A string of defections over the last year has further exposed the fraudulent case against Chevron in Ecuador. Many who were once in the plaintiffs’ close-knit inner circle have now turned on them by detailing their first-hand knowledge of the fraud.
QUITO, Ecuador — Ecuador’s state oil company resumed pumping through the country’s main pipeline on Tuesday, four days after it was damaged by a landslide. But crude spilled by the accident reached tributaries of the Amazon River and polluted drinking water for a regional capital far downstream.
Petroecuador issued a statement saying pumping resumed at 9:15 a.m. (1415 GMT) through the Trans-Ecuador pipeline and it said the flow should be back to normal within hours. Closure of the line had forced Petroecuador to accelerate three 360,000-barrel shipments of oil for China to free storage space.
A rain-caused landslide on Friday ripped up a 100-meter (100-yard) long stretch of the line near the Reventador volcano.
The company said it did not know how much of the 420,000 gallons (1.6 million liters) of crude oil that spilled had reached the Quijos river, a waterway popular with whitewater rafting enthusiasts.
But enough flowed from the Quijos into the Coca and Napo rivers downstream that the regional capital of Coca had to shut down its drinking water system and Ecuador’s government alerted Peru and Brazil, which are along the course of the Napo as it heads toward the Amazon.
In Coca, an urban area of about 80,000 people at the confluence of the Coca and Napo rivers, Mayor Ana Rivas told the Sonorama radio station that the accident “has left us without water because the river we take potable water from is contaminated. The people are indignant because there is no water to drink.”
Petroecuador has distributed bottled water to the city and Rivas said officials were using tankers to collect water from an uncontaminated stretch of river.
Alexandra Almeida of the environmental group Accion Ecologica expressed concern because “they still don’t know the real quantity of this spill of crude that affected the principle sources of water of this region.”
By Gonzalo Solano-Huffington Post, June 5, 2013
The Ecuadorian plaintiffs were dealt a noteworthy setback yesterday when the Superior Court of Ontario, stating that their assertions had “no basis in fact or law,” indefinitely stayed their attempt to recognize and enforce the judgment issued by Ecuador’s courts in Canada.
Premised on seeking to enforce the judgment against assets of Chevron Corporation subsidiaries that were not even parties to the Ecuadorian litigation, this decision is a significant impediment to the plaintiffs’ worldwide enforcement strategy.
The reason the plaintiffs have not filed– nor are they likely to– enforcement actions in the U.S. -where Chevron Corporation is headquartered- is because they know the judgment they obtained would not hold up to scrutiny in the U.S., where eight federal courts have already found the Ecuador trial to be tainted by fraud.
Since filing for enforcement and recognition in May of 2012, the plaintiffs’ lawyers and affiliates have touted Canada as a country that gives appropriate deference to judgments of foreign courts. Pablo Fajardo, attorney for the Lago Agrio plaintiffs said, “We chose Canada to go to first because it’s a country that has a great tradition of upholding foreign decisions and because its judiciary as a whole is well respected around the world.” The Ecuadoreans lead lawyer at Patton Boggs, James Tyrrell echoed the same sentiment in saying, “We’ve carefully selected the jurisdictions that we believe would be favorable for enforcement of the Ecuadorean judgment.” They went on to state that they believe that “Canadian judgments can be enforced on a streamlined basis in other Commonwealth nations.”
The ruling by Canada’s world-class and respected judiciary, should, if they are taken at their word, force the plaintiffs to concede that this development is potentially devastating to their legal strategy of seeking to launder the Ecuadorian judgment through Canada and courts of other Commonwealth nations.
The Ontario Superior Court of Justice has stayed ( see opinion here ) an action initiated by a group of Ecuadorian plaintiffs seeking to have a judgment of an Ecuadorian court against Chevron Corp. recognized and enforced in Ontario. In doing so, the court stated:
“ the plaintiffs have no hope of success in their assertion that the corporate veil of Chevron Canada should be pierced and ignored so that its assets become exigible to satisfy a judgment against its ultimate parent. There is no basis in law or fact for such a claim.… Ontario courts should be reluctant to dedicate their resources to disputes where, in dollar and cents terms, there is nothing to fight over. In my view, the parties should take their fight elsewhere to some jurisdiction where any ultimate recognition of the Ecuadorean judgment will have a practical effect.”
In response, Chevron Corporation issued the following statement:
“We are pleased with today’s decision from Justice Brown. The Ontario Superior Court ruled that it ought not to entertain the plaintiffs’ claims on the evidence before the court. This is a significant setback to the Ecuadorian plaintiffs’ worldwide enforcement strategy given that it is premised on seeking to enforce the judgment against assets of Chevron Corporation subsidiaries that were not even parties to the Ecuadorian litigation.”
“The plaintiffs should be seeking enforcement in the United States – where Chevron Corporation resides. In the U.S., however, they would be confronted by the fact that eight federal courts have already found the Ecuador trial tainted by fraud.”
Meanwhile, Chevron Corp. has made additional notable progress in the legal proceedings in the United States exposing the fraudulent nature of the plaintiffs’ judgment. This evidence further demonstrates that the judgment is illegitimate and should be unenforceable in any court that respects the rule of law. Evidence of the plaintiffs’ fraud includes:
- A former Ecuadorian judge has admitted his role in orchestrating the fraudulent judgment against Chevron and a half-million-dollar bribery scheme.
- Stratus Consulting, the lead environmental consultants to the Ecuadorian plaintiffs’ lawyers, provided sworn declarations (here and here), highlighting the lack of scientific merit to the plaintiffs’ damage claims.
- Another of the plaintiffs’ lawyers’ environmental consultants, Dr. Charles Calmbacher, has testified that plaintiffs’ evidence was being falsified from the very outset of the trial.
- Litigation hedge fund Burford Capital has provided a sworn declaration outlining the firm’s knowledge of the plaintiffs’ lawyers’ misconduct, testifying that the proceeding is irredeemably tainted by fraud.
Chevron Corp. remains committed to holding the plaintiffs’ lawyers accountable for their misconduct and demonstrating the judgment is the product of a corrupted judiciary.
A British litigation fund that backed the Ecuadorean plaintiffs who secured a $19 billion pollution judgment at the heart of Chevron’s New York racketeering lawsuit on Wednesday struck a deal with the energy giant, saying Patton Boggs LLP duped it into investing in the case.
Burford Capital Ltd. renounced its interest in the litigation in exchange for a mutual release of claims with Chevron, saying it was “deeply concerned” about mounting evidence of fraud and misconduct it alleges have permeated the Ecuadorean judgment and subsequent litigation.
In a declaration filed Wednesday, Burford chief executive Christopher Bogart claims the litigation hedge fund would not have invested $4 million in the Ecuadorean’s legal efforts were it not for their faith in Patton Boggs and lead partner Jim Tyrrell, faith he says proved misplaced when evidence of deception later emerged.
“The Lago Agrio litigation is far afield of Burford’s usual investment matters, and Burford explicitly undertook this investment because of our substantial confidence in Jim Tyrrell,” Bogart said. “As we later learned, the representations that Patton Boggs made to us … during our diligence process were false and misleading in several respects.”
The ties between Burford and Tyrell go back to Tyrell’s days as a Latham & Watkins LLP partner, where he worked alongside four firm partners who would later go on to occupy senior positions with the fund, and it was Tyrell and Patton Boggs’ assumption of leadership in the litigation that “transformed it as an investment possibility,” Bogart said.
The ongoing dispute concerns a group of indigenous Ecuadoreans who say crude oil allegedly dumped in the Amazon rainforest by Texaco Inc., which merged with Chevron in 2001, caused residents to develop cancer and destroyed natural resources.
Chevron has mounted a New York Racketeer Influenced and Corrupt Organizations Act suit seeking to squash the judgment, claiming it is the product of extortion and fraud on the part of attorney Steven Donziger and the so-called Lago Agrio plaintiffs he represents.
Burford, which terminated its funding of the plaintiffs in 2011 amidst concerns of legal improprieties but maintained a financial stake in the litigation, said it was denied the full disclosure to which it was entitled under its funding agreement, particularly with respect to a key damages assessment underlying the unprecedented Ecuadorean judgment.
The fund’s exit from Chevron’s RICO comes less than a week after that assessment, known as the Cabrera Report, was disavowed by an environmental firm hired by Donziger to evaluate the extent and effect of Chevron’s alleged pollution in the Amazon. Chevron has long claimed the report was ghostwritten by the plaintiffs to inflate the eventual damages figure.
While Donziger has maintained that his side’s contact with court-appointed damages assessment expert Richard Stalin Cabrera Vega was limited and allowable under Ecuadorean law, the testimony of two Stratus Consulting Inc. representatives on Friday indicated that the report was “fatally tainted” by Donziger’s influence.
“Chevron believes that Burford has acted responsibly after becoming aware of the fraud, bribery and extortion perpetrated here, and Chevron is pleased that Burford has taken this further action of disclaiming any interest in this matter,” Chevron Vice President and General Counsel Hewitt Pate said in a statement.
In its own statement, Burford praised Chevron’s efforts in the ongoing litigation as “instrumental in bringing to light the facts.”
A representative for the Lago Agrio plaintiffs told Law360 on Wednesday that efforts to discredit the Cabrera report were little more than a public relations gesture, saying the Ecuadorean judge who issued the disputed award excluded the report from consideration in response to Chevron’s objections and that the report therefore had no bearing on the final judgment.
The representative further dismissed the Burford testimony and the Stratus disavowal as a “sideshow” designed to “intimidate and malign” the Lago Agrio plaintiffs, adding that they would not curtail ongoing efforts to secure the Ecuadorean court’s judgment.
“Burford’s dissatisfaction flows out of an old dispute, dating back to 2011, over money they think they are entitled to, and the plaintiffs’ unwillingness to agree,” the representative said. “Dressed up as a complaint about misconduct, it is, at its core, just a disagreement about money.”
Burford’s allegations follow a series of recent setbacks for the Ecuadoreans, including Stratus’ exit from the litigation last week and a magistrate judge’s recommendation Monday that Donziger’s extortion and fraud counterclaims against Chevron be dismissed.
The Ecuadorians are currently seeking to enforce the judgment through asset freezes in Argentina, Brazil and Canada, and have sought to remove U.S. District Court Judge Lewis Kaplan from his role presiding over the New York RICO suit over his purported attempts to hinder those efforts.
Judge Kaplan has set an Oct. 15 trial date for the suit.
Representatives for Patton Boggs and for the Ecuadoreans did not immediately respond to a request for comment Wednesday.
Chevron is represented by Gibson Dunn & Crutcher LLP.
The Lagos Agrio plaintiffs are represented by Smyser Kaplan & Veselka LLP.
The case is Chevron Corp. v. Donziger et al., case number 2:11-cv-00691, in the U.S. District Court for the Southern District of New York.
By Gavin Broady-Law360, April 17, 2013