The Chevron Ecuador Lawsuit Trial | Chevron's Views & Opinions

The faux walls that have supported the fraudulent $27 billion legal case against Chevron in Ecuador came tumbling down this month with the revelation that the “independent court appointed expert” Richard Cabrera stands to gain financially from any judgment against the oil company.

The ‘independent’ expert had hid his conflict of interest from the court–and is now discredited by the fact that he had a vested personal interest in finding Chevron guilty. In any courtroom that follows the rule of law, the entire case against Chevron would be dismissed. But this is Ecuador, where justice is as slippery as the banana republic itself.

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Ecuador’s inclusion on an international list of nations accused of lagging in the fight against money laundering is a hypocritical punishment for its relations with Iran, Ecuador’s president said on Saturday.

“What arrogance! And why? Because we have relations with Iran. That’s it,” Rafael Correa said at his weekly town hall meeting. “This is imperialism in its most base form. … This has nothing to do with the struggle against money laundering.”

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The Obama administration has made a habit of kowtowing to Latin American leftists. But new information out of Ecuador ought to make the White House finally take a stance against that nation’s anti-American regime.

For years, the radical Ecuadorean government led by President Rafael Correa has been backing a massive and spurious lawsuit, sponsored by American trial lawyers, against the California-based Chevron oil company. In what amounts to a state-enforced shakedown, the plaintiffs seek a whopping $27 billion for purported environmental and health damages, all related to oil projects that Texaco – now owned by Chevron Corp. – stopped operating in Ecuador in 1990. Before it was taken over by left-wingers, the Ecuadorean government in 1998 certified that Texaco had cleaned up its old drilling sites. The new government ignores that certification.
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Richard Cabrera, author of a report upon which a 16-year-old $27 billion lawsuit against Chevron Corporation in Ecuador is based, was the subject of a court filing recently in Lago Agrio, Ecuador. It seems that officials at the oil giant based in San Ramon, California, found new “dirt” on the Ecuadoran businessman.
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Earlier in the week it was revealed that the author of a report recommending Chevron pay $27 billion in damages has a conflict of interest that he illegally hid from the court. As it turns out, Richard Cabrera, the report’s author, is the majority owner of an oil field remediation company in Ecuador that stands to gain financially from a judgment against Chevron.

Cabrera has suggested a wholly illegitimate and unsubstantiated damage recommendation against Chevron in excess of $27 billion. Cabrera was not only paid solely by the plaintiffs, but he openly relied on them to staff his effort while seeking to obstruct Chevron’s representatives from even observing his work. In fact, major portions of his submissions to the court are cribbed from the plaintiffs’ own submissions, if not written by them directly. His work product is devoid of scientific content, lacks even the most basic evidentiary support, and assesses monetary relief for alleged environmental damage and health claims he has never even bothered to investigate, inspect, or verify.

In addition to those outlined above, below is a list of other Cabrera Report flaws:

Lack of Causation

Cabrera completely ignored his court-ordered mandate to determine causation and chronology of environmental conditions. Instead, he just arbitrarily assigned liability to Texaco for every instance of alleged environmental impact in the former concession areas. By ignoring chronology and causation, Cabrera even makes Texaco liable for environmental impact caused solely by Petroecuador in the last 20 years.

Failure to Inspect and Falsifying “Evidence”

Cabrera ignored court orders that he must inspect every site, visiting only 48 of 316 wells and one of 19 production stations. Instead, Cabrera reviewed aerial photos to identify pits and used those photos incompetently and dishonestly. For example, Cabrera submitted certain aerial photos with his report and declared that various items in the photos — like trees, tanks and shadows — were pits. He also submitted photos of pits constructed by Petroecuador after 1990, backdated the photos to the 1970s and declared that the pits were constructed earlier by Texaco Petroleum. Cabrera, therefore, fraudulently overstated the number of pits.

Arbitrary Determination of Remediation Scope

With no justification, Cabrera arbitrarily concluded that 80 percent of well pits and 100 percent of production station pits need to be remediated, regardless of past or current remediation efforts. Cabrera then further fabricated and overstated the magnitude of remediation required for each pit, arbitrarily assuming that each pit needs to be remediated to a depth of four meters (13.12 ft) and that an additional area around each pit equal to 50 percent of the pit surface area also needs to be remediated.

Gross Overstatement of Remediation Cost

Cabrera grossly overstated the cost to remediate pits. Though Petroecuador has been remediating pits to Ecuador standards for approximately $85,000 per pit, Cabrera recommends remediation costs of $2.743 billion — over 150 times the Petroecuador budget of $18 million for this work.

For more information on other elements contained within Cabrera’s $27 billion damage report, please use the following hyperlinks.

• Cancer Claims
• Medical Facilities
• Potable Water Cost
• Indigenous Population Impacts
• Petroecuador’s Infrastructure
• Unjust Enrichment

It is clear the Ecuadoran court handling the lawsuit against Chevron has abandoned the due process guarantees mandated by Ecuadorian law, eliminated the plaintiffs’ burden of proof, and substituted in its place the work of Richard Cabrera. Chevron has consistently argued that it is not getting a fair trial in Ecuador. Evidence presented to the court shows Texaco Petroleum’s remediation was thorough and complete. The Amazon Defense Front has teamed up with the government of Ecuador to try to shift the liability of Petroecuador to Chevron by pressuring the company into an unjust settlement using a biased and improperly influenced court and a partisan and unqualified “independent” analyst.

New revelation of a conflict of interest for the author of a report recommending that Chevron pay $27 billion in damages in the long-running trial in Ecuador has prompted a deliberately misleading response from the Amazon Defense Front, which is the named financial beneficiary of any judgment in the case.

Cabrera has a previously undisclosed majority ownership interest in a company registered to do business with Petroecuador.  Petroecuador is the state owned oil company, chief polluter in the region, and beneficiary of Cabrera’s “findings.”  This evidence raises additional, serious questions about Cabrera’s independence and completely undermines the integrity of his report.

Seeing its potential payday at risk, the Amazon Defense Front scrambled to respond via press release.  While attempting to sidestep the issue, the Amazon Defense Front does not deny that Cabrera improperly failed to disclose his conflict of interest at the time of his appointment or thereafter. Nor does the Amazon Defense Front deny that had Cabrera’s ownership interest been properly disclosed, it would have been disqualifying.  Below is a response to four of the many misleading and inaccurate statements from the Amazon Defense Front press release:

“Cabrera disclosed to the court that he owned a clean-up company before his appointment as Special Master. This fact was properly cited by the court as one of the reasons he was qualified to do the damages assessment.”

This is a yet another of the Amazon Defense Front’s blatant attempts to mislead the public.

Exhibit 4 from the filing contains everything that Cabrera has disclosed.  Nowhere does Cabrera disclose the fact that he was a co-founder, general manager, majority stockholder, and legal representative of CAMPET at the time of his appointment as an “independent” technician or during his work for the court. CAMPET is a soil remediation company and preapproved contractor to Petroecuador. Cabrera affirmatively swore to the court that he had no conflicts of interest.  This has shown to be untrue by virtue of his financial interests in CAMPET.

The Amazon Defense Front’s statement is intended to misrepresent Cabrera’s disclosure about working for a different remediation company, CONGEMINPA, prior to his appointment.  Cabrera disclosed that his work with CONGEMINPA ended in 2003, and Cabrera had also sold all of his stock in GONGEMINMPA in 2003, years before his 2007 appointment in this case.  This past connection to a remediation company did not present a conflict of interest at the time of his appointment.  The Amazon Defense Front’s statement is meant to create the false impression that Cabrera disclosed his interest in CAMPET, the company he continued to own, manage, and legally represent during his entire tenure as a supposedly “independent” expert in the case.  But he did not make any such disclosure.  In fact, German Yanez, the judge who appointed Cabrera, told Dow Jones Newswires Feb. 9 he didn’t know about CAMPET or whether the company’s registration as a bid contractor for Petroecuador constituted any conflict of interest.

“All I know is what I saw in his curriculum (vitae),” said Yanez. “If there’s missing information, I don’t know why.”

“Chevron thought so highly of Cabrera’s qualifications that it accepted him as a court-appointed expert in an earlier part of the case and paid his fees as required by court rules.”

This is factually incorrect.

Cabrera was appointed by the court in an earlier phase of the trial, but he performed no work and at no time has Chevron paid Cabrera for anything. On the contrary, the plaintiffs paid Cabrera more than $200,000 for his subsequent work.

Chevron has repeatedly and unwaveringly questioned Cabrera’s qualifications since his original involvement in the case, has opposed his report, and has repeatedly told the court that his damages assessment is without basis, is biased, and was developed with and co-written by the plaintiffs.  At no time has Chevron ever “thought highly of Cabrera’s qualifications” to be an expert in this case.

“The fact Cabrera’s company is qualified to bid on clean-up contracts offered by Ecuador’s state-owned oil company is irrelevant. That company, Petroecuador, is not a party to the case against Chevron and would have no role in any eventual cleanup.”

This is factually incorrect.

Petroecuador was the majority partner in the consortium and is responsible for every site in question. Moreover, no remediation work in the oil producing region could occur without Petroecuador’s active involvement, participation, and authorization.  Simply put, nothing could happen in Petroecuador’s oil fields, including a remediation ordered by the court, without Petroecuador.

Meanwhile, the government of Ecuador has already acknowledged that it expects to participate in any prospective remediation work.  At a September 2009 press conference, Ecuador’s Prosecutor General, Washington Pesantez said, “Although I don’t have the exact figures, 10 percent would go to the plaintiffs if Chevron is found guilty; 90 percent would be delivered to the State for remediation or bio-remediation activities that would serve to correct biologic and chemical mechanisms…”

In addition, “the fact Cabrera’s company is qualified to bid on clean-up contracts offered by” Petroecuador is extremely relevant: — Cabrera’s report attempts at every turn to exonerate Petroecuador for 20 years of sloppy practices.  In his report Cabrera exonerates Petroecuador of the current environmental conditions in the region, grossly inflates the scope of remediation and costs of the work, and even calls on the court to award $375 million to upgrade Petroecuador’s infrastructure.  Cabrera’s company’s registration to do work for Petroecuador provides the perfect incentive for Cabrera to go to such absurd lengths to lavish benefits on Petroecuador in his report, and the perfect opportunity for Petroecuador to return the favor.

“Cabrera by virtue of his role in the case would be barred from having a role in a future clean-up.”

This statement is inherently contradictory and is made without any factual support. First the Amazon Defense Front says there is no conflict at all, and then it says that Cabrera does indeed have a conflict of interest.  His financial stake in remediation explains why Cabrera, on at least ten different occasions, concealed from the court his conflict of interest — a violation of Ecuador law.  Accordingly, Cabrera’s report should be rejected and Cabrera’s connection to Petroecuador should be investigated.

Chevron has consistently argued that it is not getting a fair trial in Ecuador. Evidence presented to the court shows Texaco Petroleum’s remediation was thorough and complete. Amazon Defense Front has teamed up with the government of Ecuador to try to shift the liability of Petroecuador to Chevron by pressuring the company into an unjust settlement using a biased and improperly influenced court and a partisan and unqualified “independent” analyst.

Chevron oil company is being sued in Ecuador for $27 billion. It’s a big number. The gross domestic product (GDP) of Ecuador in 2008 was $54 billion. So $27 billion is 50% of the GDP of the entire country. And the $27 billion claim is sheer fantasy. The damage claim against Chevron is based on a gigantic scam.
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QUITO (Dow Jones)–A court-appointed biologist said in a report that there’s no hydrocarbon contamination in Ecuadorean rivers near where Chevron Corp. (CVX) is being sued for alleged environmental damages.

But the expert said he found high levels of bacterial contamination from fecal matters that could be the source of the local population’s health problems. Heavy metals were also found in local fish – which could come from crude or other sources, court-appointed biologist Jorge Bermeo said.

The document, recently reviewed by Dow Jones Newswires, further muddles the already murky environmental lawsuit, in which plaintiffs from the region sued Texaco for environmental damages allegedly done decades ago that they claim resulted in health problems. Chevron, which bought Texaco in 2001, denies the allegations.

Both sides have criticized the report. Plaintiffs dispute the findings, accusing Bermeo of being manipulated by the company’s lawyers. Chevron said that it didn’t interfere with either the expert’s work or with the final report.

“What has been found in fish has direct relation to the oil activity, and yet, the expert is trying to provide a tool to Chevron’s defense,” said Pablo Fajardo, an attorney for the plaintiffs who asked the court to dismiss 50% of the report.

Bermeo said denied the allegation. “No representative of the company has ever pressured me or tried to influence my report,” he said in an interview.

Asked about the heavy metal in fish tissues, Chevron spokesman James Craig said the result is likely a “false positive” that stems from improper sample preparation and analytical methods.

Bermeo said that he used the best technology available.

The report was based on analyses done last September in five of 16 towns that plaintiffs claim were affected by Texaco’s oil operations. Judge Juan Nunez, who formerly oversaw the case, asked Bermeo to assess how much of the pollution in the region’s waterways was caused by the region’s fishing techniques. Around 60% of the population in the Sucumbios and Orellana provinces, where the study took place, are dedicated to agriculture and fishing activities.

“According to the laboratory results, there are not significant quantities of metals in the water to say that there are hydrocarbon contamination problems,” Bermeo said.

The report said that water and aquatic life have been impacted by direct discharge of untreated sewage and by destructive fishing practices that include the use of dynamite, chemicals and poison.

Laboratory analysis of fish tissue found a higher-than-allowed presence of hydrocarbons and heavy metals such as phosphorus, barium, potassium, and lead, among others, according to report.

The hydrocarbons and metals found are the result of being exposed to contaminants of organic and mineral origin, the report said. The metals could come from agriculture, oil and mining activities near the rivers, as well as natural causes, the report said.

It’s unclear whether the findings will weigh in the court’s decision, which is expected for the first half of 2010. In November 2008 the court-appointed geologist Richard Cabrera told the court that Chevron should pay more than $27 billion in compensation for alleged environmental damages. Chevron has repeatedly criticized the report.