Zimbabwe’s president did not travel to Ecuador as planned:
Zimbabwe state radio says President Robert Mugabe arrived home Sunday from the United Nations General Assembly in New York.
This piece discusses several of the outtakes from “Crude,” some of which a legal expert is quoted as saying may display “thuggery, an interference with the administration of justice, and a gross violation of the ethical rules of every jurisdiction [she is] familiar with.”
New York federal district judge Lewis Kaplan said this month that Chevron Corporation’s big U.S. discovery campaign, arising out of the epic mass tort suit that the oil company is defending in Ecuador, is “no fishing expedition.” Still, the fish are jumping. Chevron’s discovery nets have found a rich haul in the outtakes from “Crude,” a documentary film about the litigation.
This piece discusses recently revealed actions that were taken by plaintiffs attorney Steven Donziger:
While it may seem enough for the makers of the movie Crude to be judicially forced to have to be deposed by Chevron lawyers (after findings of outtakes from that movie which are damaging to the plaintiff’s lawsuit against the American Oil giant) the climate is dark for the plaintiffs after revelations from a just released, little seen set of transcripts of outtakes from Crude.
American Thinker weighs in on recent Chevron Ecuador developments:
A stupid American movie star, an ambitious plaintiff’s counsel, a corrupt leftist government and a U.S. oil company star in a morality play in which an attempted ripoff turns into a farce, and the good guys who stood their ground (Chevron) appear to be gaining ground and maybe even winning.
The Wall Street Journal’s take on the Chevron Ecuador trial, where the “whole tale is falling apart” and the “mess [was] almost certainly created by the government’s own oil company, PetroEcuador, which has presided over 1,200 spills in the past decade alone”…
What do you get if you cross a South American republic and crusading environmental groups with an American oil company?
If that sounds like a joke, consider Ecuador, where American plaintiff attorneys and green activists are trying to wring Chevron for the biggest environmental verdict in history. In a case that’s before an Ecuadorian court, Chevron faces a possible $113 billion verdict—it was a mere $27 billion until last week—to clean up a mess almost certainly created by the government’s own oil company, PetroEcuador, which has presided over 1,200 spills in the past decade alone.
The drama began in the 1970s, when Texaco and government oil company PetroEcuador drilled some 321 wells in Ecuador. In the early 1990s, Texaco decided to end its operations and worked out an environmental remediation plan with the government that assigned Texaco responsibility for 133 sites—proportional to the company’s share in the project. The company spent $40 million on the cleanup, and in 1998 the government and PetroEcuador legally released Texaco, which merged with Chevron in 2000, from further claim or liability.
So much for that. Environmental group Amazon Defense Front, an NGO formed in Ecuador and the sole (listed) financial beneficiary of the lawsuit, has been leading a relentless campaign against Chevron in Ecuador courts and the Western media. Actress Darryl Hannah had herself photographed dipping her hands into a fresh oil slick, supposedly evidence of Texaco’s malfeasance. The suit also enjoys the none-too-subtle support of Ecuadorian President Rafael Correa, a Hugo Chávez clone who’s blasted Texaco for its “atrocities.” Ecuador’s prosecutor general has said that the government would take 90% of any payout by Chevron.
Now, however, the whole tale is falling apart under intense legal scrutiny in multiple jurisdictions. In May, U.S. District Judge Lewis Kaplan granted a request by Chevron demanding the release of hundreds of hours of additional footage from the 2009 documentary “Crude,” which purports to be an even-handed account of the legal battle but is closer to a piece of pro-plaintiff agitprop. He also granted discovery relating to plaintiffs attorney Steven Donziger, the scope of which Mr. Donziger will ask Judge Kaplan to limit in a hearing today.
“The released version of ‘Crude’. . . depicts interactions which suggest the possibility of misconduct on the part of both plaintiffs’ counsel and the GOE [Government of Ecuador],” the judge wrote in May, adding that “it is likely that the outtakes will be relevant to significant issues in the prosecutions.” The makers of “Crude” are appealing the decision. A September 13 order by U.S. Magistrate Judge Lorenzo Garcia in the U.S. District Court in New Mexico said the footage shows “inappropriate, unethical and perhaps illegal conduct” and called the outtakes “sufficient to establish a prima facie case of attempted fraudulent activity by attorney [Steven] Donziger.”
Among those outtakes—the publicly available transcripts of which we have reviewed—is a scene in which Mr. Donziger says, in regard to the quality of evidence about the extent of the alleged contamination, that “at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bull—. It really is. We have enough, to get money, to win.”
There’s also a conversation between Mr. Donziger and two Ecuadorian associates in which they discuss (though it’s not clear just how seriously) whether they can hire local people to keep watch outside the courthouse. Readers can judge for themselves from the quote what they had in mind for this group. “It’s called an army, but it’s like . . . a specialized group . . . for immediate action,” says one of the associates. Mr. Donziger did not respond to requests for comment.
Nor are the outtakes the only inconvenient disclosures about the plaintiffs’ behavior. In sworn testimony earlier this year, U.S. biologist Charles Calmbacher, whose assessment of toxins at two sites was used to estimate Chevron’s liability, said the conclusions submitted in his name by Mr. Donziger did not reflect the 2005 report he prepared. In his real report, Mr. Calmbacher recalled, he did no estimates of costs or remediation amounts. “I concluded that I did not see significant contamination that posed immediate threat to the environment or to humans or wildlife around it.”
That wasn’t the answer Mr. Donziger was looking for, Mr. Calmbacher explained. “He wanted the answer to be that there was contamination and people were being injured . . . Because it makes money. That wins his case.” When the subpoena arrived for his testimony in March, Mr. Calmbacher says, Mr. Donziger called to discourage him from participating in the deposition.
Mr. Donziger has not addressed Mr. Calmbacher’s allegations in his filings, but in a motion to quash Donziger’s subpoena, plaintiffs called Mr. Calmbacher “a disgruntled former expert, who had a very minor role in the Lago case, and who threatened to sue plaintiffs for unpaid fees.” Plaintiffs spokeswoman Karen Hinton has also called Mr. Calmbacher’s testimony “bewildering.”
The tactics may be less shocking in Ecuador, where the courts are notoriously, er, unreliable. In the Chevron trial, one Ecuador judge, Juan Nunez, recused himself at the request of Prosecutor General Washington Pesantez after videos surfaced suggesting Judge Nunez may have been implicated in a $3 million bribery scheme involving people who identify themselves in the video as officials of Ecuador’s ruling party.
In February, the case took another farcical turn as Richard Cabrera, the court-appointed author of the original “independent” report suggesting Chevron should pay $27 billion for its transgressions, was discovered to have a potential financial stake in any verdict. Mr. Cabrera, who owns a majority stake in an oil remediation company that is on PetroEcuador’s approved list of vendors, concealed that relationship from the court by denying he had any conflict of interest. Chevron has alleged in court that he also backdated photos from the early 1990s and 2001 to appear to implicate Texaco for oil pits done after the company left the country.
More recently, Chevron has filed a case in a Colorado District Court alleging that Mr. Cabrera’s report was written in close consultation with Boulder-based Stratus, an environmental consulting firm hired by the plaintiffs, and which, Chevron claims, has been withholding evidence of improper contacts with Mr. Cabrera. In an emailed statement, Stratus Executive Vice President Doug Beltman told us that because of privilege asserted by the plaintiffs, the firm “cannot provide more information at this time other than to deny the allegations against us of fraud and other wrongdoing as false and to characterize them as part of Chevron’s ongoing media campaign against the plaintiffs.” Mr. Cabrera has not responded to the allegations.
Mr. Cabrera’s $27 billion damages estimate was an exercise in imaginary math trumped only by last week’s new plaintiffs’ figure of $113 billion. Though Texaco estimates it earned some $490 million over the project’s lifespan, Mr. Cabrera’s report suggested the company owes $8.4 billion for “unjust enrichment” while the plaintiffs’ new “conservative figure” estimates that between $18.26 billion and $37.86 billion would be appropriate. For remediation costs, Mr. Cabrera’s report assigns $2.743 billion for a job that would cost some $18 million if it were done by PetroEcuador. Mr. Cabrera assessed $9 billion for cancer victims, without any medical documentation of their existence. The plaintiffs’ new estimate is $69.7 billion.
The astronomical numbers have always been a lever to coerce Chevron into settling, but the company has so far fought back. In March, U.S. District Judge Leonard Sand in New York ruled the company could proceed with an international arbitration claim against Ecuador for violating its due process rights in the trial underway in Ecuador. The appeal is now pending on the Second Circuit Court of Appeals. Through arbitration, Chevron will likely be able to defer the payout of any whopper verdict from the Ecuador court. And if the court does not throw out the two reports by Mr. Calmbacher, any verdict could be challenged as based on fraudulent evidence.
Perhaps the definitive verdict on the case was delivered by one of the plaintiffs’ attorneys, Joe Kohn of the Philadelphia firm Kohn Swift & Graf, who told the makers of “Crude” that “a lot of my motivation is, at the end of the day, is that it will be a lucrative case for the firm.” And that’s not even in the outtakes.
An overview of the past several days of developments in the Chevron Ecuador lawsuit:
The judge’s announcement follows the final submission of “expert” reports to the court, including one from various supporters of the shakedown litigation that now claims as much as $113 billion in damages — up from the mere $27.4 billion tallied in the report from the now-discredited special master. Judging by the news release from the PR outfit that represents the U.S. trial lawyers , the sum is necessary to remove all trace of civilization from the Amazonian oil patch. (Kohn, Swift & Graf is funding the litigation, Steven Donziger is orchestrating it.)
This piece describes the Chevron Ecuador lawsuit as “baseless,” a “transnational criminal enterprise” and an “outrageous scandal” :
By Byron W. King
www.agorafinancial.com
In the past, I’ve written about what I call the “Chevron Witch Trial.” That is, Chevron is involved in a frustrating — “frivolous” is a better word — lawsuit in Ecuador, concerning alleged “environmental damage” by Texaco back in the 1970s and 1980s. Chevron merged with Texaco in 2001, so the litigation against Chevron followed the merger. There’s big money involved — $113 billion, as I’ll describe below.
I don’t own Chevron stock, nor do I list Chevron in the model portfolio of this newsletter. But I respect Chevron. It’s a well-run energy and technology firm.
I’m following this case because it illustrates the dangers that threaten even the largest companies. Across the world, there are people whose goal in life is to take down and rip off Western resource developers. The pirates off East Africa come to mind, with their assaults on oil tankers. Or the rebels in Nigeria, who bomb oil pipelines.
“Lawfare” and Transnational Crime
Sometimes, however, the bad guys use less violent means, such as by bringing baseless lawsuits and demanding large financial settlements. This kind of “lawfare” can severely harm companies, as well as add years of delay to development projects. Thus, we need to understand what’s happening.
Indeed, it turns out that the litigation against Chevron in Ecuador is, at root, a massive, transnational criminal enterprise.
Recent developments are shocking. There’s a wide-ranging conspiracy of U.S. and Ecuadorean lawyers, consultants and other players all working to fabricate a baseless — and astronomical — damage claim against Chevron. The goal is to co-opt the Ecuadorean legal system to impose a punishing financial verdict against an American company.
As crimes go, this action against Chevron makes the billions that Bernie Madoff stole look like peanuts. This case is doubtless among the largest financial crimes in history.
Background to the Ecuador Case
Here’s the background. Starting in the late 1960s, Texaco drilled for oil in Ecuador. Texaco worked there until its operations were fully nationalized in the early 1990s. For most of the time — starting in 1977, to be precise — the state-owned oil company, Petroecuador, set policy.
When Texaco departed from Ecuador in the early 1990s, it made a deal with Petroecuador and the Ecuadorian government to remediate numerous oil sites. Texaco cleaned up the sites, left Ecuador and received a “release” from the national government.
So far, so good? Not quite. In 1993, a U.S. lawyer named Steven Donziger — fresh out of Harvard Law School, Class of 1991, same as a certain Barack H. Obama — sued Texaco in New York federal court. The claim was for “environmental justice,” a novel legal concept that mostly appears in law review articles at places like Harvard.
Case Dismissed?
After much legal sparring, the case against Texaco was dismissed in the late 1990s. The federal court allowed as how attorney Donziger and his clients could still file suit in Ecuador. But on the merits, the basic case against Texaco went away in the U.S.
Using local counsel, Mr. Donziger refiled the lawsuit in Ecuador against Chevron. But this time, the plaintiffs added a long list of claims, things that weren’t part of the original U.S. case. In essence, the new Ecuadorean lawsuit asserted an almost endless string of charges against Texaco-Chevron, with a seemingly bottomless calculation of damages.
Big Money In Play
After a couple years of litigating in Ecuador, things got super-complex. The Ecuadorean judge appointed an “independent expert” named Richard Cabrera to advise the court on the merits of the claims and to calculate damages. In November 2008, Mr. Cabrera came back with a report stating that Chevron ought to pay over $27 billion of “damages” for environmental and related impacts in Ecuador.
Wow, $27 billion? That’s no typo. But that was just the beginning. In mid-September 2010, the Ecuadorean plaintiffs raised the ante to $113 billion!
In comparison, $113 billion is over twice the annual gross domestic product (GDP) of Ecuador. Under the worst nightmare scenario, could Texaco have caused that much damage? The answer is that Texaco did NOT cause any such damages, and — more importantly — the Ecuadorean “expert” is not so “independent.”
Fraud, Fraud, Fraud
In the past two months, it’s come to light that Mr. Cabrera is a con artist and his “report” is a ghostwritten fabrication. Furthermore, Mr. Cabrera was selected as an “independent expert” by the Ecuadorean court despite having a close, improper relationship with the mastermind of the case, New York attorney Donziger.
It’s an outrageous scandal in every respect. Mr. Cabrera was supposed to be an impartial, arms’-length, fair-minded adviser to the court. Except he was in Mr. Donziger’s pocket from almost the start. Indeed, Mr. Cabrera’s “expert” report was prepared — “ghostwritten” is the term that one U.S. federal judge recently used — by an environmental consulting firm that is directly in cahoots with Mr. Donziger.
As with all conspiracies, in order to make it look good, everyone had to follow a script. That is, after Mr. Cabrera submitted his ghostwritten report to the Ecuadorean court, Mr. Donziger’s environmental consulting colleagues wrote up a series of nominal “objections” to the very report that they had prepared. It made for good theater, I suppose.
The idea behind the earlier $27 billion “damage” calculation against Chevron (now raised to $113 billion) was to give the Ecuadorean court plenty of wiggle room on the downside. In other words, the Ecuadorean court would review the staggeringly large claim. Then it could assess huge damages, but at a lower number.
Next step? The reliable propaganda mills of the global left-wing media would refer to how Chevron, in essence, “got off easy” because the company didn’t get slapped with the $27 billion claim — let alone the recent $113 billion amendment.
It’s All on Tape
The scope of wrongdoing is so vast that it’s hard to wrap your brain around it. Think of this entire Ecuadorean lawsuit as a crime scene, with the dirty deeds orchestrated by a dirty New York attorney named Steven Donziger.
Indeed, Mr. Donziger is an environmental law version of Bernie Madoff, the psychopath and rip-off artist who stole nearly $10 billion from his clients under color of “investing” on their behalf. Here, Mr. Donziger is wrapping himself in the cloak of “environmental justice” to try to nick Chevron for multiple times the Madoff take.
How do I know all this? Well, in a bizarre version of the television series The Smoking Gun, it’s on tape.
A Movie Star Wannabe
In 2006, attorney Donziger invited an independent filmmaker named Joseph Berlinger to make a movie about the Chevron lawsuit. Strange, don’t you think? A lawyer making a movie about his lawsuit while it’s in progress? Yes, it’s bizarre.
Mr. Berlinger hauled his cameras from New York to Ecuador and had carte blanche to film Mr. Donziger and his conspiring pals. Eventually, in 2009, Mr. Berlinger released a movie titled Crude, starring a certain actor-wannabe named Steven Donziger. The film is, at root, a heavily biased tirade against Texaco and Chevron, telling the Ecuador “story” from Mr. Donziger’s fantasy standpoint.
Not to put too fine a point on it, but Crude is just another piece of predictable, leftist, anti-business propaganda. Of course, the U.S. Constitution’s First Amendment protects free speech, even for leftist, anti-business propaganda. Fair enough.
But there are a few scenes in Crude that are suspicious. The movie gives strong hints that attorney Donziger, or his agents, met with Mr. Cabrera and a group of environmental consultants, apparently before Mr. Cabrera was appointed by the court as the “independent expert.” Whoops.
Racketeering on Tape
Based on these clues, Chevron went to federal court in New York and demanded that Mr. Berlinger release hundreds of hours of outtakes that he didn’t use in the movie Crude. After a series of contested hearings, and an appeal to the Second Circuit Court, a federal judge ordered Mr. Berlinger to release the outtakes.
When the Chevron attorneys reviewed the tapes, it was a jaw-dropping experience, from what I hear. The outtakes include backroom and dinner-table discussions, in which Mr. Donziger and colleagues explain their motives and actions. Basically, Mr. Donziger and his band of merry men admit — on film — that their lawsuit is a massive concoction intended to shake money out of Chevron. It’s about as self-incriminating as you can get.
In essence, Mr. Donziger and his cohorts have rigged the Ecuadorean lawsuit against Chevron. This case was wired from the beginning. The idea was always to slap Chevron with a gigantic damage claim in Ecuador and then negotiate a sweet settlement with plenty of money for everybody who… umm… “helped.”
This lawsuit is a legalistic form of fraud, blackmail and racketeering. There appear to be prima facie violations of the U.S. Foreign Corrupt Practices Act as well as federal bribery, racketeering and conspiracy laws. The Crude film outtakes show Mr. Donziger violating a few of the Federal Rules of Civil Procedure (Rule 11 comes to mind), as well as the Canons of Ethics that govern New York lawyers.
That, and much more. It’s all there on video, live and in color. Mr. Donziger is looking at disbarment, if not criminal indictment. (Where’s the U.S. Justice Department when you need it?)
“On the Corrupt Side”
So far, it’s mainly the attorneys in the case, and senior Chevron executives — plus a few U.S. federal judges — who have seen the actual Crude film outtakes. But it’s not like these outtakes are state secrets. They’re public records, on file in a number of U.S. courthouses.
Chevron has litigated the proceedings in several federal courts, in an effort to force the U.S.-based perpetrators to submit to depositions. As you can imagine, the perps do NOT want to be questioned under oath. But Chevron wins all the cases, because the evidence is overwhelming. (Maybe the perps should just take the Fifth?)
Court pleadings include extensive, transcribed excerpts from the Crude movie outtakes. In both open court and in written decisions, several federal judges have described what’s going on in — shall we say — unflattering judicial terms. The judges use terms like “fraud,” “outrageous,” “shocking” and “on the corrupt side.”
Consider this comment, from Magistrate Judge Lorenzo Garcia, from the U.S. District Court for the District of New Mexico:
“The release of many hours of the outtakes has sent shock waves through the nation’s legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct. In the film itself, attorney Donziger brags of his ex parte contacts with the Ecuadorian judge, confessing that he would never be allowed to do such things in the United States, but in Ecuador, everyone plays dirty. The outtakes support, in large part, [Chevron's] contentions of corruption in the judicial process.”
“It’s a New Era”
Or consider what Federal Magistrate Judge Joseph Brown of the U.S. District Court for the Middle District of Tennessee had to say about the times in which we live:
> “I’m amazed at what parties will get themselves (into), paint themselves into corners by discussing litigation and everything else with moviemakers that are putting it on Facebook or Twitter or something else. It’s a new era.”
Indeed, it’s a new era. It’s a time when life imitates art, sometimes even following the formula of the television series The Smoking Gun.
Then again, $113 billion is a lot of money to try to steal. As I said above, this is one of the largest financial crimes in history, unfolding before us.
That’s all for now. Thanks for reading…
There have been significant developments in the Chevron Ecuador lawsuit over the past several weeks. Additional evidence of corruption and fraud being committed by members of the plaintiffs’ legal team has come to light through video outtakes from the documentary “Crude.” A judge ordered that director Joe Berlinger release these hundreds of hours of video, and has also ordered that he face questions to find out what else he knows.
Below you will find links to key stories that have been published recently on these developments:
