the Ecuadorian lawsuit against the company, violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO), committing extortion, money laundering, wire fraud, Foreign Corrupt Practices Act violations, witness tampering and obstruction of justice in obtaining the Ecuadorian judgment and in trying to cover up his and his associates’ crimes.
The court found that Donziger and his team “wrote the [Ecuadorian] court’s Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment.” As Judge Lewis Kaplan stated in the court’s ruling: “The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador – and they knew it. Indeed, one Ecuadorian legal team member, in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, ‘apart from destroying the proceeding, all of us, your attorneys, might go to jail.’ It is time to face the facts.”
“Today’s decision is unequivocal: The Ecuadorian judgment against Chevron is a fraud and is the result of criminal acts by a handful of corrupt lawyers looking to enrich themselves,” said Hewitt Pate, Chevron vice president and general counsel. “Chevron’s reputation was taken hostage and held for a multibillion-dollar ransom. Rather than give in and pay these criminals off, Chevron exposed the truth. Chevron is pleased with today’s judgment. We are confident that any court that respects the rule of law will likewise find the Ecuadorian judgment to be illegitimate and unenforceable.”
During the seven-week RICO and fraud trial, Chevron presented unrebutted evidence detailing the extent of the fraudulent acts undertaken and directed by Donziger, his Ecuadorian legal team and other associates, including fabricating environmental evidence, pressuring scientific experts to falsify reports, plotting to intimidate judges into handing down favorable rulings, bribing court-appointed experts, ghostwriting court reports and even drafting the final judgment. Today’s judgment made clear that Donziger and his associates resorted to fraud due to the lack of evidence to support their claims against Chevron.
Today’s ruling prohibits Donziger and his associates from seeking to enforce the Ecuadorian judgment in the United States and further prohibits them from profiting from their illegal acts.
Chevron has never operated in Ecuador. Texaco Petroleum (TexPet), which became a subsidiary of Chevron in 2001, was a minority partner in an oil-production consortium in Ecuador along with the state-owned oil company, Petroecuador, from 1964 to 1992. After TexPet turned its remaining share of the oil operations over to Petroecuador in 1992, pursuant to an agreement with Ecuador, TexPet agreed to conduct a remediation of selected production sites while Petroecuador committed to perform any remaining cleanup. The government of Ecuador oversaw and certified the successful completion of TexPet’s remediation and fully released TexPet from further environmental liability. Petroecuador, however, failed to conduct the cleanup it promised and has continued to operate and expand oil operations in the former concession over the past 20 years.
An international arbitration tribunal in The Hague has already ruled that the Republic of Ecuador released Texaco – and therefore Chevron – from liability for all public interest or collective environmental claims through agreements signed in the 1990s. The Lago Agrio plaintiffs’ lawyers have repeatedly admitted, and the relief in the Lago Agrio judgment makes clear, that their claims are exclusively collective and not individual.
“Chevron believes that the people of the Oriente deserve a better quality of life. They lack basic infrastructure, including water and sewage treatment. We hope that this ruling will prompt the government of Ecuador and Petroecuador to finally take responsibility and address the issues facing the region and its people,” Pate added.
The U.S. District Court for the Southern District of New York today ruled that the $9.5 billion judgment against Chevron Corporation in Ecuador was the product of fraud and racketeering, finding it unenforceable.
In response, Chevron issued the following statement:
“This ruling is a resounding victory for Chevron and our stockholders. It confirms that the Ecuadorian judgment against Chevron is a fraud and the product of a criminal enterprise. Steven Donziger and his associates can now be held accountable and will not be allowed to profit from their illegal acts. Any court that respects the rule of law will find the Lago Agrio judgment to be illegitimate and unenforceable.”
Chevron presented overwhelming evidence of fraud during the civil RICO trial that concluded in November 2013. Evidence of the Ecuadorian plaintiffs’ and their agents’ fraud includes:
- A former Ecuadorian judge has admitted his role in orchestrating the fraudulent judgment against Chevron in exchange for a half-million-dollar bribe from Donziger and his associates.
- Stratus Consulting, the lead environmental consultant to the Ecuadorian plaintiffs’ lawyers, provided sworn declarations (here and here), highlighting its and Donziger’s role in ghostwriting the reports of a purportedly “independent” Ecuadorian court expert and the lack of scientific merit to the plaintiffs’ environmental claims.
- Another of the plaintiffs’ lawyers’ environmental consultants, Dr. Charles Calmbacher, has testified that plaintiffs falsified environmental evidence in Ecuador.
- Litigation funder Burford Capital has provided sworn testimony outlining the firm’s knowledge of the plaintiffs’ lawyers’ misconduct, testifying that the proceeding is irredeemably tainted by fraud.
During a six-week federal trial in New York, Chevron introduced overwhelming evidence of fraud, extortion and other misconduct as part of a civil lawsuit against Steven Donziger and his associates.
Read Chevron’s post-trial brief:
Using Internet Explorer, click here to read a comprehensive summary of Chevron’s claims and supporting evidence against Steven Donziger and his associates. The post-trial brief contains citations that are hyperlinked to the respective exhibits.
The hyperlinked post-trial brief may also be read by opening this link in Adobe Reader: http://theamazonpost.com/post-trial-brief-pdfs/brief/01ChevronPostTrialBr.pdf
Since late 2013, Ecuador’s government has invited actors, politicians, journalists and many others to the Oriente region of the Amazon to see oil contamination allegedly caused by Texaco. The government claims these pits are evidence of Chevron’s environmental liability in the region. Their favorite tour stop is a site called Aguarico-4 (AG-4). Through scripted media spectacles at this site, the Republic of Ecuador is assisting Steven Donziger in advancing his fraudulent case, while attempting to distract public attention from the government’s own environmental and social obligations in the region.
But here are a few details about AG-4 that they conveniently exclude from their tour:
- Texaco Petroleum (TexPet), which became a subsidiary of Chevron in 2001, was a minority partner in an oil-production consortium in Ecuador along with the state-owned oil company, Petroecuador, from 1964 to 1992. After TexPet turned its remaining share of the oil operations over to Petroecuador in 1992, pursuant to an agreement with Ecuador, the company agreed to conduct a remediation of selected production sites, while Petroecuador committed to perform any remaining cleanup. The government of Ecuador oversaw – and certified – the successful completion of TexPet’s remediation and fully released the company from further environmental liability. Petroecuador, however, failed to conduct the cleanup it promised and has continued to operate and expand oil operations in the former concession over the past 20 years – including AG-4.
- The soil at AG-04 was remediated by TexPet between September and October of 1996, and inspected by the government of Ecuador. Inspectors from the National Hydrocarbons Bureau and Petroproduccion certified TexPet’s soil remediation at AG-04 was successful on March 14, 1997, and on March 20, 1997, the Ecuador Ministry of Energy and Mines approved TexPet’s work at AG-04 as complete.
- In 2006, Petroecuador identified AG-04 as a pit it was responsible for remediating under a government remediation program. But representatives of the plaintiffs in the lawsuit against Chevron met with members of President Rafael Correa’s administration to try to stop the remediation program and developed a plan to halt the remediation fearing it would hurt their case.
- While they continue to publicly claim to work in the interests of the environment, their actions tell a different story. Privately, as shown here, they have pressured Petroecuador to halt its remediation program. Fearful that Chevron would, in Fajardo’s words, “say that the State finally assumed its duty and is going to clean up what it ought to,” Steven Donziger instructed Fajardo “to go to Ecuadorian President Rafael Correa to put an end to this shit once and for all.”
A recent BusinessWeek report aptly summarized the Republic’s efforts: “By focusing celebrity and popular ire on Chevron, Correa hopes to distract his own people and anyone else who’s paying attention from the harsh reality that poor Ecuadorians in the jungle have their own government to blame…”
And the Economist stated: “Petroecuador’s own corporate documents suggest a long-standing interest in Aguarico-4. Its statistical report of 2007 lists Aguarico-4 as a “production recovery” site; its 2011 report refers to “reconditioning work” going on at the pool. That seems to confirm that Petroecuador has for some time regarded Aguarico-4 as its responsibility. It also seems to deny Mr Correa’s claim that the site has been neglected since 1986. Perhaps Mr Correa should tell all of humanity about that.”