The Amazon Post

Having been found by a U.S. Federal Court to have violated federal racketeering laws, Steven Donziger and his supporters are resorting to their old playbook.  In an attempt to take the spotlight off of the overwhelming evidence of fraud, Donziger and his supporters – including activist groups like Amazon Watch – are working overtime to downplay the significance of the RICO judgment by raising the same old, tired arguments and allegations that were disproven years ago.  In press releases, blog posts and tweets they continue desperately trying to cover up their crimes. Here are the Top 5 Distractions Donziger’s team is using to divert attention from the fact that they were found to have committed extortion, money laundering, wire fraud, Foreign Corrupt Practices Act violations, witness tampering and obstruction of justice:

Distraction #1: Raise Issues Not Relevant to the RICO Trial
Despite the fact that a U.S. Federal Court was very clear that the RICO trial was only about issues related to Donziger’s fraud and misconduct, he and his team continue to claim that the recent judgment is meaningless because the trial did not include the merits of the case.

FACT: The RICO trial was solely about the fraud and racketeering activity that allowed Donziger and his team to secure the $9.5 billion judgment against Chevron in Ecuador.  The court was consistently clear about the scope of the trial.  In fact, the judgment even addresses Donziger’s repeated attempts to make the trial about environmental issues by stating, “…the defendants’ effort to change the subject to the Oriente, understandable as it is as a tactic, misses the point of this case.”

Distraction #2: Claim Chevron Wanted the Case Heard in Ecuador
Donziger and his team like to claim Chevron wanted to be sued in Ecuador.  In fact, they recently issued a press release stating, “Chevron wanted the trial to be held in Ecuador and promised to abide by any adverse decision.”

FACT: Chevron did not agree to any stipulation concerning jurisdiction in Ecuador. In fact, Chevron was not a party to the prior New York action.  The case that was brought against Texaco in New York is completely different than what has been brought against Chevron in Ecuador, including different plaintiffs and different claims.  The Amazon Post exposed this myth here in 2010.

Distraction #3: Allege Death Threats
Donziger’s Ecuadorian team has accused Chevron of, or implied that Chevron was connected with, death threats or other harms against them.  Despite having no evidence whatsoever to support their claims, Juan Pablo Saenz, an Ecuadorian lawyer on Donziger’s team was recently quoted claiming he has received two anonymous death threats, implying Chevron was to blame.

FACT: This is not the first time that the plaintiffs’ representatives have thrown around these types of unfounded accusations. The Amazon Post thoroughly debunked the issue previously, highlighting that Donziger’s spokesperson, Karen Hinton, and his Ecuadorian lawyer, Pablo Fajardo, have repeatedly implied that Chevron is responsible for the murder of Fajardo’s brother.

Distraction #4: Take the Fight Back to Ecuador
As many in the U.S. media and independent press have come to realize that  Donziger has sought to use them as part of his scheme, he and his team are now working with the Republic of Ecuador to invite international journalists and celebrities to take part in a ‘Toxic Tour’ of the region.  They claim the tour highlights environmental damage caused by Chevron.

FACT: The Republic of Ecuador has launched a campaign against Chevron in an attempt to evade its own responsibility for addressing the environmental, social and economic needs of the people of the Oriente. In fact, the Republic is even paying for journalists to participate in the junket. What these journalists and celebrities are not being told is that TexPet, a subsidiary of Texaco, cleaned-up its share of impacted sites before leaving Ecuador. After TexPet ceased operations in Ecuador, pursuant to an agreement with the Republic, it fully remediated its share of production sites.  The sites that TexPet was to remediate were negotiated and agreed to by the Republic of Ecuador.  After the remediation was complete, it was certified by the government and state oil company Petroecuador, and TexPet exited the country with a full release by the Republic of Ecuador from further environmental liability.  Petroecuador, however, has continued to operate many of the sites in the former concession area over the last 20 years – including the site visited on the government’s tour, Aguarico 4 (AG-04). A video detailing TexPet’s successful remediation can be found here.

Distraction #5: Attack the Judge
According to Donziger’s playbook, when all else fails, attack the judge.

FACT: This tactic was a favorite of Donziger’s team in Ecuador, as is evidenced by an outtake from the movie Crude, in which Donziger is caught saying, “the only language that I believe this judge is going to understand is one of pressure, intimidation and humiliation.”  His team has tried similar tactics against the U.S. federal judge presiding over the RICO case, accusing him of bias and even racism. Judge Kaplan is far from alone in finding the judgment against Chevron in Ecuador to be the product of fraud. Eight federal courts in the U.S. have found that the Lago Agrio trial was marred by the plaintiffs’ representatives’ fraud. Chevron is also seeking relief against Ecuador in international arbitration, where an international arbitration tribunal has already issued a partial award in favor of Chevron. In addition, the Supreme Court of Gibraltar recently issued a lengthy ruling allowing Chevron to proceed with its conspiracy and other claims against James Russell DeLeon, the main funder of the movie Crude and a key financial backer of Donziger’s lawsuit against Chevron.

The U.S. District Court for the Southern District of New York today granted Chevron’s request to bring counterclaims against Patton Boggs. Today’s order is here and Chevron’s counterclaims are here.

This month, the same federal court found that the Ecuadorian judgment against Chevron was the product of fraud and racketeering activity, finding it unenforceable. Patton Boggs came into the case at a critical moment when the scheme was collapsing and proceeded to resurrect it and then try to cover it up. Chevron is pursuing claims against Patton Boggs to hold it accountable for its role in perpetuating this fraud against the company.

  • Read the court’s March 4 ruling here.
  • Read Chevron’s statements about the ruling here and here.
  • Read key excerpts from the court’s ruling here.
  • Read what others are saying about the ruling in news coverage here (updated 3/14/14).

“The decision in the Lago Agrio case was obtained by corrupt means. The defendants here may not be allowed to benefit from that in any way.”
(p.485)

“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”
(p.4)

“If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.”
(p.2)

“What this Court does do is to prevent Donziger and the two LAP Representatives, who are subject to this Court’s personal jurisdiction, from profiting in any way from the egregious fraud that occurred here.”
(p.3)

“This case is extraordinary. The facts are many and sometimes complex. They include things that normally come only out of Hollywood – coded emails among Donziger and his colleagues describing their private interactions with and machinations directed at judges and a court appointed expert, their payments to a supposedly neutral expert out of a secret account, a lawyer who invited a film crew to innumerable private strategy meetings and even to ex parte meetings with judges, an Ecuadorian judge who claims to have written the multibillion dollar decision but who was so inexperienced and uncomfortable with civil cases that he had someone else (a former judge who had been removed from the bench) draft some civil decisions for him, an 18-year old typist who supposedly did Internet research in American, English, and French law for the same judge, who knew only Spanish, and much more.
(p.1)

In the end, however, he and the Ecuadorian lawyers he led corrupted the Lago Agrio case. They submitted fraudulent evidence. They coerced one judge, first to use a court-appointed, supposedly impartial, “global expert” to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger hand-picked and paid to “totally play ball” with the LAPs.

They then paid a Colorado consulting firm secretly to write all or most of the global expert’s report, falsely presented the report as the work of the court-appointed and supposedly impartial expert, and told half-truths or worse to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the LAP team wrote the Lago Agrio court’s Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment. If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.
(p.2)

What this Court does do is to prevent Donziger and the two LAP Representatives, who are subject to this Court’s personal jurisdiction, from profiting in any way from the egregious fraud that occurred here.
(p.3)

Justice is not served by inflicting injustice. The ends do not justify the means.
(p.4)

The importance of Donziger’s media and public relations strategy is evident from the manner in which Donziger spent the millions of dollars that were obtained from investors. He outlined the campaign in a memorandum he wrote to his team in late 2003. He explained that the team would initiate and/or utilize celebrities; non-governmental organization “pressure;” the “Ecuador government – executive, and Congress;” national, international, and Ecuadorian press; a “divestment campaign” in which the team would seek to convince institutional investors to sell Chevron stock and even a criminal case in Ecuador in its effort to obtain money from Chevron.
(p.35)

Just as important as the pressure campaign directed at Chevron was an analogous campaign directed at the Ecuadorian courts. As we have seen already, Donziger viewed the
Ecuadorian courts as corrupt, weak and responsive to pressure – as institutions that, at best, “make decisions based on who they fear the most, not based on what the laws should dictate.”
(p.36)

Donziger hired David Russell, an environmental engineer, to generate an initial cost estimate for remediation of the Concession area. Russell visited only about 45 of the hundreds of oil pits in the region, and based his calculations on an extrapolation of what he observed at those sites. But he did not analyze any soil or water samples at any of the sites he visited. And his visits to some of those sites, he acknowledged at trial, were no more searching than driving past them at 40 or 50 miles per hour.
(pgs 41-42)

Secrecy was essential because Donziger and the LAP team knew that an appearance of independence and neutrality was essential in order for the expected efforts of Pinto and Reyes to be taken seriously by Chevron and the court. In fact, the agreement was for Reyes and Pinto to work covertly for the LAP team and to keep their relationship with the LAPs secret from the judge. And Donziger well understood that the arrangement was improper.
(p.63)

Faced with this coercion, Judge Yánez granted the request to cancel the LAPs’ remaining judicial inspections. Donziger and Fajardo succeeded also in convincing the judge that he should “fear” the LAP team
(p.71)

Donziger noted also in his July 17, 2007 email to Fajardo that the LAPs’ hired consultants needed to be required to submit their drafts to the LAP team early on. Donziger wanted control over the consultants’ reports from their inception. He did not want to risk waiting until their work was “final” and ready to be included in the report to discover that it ultimately was not “useful” to the LAPs.
(p.99)

We now know, and Donziger eventually admitted, that the Cabrera Report was not written by Cabrera. It was written almost entirely by Stratus and others working at the direction of Stratus and Donziger. Indeed, all of the damage amounts in the Cabrera Report came verbatim from
Stratus’ drafts.
(p.109)

In the last analysis, the facts concerning the Cabrera Report are crystal clear. The remaining LAP judicial inspections were cancelled, the global expert proposal adopted, and Cabrera appointed in consequence of the coercion of and pressure placed upon Judge Yánez. As Donziger admitted in a Crude outtake, Judge Yánez “never would have done [that] had we not really pushed him.

Cabrera was not even remotely independent. He was recruited by Donziger. He was paid under the table out of a secret account above and beyond the legitimate court-approved payments. He was promised work on the remediation for life if the LAPs won. The LAPs gave him an office and life insurance, as well as a secret ary who was a girlfriend of one of the LAP team members.
(p.115)

Donziger, however, over time has attempted to avoid responsibility in a variety of ways including denial followed by various explanations, justifications and evasions in efforts to portray these events in a benign light. None has merit.
(p.116)

The Court rejects Donziger’s excuses entirely. He knew at all times that his actions were wrongful and illegal.
(p. 118)

It was Donziger’s purpose to magnify the pressure on Chevron by increasing both the perceived magnitude of its potential exposure and the perceived likelihood that the exposure in the end would culminate in huge liability. He repeatedly did so by manifestly wrongful means,
which included corruption of the litigation and a pressure campaign premised on misrepresentations.
(p.362)

Chevron’s claim with respect to the Lago Agrio case itself, insofar as it pertains to the predicate acts of attempted extortion, is not that the case was entirely baseless. Rather, it is that Donziger and others corrupted the case by bribing the judge and by other corrupt and fraudulent means and that they did so, among other reasons, to instill fear in Chevron of a catastrophic result sufficient “to get [Chevron’s] money without” litigating the case to judgment, without “going through a lengthy appeals process that drags this out for years,” and without the need for time consuming and expensive judgment enforcement proceedings.
(p.364)

As amply detailed above, Donziger’s actions in increasing the pressure on Chevron by dishonest and corrupt steps in the litigation – coercion, bribery, ghostwriting, and so on – were intended to communicate threats to Chevron. Their purpose was to instill fear of a catastrophic outcome in order to increase the amount Chevron would pay to avoid the worst.
(p.366)

Donziger’s misconduct outside the courthouse went hand in hand with his misconduct within it. Both were parts of an offensive to produce a multi-billion dollar payout. Donziger’s “brute force” campaign depended largely on his ability to threaten Chevron by portraying the litigation as a likely source of huge liability for the company.
(p.367)

Donziger engaged in multiple acts that are indictable under the wire fraud statute and that therefore are acts of racketeering activity.
(p.379)

Donziger’s overriding goal was to extract a large payment from Chevron in exchange for peace. In pursuit of that objective, however , he engaged, as we have seen, in a number of deceitful schemes, each of which was intended to play its part in achieving that end and each of which was furthered by use of the wires. These included, but were not limited to: (1) the ghostwriting of the Cabrera Report by Stratus and the LAPs and the passing off of the report as the work of Cabrera, together with the misrepresentations of his supposed impartiality and independence; (2) the false portrayal of Cabrera as neutral and impartial, (3) the concealment of the true relationship among Cabrera, Stratus and the LAPs, including concealment of the secret payments to Cabrera; (4) the ghostwriting by Stratus of the response to Chevron’s objections to the Cabrera Report, which too were passed off as Cabrera’s work; (5) the attempts to deceive Chevron and courts in the Section 1782 proceedings concer ning what actually had transpired among Cabrera, Stratus, and the LAPs; (6) the ghostwriting of a ll or much of the Judgment and Zambrano’s false claim of authorship; and (7) the false statements to the media and to public officials that were made to increase the pressure on Chevron.
(p.381)

As the “cabeza” of the Lago Agrio litigation for the LAPs, Donziger’s responsibilities included: (1) obtaining money to fund the litigation and related activities, including public relations
and media, and (2) disbursing, or causing the disbursement of, the funds thus raised to vendors and to recipients in Ecuador, most notably Selva Viva, which managed most of the money sent there. To whatever extent he (1) obtained money from outside the United States or (2) sent or caused money to be sent from the United States to another country, in each case with the requisite intent and to promote the carrying on of a RICO predicate offense, he committed money laundering. The record in this case contains persuasive evidence of a number of such offenses by Donziger.
(p.384)

Donziger’s conduct with respect to the Fajardo Declaration was obstruction of justice, plain and simple. The declaration was drafted while the Stratus Section 1782 proceeding was pending, as Donziger was acutely aware. Its purpose – in Donziger’s words – was to “prevent Stratus’ role relative to the Cabrera report from coming out.” Donziger was involved in the communications as to what it would and would not say. He knew that it was false or misleading. His conduct was intended to “impede . . . the due administration of justice,” and it fell squarely within the federal obstruction of justice statute.
(p.389)

Donziger attempted to have Mark Quarles alter materially the declaration he submitted to Judge Sand in an earlier proceeding in this district between Chevron and the ROE. As discussed previously, Donziger urged Quarles to assert that Cabrera neither had entertained suggestions from nor even met with the LAPs regarding his work plan, both of which Donziger knew were false. Although Donziger knew that the statements he sought to have Quarles make were false, he urged Quarles to adopt them to prevent exposure of the truth regarding Cabrera and to
mislead the court. Donziger’s effort to influence Quarles’s testimony constitutes witness tampering.
(p.391)

The Court’s findings make clear that Donziger caused the use of the secret account for the purpose of paying Cabrera, that he asked Kohn to wire money to that account, and that he knew the money was intended to pay Cabrera. It has found further that the money in fact was used to pay Cabrera. The Court therefore finds that Donziger was “aware” that it was “substantially certain” that Cabrera would be paid from the funds he wired to the secret account.
(p.397)

Here, the payments increased the likelihood that Donziger’s business – that of contingency litigation – would benefit from a favorable judgment. Roughly 30 percent of the 20 percent contingency fee owed to the litigation team accrues to Donziger. He stood to benefit directly from any judgment and, accordingly, from any act that improved the likelihood that such a judgment would issue and its amount. The improper payments to Cabrera were intended to do, and did, exactly that.

As the foregoing discussion makes clear, Donziger’s pressure campaign included a plethora of false and misleading representations to persons and entities – including among others members of the media, the New York Attorney General, the SEC, the New York State Comptroller, and Chevron shareholders – often in efforts to pressure Chevron into settlement. Likewise, Donziger, a member of the New York Bar, attempted to deceive the judges of this Court.
(p.408)

There is abundant evidence that, at the time the Ecuadorian courts’ decisions in the Lago Agrio case were rendered, the judicial system was not fair or impartial and did not comport with the requirements of due process. The Ecuadorian decisions therefore are not entitled to recognition here.
(p.419)

In sum, this Court finds that Ecuador, at no time relevant to this case, provided impartial tribunals or procedures compatible with due process of law. The decisions of its courts in the Lago Agrio case are not entitled to recognition in courts in the United States. The defendants’ reliance on them, as well as their collateral estoppel defense, therefore fail.
(p.433)

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.

The court’s opinion is here, the judgment as to Donziger defendants and defendants Camacho and Piaguaje is here, and the appendices to the opinion can be found here.

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.”

Human Rights Watch, an independent organization “dedicated to defending and protecting human rights” which “give[s] voice to the oppressed and hold[s] oppressors accountable for their crimes,” published a letter that it wrote to Ecuador’s President of the Council of the Judiciary. The letter pointed to serious breaches of judicial independence, citing examples of Ecuador President Rafael Correa’s administration’s interference in that country’s judiciary and bias in the judicial appointment process. Chevron has long raised concerns in the Lago Agrio case about the integrity of Ecuador’s judiciary.

The letter pointed specifically to concerns about the integrity of the National Court of Justice, the same court that ratified the fraudulent Lago Agrio judgment against Chevron in December 2013. The National Court of Justice took that action despite overwhelming evidence of fraud, bribery and corruption in the case, once again violating the nation’s international obligations and the rule of law. The letter pointed to other misconduct that occurred at the same time as Chevron’s appeal of the 2011 verdict worked its way through the judicial process.

Human Rights Watch said that “corruption, inefficiency, and political influence have plagued Ecuador’s judiciary for years,” and that in 2011, “the administration of President Rafael Correa initiated an ambitious judicial reform process to address these chronic problems.”

Unfortunately, the organization wrote, this “reform” process has led to anything but actual reform. While the organization said the government took some positive steps, its formation of a temporary Transitional Council of the Judiciary and a five-member permanent Council of the Judiciary, both charged with appointing judges, raised new concerns about executive interference in the judiciary:

“The Council of the Judiciary has also overhauled the composition of the judiciary by appointing and removing hundreds of judges, including all magistrates of the National Court of Justice, through highly questionable mechanisms that we believe severely undermine judicial independence in the country.”

The letter continued:

“In 2012, the Transitional Council of the Judiciary appointed all 21 members of Ecuador’s highest court, the National Court of Justice, as well as all its substitute judges, through mechanisms that lack the objectivity and transparency provided for in international standards on judicial independence.”

Similar to President Correa’s statements and actions in support of the Lago Agrio plaintiffs, the letter said that, “when President Correa launched his justice reform initiative, he made public statements that further undermined the credibility of the judiciary as an independent branch of government.”

The letter said that additionally, “the overhaul of the judiciary was carried out by former government officials who, with one exception, served under President Correa,” and that “these appointments, together with Correa’s statements, run counter the Bangalore Principles of Judicial Conduct, which state that, “[a] judge shall not only be free from inappropriate connections with, and influence by, the executive and legislative branches of government, but must also appear to a reasonable observer to be free there from.”

Human Rights Watch urges Ecuador to “adopt measures to ensure that Ecuador complies with international standards on judicial independence.” Chevron will continue to seek redress under international law for the ongoing denial of justice in Ecuador.

Chevron has filed Post-Trail Reply Brief as part of the federal racketeering trial against Steven Donziger and his associates.

Click here to read about the unrefuted evidence of fraud, bribery and extortion uncovered by Chevron in the case.

As reported last month, Chevron successfully reinstated over 100 videos that were removed by YouTube after Ares Rights, a Spanish firm working on behalf of the government of Ecuador,  filed meritless Digital Millennium Copyright (DMCA) infringement claims.

Despite Ecuador’s failed attempt to quash free speech and suppress our perspective on the ligation, Ares Rights CEO, Jonathan Palma again contacted Chevron via email on January 10th demanding that we remove the videos (here and here), and threatening to “escalate” the matter further if we did not.

As we have already demonstrated, Chevron has the legal right to use, host and disseminate videos that depict misconduct and potentially illegal activity by Steven Donziger and others associated with the case in Ecuador.  There is simply no basis to any of the claims made by Ares Rights concerning the videos. Each of the video clips was either created by or on behalf of Chevron or, in most cases, was taken from outtakes of video filmed by Joseph Berlinger and his associates in connection with the documentary Crude.  These video clips were provided to Chevron in connection with litigation discovery pursuant to an agreement that allows the company to publically disseminate the videos.  Moreover, because these videos are being used in connection with core political speech and the exercise of Chevron’s First Amendment rights, the dissemination of these videos falls within the “fair use” provision of copyright regulations.

If Ares Rights’ claims were legitimate and not just an attempt to censor unfavorable content, the firm would have filed claim against Chevron in the United States District Court for the Northern District of California (where both Chevron and YouTube have offices) or the Southern District of New York (where the Chevron Corp. v. Berlinger matter was litigated) – both locations where Chevron had consented to jurisdiction in filing counter DMCA notifications with YouTube.

While their bullying tactics may have worked against others, Chevron will not give in to this attempt to prevent us from exposing the truth about the fraudulent case against Chevron in Ecuador.

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 a comprehensive summary of Chevron’s claims and supporting evidence against Steven Donziger and his associates in the company’s post-trial brief here.

Update 2/18/14: A version of Chevron’s post-trial brief with hyperlinked citations is available here.

The following are excerpts from recent news stories:

Law Blog doesn’t know where U.S. District Judge Lewis Kaplan plans to spend the holidays, but one thing is sure: he’ll have plenty to read while he’s there.  Judge Kaplan is presiding over the racketeering case of New York lawyer Steven Donziger, whom Chevron Corp. has accused of fraud, conspiracy and a host of other unseemly actions relating to a massive environmental verdict against the oil giant in an Ecuadorean court.

Mr. Donziger led a team representing Ecuadorean villagers who sued over decades-old pollution from oil exploration in the Amazon rainforest. Chevron has denied liability for any contamination, and says the $9.5 billion judgment issued in 2011 was fraudulently obtained because the plaintiffs’ team allegedly agreed to pay off court officials, fabricated evidence and ghostwrote much of the final judgment.

In the latest filings Chevron (which submitted more than 900 pages) portrayed Mr. Donziger as a money-mad attorney who engineered a transnational fraud in hopes of a huge payoff, and said he and the defendants failed to disprove any of the claims against them…

Thus, this trial record proved what Chevron has been saying all along—that Donziger, who professes merely to be a lawyer representing clients, is, in reality, a liar, con man, and criminal who has headed a racketeering enterprise targeting Chevron as its deep-pocketed victim… Indeed, Donziger himself stands to personally make $600 million or more if this scheme succeeds. Chevron asks this Court to exercise its equitable power to prevent Defendants from profiting from their crimes, and to remedy the harm to Chevron. (Wall Street Journal, Law Blog)

As is typical in this decades-long battle, the two sides agree on almost nothing. Chevron says it’s the victim of an audacious shakedown scheme in which Donziger enlisted Ecuadorean villagers to serve as cut-out plaintiffs for a lawsuit that would largely benefit himself and outside financiers, including billionaire online poker magnate J. Russell DeLeon…

Claim: The Ecuadorean plaintiffs wrote the “independent” expert’s report the court relied upon to assess damages against Chevron. Chevron presented overwhelming evidence — including the admissions of executives at Stratus, a Colorado environmental consulting firm — that the report of court-appointed expert Richard Cabrera was actually written by the plaintiffs. Chevron also presented evidence that Donziger tried to hide this fact, including testimony from lawyer Jeff Shinder that he quit the case after learning of the deception…

Claim: The plaintiffs wrote Judge Zambrano’s judgment against Chevron. Zambrano testified he worked “very hard” on the 188-page judgment “for many hours, many days, including several weekends.” But Chevron’s lawyers tripped up the judge by getting him to admit he didn’t know the meaning of terms he’d used in his judgment, including “TPH” (total petroleum hydrocarbons), which appears 38 times in the judgment and accounts for $5 billion of damages. He also couldn’t explain the meaning of the English word “workover,” which appears twice in the judgment and also in plaintiff materials Chevron says the judge copied verbatim. The judge also said he dictated almost the entire judgment to an 18-year-old assistant, although he couldn’t explain how typographical errors in plaintiff legal documents made it through dictation to appear in his judgment.

Chevron, in its 350-page filing, cites numerous examples of alleged fraudulent behavior in the U.S., including the creation of the Cabrera report in Colorado. “The majority of the conspirators were American, carrying out their fraudulent scheme largely in and from the United States through evidence manufactured here, for the purposes of extorting an American company,” Chevron says.

The facts: Starting in 1964, Texaco drilled in the Oriente region of Ecuador in a consortium with Gulf Oil and Ecuador’s state-owned oil company, now called Petroecuador. Texaco managed the operation but Petroecuador was majority owner and got the vast majority of the profits: $23 billion from 1964 to 1992, compared with $500 million for Texaco, according to Chevron, which bought Texaco in 2001.

Ecuador pushed Texaco out of the country in 1992 and has subsequently drilled 414 wells, 30% more than during the consortium, spreading pollution widely through the jungle.

Chevron says Texaco paid $40 million in a cleanup effort from 1995 to 1998, in exchange for a release from the government of Ecuador — and expressions of gratitude from Hugo Camacho, one of the plaintiffs suing Chevron. Donziger originally sued in 1992 in New York. In 1999 a new regime in Ecuador passed a law allowing private citizens to sue over environmental damage, and after Donziger’s case was transferred to Ecuador he filed a new case in 2003, naming Chevron.

Why don’t the plaintiffs sue the primary polluter in the jungle, Petroecuador? They say they can choose who to sue, and Chevron can always try to recover any judgment from Petroecuador. But Chevron says the plaintiffs also negotiated a deal with the government of Ecuador in 1996 waiving all claims against Petroecuador. (Forbes)

AFTER THE DONZIGER TRIAL, CHEVRON CAN REST EASY

If Chevron outside counsel Randy Mastro of Gibson, Dunn & Crutcher has any regret after the Chevron Corporation v. Donziger trial, it could only be that he didn’t request a jury. To any objective observer, the Manhattan bench trial was a rout. Virtually all of Chevron’s claims about serial deception by the lawyers who sued it in Ecuador were persuasive and corroborated. Virtually none of Chevron’s opponents’ explanations were plausible or corroborated. Their star witness, the Ecuadorian ex-judge Nicolas Zambrano, wearing a winter cap with an Angry Birds insignia, flailed on the stand at the most basic questions about the opinion he claims to have written. Chevron nemesis Steven Donziger, who is a master of public relations outside the courtroom, responded with evasions.

In a few months U.S. District Judge Lewis Kaplan will issue a doorstop opinion that reflects these evidentiary realities. In due course the arbitrators hearing the meta-dispute between Chevron and Ecuador will do the same. Donziger may win points now or on appeal about the U.S. law implications of Kaplan’s findings of fact, and Ecuador may win points about the international law implications of the arbitration tribunal’s findings of fact. But the facts will stand. And regardless of their formal legal effect, the facts will neutralize the Ecuadorian judgment against Chevron, now valued at $9.5 billion. Somewhere along the line as Chevron made its case in U.S. court, the Ecuadorian judgment became unenforceable for laughability. If Donziger’s dreams of recovery weren’t already dead, they died with the gasps in the gallery when the judge in the Angry Birds cap drew blanks about his own purported decision. (Litigation Daily)

CHEVRON APPEALS FRAUDULENT ECUADOR COURT DECISION

U.S. energy company Chevron Corp appealed on Monday to Ecuador’s highest court, asking it to cancel a $9.5 billion fine for polluting the Amazon rainforest in a long-running case.  Last month Ecuador’s National Court of Justice upheld a 2011 verdict by a lower court that Chevron was responsible for pollution in the area caused by U.S. oil firm Texaco, whose assets were bought by Chevron in 2001.

Chevron says that 2011 ruling was obtained by fraud and it is pursuing a case in New York against the U.S. lawyer representing the plaintiffs who it says resorted to corruption to win what it calls an “illegitimate” verdict.  “Chevron Corp asked the Constitutional Court of Ecuador today to revoke the fraudulent $9.5 billion sentence against the company because of the multiple violations of constitutional guarantees,” the U.S. company said in a statement.

Chevron says Texaco cleaned up the area before handing it to Ecuador’s state oil company, Petroecuador, which Chevron says bears the responsibility.  (Reuters)

Last month Ecuador’s National Court of Justice upheld a 2011 verdict by a lower court that Chevron was responsible for pollution in the area caused by US oil firm Texaco, whose assets were bought by Chevron in 2001.

Chevron says that 2011 ruling was obtained by fraud and it is pursuing a case in New York against the US lawyer representing the plaintiffs who it says resorted to corruption to win what it calls an “illegitimate” verdict.  (Upstream)

INTERNATIONAL HEARINGS CONTINUE IN DC IN JANUARY

Meanwhile, on a parallel legal track, Chevron is trying to extinguish its pollution liability by seeking an international-arbitration ruling against the government of Ecuador. In that action, the San Ramon (Calif.) energy giant has alleged that under a bilateral investment treaty with the U.S., Ecuador had an obligation to protect the due-process rights of an American company doing business in the Andean country. (The company in question was actually Texaco, which Chevron acquired in 2001, eight years after the pollution litigation began.)

A panel of three arbitrators is scheduled to reconvene in Washington, D.C., in January to continue its years-long assessment of Chevron’s treaty claims. Much of the evidence in the arbitration case mirrors what Chevron presented during the six-week civil-racketeering trial in New York in October and November…

That’s not to say that the outcome—Chevron’s expected victory—would be any different if Gibson, Dunn had faced a more muscular opponent. While Winston & Strawn’s filings in the arbitration case raise some interesting questions, Ecuador’s lawyers have little fresh to say, on most topics, about the troubling evidence of crooked Ecuadorian judicial proceedings. (Bloomberg BusinessWeek)

ADDENDUM: ECUADORIAN PRESIDENT LASHES OUT AT AMERICAN MEDIA

Ecuadorian president Rafael Correa lashed out at the Washington Free Beacon over the weekend, accusing it of being in hock to oil company Chevron, which is engaged in a legal battle involving alleged environmental damage in the South American nation.

“Con cariño para @FreeBeacon” – with love, for the Free Beacon – Correa wrote on his official Twitter account. He included a picture that called the Free Beacon “corrupt” and wished readers a Merry Christmas and Happy New Year.

The president was responding to an article that detailed the government’s ties to the Spanish anti-piracy firm Ares Rights that has allegedly abused intellectual property protections on YouTube in an attempt to remove Chevron’s videos criticizing the government’s role in an $18 billion civil judgment against the company.

The Free Beacon story detailed the ties between Ares Rights and the Ecuadorian government and noted allegations by Chevron and legal blogger Adam Steinbaugh that the company’s copyright infringement claims were naked attempts to suppress communications critical of the government.

The company has extensively documented evidence of fraud on the plaintiffs’ part on its website, the Amazon Post, and in YouTube videos. Ares Rights targeted the latter and succeeded in getting a number of videos removed. They were later reinstated.

The OAS special rapporteur on press freedom, the office that Correa sought to weaken, criticized the Correa administration in 2011 for using “desacato” (literally, “disrespect,” similar in effect to libel) laws to silence journalists that criticized the government.

“Ecuador has spearheaded a resurgence in the use of archaic criminal defamation laws…to silence dissent,” the Committee to Protect Journalists wrote in March.  Those CPJ remarks came after the director of daily newspaper La Nación was jailed for exposing wrongdoing by María Helena Villarreal, the governor of Ecuador’s Carchi province. Villarreal resigned after the paper published its expose.

The Ecuadorian government sentenced in 2011 three editors and one reporter at El Universo, one of the country’s largest newspapers, to three years in prison for supposedly defaming Correa.

Condemnation of the Correa administration by international human rights watchdogs has elicited conspiratorial replies from Correa’s administration.

A recent report from Transparency International ranked Ecuador 102 out of 170 nations in TI’s “corruption perceptions index.” The government brushed off the findings because TI has received financial support from Chevron. (The Washington Free Beacon) 

Canadian Court of Appeal Decision in Ecuador Enforcement Proceeding

Separately, in Canada, the Court of Appeal for Ontario said that the Ecuadorian plaintiffs could try their luck in the Canadian judicial system after Chevron flatly refused to pay up on a $9.5 billion judgment in Ecuador. The Canadian ruling was not a victory on the merits for the rain-forest residents fighting Chevron.

The oil company has vowed never to comply with the 2011 Ecuadorian judgment, which Chevron claims was based on judicial coercion, fabricated evidence, and bribery. In fact, Chevron has sued the main American lawyer for the Ecuadorian plaintiffs, Steven Donziger, accusing him of running what amounts to a racketeering conspiracy designed to shake down the company. (Bloomberg BusinessWeek) 

Chevron Statement on Canadian Appeal Court Decision

The Court of Appeal for Ontario has granted an appeal brought by a group of Ecuadorian plaintiffs.  The decision affords the plaintiffs no substantive relief and merely allows the action to go forward.  The plaintiffs are seeking to have an Ecuadorian judgment against Chevron recognized and enforced in Ontario, Canada.

In May 2013, the Ontario Superior Court of Justice stayed all efforts to recognize that judgment in Ontario.  In granting the appeal, the Court of Appeal did not address whether the Ecuadorian judgment was procured by fraud or whether the Ecuadorian judgment should be recognized or enforced at all against Chevron or its independent, indirect subsidiary, Chevron Canada Limited.  Nor did the Court grant any relief or remedy whatsoever to the Ecuadorian plaintiffs. The Court limited its determination only to whether the Ontario court may entertain further proceedings in the action.

The court decision stated:

“In these circumstances, the Ecuadorian plaintiffs should have an opportunity to attempt to enforce the Ecuadorian judgment in a court where Chevron will have to respond on the merits.  That the plaintiffs in this case may ultimately not succeed on the merits of their recognition and enforcement action, or that they may not succeed in successfully collecting from the judgment debtors against whom they bring this action, are not relevant factors for a court to consider in determining whether to grant a discretionary stay before defendants have even attorned to the jurisdiction of the Ontario court.” 

Chevron is evaluating next steps, including a possible appeal of today’s decision to the Supreme Court of Canada.  If the Ecuadorian plaintiffs truly believed in the validity of the Ecuadorian judgment, they should seek enforcement in the United States, where Chevron resides, rather than targeting assets of the company’s subsidiaries that are not parties to the Ecuadorian litigation.  They are aware that in the U.S., however, they would be confronted by the fact that eight federal courts have already found the Ecuador trial to be tainted by fraud.  Chevron remains committed to fighting enforcement of the fraudulent Ecuadorian judgment and we are confident that any jurisdiction that respects the rule of law will find it illegitimate and unenforceable.

Chevron recently presented overwhelming evidence that the Ecuadorian judgment is a product of fraud in a trial before a United States federal court as part of a civil lawsuit under the Racketeer Influenced and Corrupt Organizations Act (RICO) against the trial lawyers and consultants leading the litigation against the company.  That evidence further demonstrates that the judgment is illegitimate and should be unenforceable in any court that respects the rule of law.  A decision in that case is expected in early 2014.

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 and a half-million-dollar bribery scheme.
  • Stratus Consulting, the lead environmental consultant 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 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.

Last week we noted that videos [here] on the Chevron case in Ecuador were the subject of frivolous Digital Millennium Copyright Act (DMCA) infringement notices filed by Ares Rights – a Spanish firm that works on behalf of the government of Ecuador to censor negative messages and video content posted on the internet about President Rafael Correa and his administration.

We can report that Ecuador’s meritless attempt to suppress free speech and our perspective on the ligation has failed and the videos in question have been reinstated by YouTube.

This likely won’t spell the end of Ecuador’s abusive use of DMCA takedown notices to censor its critics. We will, however, continue to work to expose Ecuador’s flagrant attempts to stifle speech and conceal the truth about the fraudulent case against Chevron in Ecuador.

Additional coverage of the Ecuador/Ares Rights attempt to censor our videos can be found here:

Adam Steinbaugh: Ares Rights Continues Questionable DMCA Censorship For Ecuador, Targets Chevron

Tech Dirt: Censorious, Abusive Spanish Anti-Piracy Firm Targets Chevron (Yes, Chevron) With Bogus Copyright Takedowns

Washington Free Beacon: Oil Company: Ecuadorian Government is Abusing Copyright Law

You may have noticed that our videos on The Amazon Post are currently down. In late November, Ares Rights, a firm based in Spain that claims to be “devoted entirely to the defense of rights on the Internet,” filed copyright infringement claims against videos legitimately posted to YouTube by Chevron. Why is a Spanish firm interested in taking down videos on the Chevron case in Ecuador?

According to a report by Adam Steinbaugh, a specialist in Law and Technology, Ares Rights works on behalf of the government of Ecuador to censor negative messages and video content posted on the internet about the government. Clearly Ecuador’s censorship does not stop at the country’s border.

When material is placed on the internet that is perceived to be anti-government, Ares sends a letter to sites like YouTube, Google, Scribd and Vimeo claiming it affects copyrights of one of its clients in an attempt to get the material removed by the hosting site — even if their clients don’t own the copyrights to the materials, as in our case.

Surely Ecuador, the country that has recently worked to rebrand itself as the “home of internet freedom,” wouldn’t be interested in censoring our videos, would they?

This isn’t, however, an anomaly, rather a calculated strategy of filing meritless copyright infringement notices to quash free speech. Other documented instances of this internet censorship include filings made against:

  • Diego Peñaherrera: A former presidential guard who posted a video about Ecuadorian President Rafael Correa.
  • Pocho Alvarez: A documentarian who posted a video on anti-mining protests at Íntag.
  • Emilio Palacio: A former editor at El Universo, who posted a video on Correa’s campaign against Chevron.
  • Rosie Gray: A journalist who published documents on Scribd about Ecuador’s purchase of spy equipment.
  • Pedro Granja: A lawyer who published a poster that featured a photo of Jorge Glas Viejo, the father of the Vice President.

Ecuadorian news outlet, El Comercio reported on these tactics in an Oct. 27 story titled: “Ares Rights purges from the Internet information that is annoying to the regime.” Another Ecuadorian press agency, El Universo ran a similar story on Dec. 9, 2013, titled: “Ares Rights, Fighting Piracy or Trying to Control the Internet?”

We’re working to reinstate the videos and those involved in and supporting the fraudulent case against Chevron will eventually learn that you may be momentarily successful in taking down a video, but ultimately you cannot silence the truth.

Chevron’s RICO trial against Donziger begins

Randy Mastro of Gibson Dunn & Crutcher, who has led Chevron’s case from its inception, gave the company’s opening. In a sign of the significance Chevron attaches to the case, its vice president and general counsel, R. Hewitt Pate, was present  through the entire first day, having arrived at the courtroom half an  hour before its doors even opened at 8:30 a.m.

Mastro also praised his client for having fought the case as hard as it has. “Chevron didn’t give in,” he told Judge Kaplan. “It stood up and refused to be extorted and defrauded.” If Donziger’s “shakedown” of Chevron succeeds, he warned, “Who will be the next U.S. victim of his paradigm? It will be open season on U.S. corporations in corrupt foreign jurisdictions.” (Fortune)

Chevron Ecuador Lawsuit Funding Firm CEO Tells Judge of Regrets

“One of the financiers of an environmental lawsuit that led to a $19 billion verdict against Chevron Corp. in Ecuador told a judge that he came to regret funding the case once after learning that it may be a fraud.

Burford Capital LLC Chief Executive Officer Christopher Bogart told a Manhattan federal judge yesterday that his firm, which he described as the world’s largest dedicated litigation financing provider, supplied $4 million to the Ecuadorean plaintiffs and later sold the share when it became “deeply concerned about the mounting evidence of fraud and misconduct.”

Chevron alleges in the non-jury trial before U.S. District Judge Lewis Kaplan that a Manhattan lawyer, Steven Donziger, and others involved in the pollution case engaged in a “racketeering enterprise” and won the 2011 verdict through coercion, manufactured evidence and bribery of the Ecuadorean judge who wrote it. The company is seeking a ruling preventing the plaintiffs from trying to enforce the verdict in courts around the world. Burford reached an agreement with Chevron to provide testimony after being described in the lawsuit as a party involved in the scheme, Bogart said yesterday.” (BloombergBusinessweek)

Pollutions Evidence Seeps into Chevron Fraud Trial

A scientist who first tagged Chevron with billions in liabilities for rainforest contamination and is now testifying for the oil giant told the court about his “toxic tour” of the Amazon. David Russell, the head of the environmental consulting firm Global Environmental Operations, started out as the lead scientific witness against the company in 2003. …

After drawing up his observations in the Hotel Lago, he arrived at a cost-estimate of more than $6 billion. He called the figure Thursday a S.W.A.G., or a “Scientific Wild Ass Guess.” Two years into the case, Russell quit after a falling out with Steven Donziger, who was then the lead attorney on the lawsuit representing residents of the Ecuadorean rainforest, and publicly disavowed the estimate. (Courthouse News Service)

Former Ecuadorean Judge testifies to bribery in Chevron case

A former Ecuadorean judge testified on Wednesday that he ghost-wrote rulings for a judge who ordered Chevron Corp to pay $19 billion to villagers whose land had been polluted by oil exploration.

The former judge testified at a trial in New York in which Chevron accuses U.S. lawyer Steven Donziger of bribing the Ecuadorean judges to win the award for the villagers.

Donziger has denied bribing the officials. (Reuters)

Disastrous day for the Lago Agrio plaintiffs in Chevron Trial

In remarkable testimony Tuesday in federal court in Manhattan, the former Ecuadorian judge who signed a $19 billion environmental judgment against Chevron in 2011 seemed startlingly unfamiliar with the contents of the opinion he claims to have authored. He was unable to account for key data, reasoning, case citations, and terms he used in it.

The strikingly poor performance of the judge, Nicolás Zambrano Lozada, appeared to bolster Chevron’s contention that the $19 billion judgment in the environmental case, commenced in Lago Agrio, Ecuador in 2003, was not written by Zambrano at all, but rather by the plaintiffs lawyers themselves, who, Chevron maintains, won that opportunity by agreeing to pay Zambrano $500,000 from out of any eventual recovery. Zambrano maintains that he wrote the ruling without any assistance from anyone. (Fortune)

The Chevron Judge Who Knows Little About His Judgment

Yesterday, Chevron had an opportunity in federal court in Manhattan to interrogate the former Ecuadorian judge who issued the ruling. Turns out he doesn’t know much about it.  Nicolas Zambrano, whose name appeared on the 188-page, single-spaced decision from a provincial court in Lago Agrio, Ecuador, could not recall the name of the chemical substance the ruling described as “the most powerful carcinogenic agent” allegedly associated with oil contamination in the rainforest. He could not identify the study that the decision described as providing “statistical data of the highest importance to delivering this ruling.” He likewise did not recall what legal theory of “causation” the decision relied upon to link oil pollution to ecological and human harm.

Conceding that he does not speak or read French or English, he could not plausibly explain how the ruling he claimed as his own could include legal citations in those languages drawn from French, Australian, and U.S. doctrines. Zambrano said that his secretary, an 18-year-old woman who also, so far as he knew, did not speak or read French or English, found the far-flung legal materials on various websites. “The young woman who would help me type the judgment, she was the one going on the Internet,” Zambrano testified. She “chose the Spanish option” on legal websites. “That is how I would become aware or informed of the subject I was interested in. She would print them, so I could read them later.” (Bloomberg Businessweek)

Lawyer describes fraud, lies and acrimony in $19 billion Chevron case

Since its founding 40 years ago, Kohn, Swift & Graf has earned a national reputation for filing sophisticated class-action lawsuits against major corporations. It says so right on the Philadelphia law firm’s website. In humiliating testimony on Nov. 4 in federal court in New York, Joseph Kohn claimed that in the course of representing residents of the Ecuadorian rainforest in litigation against the oil industry, he and his firm were serially defrauded—not by a corporate foe, but by a fellow plaintiffs’ attorney. …

Hoping for a slice of any winnings, Kohn financed Donziger’s lawsuit, which began in New York in 1993, was dismissed in  2001, and was eventually restarted in Ecuador in 2003. After investing roughly $7 million in the case, including $1.1 million paid directly to Donziger, Kohn and his firm backed out of the Ecuador litigation in 2009. He testified that he withdrew because Donziger repeatedly lied to him about the improper ghostwriting of a supposedly “independent” damages report submitted by Donziger’s legal team to the court in Ecuador. (BloombergBusinessweek)

Sex and Blackmail now on the docket in Chevron Pollution Case

Lawyers representing Donziger have tried to turn the tables one more time, putting on witnesses to explain how and why the plaintiffs’ attorney pressed his long-running suit against Chevron in Ecuador. Alejandro Ponce Villacris, an Ecuadorian lawyer who worked with Donziger from mid-2005 through late 2008, took the stand to testify that Donziger did not violate Ecuadorian legal regulations. On cross-examination by Chevron’s attorneys, however, Ponce conceded that members of the plaintiffs’ legal team in Ecuador discussed a “sex scandal” concerning one of the six judges who, at various times from 2003 through 2011, presided over the Ecuadorian trial. When asked whether the plaintiffs, as a way of gaining courtroom leverage, threatened the Ecuadorian judge in 2006 with the filing of a public complaint about the sex scandal, Ponce said, “I don’t recall that.” Pressed on the point, he said repeatedly: “Not that I can recall.”

Eventually, U.S. District Judge Lewis Kaplan, who is hearing the racketeering case without a jury, intervened. As for the plaintiffs threatening the Ecuadorian judge with disclosure of alleged sexual improprieties as a way of getting him to rule in their favor, Kaplan declared: “I think, actually, it’s undisputed that occurred.” Kaplan’s definitive statement that Donziger’s team had engaged in what amounted to a form of blackmail appeared to startle a number of people in the packed Manhattan courtroom. (BloombergBusinessweek)

Chevron trial nears its end

Mr. Donziger, who is scheduled to appear in his defense Monday, took the unusual step of pre-releasing his written testimony to reporters at the end of last week, some of which could be disallowed by District Judge Lewis A. Kaplan. Mr. Donziger accuses the judge of being biased against him and stacking the case in favor of Chevron through rulings that, among other things, forced him to turn over personal and confidential documents that Chevron is now using against him.

While admitting to some “errors” in handling the Ecuadorean case, Mr. Donziger flatly denies having offered Judge Zambrano a $500,000 bribe or having even seen or met with the judge. He said the only evidence Chevron has of the alleged bribe is the testimony of another Ecuadorean judge who disgraced himself and undermined his testimony by himself soliciting a bribe from Mr. Donziger. (Washington Times)

Chevron makes its case in Trial over $19 bln Ecuadorean judgment

Chevron, which rested its case on Tuesday, has brought a series of expert witnesses from the fields of linguistics, psychology and computer science to testify in the case over the past four weeks.

The star witness was Alberto Guerra, a former Ecuadorean judge who said he was paid by lawyers for the villagers to ghostwrite rulings for the judge in the case.

Donziger was aware of the arrangement, he said.

“Mr. Donziger thanked me for the work that I was going to do,” Guerra said. (Reuters)

Chevron Assails Lawyer Who Led Multibillion-Dollar Suit Against It

In one of the more dramatic moments in a legal battle that has stretched for 20 years, a lawyer for Chevron questioned Mr. Donziger over a string of emails that he received from an Ecuadorean colleague that included words like “puppet” and “puppeteer.” The words, the company maintains, were references to two judges involved in bribes that it says Mr. Donziger and his associates arranged.

“ ‘The puppet will finish the entire matter tomorrow’ — do you recall that, Mr. Donziger?” asked the lawyer, Randy M. Mastro, quoting from the emails. “The puppeteer is pulling the string and the puppet is returning the package.”

Days after Judge Zambrano took over the Lago Agrio case, an Ecuadorean lawyer sent an email to Mr. Donziger reading, “The puppeteer won’t move his puppet unless the audience pays him,” Mr. Mastro said in court on Tuesday. Mr. Mastro then cited payments to Mr. Guerra that he said followed that message, which Chevron has claimed were bribes. (New York Times)

Chevron v. Donziger: The Goat on the Stick

Drawing from a dizzying range of sources, Mastro showed that Donziger or his colleagues have referred to him as the cabeza or commander-in-chief, while Donziger once called Fajardo his “young field lawyer in Lago Agrio.” Donziger’s contract gave him “overall responsibility for the strategic direction of the Litigation and [its] day-to-day management.” As Donziger once put it, “I am at the epicenter of the media, political, and legal activity surrounding the case both in Ecuador and the U.S.” Despite claiming to effectively work for Fajardo, Chevron established that Donziger made more than six times Fajardo’s salary, and that Donziger’s allotted contingency fee is over three times larger.

“You must have a very generous boss Mr. Donziger,” said Mastro sarcastically.  Specifically, Mastro established that Donziger is entitled to 31.5 percent of the 20 percent of the Ecuadorian judgment allocated to fees. That came to roughly $1.2 billion when the judgment stood at $19 billion. Now that Ecuador’s highest court has lopped off the penal component and halved the verdict to $9.5 billion, Donziger stands to earn about $600 million. (American Lawyer, Litigation Daily)

Chevron uses ‘Thermonuclear Device’ of RICO Against Donziger

Mastro is seeking a ruling preventing Donziger and the named plaintiffs from profiting from the judgment in Ecuador. That may only be applicable in the U.S. But combined with a finding that Donziger committed fraud in obtaining that judgment, Mastro said, the ruling could make it difficult for him to enforce it anywhere Chevron has assets.

He also hopes Donziger’s lesson resonates with other lawyers who file suit in foreign courts to obtain large judgments they can use as leverage for settlements in the U.S. Dole Food used a similar approach, although stopping short of suing under RICO, to challenge lawsuits filed by U.S. lawyers claiming thousands of Nicaraguan workers had been made sterile by agricultural chemicals. (It later paid to settle many of those cases.) (Forbes)

Chevron’s Ecuadorean Foes Hit With Double-Whammy

A March 26, 2007, email from Pablo Fajardo to the Ecuadorean legal team – bearing the subject line “Orange Alert” – began: “Today the cook met with the waiter to coordinate the menu.”

Chevron believes that the “cook” refers to Yanez, who allegedly met with Cabrera – “the waiter” – to hatch a plan for the global assessment “menu.”
Ponce again insisted that he did not know what these terms meant, and he added that was not included on that email.

Brodsky undermined that denial by confronting Ponce with another Oct. 8, 2007, email from Fajardo listing the witness as the first of six recipients.
In screaming caps, the email states, “LET’S ALSO COOPERATE WITH THE COOK SO THAT HE CAN RESPOND BEFORE THE JUDICIAL COUNCIL.”
Chevron believes this refers to the Ecuadorean Judicial Council’s handling of a complaint against Yanez.
U.S. District Judge Lewis Kaplan, who is hearing the case without a jury, quipped, “I don’t imagine they have jurisdiction over restaurants.” (Courthouse News Service)

U.S trial ends over Ecuador pollution judgment against Chevron

An attorney for Chevron Corp on Tuesday accused U.S. lawyer Steven Donziger of orchestrating an international criminal conspiracy by using bribery and fraud in Ecuador to secure a multibillion-dollar pollution judgment against the oil company.

“It was a scheme so audacious, so bold, that it would make even a Mafia boss blush,” lawyer Randy Mastro said during his closing argument before U.S. District Judge Lewis Kaplan, who is presiding over the non-jury trial. (Reuters)

Chevron pollution case twist: Ecuadorians back away from their American lawyer”

The Secoya leader explained that, in addition to the differences over accounting, the Ecuadorian council was concerned that Chevron’s racketeering suit against Donziger in the U.S. had become a distraction from the pollution litigation in Ecuador. “We also took action because of Donziger’s attitude,” Piaguaje testified.

Called as a witness by the U.S.-based legal team defending Donziger and the Ecuadorians in the rainforest, Piaguaje cast a cloud of confusion over the proceedings before U.S. District Judge Lewis Kaplan. At a different point in his testimony, Piaguaje reiterated that the Ecuadorian plaintiffs had “suspended” Donziger “from his functions.” He also said, though, that Donziger remained a lawyer for the Ecuadorian plaintiffs. Piaguaje’s tone remained calm throughout his testimony. After several hours in the chilly courtroom, he slipped a dark coat over his traditional tunic. (BloombergBusinessweek)

Chevron Claims Trial Showed Proof of Fraud in Ecuador

Closing arguments began today in Manhattan after six weeks of trial in which the company claimed lawyers for the plaintiffs in the Ecuador environmental case bribed judges and drafted much of the actual ruling. Steven Donziger, a New York attorney accused of leading the scheme, has denied allegations of wrongdoing and maintained the judgment is valid.

Randy Mastro, a lawyer for Chevron, the second-largest U.S. energy company, argued to U.S. District Judge Lewis Kaplan that the evidence showed the pollution ruling was a fraud.

“One thing has always been certain: this judgment was ghostwritten by these plaintiffs,” Mastro told Kaplan today.  Mastro said “strings of words” from Donziger’s e-mails and sequences of numbers from an internal database that appear verbatim in the judgment show the plaintiffs’ influence.  “This is like not even fingerprints,” Mastro said. “This is like 10 fingers, both palms. Their internal work product shows up word for word in the document because they wrote it themselves.”

…..

Mastro, the Chevron lawyer, said today that Donziger’s testimony about his smaller role in the case is contradicted by the fact that he makes “six or seven times” more than Fajardo.  “In every business I’ve ever been in the boss makes more money,” Mastro told the judge.  “To him the ends came to justify the means, the methods didn’t matter,” Mastro said. “He set about to make the big score and set his sights on Chevron.”  (Bloomberg)

The trial against Steven Donziger and his co-conspirators, which was brought by Chevron under the Racketeer Influenced and Corrupt Organizations Act (RICO), has concluded.

During the trial, Chevron presented conclusive and overwhelming evidence that the lawyers behind the lawsuit in Ecuador fabricated evidence, ghostwrote court reports, bribed judges and authored the 2011 judgment against the company.

Randy Mastro, Chevron’s lead lawyer in Chevron v. Donziger, delivered the following remarks as part of his closing arguments:

“What has happened in this courtroom over the past six weeks is something Chevron was denied in Ecuador. All parties here have had a full and fair opportunity to make their case, and that reflects the very best of the American justice system and of its bar. But we have also now seen exposed at this trial the worst of the American bar. Steven Donziger, an American lawyer, who colluded with other American lawyers, American consultants and American funders, to target a deep-pocketed American victim, Chevron.

Now, Mr. Donziger admitted on Crude outtakes that he did things in Ecuador ‘you would never do in the United States,’ things that were just ‘out-of-bounds.’ And he was forced to admit on cross-examination at this trial that he did things ‘down there that know would not be appropriate here.’

Because Steven Donziger has shamed our profession. In the guise of practicing law, he has done shocking, stupefying things, that even his own lawyer admitted in opening statements might subject him to ethical charges. But we lawyers don’t leave our ethical and legal obligations at the border when we go overseas, and we surely don’t abandon them altogether when we come back home.

And Steven Donziger, your Honor, has shamed his temple, this courthouse, this sacred place where we litigators practice our profession. He has obstructed justice, lied to court after court, including this one, and showed utter contempt for the rule of law. Because lawyers don’t threaten, intimidate and blackmail judges. They don’t intentionally deceive and defraud courts. They don’t bribe judges and court officers. They don’t forge and ghostwrite official court documents, including the judgment in their own favor. And they don’t take the false narrative they have created in a corrupt foreign court and then use it like a club in the U.S. to try to extort billions of dollars out of a well-heeled U.S. victim. Lawyers don’t do those things. Criminals do.

We have proven at this trial by overwhelming evidence, really beyond any reasonable doubt, even though that is not our burden in this civil case, that the things Steven Donziger and his co-conspirators did in Ecuador, and here in the United States, to try to pressure a U.S. company into paying them off are crimes and cry out for a remedy.”

A decision is expected in early 2014.

Donziger Takes the Stand

In federal court this week, attorney Steven Donziger admitted to: Paying a supposedly independent court-appointed expert in Ecuador out of a secret account; altering the expert’s report hours before it was submitted to the court; and receiving an e-mail  from his co-counsel soon after a new judge was assigned to his multibillion-dollar pollution lawsuit against Chevron, saying “the puppeteer won’t move his puppet unless the audience pays.” A few days later, $1,000 was removed from the bank account of a group controlled by the plaintiff lawyers and given to Alberto Guerra, a former judge who has testified he helped write the $19 billion judgment – since cut to $9 billion by Ecuador’s highest court – against Chevron.

In multiple depositions and hours of cross-examination this week, Randy Mastro, a Yale Law grad who worked as a federal prosecutor in New York before joining Gibson, Dunn, has meticulously assembled the bits of evidence he thinks he needs to prove Donziger engaged in a conspiracy to defraud Chevron with the Ecuador judgment.

In hours of cross-examination, Mastro confronted Donziger with a collection of e-mails, internal documents and witness statements that painted a picture of a lawyer who coordinated an international scheme to win a judgment in Ecuador based on evidence the plaintiffs supplied to the court.  [Donziger] admitted to paying the Colorado firm Stratus Consulting to produce much of the evidence that appeared under the name of a court-appointed expert, Richard Cabrera, and fighting hard against Chevron’s efforts to uncover that relationship.

Mastro went on to get Donziger to acknowledge forging a signature is wrong, obviously hoping the judge will connect the dots to Chevron’s claims that plaintiff lawyers forged the signatures of Ecuadorean villagers and scientific documents submitted to the court.  (Forbes)

In an trial that has already lasted more than a month, Chevron has presented a series of witnesses, several of them former allies of Donziger’s, who have testified that he used deception, bribery, and coercion to secure a liability finding that Ecuador’s top court last week upheld, even as it halved the damages from $19 billion to $9.5 billion.

Under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act, known as RICO, Mastro is attempting to show that Donziger was the kingpin in an illegal “enterprise” designed to extort an enormous settlement from Chevron.

To erode Donziger’s professions of self-sacrifice, Mastro quizzed the plaintiffs’ attorney about his potential compensation. Even under the reduced $9.5 billion damage amount, Donziger acknowledged, he would stand to collect more than $600 million in contingency fees. In response to Mastro’s questions, Donziger also acknowledged that he and the financiers of his lawsuit had arranged to route their winnings to a trust in Gibraltar, a Mediterranean tax haven.  (Bloomberg BusinessWeek)

A Manhattan lawyer who’s spent his career battling Chevron Corp. over pollution in Ecuador said he may collect as much $600 million in fees if his court victory in the South American nation is enforced.  “You expect to get paid,” Randy Mastro, the lawyer for the oil company, said while asking Donziger what he meant in previous comments about trying to get a “juicy check” from Chevron. “It was a joke,” Donziger said.

Mastro attacked Donziger’s allegation that he was an employee of the villagers, asking why the lead litigator in Ecuador, Pablo Fajardo, referred to him as the “comandante,” or commander in Spanish. “He used the term comandante as a term of affection, more as a buddy or something,” Donziger said yesterday.  In one year during the case, Fajardo was also paid just $24,000 while Donziger received $150,000, Mastro said.

Chevron built its racketeering case against Donziger after pre-trial information exchanges produced hundreds of hours of outtakes from “Crude,” and a sporadic journal Donziger kept.  The journal, which Donziger described as “personal notes,” was intended to help remind him of details if he wrote a book, he said in his draft testimony.  Chevron contended the material showed Donziger discussing ways to take advantage of Ecuador’s weak judiciary and pressure judges. Donziger said the outtakes were edited by Chevron and that some of his statements were taken out of context. (Bloomberg)

New York lawyer Steven Donziger was the mastermind behind a litigation team that spent more than $21.4 million to allegedly extort billions from Chevron Corp. CVX +0.42% over environmental damage claims in Ecuador’s Amazon Basin, a lawyer for the oil giant said Monday. 

During his cross-examination of Mr. Donziger on Monday afternoon, Randy Mastro, a lawyer for Chevron, portrayed him as a mercenary who stands to gain the largest share of the money from a 2003 pollution lawsuit filed in Ecuador on behalf of villagers in a remote corner of that country’s rainforest.  “This isn’t a pro bono case for you, is it?” said Mr. Mastro. He went on to quote an email exchange between Mr. Donziger and another lawyer that referenced “juicy checks,” as well as an entry from Mr. Donziger’s diary that described “billions of dollars on the table.”

In a written statement submitted to the court this week, Mr. Donziger downplayed his role in the case, saying that while he did play a “significant” role as an advisor to the litigation team, another attorney, Pablo Fajardo, represented the plaintiffs in court and has been the lead lawyer on the case since 2005.  But Mr. Fajardo, who was several years his junior, referred to his American counterpart as the “Comandante” and made far less money, Mr. Mastro said. For example, under the terms of their retention agreement, the plaintiffs’ team is entitled to 20% of the judgment, but Mr. Donziger would get the lion’s share—nearly one-third of that portion, or 31.5%, according to Mr. Mastro. (Wall Street Journal)

Instead, Chevron spent most of Donziger’s first hour on the stand establishing his outsize role in the Ecuadorian pollution case. As his starting point, Mastro took on Donziger’s insistence that he “served on the case at the pleasure of the plaintiffs and their representative [Pablo Fajardo]. I work for them; they do not work for me.”

Drawing from a dizzying range of sources, Mastro showed that Donziger or his colleagues have referred to him as the cabeza or commander-in-chief, while Donziger once called Fajardo his “young field lawyer in Lago Agrio.” Donziger’s contract gave him “overall responsibility for the strategic direction of the Litigation and [its] day-to-day management.” As Donziger once put it, “I am at the epicenter of the media, political, and legal activity surrounding the case both in Ecuador and the U.S.” Despite claiming to effectively work for Fajardo, Chevron established that Donziger made more than six times Fajardo’s salary, and that Donziger’s allotted contingency fee is over three times larger.

“You must have a very generous boss Mr. Donziger,” said Mastro sarcastically.  Specifically, Mastro established that Donziger is entitled to 31.5 percent of the 20 percent of the Ecuadorian judgment allocated to fees. That came to roughly $1.2 billion when the judgment stood at $19 billion. Now that Ecuador’s highest court has lopped off the penal component and halved the verdict to $9.5 billion, Donziger stands to earn about $600 million.

The remainder of the day was devoted to Chevron’s cross-examination of one of Donziger’s co-defendants, Javier Piaguaje, who was a plaintiff in the Amazon environmental case. Most notably, Piaguaje was unaware that as a plaintiff he had ceded all of his rights in the judgment to the Amazon Defense Front, despite having been a member of the “Assembly of los Affectados,” and despite having certified as much in an interrogatory response. Piaguaje was also unaware that Fajardo has been allotted 2 percent of any recovery. And, he admitted that he could attribute the pollution at the Tarapoa oil well near his childhood home to Chevron predecessor Texaco only on the basis of rumor. (According to the book Amazon Crude, that well was drilled by Clyde Petroleum).  (American Lawyer, Litigation Daily)

Donziger was less clear in response to specific questions from Chevron counsel Randy Mastro of Gibson, Dunn & Crutcher—especially on the allegation that Donziger’s team bribed ex-judge Alberto Guerra to ghostwrite orders unfavorable to Chevron for another Ecuadorian judge, Nicolas Zambrano.

Mastro introduced documents showing that in September 2009, Fajardo emailed Donziger, “The puppeteer is pulling the string and the puppet is returning the package.” About a week later, according to a bank deposit slip that Chevron is trying to move into evidence, a plaintiffs’ employee deposited $1000 into Guerra’s account. In October 2009, Fajardo emailed Donziger, “The puppeteer won’t move his puppet until the audience [pays] him something,” and within days $1000 was withdrawn from the plaintiffs’ Ecuadorian account. As a general matter, Donziger said that Fajardo was not using codewords, but jokey nicknames.

Isn’t it true, Mastro asked, “the puppeteer was Guerra?” “That’s not my recollection,” said Donziger.  Isn’t it true, Mastro asked, “the puppet was Judge Zambrano?”  “I have no recollection,” said Donziger.

Mastro also brought up the 2007 Power Point meeting where Cabrera was caught taking instructions from the Ecuadorian plaintiffs on a film outtake. “The cameras were rolling,” Donziger said. “It was not a secret.” Mastro responded that Cabrera showed up on film for less than five seconds in the course of a seven-hour meeting, because Donziger had instructed the camera crew not to film Cabrera. Donziger said he didn’t recall that. Moreover, Mastro noted, when a scientist said on camera the next morning that it was weird for Cabrera to have been there, Donziger told him not to talk about it, and told the cameraman it was off the record.

When the Cabrera affair began coming to light in U.S. discovery proceedings in 2010, a junior lawyer in Ecuador voiced the fear that “all of us, your attorneys, might go to jail.” Donziger said this was only one view. During the same period, Donziger wrote a memo stating that from a traditional Ecuadorian law perspective the Cabrera process was improper and violated court rules. He testified that he was at times confused about Ecuadorian law.  (American Lawyer, Litigation Daily)

Chevron, on the other hand, claims that Donziger got Cabrera into his position by blackmailing Ecuadorean Judge German Yanez who was embroiled in a sex scandal during that period.  Mastro alleged that an entry from Donziger’s litigation notes showed that Ecuadorean lawyers threatened to file a complaint against the judge if their demands were not met. The passage he displayed in court started: “We wrote up a complaint against Yanez, but never filed it while letting him know we might file it if he does not adhere to the law and what we need.”

After Yanez ruled in their favor, the judge told Donziger’s co-counsel Luis Yanza that “we needed to back him now as he fights to survive in the court,” according to the notebook.  (Courthouse News Service)

In one of the more dramatic moments in a legal battle that has stretched for 20 years, a lawyer for Chevron questioned Mr. Donziger over a string of emails that he received from an Ecuadorean colleague that included words like “puppet” and “puppeteer.” The words, the company maintains, were references to two judges involved in bribes that it says Mr. Donziger and his associates arranged.

“ ‘The puppet will finish the entire matter tomorrow’ — do you recall that, Mr. Donziger?” asked the lawyer, Randy M. Mastro, quoting from the emails. “The puppeteer is pulling the string and the puppet is returning the package.”

Days after Judge Zambrano took over the Lago Agrio case, an Ecuadorean lawyer sent an email to Mr. Donziger reading, “The puppeteer won’t move his puppet unless the audience pays him,” Mr. Mastro said in court on Tuesday. Mr. Mastro then cited payments to Mr. Guerra that he said followed that message, which Chevron has claimed were bribes. (New York Times)

The following are the Chevron v Donziger week five highlights:

Alejandro Ponce Villacris – Ecuadorian lawyer who worked with Donziger

Sex and Blackmail Now on the Docket in Chevron Pollution Case

“Lawyers representing Donziger have tried to turn the tables one more time, putting on witnesses to explain how and why the plaintiffs’ attorney pressed his long-running suit against Chevron in Ecuador. Alejandro Ponce Villacris, an Ecuadorian lawyer who worked with Donziger from mid-2005 through late 2008, took the stand to testify that Donziger did not violate Ecuadorian legal regulations. On cross-examination by Chevron’s attorneys, however, Ponce conceded that members of the plaintiffs’ legal team in Ecuador discussed a “sex scandal” concerning one of the six judges who, at various times from 2003 through 2011, presided over the Ecuadorian trial. When asked whether the plaintiffs, as a way of gaining courtroom leverage, threatened the Ecuadorian judge in 2006 with the filing of a public complaint about the sex scandal, Ponce said, “I don’t recall that.” Pressed on the point, he said repeatedly: “Not that I can recall.”

Eventually, U.S. District Judge Lewis Kaplan, who is hearing the racketeering case without a jury, intervened. As for the plaintiffs threatening the Ecuadorian judge with disclosure of alleged sexual improprieties as a way of getting him to rule in their favor, Kaplan declared: “I think, actually, it’s undisputed that occurred.” Kaplan’s definitive statement that Donziger’s team had engaged in what amounted to a form of blackmail appeared to startle a number of people in the packed Manhattan courtroom.

Kaplan did not explain himself, and the testimony continued with Ponce professing a hazy memory on many critical issues. To what, then, was Kaplan referring? Here’s the likely answer:

By means of its civil-racketeering suit, Chevron has obtained from Donziger voluminous notes that the New York-based plaintiffs’ attorney kept about his adventures in Ecuador. This quasi-diary, in which Donziger muses about his methods and his ambitions—often in brutally frank terms—has become part of the court record. So have numerous e-mails Donziger exchanged with his colleagues. Kaplan has demonstrated in his pretrial rulings and comments from the bench that he’s intimately familiar with the record. The Donziger diary and e-mails contain references to the plaintiffs’ legal team drafting a formal complaint in 2006 accusing the Ecuadorian judge at that time of sexually harassing women at the courthouse in Lago Agrio, an oil town in the rain forest. According to these once-private communications, Donziger’s team quietly informed the judge that if he did not make a crucial procedural ruling the plaintiffs were seeking, the harassment complaint would be filed.

“Pablo met with the judge today,” Donziger wrote in an e-mail he sent on July 26, 2006, to another attorney in the U.S. “The judge, who is on his heels from the charges of trading jobs for sex in the court, said he is going to accept our request to withdraw the rest of the inspections.” The Ecuadorian judge “wants to forestall the filing of a complaint against him by us, which we have prepared but not yet filed,” Donziger added.

(Bloomberg Businessweek)

Chevron’s Ecuadorean Foes Hit With Double-Whammy

A March 26, 2007, email from Pablo Fajardo to the Ecuadorean legal team – bearing the subject line “Orange Alert” – began: “Today the cook met with the waiter to coordinate the menu.”

Chevron believes that the “cook” refers to Yanez, who allegedly met with Cabrera – “the waiter” – to hatch a plan for the global assessment “menu.”

Ponce again insisted that he did not know what these terms meant, and he added that was not included on that email.

Brodsky undermined that denial by confronting Ponce with another Oct. 8, 2007, email from Fajardo listing the witness as the first of six recipients.

In screaming caps, the email states, “LET’S ALSO COOPERATE WITH THE COOK SO THAT HE CAN RESPOND BEFORE THE JUDICIAL COUNCIL.”

Chevron believes this refers to the Ecuadorean Judicial Council’s handling of a complaint against Yanez.

U.S. District Judge Lewis Kaplan, who is hearing the case without a jury, quipped, “I don’t imagine they have jurisdiction over restaurants.” (Courthouse News Service)

Ecuadorean Court Experts Free To Show Bias, Atty Says

When pressed by Chevron’s counsel, Ponce conceded that he had referred to Cabrera as “independent” in prior communications, and admitted that under instructions from the Ecuadorean court Cabrera was “expected” — but not required — to act independently.

Ponce’s testimony prompted Chevron to delve into several of the seedier allegations it has made regarding the underlying proceedings, including claims that Donziger and his cohorts leveraged a presiding judge’s sex scandal in order to engineer Cabrera’s appointment and that the Ecuadorean plaintiffs’ team used a system of secret code names — including “The Cook” and “The Boss” — in internal communications to refer to judges and others they sought to influence. (Law360)

Chevron Rests Its Case

Chevron makes its case in trial over $19 bln Ecuadorean judgment

Chevron, which rested its case on Tuesday, has brought a series of expert witnesses from the fields of linguistics, psychology and computer science to testify in the case over the past four weeks.

The star witness was Alberto Guerra, a former Ecuadorean judge who said he was paid by lawyers for the villagers to ghostwrite rulings for the judge in the case.

Donziger was aware of the arrangement, he said.

“Mr. Donziger thanked me for the work that I was going to do,” Guerra said.

(Reuters)

Donald Moncayo – Member of Donziger team

Moncayo, a member Selva Viva, the organization that supported the Lago Agrio plaintiffs in the underlying litigation, took the stand Tuesday to detail how he had glimpsed Zambrano and Calva working together in the Ecuadorean courthouse on at least three occasions when he passed by Zambrano’s office while on other business.

During cross-examination, Chevron attorneys painstakingly dissected Moncayo’s claims and prompted him to concede that he did not know what the two were actually working on because he could not see Zambrano’s computer screen through his office window. Moncayo also admitted that he did not know for certain that the documents piled on Zambrano’s desk were related to the underlying litigation.

“I figured they were ours because there were a lot of them,” Moncayo said through an interpreter. “It was just my imagination that those were [documents] from our case.”

http://www.law360.com/articles/488138/secretary-backs-judge-s-authorship-of-19b-chevron-verdict

Ecuadorian Court Cuts Chevron’s Pollution Bill in Half

While Chevron (CVX) fights in federal court in New York to prove that a huge oil-pollution verdict it incurred in Ecuador was a fraud, the top court in Ecuador now says maybe the liability tab isn’t as immense as the company thought. Never a dull moment in the two-decade-old environmental brawl.

In February 2011, a trial court in the provincial oil town of Lago Agrio, Ecuador, imposed an $18 billion judgment against Chevron related to contamination of the rainforest in the 1970s and 1980s. With various add-ons, the bill grew to $19 billion. On Tuesday, the Ecuadorian Supreme Court upheld the liability finding, even as it cut Chevron’s bill in half, to $9.5 billion. The appellate court said that the trial judge had improperly doubled the compensation the American oil company must pay as a form of punitive damages.

“The court has issued a sentence that confirms all the evidence gathered, the damage, and the payment Chevron must make,” Juan Pablo Saenz, one of the lawyers for the thousands of Amazon residents seeking a cleanup and other remedies, told the French news agency AFP. Chevron, however, reiterated its vow never to pay a dime. “The Lago Agrio judgment is as illegitimate and unenforceable today as it was when it was issued three years ago,” Chevron said in a written statement late last night. The San Ramon (Calif.)-based company has virtually no assets in Ecuador. The pollution case concerns the activities of Texaco, which ceased operations in Ecuador in 1990; Chevron acquired Texaco in 2001. (Bloomberg BusinessWeek)

For More Information, go to:  http://www.theamazonpost.com/

National Court of Justice Violates International Obligations

Despite overwhelming evidence of fraud, bribery and corruption, Ecuador’s National Court of Justice ratified the fraudulent Lago Agrio judgment against Chevron Corporation, once again violating the nation’s international obligations and the rule of law.

Without any investigation, the National Court ignored uncontested proof of the plaintiffs’ lawyers’ fraud and collusion with the Provincial Court of Sucumbíos, which issued the $19 billion judgment in February 2011. In an attempt to give the false appearance of due process, the court eliminated the illegal “punitive damages” portion of the judgment against the company.

The court’s reduction of the judgment follows the strategy of manipulation and deceit laid out by plaintiffs’ lawyers in outtakes of the movie Crude, in which they discuss concocting an inflated damages figure so the judge could look reasonable when ordering a lower amount. Ecuadorian law does not allow the imposition of punitive damages, and the National Court’s elimination of them from the judgment does not make it any less fraudulent.

“The Lago Agrio judgment is just as illegitimate and unenforceable today as it was when it was issued almost three years ago,” said Hewitt Pate, Chevron vice president and general counsel. “The Government of Ecuador should be investigating the lawyers who are using its courts to commit fraud, rather than issuing another court opinion in furtherance of that fraud.”

With this ruling the court also disregarded a recent award by an international arbitral tribunal which found that the Settlement and Release Agreements that the Government of Ecuador entered into with Chevron’s subsidiary, Texaco Petroleum Company, released the company of any liability for all public interest or collective environmental claims. The Lago Agrio plaintiffs’ lawyers have repeatedly admitted, and the relief in the Lago Agrio judgment makes clear, that the plaintiffs’ claims are exclusively collective and not individual. Separate and apart from the fraud, this should have led to a complete dismissal of the case.

The company is reviewing the court’s decision to determine its legal options and next steps. In addition to the international arbitration pending against Ecuador in the Hague, Chevron has filed a civil lawsuit in the United States to hold the plaintiffs’ lawyers and consultants accountable for fraud, extortion and other misconduct associated with the Lago Agrio litigation. That case, brought under the federal anti-racketeering statute and other state laws, is currently in trial in a New York federal court.

Yesterday’s decision is not surprising. Refusing to investigate the blatant misconduct of the plaintiffs’ representatives and its own judges, the Republic of Ecuador has instead embarked on a global propaganda and intimidation campaign against Chevron and anyone who helps expose the ongoing fraud committed in the case against Chevron. This is a manifest denial of justice, and Chevron will continue to seek redress under international law.

The following are the Chevron v Donziger week four highlights:

Judge Nicolas Zambrano (Ecuadorean Judge) - 

Disastrous day for the Lago Agrio plaintiffs in Chevron trial - 

In remarkable testimony Tuesday in federal court in Manhattan, the former Ecuadorian judge who signed a $19 billion environmental judgment against Chevron in 2011 seemed startlingly unfamiliar with the contents of the opinion he claims to have authored. He was unable to account for key data, reasoning, case citations, and terms he used in it.

The strikingly poor performance of the judge, Nicolás Zambrano Lozada, appeared to bolster Chevron’s contention that the $19 billion judgment in the environmental case, commenced in LagoAgrio, Ecuador in 2003, was not written by Zambrano at all, but rather by the plaintiffs lawyers themselves, who, Chevron maintains, won that opportunity by agreeing to pay Zambrano $500,000 from out of any eventual recovery.

Early in his examination Mastro sprang upon Zambrano a pop quiz on the ruling he claims to have written – a daring gambit that seemed to pay off. Mastro asked Zambrano, for instance, to name what the author of the ruling had described as “the most powerful carcinogenic agent considered in this decision.” “I don’t recall exactly,” Zambrano responded. “But if you give me the names, perhaps I can remember.”

Mastro then asked Zambrano to identify what the author of the opinion had called “the statistical data of the highest importance to delivering this ruling.” Zambrano hazarded a guess, but was mistaken.” What theory of causation,” Mastro asked next, “does the author of the ruling say he agrees with?” “I don’t recall,” Zambrano said.

Mastro may have been emboldened to subject Zambrano to this test by the fact that – as he revealed next – Zambrano had been, during his deposition last Friday and Saturday, unable even to identify exactly what the initials “TPH” stood for in the ruling. “It pertains to hydrocarbons,” Zambrano had answered, “but I don’t remember exactly.” As, it seemed, almost everyone in the courtroom except Zambrano knew, the initials stood for “total petroleum hydrocarbons,” the main measure of contamination referred to throughout the 188-page, single-spaced ruling.

Zambrano seemed puzzlingly unprepared for the most foreseeable questions he was being called upon to field. Within weeks after Zambrano ostensibly issued the $19 billion judgment on February 14, 2011, for instance, Chevron began publicly highlighting alleged “irregularities” contained within it, of which the most problematic were its seemingly plagiaristic incorporation of long passages from certain internal memos known to have been authored by the Lago Agrio lawyers themselves, but never introduced into the official record – the only place Zambrano could have legitimately gained access to them.  (CNN Money)

The Chevron Judge Who Knows Little About His Judgment

Yesterday, Chevron had an opportunity in federal court in Manhattan to interrogate the former Ecuadorian judge who issued the ruling. Turns out he doesn’t know much about it.  Nicolas Zambrano, whose name appeared on the 188-page, single-spaced decision from a provincial court in LagoAgrio, Ecuador, could not recall the name of the chemical substance the ruling described as “the most powerful carcinogenic agent” allegedly associated with oil contamination in the rainforest. He could not identify the study that the decision described as providing “statistical data of the highest importance to delivering this ruling.” He likewise did not recall what legal theory of “causation” the decision relied upon to link oil pollution to ecological and human harm.

Conceding that he does not speak or read French or English, he could not plausibly explain how the ruling he claimed as his own could include legal citations in those languages drawn from French, Australian, and U.S. doctrines. Zambrano said that his secretary, an 18-year-old woman who also, so far as he knew, did not speak or read French or English, found the far-flung legal materials on various websites. “The young woman who would help me type the judgment, she was the one going on the Internet,” Zambrano testified. She “chose the Spanish option” on legal websites. “That is how I would become aware or informed of the subject I was interested in. She would print them, so I could read them later.”  (Bloomberg Businessweek)

Chevron v. Donziger: The Zambrano Pop Quiz

Mastro surprised Zambrano with a pop quiz about the Ecuadorian judgment, which Zambrano avers that he wrote unassisted. Zambrano was unable to answer a single question correctly….What theory of causation did the judgment’s author adopt? “Do not look at the judgment sir!” Mastro yelled. Zambrano replied, “I don’t recall.”

Zambrano offered no documentary evidence outside the judgment to prove his authorship, saying that he had destroyed his notes. He said that he did not know how the judgment included a string of more than 100 words from a plaintiffs’ draft memo that did not appear in the court record.

Zambrano offered no explanation for how nine of his Chevron orders and more than 100 of his other orders in other cases appeared in draft form on the computer of Judge Alberto Guerra, who claims to have worked as Zambrano’s paid ghostwriter. He offered no explanation for a bank deposit slip showing a payment from Zambrano, or for notations in Guerra’s diaries of several payments consistent with Guerra’s avowed salary as Zambrano’s ghostwriter.

Over the course of the day, there were too many apparent inconsistencies between Zambrano’s trial and deposition testimony to immediately count. Perhaps most damaging was his trial testimony that he did not read the full court record in the Ecuador case. At deposition four days earlier he had sworn: “In order to rule on it I had to read it, and that’s what I did.” (American Lawyer, Litigation Daily)

Ex-Judge In $19B Chevron Trial Flounders Under Questioning

Mastro — who promised during opening statements that he would be giving Zambrano a “New York welcome” — pressed the former judge on how drafts of nine orders in the Lago Agrio litigation wound up on Guerra’s personal computer, a claim for which Zambrano had no explanation. Mastro also produced a bank deposit noting a $300 deposit into Guerra’s bank account, which Zambrano confirmed bore his Ecuadorean personal identification number and signature. (Law360)

 

Joe Kohn (Partner, Kohn, Swift & Graf PC)

$19B Chevron Suit’s Top Funder Says Donziger Duped Him

A former funder of the Ecuadorean pollution lawsuit at the heart of Chevron Corp.’s $19 billion New York racketeering case against attorney Steven Donziger took the stand Monday to accuse Donziger of telling “blatant lies” about the integrity of the proceedings in order to keep the cash flowing.

Joseph Kohn’s firm Kohn Swift & Graf PC pumped more than $6 million into the underlying litigation as its primary funder until November 2009, when Kohn broke off the firm’s relationship with Donziger — who secured the unprecedented $19 billion pollution verdict in Ecuadorean court — amid concerns that the case had become tainted by interference and fraud, according to his testimony.

Kohn, however, says Donziger repeatedly lied to him about Cabrera’s purported independence, blocked Kohn’s efforts to appoint an outside investigator to look into accusations of fraud, and confessed during a private meeting that it would be “embarrassing” to the Ecuadorean plaintiffs’ team if the extent of their contact with Cabrera were to come to light.

“He obtained millions of dollars in litigation funding from KSG on the basis of material misrepresentations and material omissions about the Ecuadorean litigation,” Kohn testified. (Law360)

Lawyer Describes Fraud, Lies, and Acrimony in $19 Billion Chevron Case

After investing roughly $7 million in the case, including $1.1 million paid directly to Donziger, Kohn and his firm backed out of the Ecuador litigation in 2009. He testified that he withdrew because Donziger repeatedly lied to him about the improper ghostwriting of a supposedly “independent” damages report submitted by Donziger’s legal team to the court in Ecuador.

Faced with overwhelming evidence that the expert’s report was ghostwritten, the Kohn Swift firm withdrew from the case, Kohn testified. In 2010, he said that he demanded that Donziger “come clean” about the whole matter. “Mr. Donziger did not respond directly to that,” Kohn said in his declaration. “Instead he looked down at his shoes and said someone on the Ecuadorian team ‘may’ have provided ‘some’ documentation” to the expert “and if it came out, it could be embarrassing for the Ecuadorian plaintiffs’ team.”

At another point in his declaration, Kohn said: “Mr. Donziger lied to me about a number of aspects of the Ecuadorian litigation. … He obtained millions of dollars in litigation funding from Kohn, Swift & Graf on the basis of material misrepresentations and material omissions about the Ecuador litigation.” (Bloomberg Businessweek)

Ecuador Lawsuit Backer Tells Chevron Judge He Advised Settling

In testimony filed with the court, Kohn said that his firm’s relationship with Donziger began to deteriorate in 2008 when the case began to take longer than expected and Chevron raised questions about possible unethical conduct.

Kohn said in court today that he responded with a letter stating that he could “no longer function as counsel.” In a follow-up meeting in 2010 in Philadelphia, Kohn told other members of the Ecuadorean plaintiffs team that they should consider transitioning to other lead legal counsel.

I gave them my best advice that the case appeared to be running off of a cliff,” he said today in court under Donziger’s questioning. (Bloomberg)

Chevron v. Donziger: Joe Kohn’s Warnings

In his written testimony and on re-direct, Kohn said that Donziger induced him in August 2007 to wire funds into a segregated bank account that, unbeknownst to Kohn, was used to pay the purportedly-independent court-appointed expert Richard Cabrera.

After learning more from Constantine Cannon about Cabrera’s allegedly fraudulent ties to the plaintiffs in April 2010, Kohn told the Ecuadorian team leaders that they were driving the case “over a cliff.” Kohn recalled telling Donziger to “come clean” and resign, while Donziger equivocated and “looked down at his shoes.”

“I have come to realize that my firm and I were deceived,” he wrote, and that the “dangerous combination” of “Donziger’s conceit and naivete… is leading the case rapidly toward disaster.” (American Lawyer, Litigation Daily)

Jeffrey Shinder (Managing Partner, Constantine Cannon)

Chevron v. Donziger: The Lawyer Who Walked Away

On Day 9 of the Chevron v. Donziger trial, a lawyer who had auditioned for the role ultimately taken by Patton Boggs testified that he withdrew from the case for ethical reasons after discovering what had really happened in the Ecuadorian tort suit brought against Chevron by residents of the Amazon. “I wanted no part of it,” said Jeffrey Shinder, who is the New York managing partner of Constantine Cannon.

Shinder said at Thursday’s hearing that Donziger “brandished” the expected judgment as “an asset,” and that the “primary underpinning” for his expectation was the so-called Cabrera Report, which called for $27 billion in damages against Chevron.

On the Sunday morning after Chevron fleshed out its ghostwriting allegations in a January 2010 discovery filing, Shinder said that Donziger appeared “borderline panicked.” Over breakfast at Gracie’s Cafe on the Upper East Side of Manhattan, he continued to deny the ghostwriting, but began to fall back on the mantra: “You have to understand they do things differently in Ecuador.”

A week later Shinder flew to Colorado to speak with the scientists. At the end of a full day of interviews, plaintiffs’ chief scientist Douglas Beltman admitted to Shinder that he had, on his client’s instructions, substantially ghostwritten the first iteration of the Cabrera Report, recommending $16 billion in damages. Beltman recalled watching the report being printed and boxed up in the plaintiffs’ Ecuador law office a day before filing. Then, in a sort of shadow play, Beltman confessed that he had criticized his own report and substantially ghostwritten Cabrera’s revision, calling for $27 billion in damages.

Shinder tried to “keep [a] poker face,” but inside, he found the story “profoundly troubl[ing]” and “shocking.” In his deposition he said he was “sickened.

Later that day, Shinder told Donziger that the Ecuadorian case was “irretrievably wounded.”

Shinder felt “physically ill,” according to McDermott’s notes, and alluded to a “fraud on [the] foreign court.” (When pressed at deposition, Shinder said: “I mean, what was done was dishonest. I will leave it to others to make the legal conclusion as to whether it was fraudulent.”) (American Lawyer, Litigation Daily)

Constantine Cannon Lawyer Testifies for Chevron about Corruption

 A New York commercial litigator said on the stand that he bowed out of the Ecuadorean pollution case against Chevron Corp. in 2010 when he discovered “shocking” levels of corruption on the plaintiffs’ side, Bloomberg Businessweek’s Paul M. Barrett reports.

Jeffrey Shinder, the managing partner of the New York office of the Constantine Cannon LLP law firm, said that Steven Donziger, the lead plaintiffs’ lawyer fighting Chevron in Ecuador, had lied to him to cover up the ghostwriting of a critical scientific report supposedly written by a court-appointed independent expert in Ecuador. Shinder said that he withdrew from the suit against Chevron on ethical grounds after he learned that, in fact, Donziger had overseen the ghostwriting of the report by American consultants working for Donziger.

“It was a shocking event, and I remember it very clearly,” Shinder testified. (Bloomberg Businessweek)

Donziger/Patton Boggs

Injustice In Ecuador For Chevron?

In what might be an unprecedented action, Chevron is countersuing attorney Steven Donziger and Patton Boggs, a Washington D.C. law firm, who are some of the lawyers representing the Ecuadorean oil giant, PetroEcuador. The charge? According to Chevron, Donziger and Patton Boggs are guilty of fraud and malicious prosecution. Pretty strong language leveled at a high-brow lawyer and a well-heeled international law firm.

Patton Boggs continues to seek enforcement under Ecuadorian court, as they would certainly lose the case if tried by U.S. jurisdiction. In fact, eight US federal courts have already found the Ecuador trial tainted by fraud. During the last several months, a former Ecuadorian judge has admitted his role in orchestrating the fraudulent judgment against Chevron and a half-million-dollar bribery scheme. The plaintiff’s troubles continue with environmental consulting firms declaring the lack of scientific merit to the plaintiff’s claims, as well as the CEO of Burford Capitol claiming they were misled by Patton Boggs to provide financing for the lawsuit against Chevron.(Forbes)

For more information please go to: http://www.theamazonpost.com/

ALBERTO GUERRA (former Ecuadorean judge)

On the witness stand on Wednesday, the former judge, Alberto Guerra, said he met in 2009 with Donziger and other representatives of the villagers at Honey & Honey, a restaurant in Quito.  Guerra said another lawyer representing the villagers had already agreed to pay him $1,000 a month to ghost-write court orders for the presiding judge, Nicolas Zambrano. Zambrano, who was also being paid, agreed to expedite the case and limit procedural avenues by which Chevron could delay it, Guerra said. (Reuters)

Guerra has said in a declaration filed with the court that he was paid thousands of dollars by lawyers for the plaintiffs to steer the case in their favor. Another former Ecuadorean judge who issued the $19 billion ruling, Nicolas Zambrano, was promised $500,000 from the proceeds, Guerra said in the November filing. Guerra said he also routinely ghost wrote judgments for Zambrano and was paid for those services.

Guerra said in court that he was given the bribes sometimes in the form of deposits in his bank account and other times in envelopes filled with $20 and $50 bills. (Bloomberg Businessweek)

Guerra said he and Zambrano had previously discussed soliciting a bribe from Chevron, and that Zambrano asked him to contact lawyers representing the oil company.  The two targeted Chevron because they believed it was “in quite a better financial situation than the plaintiffs,” and that there was a “larger financial benefit [that] could be obtained” for them, Guerra said.  Chevron’s attorneys declined the offer a few weeks later, Guerra testified, leaving Zambrano “discouraged, dispirited.” He said that’s when they solicited Donziger’s team. (Courthouse News Service)

“Mr. Fajardo summarized the agreement he had reached with me to Mr. Donziger and Mr. Yanza, and Mr. Donziger asked me if it was accurate,” Guerra said via a translator. “After hearing my positive answer, Mr. Donziger and Mr. Yanza thanked me for the work I was going to do.”  Guerra alleges that in late 2009 he was illegally ghostwriting court orders in a number of cases for Nicholas Zambrano, the Ecuadorean judge who ultimately entered the contested judgment, and that it was Zambrano’s idea to solicit bribes from the parties.

On Wednesday, Guerra testified that he went about issuing court orders in Zambrano’s name per the alleged arrangement, occasionally including findings favorable to Chevron in order to avoid raising suspicions. In exchange, he claims he was paid via direct bank deposits or envelopes full of cash delivered by Fajardo himself on a Quito street corner. (Law360)

“It could not seem as though all of the orders were being issued for the benefit of the plaintiffs,” he said through an interpreter in court yesterday, explaining why some of the rulings he was involved with favored Chevron. “The idea was to not have it look suspicious.” (Bloomberg)

While on the stand, Guerra told his sordid tale in a calm, convincing way. Dressed neatly in a light-gray business suit, he spoke without hesitation in Spanish. Via a translator, he matter-of-factly described an Ecuadorian court system so rife with corruption that his own felonious behavior sounded merely routine. (Bloomberg Businessweek)

“Did you understand you were violating Ecuadorian law?” Chevron counsel Randy Mastro of Gibson, Dunn & Crutcher repeatedly asked. “It hurts me to say so, but yes,” replied Guerra. (American Lawyer, The Litigation Daily)

ADOLFO CALLEJAS (Ecuadorian Counsel to Chevron)

Callejas took the stand for Chevron on Monday and Tuesday in the company’s fraud and racketeering case against the holders of the Ecuadorian mega-judgment and their U.S. lawyer, Steven Donziger. First, Callejas testified that ex-judge Alberto Guerra contacted one of Callejas’s colleagues by telephone so many times in 2009, at least once offering overtly to “fix” the case, that he urged his colleague to change his phone number. Then, in October of that year, Callejas said he received a call from a former clerk of the court, inviting him to meet directly with the judge who would write the final judgment, Nicolas Zambrano. The next miraculous offer came about a year later, according to Callejas’ written direct testimony, when another colleague was approached by a friend, who said that Guerra said Zambrano wished to know whether Chevron would like to ghostwrite a judgment in its own favor.

Then Gomez then asked one question too many. In all those years had he ever been threatened?  Well, Callejas noted, there was the time in 2009 when an effigy bearing his photo, dressed in prison garb, was beheaded by a costumed angel of death with a giant scythe. In his written statement Callejas testified that protesters led by the plaintiffs were shouting: “Let death bury him! Bury him face down so the one below likes it!” Then the effigies of Chevron’s lawyers and CEO were placed in coffins, led outside Lago Agrio in a mock funeral march, and buried in shallow graves strewn with flowers by their mock widows. “If that was not an incitement to personal violence,” concluded Callejas, his voice rising on the stand, “I don’t know what would be.”

Gomez’s reply: “No more questions, Your Honor.” (American Lawyer, The Litigation Daily)

SARA MCMILLEN (Chevron Scientist—Testified Friday, October 18))

McMillen was suspicious of the LAPs’ testing laboratory, known as HAVOC, which to me sounds like KAOS from Get Smart. Her suspicions arose because HAVOC had reported results “below detection limits that could be achieved using state of the art equipment and methods in U.S. laboratories.” Chevron obtained an Ecuadorian court order to inspect HAVOC, which “was in a house or residential building, which had an exhaust duct sticking out of the upstairs window,” but HAVOC “would not permit the court-appointed expert or Chevron’s legal team access to its facility.” She points to something Donziger wrote: an inspection of HAVOC “WOULD BE A DISASTER FOR THE LAGO AGRIO CASE.” (Letters Blogatory)

SPENCER LYNCH  (Director of Digital Forensics at Stroz Friedberg, LLC)

Lynch said Donziger’s hard drive contained a draft of the expert report prepared by Richard Cabrera for the Lago Agrio trial.  Though Cabrera was supposed to be independent, Chevron says his report was ghostwritten by Stratus Consultants, a Colorado-based firm working for Donziger.  The draft of this report on Donziger’s computer was included in an email April 1, 2008, sent by gringograndote@gmail.com, Lynch said.

Donziger’s hard drive also contained a draft of the Cabrera Report, “which was most likely modified and saved by Ecuadorean plaintiffs’ lawyer Juan Pablo Saenz the day before it was filed with the Ecuadorian court by Richard Cabrara,” Lynch wrote in his witness statement. “Excepting the court markings and handwriting, that draft is identical to the report filed with the Ecuadorean court by Richard Cabrera on April 1, 2008. I therefore conclude that [it] was the final draft of the Cabrera report.”

After comparing the draft of the Cabrera report on Donziger’s hard drive with the final, Lynch found both documents identical.  ”In other words, the text, figures and charts from the final draft Cabrera Report appear verbatim in the filed Cabrera Report,” Lynch said. “It is the same document.” (Courthouse News Service)

Ecuador’s Worn-Out War on Chevron
Raul Gallegos is the Latin American correspondent for the World View blog

It is hard for many to take Correa’s environmental protestations seriously. On Oct. 6, Ecuadorian journalist Emilio Palacio asked the obvious question: “After 30 years, how come no one has done anything to clean up that mess?” he said, referring to successive Ecuadorian governments. Ecuador’s “neoliberal governments, we know, didn’t care much about environmental rights. But we now have nearly seven years” of the Citizens’ Revolution, citing Correa’s political coalition. “Why haven’t they done anything to remedy this?” Palacio’s report presented documents purporting to show that, as recently as 2011, years after Texaco had left, Petroecuador continued to dump crude, including into the pool in which Correa dramatically dipped his hand. (Bloomberg-World View)

For more details and information on the case, including witness testimony please visit: http://www.theamazonpost.com/

Christopher Bogart (CEO, Burford Capital LLC)

Burford Capital LLC Chief Executive Officer Christopher Bogart told a Manhattan federal judge yesterday that his firm, which he described as the world’s largest dedicated litigation financing provider, supplied $4 million to the Ecuadorean plaintiffs and later sold the share when it became “deeply concerned about the mounting evidence of fraud and misconduct.”  (Bloomberg BusinessWeek)

David Russell (Environmental Expert)

A former expert for the plaintiffs, David Russell, testified yesterday that he provided a $6.114 billion damages estimate based “largely on assumptions Donziger told me to use.”

“Within a year of working for Donziger, I came to learn that my cost estimate was wildly inaccurate and had no scientific data to back it up,” he said in written testimony submitted to the judge. (Bloomberg BusinessWeek)

After drawing up his observations in the Hotel Lago, he arrived at a cost-estimate of more than $6 billion. He called the figure Wednesday a S.W.A.G., or a “Scientific Wild Ass Guess.”

“While I was working on the estimate in the Hotel Lago, Donziger told me that he wanted a ‘really big number,’ and he needed a ‘really big number’ for purposes of ‘putting pressure’ on Chevron to settle the litigation,” the deposition states. “In response, I told him that I would try to come up with the biggest possible cost estimate I could.” (Courthouse News Service)

You’ve heard of courtroom “junk science.” How about SWAG?  Junk science refers to dubious technical evidence presented by hired-gun expert witnesses. It’s one of the banes of civil litigation. SWAG, or “scientific wild-assed guessing,” is a form of junk science that came up yesterday in Chevron’s continuing lawsuit against a plaintiffs’ attorney who won a $19 billion pollution verdict against the company in Ecuador….Russell also testified that he made some of his observations of waste oil pits from the comfort of a vehicle driving by at 40 or 50 miles an hour.  (Bloomberg Businessweek)

Randy Mastro (Chevron Legal Counsel, Gibson, Dunn & Crutcher)

“That’s what Steven Donziger was trying to do against Chevron — coerce a big payday against a big company until the pain went away.  But Chevron refused. It refused to be extorted and defrauded and that’s why we’re here today.”  (Bloomberg News)

“This is a new paradigm. It’s fraud and extortion and they’re trying to force a payoff. If they do, it will be open season on U.S. companies.” (Bloomberg News)

Mastro also praised his client for having fought the case as hard as it has. “Chevron didn’t give in,” he told Judge Kaplan. “It stood up and refused to be extorted and defrauded.” If Donziger’s “shakedown” of Chevron succeeds, he warned, “Who will be the next U.S. victim of his paradigm? It will be open season on U.S. corporations in corrupt foreign jurisdictions.” (Fortune Magazine)

“It’s been a long hard road to get here, but judgment day is at hand,” said Mastro, a partner at Gibson, Dunn & Crutcher. He urged Kaplan to hold Donziger responsible as the man who “masterminded and orchestrated” the scheme and along the way committed “multiple acts of wire and mail fraud, extortion, bribery, witness tampering and money laundering.”

“Your honor, it’s a shakedown scheme pure and simple,” Mastro said. (New York Law Journal)

Steven Donziger (Defendant)

In an April 4, 2007 entry, Donziger called his co-litigants “fellow soldiers” and mused about the possibility of obtaining a settlement from Chevron. “I sit back and dream,” he wrote. “I cannot believe what we have accomplished. Important people interested in us. A new paradigm of not only a case, but how to do a case. Chevron wanting to settle. Billions of dollars on the table. A movie, a possible book. I cannot keep up with it all.” (Bloomberg News)

“Some days I fantasize about putting my strong hands around Reis Veiga’s neck and squeezing for mercy,” Donziger wrote in a book proposal about the Lago Agrio case that he shopped to a literary agent in 2006. (Fortune Magazine)

In the movie, as Donziger prepared to ambush an Ecuadorian judge in his chambers with a local TV news crew, he told the documentary maker: “This is something you would never do in the United States. But Ecuador, you know, this is how the game is played, it’s dirty.” (American Lawyer)

Mastro quoted Donziger’s compromising observations that a plaintiffs lawyer’s role is “to make [f-ing] money,” and that for the Ecuadorian court evidence was “just a bunch of smoke and mirrors and bullshit”—as well as his boast that his case had created a “new paradigm.” (American Lawyer)

Again Mastro quoted Donziger: “If you repeat a lie a thousand times it becomes the truth.” (American Lawyer)

Ricardo Reis Veiga (Chevron’s Legal Counsel in Ecuador)

“I experienced an unimaginable nightmare, ranging from stress, anger, pain and frustration from having to face such accusations,” Veiga said in written testimony filed with U.S. District Judge Lewis Kaplan. (Bloomberg News)

According to his testimony, Reis Veiga was also the target of some of Front’s intimidating rallies outside the Lago Agrio courthouse. At one, Reis Veiga and four other Chevron officials were depicted as cardboard effigies wearing prison fatigues. A man dressed as the personification of “Death” then cut their throats and laid them in coffins, and then stabbed them again with his sickle. (Fortune Magazine)

Ted Boutrous (Chevron legal counsel, Gibson, Dunn & Crutcher)

Ted Boutrous, a lawyer for Chevron, said the proceedings in Ecuador were “one of the most egregious litigation frauds in history.” (Reuters)

Witness statements can be found here.

For information and the latest details on the case continue to visit www.theamazonpost.com.

The Chevron v. Donziger RICO trial to hold Steven Donziger and his associates accountable for orchestrating and executing a fraudulent scheme against Chevron in Ecuador started yesterday in New York, and Chevron began calling key witnesses after brief opening statements by each party concluded.

The second day of the trial commenced today, with witnesses Chris Bogart (CEO of litigation hedge fund Burford Capital) and David Russell (former Lago Agrio plaintiffs’ scientific expert) being called to give testimony. Russell’s testimony will continue tomorrow. Their witness statements, along with those of Chevron Attorney, Ricardo Reis Veiga’s, whose testimony concluded today, can be found linked below.

Ricardo Reis Veiga

Veiga is the Senior Managing Counsel for the Major Transactions Law Group at Chevron. Since 1990 he has been one of the principle attorneys involved in providing legal advice relating to various matters regarding Texaco Petroleum Company’s (TexPet) former operations in the Oriente region of Ecuador. From 1990 through 1998, he participated in the negotiations of the settlement and release between TexPet and the Republic of Ecuador and Petroecuador and monitored the remediation conducted by TexPet. From 2003 to 2009, he oversaw the day-to-day defense of the lawsuit against Chevron in Lago Agrio. In 2003, Donziger and his team sought to have bogus criminal charges brought against Veiga, his colleague, Rodrigo Perez Pallares, and former ministers of officials of the Republic of Ecuador for purported falsification of documents regarding the settlement and release in an effort to pressure Chevron into a settlement. The charges were formally dismissed by the Republic of Ecuador in 2011 after an extensive personal toll.

Ricardo Reis Veiga Witness Statement

Christopher Bogart

Bogart is the Chief Executive Officer and co-founder of Burford Capital LLC, which finances litigation. On October 31, 2010, Burford gave the plaintiffs $4 million in financing as the first tranche in what was planned to become a $15 million investment. In exchange it received a 1.5% stake of any recovery, which was to rise to a 5.5% stake upon full funding. In a September 2011 letter to Donziger’s team, Bogart accused them of having defrauded the firm into investing in their case two years prior, stating: “We believe that you and particularly your U.S. representatives engaged in a multi-month scheme to deceive and defraud in order to secure desperately needed funding,” and that, “all the while concealing material information and misrepresenting critical facts in the fear that we would have walked away had we known the true state of affairs.”

Christopher Bogart Witness Statement

David Russell

Russell is an environmental engineer and the president and the principal of Global Environmental Operations, Inc., an environmental consulting firm. Russell worked for Donziger from 2003 to 2005. At one time he was the lead environmental scientist for Donziger and his team.

David Russell Witness Statement

The trial to hold Steven Donziger and his co-conspirators accountable for orchestrating and executing a fraudulent scheme against Chevron in Ecuador begins today in New York.

Chevron has brought a civil lawsuit against the lawyers behind the Chevron Ecuador case under the Racketeer Influenced and Corrupt Organizations Act (RICO). The plaintiffs’ legal team committed fraud, extortion and other misconduct in pursuit of the Ecuadorian judgment.

Since the Ecuadorian judgment was rendered in 2011, Chevron has uncovered overwhelming evidence that demonstrates the Ecuadorian plaintiffs’ lead American lawyer, Steven Donziger, and his team fabricated scientific evidence, ghostwrote court reports, and even bribed the presiding judge to allow them to draft the $19 billion judgment.

Through the RICO lawsuit, the company is seeking a United States federal court judgment against Donziger and his team, based on the evidence that the Ecuadorian judgment was procured through fraud and other unlawful acts, and ensuring that those who perpetrated the fraud should not profit from their misconduct and abuse of the legal system.

Check back throughout the trial for updates and more information.

 

An international arbitration tribunal yesterday issued a Partial Award in favor of Chevron and its subsidiary, Texaco Petroleum Company (TexPet). The Tribunal found that the Settlement and Release Agreements that the government of Ecuador entered into with TexPet released TexPet and its affiliates of any liability for all public interest or collective environmental claims. 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. The arbitration stems from the government of Ecuador’s interference in the ongoing environmental lawsuit against the company and its courts’ failure to administer justice in a trial that has been marred by multiple instances of fraud.

“The game is up. This award by an eminent international tribunal confirms that the fraudulent claims against Chevron should not have been brought in the first place. It is now beyond question that efforts by American plaintiffs lawyers and the government of Ecuador to enforce this fraudulent judgment violate Ecuadorian, U.S., and international law,” said Hewitt Pate, Chevron vice president and general counsel. “Continuing to support this fraud only increases the government of Ecuador’s growing liability to Chevron and we urge Ecuador to reconsider its position and pursue a more responsible course.”

Convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty and administered by the Permanent Court of Arbitration at The Hague, the Tribunal found that the Settlement and Release Agreements that the Government of Ecuador entered into with TexPet in 1995 and 1998 released TexPet and its affiliates of any liability for all public interest or collective environmental claims. In its decision, the Tribunal found that: 1) Chevron and TexPet are “Releasees” under the 1995 Settlement Agreement and the 1998 Final Release; 2) Chevron can invoke and enforce its contractual rights as a Releasee; and 3) the Government settled all public interest or collective environmental claims, including collective claims asserted by third parties.

This Award comes after the Tribunal’s February 2013 finding that Ecuador is in breach of its obligation to “take all measures necessary to suspend or cause to be suspended the enforcement” of the Lago Agrio judgment—an obligation that the Tribunal had imposed on Ecuador in 2011, and reinforced and expanded in 2012, but which Ecuador has continuously ignored. In prior rulings, the Tribunal put the Republic of Ecuador on notice that if Chevron’s arbitration ultimately prevails, “any loss arising from the enforcement of (the judgment) may be losses for which the (Republic) would be responsible to (Chevron) under international law.”

The next arbitration hearing regarding the collusion between the Ecuadorian courts and the Lago Agrio plaintiffs and their lawyers is scheduled for January 2014.

Chevron filed the international arbitration claim against the government of Ecuador on September 23, 2009, claiming violations of Ecuador’s obligations under the United States-Ecuador Bilateral Investment Treaty, investment agreements, and international law. Chevron’s subsidiary, TexPet, participated until 1992 as a minority member of a consortium that explored for and produced oil under contracts with Ecuador and Ecuador’s government-owned oil company, Petroecuador. Through the arbitration, Chevron seeks to hold Ecuador accountable for the denial of justice that occurred through the Lago Agrio court’s actions during the litigation and the issuance of the fraudulent $19 billion judgment.

Much has been written about Chevron’s discovery requests for certain electronic information related to the plaintiffs, their associates and others involved in the lawsuit against Chevron in Ecuador.

Here are the facts:

What is Chevron seeking?
The subpoenas served by Chevron are standard discovery requests in support of our fraud and racketeering case against the plaintiffs’ lawyers and backers.  Chevron is not seeking email content, only user account sign-up information and IP logs.

The information that email providers submit in response to these kinds of subpoenas is limited:  the identifying information that the user provided when the account was created, the IP address of the computer used to create the account, and whatever login information remains in the email provider’s computers showing when the user logged in and what IP address was used.

Who are the users of these accounts?
The users of the email addresses targeted are not anonymous “John Does”, as has been suggested.  Each user has been identified, either through public records or through other records produced through discovery.  In most cases, the email addresses contain the users’ names or initials.  In a few instances, there is evidence that the accounts were used to communicate between the defendants in the RICO case, and knowing who logged into those accounts is relevant.

Why does Chevron need this information?
This information will allow Chevron to further expose the lengths to which the plaintiffs went to conceal and perpetuate the fraudulent lawsuit against Chevron in Ecuador.

Chevron was forced to serve these subpoenas because the plaintiffs’ lawyers have attempted to conceal their fraud and have obstructed discovery in courts around the United States.

Court-ordered discovery already demonstrates that the plaintiffs’ lawyers falsified evidence throughout the trial in Ecuador, blackmailed a judge, ghostwrote “independent” expert reports, and had a hand in writing the $19 billion judgment itself.

Discovery also shows that the plaintiffs’ lawyers and their affiliates managed the fraudulent litigation and the related pressure and extortion campaign from the United States.  We have also found through discovery that the plaintiffs’ lawyers and their affiliates created e-mail addresses intended to be aliases to disguise the ultimate user, and used dozens of email accounts to transfer fraudulent documents and to try to conceal their scheme.  These subpoenas will identify the owners of those accounts, show how they were used to hide the transfer of documents among the RICO co-conspirators, and provide records proving where the plaintiffs’ lawyers’ and affiliates’ activities in furtherance of the fraud took place.

Has this happened before?
Several courts have required email service providers to produce this exact type of information in other cases, and have rejected the claims that doing so implicates privacy or First Amendment rights.

The Lago Agrio plaintiffs’ lawyers have long used bogus science and fabricated technical “facts” to fool activists, journalists and others about environmental and health conditions in Ecuador’s Oriente region as part of their scheme to defraud Chevron. This section identifies the real science and sound academic research that debunk the Lago Agrio plaintiffs’ lawyers’ most frequently repeated scientific falsehoods about Texaco’s legacy in the country.

1. CANCER MORTALITY IN ECUADOR’S OIL REGION IS SAME OR LOWER THAN OTHER REGIONS
There is No Cancer “Cluster” or Outbreak in Ecuador’s Oil-Producing Region

Ecuador collects detailed information about public health from cantons throughout the country, including both oil-producing and non-oil-producing regions. Those official statistics prove that the cancer mortality rate in Ecuador’s oil producing regions is the same or lower than in the regions of the Amazon where no oil production occurs. The cancer mortality rate in the oil producing regions also is lower than in Pichincha province, where Quito is located. In fact, despite comparing cancer data from regions with no oil production, low oil production, and high oil production, researchers found no relationship at all between oil operations and cancer in Ecuador. Click here to see a peer-reviewed article that analyzes Ecuador’s cancer-mortality statistics. Plaintiffs’ lawyers, on the other hand, sponsored a published study claiming to show a “cancer cluster” in the village of San Carlos, but as this peer-reviewed letter to the editor shows, that study used incorrect population data. When the population data was corrected, the plaintiffs’ lawyers’ study showed no increase in cancer. Furthermore, the plaintiffs have never submitted a single medical record or cancer diagnosis to the court.

2. INDIGENOUS POPULATION HAS GROWN SINCE TEXACO OPERATIONS BEGAN IN ECUADOR
Texaco Operations Did Not Cause Decline of Indigenous Populations or Extinction of Indigenous Groups

The populations of indigenous groups associated with the Lago Agrio trial – the Cofan, Siona-Secoya and Huaorani – all have increased since oil was discovered in Ecuador’s Amazon in the 1960s. This paper on demographic trends in indigenous populations examined all of the available population data and determined that since the 1960s, the population of each of those groups has grown as fast or faster than the population of Ecuador as a whole. Meanwhile, the plaintiffs’ claim that Texaco’s activities led to the extinction of a different indigenous group, the Tetete, is a. As this peer-reviewed paper explains, all available evidence indicates that by the time oil exploration began in the Oriente in the 1960s, the Tetete population already had been decimated by disease and warfare. The disappearance of the Tetete had nothing to do with oil operations.

3. NO OIL POLLUTION IN GROUNDWATER OR DRINKING WATER
Oil Operations Did Not Cause Groundwater or Drinking Water Contamination in the Former Concession Area

Despite repeated claims about massive hydrocarbons contamination of groundwater and drinking water in the vicinity of oil operations, plaintiffs’ lawyers have never provided evidence to substantiate this allegation. In fact, their own technical consultants and experts have admitted — in e-mails, letters, and sworn testimony and on videotape — that they don’t have evidence to back up the allegation. Those admissions, of course, are consistent with Chevron’s evidence at trial. They also are consistent with the findings in a peer-reviewed academic paper on the weathering of crude oil and actual groundwater data in Ecuador’s Oriente.

4. SOCIO-ECONOMICS BETTER IN OIL REGION
Indicators in the Oil-Producing Region Are Better Than Most of Rural Ecuador

These maps depicting actual conditions in the Oriente reveal that the Lago Agrio plaintiffs’ lawyers’ claims on a host of socio-economic issues are wrong. In fact, socio-economic and health indicators for the former Petroecuador-Texaco Petroleum concession area are the same or better than those of most rural areas of Ecuador.

5. DEFORESTATION CAUSED BY FARMING
Rainforest Destruction in Ecuador’s Amazon Due to Agricultural Expansion, Not Oil Operations

Plaintiffs’ lawyers continue to blame Texaco for massive deforestation in the oil operations area even as all available data and academic research on the subject confirms that deforestation was the result of government-decreed colonization and expansion of the agricultural frontier from the 1960s to the 1980s. No academic who has seriously researched the issue blames oil development for state colonization policies that affected not only the rainforest but also the indigenous cultures inhabiting the region. Several papers and book chapters tell the real story of colonization and deforestation.

6. FALSE REMEDIATION COSTS
Lago Agrio Judgment’s Soil Remediation Costs Are 60 Times Higher Than in U.S.

The plaintiffs’ lawyers and the Lago Agrio judgment they ghost-wrote for the court call on Chevron to pay more than 60 times more for environmental remediation than what comparable work would cost in the U.S. (or for that matter what state-owned oil company Petroecuador now pays to perform the exact same remediation). This report explains the absurdity of the costs assessed by plaintiffs’ lawyers in the ghost-written judgment.

Chevron petitioned the Office of the U.S. Trade Representative (USTR) to reconsider Ecuador’s trade preferences, given Ecuador’s failure to recognize and enforce “in good faith” arbitral awards handed down by an international tribunal in The Hague under the U.S.-Ecuador Bilateral Investment Treaty. That conduct is inconsistent with mandatory criteria Ecuador must meet in order to stay eligible for preferential duty-free treatment under the Generalized System of Preferences (GSP).

By publicly and flagrantly rejecting multiple rulings from the international tribunal, the government of Ecuador has demonstrated a complete disregard for the rule of law. Ecuador cannot repeatedly defy the eligibility requirements that govern GSP and still expect to receive trade preferences.  Ecuador has made it clear that it wants all the privileges and preferences of international trade agreements, without having to abide by the most basic practices and protocols of international trade. Today’s decision by the USTR sends a message that the U.S. government takes the GSP criterion seriously and that Ecuador’s behaviors have warranted a review of its suitability to remain in the GSP program.

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 already bad year (see here, here and here) for the plaintiffs’ lawyers, just took another turn for the worse.

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.

 

Stratus Consulting has provided sworn declarations outlining the firm’s knowledge of the plaintiffs’ lawyers’ misconduct in the ongoing environmental litigation in Lago Agrio, Ecuador as well as testifying that there is no scientific merit to the plaintiffs’ damages claims against Chevron Corp. (NYSE: CVX) and Texaco Petroleum (TexPet).

Chevron recently settled pending fraud and extortion claims against Boulder, Colo.-based Stratus.  Stratus had been the lead environmental consultants to the plaintiffs’ lawyers in the trial.

“We are pleased that Stratus came forward to reveal the truth.  We call on others with knowledge of the fraud tainting the trial in Ecuador to come forward and do the right thing,” said Hewitt Pate, Chevron vice president and general counsel.

In sworn declarations (here and here), Stratus details the role the firm and the plaintiffs’ lawyers played in drafting the supposedly independent damages report of Richard Cabrera, which serves as an evidentiary basis of the 2011 judgment against Chevron in Ecuador.  Testimony also provides a direct account of lead plaintiffs’ lawyer Steven Donziger’s control of the “Cabrera Report” process and the pressure Donziger applied to contrive damages attributed to Chevron.  In filings submitted in the Southern District of New York today, Stratus’s representatives state:

  • “Stratus is not aware of any scientific evidence that people in the former concession area are drinking water contaminated with petroleum.”
  • “At no time while working on the Ecuador Project did I see any data supporting a finding of groundwater contamination from TexPet operations…”
  • “I am not aware of any scientific data that shows that any adverse health effects are caused by contamination from petroleum operations in the Oriente.”
  • “…the conclusion that there were 1,400 ‘excess cancer’ deaths near the oil operations area is invalid and unsupported.”
  • “I am not aware of any credible scientific evidence that supports the statement that cancer rates were up to 30 times higher than normal, or that the incidence of childhood leukemia was found to have reached alarming levels.”
  • “I am not aware of credible scientific evidence that more than 9,000 people in the area of oil operations in Ecuador are going to contract cancer in the coming decades or that links any such incidence to oil operations.”
  • “I am not aware of any credible scientific evidence that supports the statement that TexPet’s operation of the concession ravaged thousands of square miles of once-pristine rainforest, that it poisoned the environment of tens of thousands of people, or that it decimated indigenous tribes who lived in the region.”
  • “I disavow any and all findings and conclusions in all of my reports and testimony on the Ecuador Project.  I deeply regret that I allowed myself and my company to be used in the Lago Agrio Litigation in the way that we were…”

Stratus is the latest instance of individuals and groups formerly aligned with the plaintiffs either accusing the plaintiffs’ lawyers of fraud or providing firsthand accounts of corruption tainting the trial and judgment.  In January, a former Ecuadorian judge came forward to admit his role in orchestrating the fraudulent judgment against Chevron.  It was also revealed that Burford Capital, one of the largest financial backers of the plaintiffs, accused the plaintiffs’ lawyers of fraud and other misconduct in connection with their pursuit of their case.  In December, a former environmental consultant to the plaintiffs came forward with additional proof of fraud and the fabrication of evidence on the part of the plaintiffs’ lawyers.

Chevron’s RICO claim is set for trial on October 15, 2013.

Reuters is reporting today that “The Ecuadorean judge who issued an $18.2 billion verdict against Chevron Corp has denied bribery allegations made by another judge who presided over the landmark pollution case in the South American country, according to a court filing on Thursday.

“Nicolas Zambrano had been accused in a U.S. court-filed sworn statement by Alberto Guerra, a fellow judge who heard the case in Ecuador in 2003 and 2004, of taking a $500,000 bribe from the plaintiffs.”

 

Zambrano’s allegations are false and completely uncorroborated.  As he admits in his affidavit, this would not be the first time Zambrano has lied about his work on the judgment.

 

On the other hand, Mr. Guerra’s account is corroborated by hard evidence: computer, bank (here, here, here, and here), and shipping records, as well as the plaintiffs’ lawyers’ own internal e-mails (here, here, and here).  Moreover, Mr. Guerra’s testimony supports what the evidence already proves – the plaintiffs’ lawyers wrote the judgment.  Information from eight internal plaintiffs’ documents appears in 60 pages of a 188-page judgment.  There is no innocent explanation for this and Zambrano provides no plausible explanation for it – let alone evidence.

How does Zambrano explain the shipping records?  How does Zambrano explain drafts of at least a dozen orders he issued residing on Mr. Guerra’s computer?  Zambrano’s affidavit is silent when it comes to the evidence.  More to the point, the affidavit is notable for nothing more than what it omits.

 

Consider all that is known:

 

  • From Dr. Charles Calmbacher, the plaintiffs’ lead expert at the beginning of the trial, we know the plaintiffs’ court reports were being fabricated.
  • From Dave Russell, the plaintiffs’ lead technical advisor, we know the evidence didn’t support the plaintiffs’ lawyers’ claims.  Russell told plaintiffs’ lawyers that their testing was “self- defeating” and “counterproductive.” He went on to admit that Texaco’s environmental cleanup was “performing as designed.”
  • From Fernando Reyes, another environmental expert working for the plaintiffs, we know how the plaintiffs’ lawyers’ aborted their self-defeating evidence collection process and replaced it with another rigged in their favor.
  • From the plaintiffs’ lawyers’ documents produced under court-ordered discovery, we know that three separate law firms aligned with the plaintiffs withdrew citing ethical concerns, and a fourth firm stated, “it appears not only that Cabrera and plaintiffs can be charged with a ‘fraud’ respecting the former’s report…”
  • One of the plaintiffs’ Ecuadorian lawyers admitted in an e-mail that if evidence of their collusion and fraud was exposed, “all of us, your attorneys, might go to jail.”
  • From Kohn, Swift, and Graf, the law firm that invested $7 million in the plaintiffs’ case, we know that they believe their co-counsel engaged in fraud.
  • From Burford Capitol, the hedge fund that invested $4 million in the plaintiffs’ case, we know that they believe the plaintiffs’ lawyers’ engaged in fraud.

 

Eight U.S. federal judges have found evidence of the plaintiffs’ representatives’ misconduct tainting the trial.  Zambrano’s only shot at collecting his promised half million dollar bribe is if he dives even further into bed with the plaintiffs’ lawyers.

An international arbitration tribunal issued an award yesterday finding that the Republic of Ecuador has violated the Tribunal’s prior Interim Awards authorized under international law and a treaty between the United States and Ecuador by not preventing the attempted enforcement of a $19 billion judgment against Chevron Corp. In prior rulings, the Tribunal put the Republic on notice that if Chevron’s arbitration ultimately prevails, “any loss arising from the enforcement of (the judgment) may be losses for which the (Republic) would be responsible to (Chevron) under international law.”

Convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty (the BIT) and administered by the Permanent Court of Arbitration at The Hague, the Tribunal found Ecuador in breach of the Tribunal’s prior rulings and ordered the Republic to explain why it should not be ordered to compensate Chevron for all harm resulting from the plaintiffs’ attempts to enforce a judgment resulting from an environmental trial against the company in Lago Agrio, Ecuador.

Almost one year ago, the Tribunal issued a Second Interim Award ordering the Republic of Ecuador—and all of its branches, including the judiciary—to take all necessary actions to prevent enforcement and recognition of the Lago Agrio judgment, both inside and outside of Ecuador.  That award expanded upon a prior award requiring Ecuador to “take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment.”

“The Tribunal’s decision confirms that the enforcement actions being pursued against Chevron in Argentina, Brazil, and Canada fly in the face of international law,” said Hewitt Pate, Chevron vice president and general counsel.  “Yet Ecuador has consistently aligned itself with American trial lawyers who have used corrupt courts to advance an unprecedented fraud.  It is not too late for the Republic to reverse course, declare the Lago Agrio judgment illegitimate, and address the real challenges facing its citizens.”

Despite the Tribunal’s Awards, the Republic of Ecuador has facilitated the plaintiffs’ pursuit of enforcement in Argentina, Brazil, and Canada.  These actions are the result of Ecuador’s failure to meet its international law and treaty obligations.

Chevron’s arbitration claim stems from the government of Ecuador’s interference in the ongoing environmental lawsuit against the company in Ecuador and its courts’ failure to administer justice in a trial that has been marred by fraud.  Additionally, Chevron maintains that the government of Ecuador has failed to uphold prior settlement and release agreements that the government of Ecuador entered into with Texaco Petroleum Company (now a Chevron subsidiary) when the consortium between Texaco Petroleum and Petroecuador was terminated.

In its ruling, the Tribunal found that “Neither disagreement with the Tribunal’s orders and awards on interim measures nor constraints under Ecuadorian law can excuse the failure of the (Republic), through any of its branches or organs, to fulfil its obligations under international law imposed by the Treaty, the UNCITRAL Rules and the Tribunal’s orders and awards thereunder, particularly the First and Second Interim Awards on Interim Measures.”

In August 2011, a different international arbitration tribunal convened under the BIT awarded Chevron and Texaco Petroleum $96 million, plus interest, in a claim against the Republic of Ecuador related to past oil operations.  The Tribunal found that Ecuador’s courts violated the BIT and international law through their decade-long delays in ruling on certain commercial disputes between Texaco Petroleum and the Ecuadorian government.  A court in the Netherlands has upheld the award and Ecuador has filed a second appeal.

A former Ecuadorian judge has acknowledged his direct involvement in orchestrating a fraudulent judgment against Chevron Corp. in the environmental trial against the company in Lago Agrio, Ecuador.

In a sworn declaration filed today in New York federal court, Alberto Guerra, who presided over the case when it was first filed in 2003, reveals that he was paid thousands of dollars by the plaintiffs’ lawyers and a subsequent judge, Nicholas Zambrano, for illegally ghostwriting judicial orders issued by Zambrano and steering the case in the plaintiffs’ favor.  Guerra, who is no longer a judge, attests that the plaintiffs’ lawyers were permitted to draft the $18 billion judgment in their own favor after they promised to pay Zambrano a $500,000 bribe out of the judgment’s enforcement proceeds, and that Guerra then reviewed the plaintiffs’ lawyers’ draft for Zambrano before the judge issued it as his own.

“Another participant in the fraud has now come forward rather than wait to be exposed by others,” said Hewitt Pate, Chevron vice president and general counsel.  “Chevron urges additional whistleblowers in Ecuador, the United States, and elsewhere to come forward.  It is never too late to tell the truth.”

Guerra’s declaration, which is corroborated by computer, bank, and shipping records, as well as the plaintiffs’ lawyers’ own internal e-mails, provides a direct account of corruption that has tainted the trial for years.  Guerra describes multiple meetings with the plaintiffs’ lawyers and representatives – namely, New York-based Steven Donziger, Pablo Fajardo, and Luis Yanza – to discuss payoffs, kickbacks, and the ghostwriting of court orders favorable to the plaintiffs.  Guerra attests:

  • “I was Mr. Zambrano’s ‘ghostwriter’ and I wrote the great majority of the rulings issued in civil cases assigned to Mr. Zambrano, including the Chevron case.”
  • “Mr. Donziger thanked me for my work as ghostwriter in this case and for helping steer the case in favor of the Plaintiffs’[sic].  The payments from the Plaintiffs’ representatives were given to me by Mr. Fajardo in cash, or were deposited into my savings account at Banco Pichincha.  I remember that while I was writing court rulings for Mr. Zambrano I would regularly meet with Mr. Fajardo, perhaps twice per month, to discuss my work.”
  • “Mr. Zambrano told me he was in direct contact with Mr. Fajardo and that the Plaintiffs’ representatives had agreed to pay him USD $500,000 from whatever money they were to collect from the judgment, in exchange for allowing them to write the judgment in the Plaintiffs’ favor.”
  • “Approximately two weeks before the trial court in the Chevron case issued the judgment, Mr. Zambrano gave me a draft of the judgment so that I could revise it. It was through him that I found out that the attorneys for the Plaintiffs had written that judgment and had delivered it to him.”
  • “I worked on that document in Mr. Zambrano’s residence in Lago Agrio using Mr. Fajardo’s computer.”
  • “Based on what Mr. Zambrano told me, it is my understanding that the Plaintiffs’ attorneys made changes to the judgment up to the very last minute before it was published.”
  • “I knew at the time, and I know now, that the agreement in which I participated, and by which the Plaintiffs’ representatives drafted the judgment in the Chevron case which Judge Zambrano issued, with my help, was a violation of Ecuadorian law. According to Ecuadoran law, only a judge is authorized to write rulings and judgments. For these same reasons I knew at the time, as I know now, that the arrangement in which I participated, whereby I drafted court rulings for Mr. Zambrano steering the case in favor of the Plaintiffs, and was paid by the Plaintiffs’ representatives for that work, was a violation of Ecuadoran law. And I knew at that time, as I know now, that the agreement that Mr. Zambrano told me he had reached with the representatives’ attorneys, to let them draft the judgment in favor of the Plaintiffs and against Chevron, in exchange for him receiving USD $500,000 once they collected the money from the judgment, was a violation of Ecuadoran law.”

One year after issuing the judgment against Chevron, Zambrano was dismissed from the bench as part of an organized crime commission investigation involving the inappropriate release of narcotics traffickers from prison.

Guerra’s account is corroborated by contemporaneous documentary evidence.  For example, his computer contains drafts of numerous court orders Zambrano issued, including in the Lago Agrio case.  And his bank records (here, here, here, and here) document payments made to him by a representative of the plaintiffs.  Shipping records and Guerra’s calendar further corroborate his testimony.

Sworn statements by several other witnesses also corroborate Guerra’s account.  Chevron’s Ecuadorian lawyers and others known to them now attest to the fact that, at various times during Zambrano’s tenures on the case, Guerra directly approached them to solicit bribes on Zambrano’s behalf in order to fix the Lago Agrio judgment, and that Chevron refused Guerra’s approaches.  Moreover, contemporaneous declarations (here and here) from two of Chevron’s Ecuadorian lawyers described the failed bribery solicitations at the time they occurred.  These several witnesses attest in their sworn statements that Chevron flatly rejected Guerra’s repeated bribe solicitations on behalf of Zambrano.

Guerra’s testimony and corroborating evidence confirm what the extensive overlap between the plaintiffs’ lawyers’ internal files and the judgment itself already supported – that the plaintiffs’ lawyers corrupted the Ecuadorian court and actually wrote the $18 billion judgment against Chevron.

Contemporaneous e-mails between the plaintiffs’ lawyers and representatives, produced through court-ordered discovery in the United States, also corroborate Guerra’s declaration.  When another judge had to recuse himself from the case in the midst of a bribery solicitation scandal and Zambrano was poised to resume presiding over it, the plaintiffs’ lawyers identified “Guerra” by name as a potential target to influence the case’s ultimate ruling.  The plaintiffs’ lawyers even assigned code names to Zambrano and Guerra, referring to them as the “puppeteer” and the “puppet.”  On October 27, 2009, Fajardo sent Donziger and Yanza an e-mail stating, “The puppeteer won’t move his puppet until the audience doesn’t [sic] pay him something.”  On November 27, 2009, Yanza sent Donziger an e-mail warning him about increased costs due to paying the “puppeteer.”

This revelation is the latest in a recent series of instances where individuals and groups formerly aligned with the plaintiffs have either accused the plaintiffs’ lawyers of fraud or provided first-hand accounts of corruption tainting the trial and judgment.  Earlier this month, it was revealed that Burford Capital, one of the largest financial backers of the plaintiffs, accused the plaintiffs’ lawyers of fraud and other misconduct in connection with their pursuit of their case.  In December, a former environmental consultant to the plaintiffs came forward with additional proof of fraud and the fabrication of evidence on the part of the plaintiffs’ lawyers.

Because of the risks to Guerra and his family from coming forward, Chevron has taken reasonable measures, based on third-party assessments, to protect Guerra’s safety and security, and that of his family, including relocating them from Ecuador and providing other assistance.  In exchange for collecting and turning over hard evidence corroborating his account, including his personal computer, two cell phones, his day calendars, and bank, phone and shipping records, Guerra received a total of $38,000 from Chevron, but as Guerra affirms, he has “not . . . received any money or compensation in exchange for signing this sworn declaration.”

Additional evidence produced by the plaintiffs’ American lawyers provides corroborating proof that the Lago Agrio plaintiffs’ representatives participated in the drafting the judgment.  In at least eight separate instances, the judgment tracks the plaintiffs’ lawyers’ own documents, in some cases word-for-word, reciting content from the plaintiffs’ lawyers’ internal materials that did not form part of the record, as well as copying errors and idiosyncratic reference citations that only appeared in the plaintiffs’ internal documents.

Chevron intends to provide all of this evidence to Ecuador’s Prosecutor General and to request that his office investigate Zambrano and the plaintiffs’ lawyers.  The company has provided similar evidence of fraud, corruption, and attorney misconduct to authorities in Ecuador in the past, but to date, the government there has taken no apparent action to enforce its laws.

“Chevron once again calls on Ecuadorian authorities, and authorities wherever these plaintiffs’ lawyers are trying to advance their fraud, to investigate and bring an end to this scheme,” said Pate.  “Ecuador should not tolerate American lawyers using Ecuador’s institutions and citizens as puppets.”

In now coming forward, Guerra has also agreed to make himself available to appear before other courts, tribunals, and investigators if requested to do so.

Chevron Corp. today condemned actions taken by the Lago Agrio plaintiffs’ lawyers to intimidate, threaten, and harass whistleblower Fernando Reyes who has provided a sworn declaration offering an insider’s account of the plaintiffs’ lawyers’ fraud during the trial in Ecuador.  Subsequent to the filing of the Reyes Declaration, the plaintiffs’ lawyers and publicist have issued press statements attacking and disparaging Reyes and threatening him with harassing litigation.

Rather than address the substance of Reyes’ testimony on the merits, the plaintiffs’ representatives hope to intimidate him.  Chevron calls upon the authorities to investigate these threats against Reyes.  Chevron encourages other whistleblowers who have information about the plaintiffs’ lawyers’ fraud to come forward.

Reyes is an Ecuadorian petroleum and environmental engineer who served as a consultant to the plaintiffs’ lawyers.  Last Wednesday, Chevron submitted a sworn declaration from Reyes in support of its fraud and racketeering lawsuit in New York against the plaintiffs’ lawyers and backers in which Reyes provides an eyewitness account as to how the plaintiffs’ lawyers have sought to manipulate the trial since its infancy, deceived the court, corrupted the trial process, and engaged in the development of a fraudulent “independent” report.  Reyes’ testimony is corroborated not only by his own notes, but by documents  produced by Donziger in court-ordered discovery, deposition testimony, and outtakes (here and here) from the movie “Crude.”  The plaintiffs’ lead American lawyer, Steven Donziger, once described Reyes as “one of the most qualified engineers and academics in the field.”

The Reyes Declaration confirms the plaintiffs’ lawyers’ fraud on multiple levels.  Reyes had considerable involvement in the Lago Agrio case for the plaintiffs, first serving as what was represented as an “independent” monitor of court experts and then as a “shadow” advisor to Richard Cabrera, a supposedly-independent court expert.  In fact, Reyes introduced Cabrera to Donziger and his co-counsel, and the plaintiffs’ lawyers pressured the court in Ecuador to appoint Cabrera to conduct a “global assessment” of environment conditions in the Oriente region of Ecuador’s Amazon.  Reyes was also present in a meeting between the plaintiffs’ lawyers and consultants and Cabrera before Cabrera was appointed as an independent court expert (video from the meeting here and here).  Cabrera ultimately submitted a report to the court, described by one of the plaintiffs’ consultants as “the single most important technical document for the case,” assigning more than $27 billion in damages against Chevron.

Cabrera’s report has since been shown to be a fraud, written by the plaintiffs’ representatives and passed off as the work of a neutral and independent court appointee.  Reyes’ declaration describes the process by which the plaintiffs’ lawyers sought out someone who, as Donziger put it, would “totally play ball with us and let us take the lead while projecting the image that he is working for the court.”  The plaintiffs’ lawyers’ were aware of the fraud they were committing: as their scheme to deceive the court was unraveling, Donziger’s co-counsel wrote, “all of us, your attorneys, might go to jail.”

While courts in Ecuador have ignored the evidence of the plaintiffs’ lawyers’ fraud, even going as far as to include many of “Cabrera’s” claims in the judgment issued last year, other courts have not.  In an opinion issued in July, a court in the Southern District of New York found that “uncontradicted evidence demonstrates that the report and subsequent responses filed in Cabrera’s name were tainted by fraud.”

More information on the plaintiffs’ lawyers’ fraud can be found here.  Additional background on the Ecuador litigation can be accessed here and here.

Today, Chevron filed a complaint before the New York State Joint Commission on Public Ethics today, seeking an investigation of New York State Comptroller Thomas DiNapoli as well as current and past members of his staff for multiple violations of New York Public Officers Law.

Chevron’s complaint relates to ongoing litigation in Ecuador and demonstrates how Comptroller DiNapoli, who oversees the New York State Common Retirement Fund, which, according to SEC filings, owns more than own more than $800 million of Chevron stock, apparently breached his ethical and fiduciary duties. Under New York Public Officers Law, public officials are prohibited from having “any interest, financial or otherwise…which is in substantial conflict with the proper discharge of his duties in the public interest.” Evidence shows that Comptroller DiNapoli used his office to support the Ecuadorian plaintiffs’ lawyers’ scheme to pressure Chevron into settling the lawsuit in exchange for benefits received from the plaintiffs’ representatives.

The plaintiffs’ supporters, amongst other things, have made direct financial contributions to DiNapoli’s campaign in excess of $60,000 and have given him other political benefits. In an apparent quid pro quo exchange, DiNapoli has given his unwavering support and used his public office to take actions on behalf of the plaintiffs, such as sponsoring shareholder resolutions and making public statements against Chevron that were explicitly intended to pressure the company to settle the fraudulent lawsuit.

Comptroller DiNapoli took office in 2007 after his predecessor, Alan Hevesi, left office under allegations of misconduct, including a pay-for-play scandal that ultimately resulted in prison time.

Various media outlets are reporting that the Lago Agrio plaintiffs’ lawyers have initiated recognition and enforcement actions of their fraudulent judgment in Argentina. Rather than attempt to enforce in the United States- where Chevron Corporation resides- the plaintiffs’ lawyers will again attempt to launder their illegitimate judgment through a foreign court. If they believed in the integrity of their judgment, they would be seeking enforcement in the United States. In the U.S., however, the plaintiffs’ lawyers would be confronted by the fact that seven federal courts have made fraud findings related to the plaintiffs’ lawyers’ scheme. Chevron does not believe that the Ecuador judgment is enforceable in any court that observes the rule of law. The company will continue to pursue relief against Ecuador in pending arbitration and against the plaintiffs’ representatives in a pending RICO action in New York.

On October 15, the Lago Agrio court in Ecuador granted a plaintiffs’ motion seeking the embargo of various assets associated with Chevron subsidiaries. This court order is a departure from Ecuadorian law and has no justifiable foundation.

Naturally, one of the questions that this action raises is why is this issue back before a court in Ecuador?  The plaintiffs’ maneuvering in this matter simply illustrates the weakness of their claims.  Having encountered significant jurisdictional delays to their enforcement efforts in Canada and Brazil, the plaintiffs have returned to Lago Agrio – the one court they can count on to try to launder their illegitimate judgment.

After all, if the plaintiffs’ lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States – where Chevron Corporation resides.  In the U.S., however, the plaintiffs’ lawyers would be confronted by the fact that seven federal courts have already made fraud findings related to the plaintiffs’ lawyers’ scheme.

It is also important to consider how this figures into Ecuador’s international standing.  Recall that Ecuador just lost a $1.8 billion arbitration over expropriated oil assets.  The Lago Agrio court’s action this week puts Ecuador in further breach of international law.

An international arbitration tribunal has twice ordered the Republic of Ecuador, including “its judicial, legislative, or executive branches” to “take all measures necessary to suspend or cause to be suspended the enforcement and recognition within and without Ecuador” of the Lago Agrio judgment.  Ecuador has so far rejected the tribunal’s order.

Ultimately, however, if Chevron prevails in the arbitration, it may be the Republic of Ecuador that is liable for damages related to the Lago Agrio lawsuit.  In a prior ruling, the arbitration tribunal has put the Republic on notice that if Chevron’s arbitration prevails, “any loss arising from the enforcement of (the Lago Agrio judgment) may be losses for which the (Republic) would be responsible to (Chevron) under international law.”

This latest order from the Lago Agrio court is no more valid than the fraudulent judgment on which it is based.  Nevertheless, Chevron intends to challenge the Lago Agrio court’s unlawful action through all available remedies – inside and outside of Ecuador.

Today, the U.S. District Court in New York rejected the Ecuador plaintiffs’ attempt to avoid a ruling on the validity of their fraudulent judgment and made important factual findings about the plaintiffs’ fraud and misconduct. In a 97-page opinion, Judge Kaplan rejected the effort of the Ecuadoran plaintiffs and their lawyers to abruptly drop some of their arguments in Chevron’s RICO case in order to avoid a ruling against them, calling this tactic an “unworthy pretense.”  The court examined the record and issued findings that plaintiffs’ lawyers engaged in activities that “tainted” the Ecuadoran trial, further observing that “there are serious questions concerning the preparation of the judgment itself.”  Judge Kaplan denied Chevron’s motion for immediate summary judgment on whether the Ecuador judgment is enforceable under New York law, instead requiring further legal and factual submissions prior to a final ruling.  Chevron intends to press forward with the New York case until the perpetrators of the Ecuadorian judicial fraud are held accountable for their actions.

The court’s opinion can be found here.

According to the plaintiffs’ lead U.S. lawyer Steven Donziger, “If you repeat a lie 1,000 times, it becomes the truth.” While advancing their meritless case, the Lago Agrio plaintiffs’ lawyers have, for years, repeated lies and distortions, knowing full well they are unfounded. Even as these claims have been thoroughly debunked by science and exposed- through their own correspondence- as manufactured and fraudulent, the lawyers and their colleagues continue to perpetuate the same false and baseless claims, time and again. The following items are some of the plaintiffs’ lawyers oft repeated lies and the truth they don’t want the public to know.

The Lago Agrio Plaintiffs’ Lawyers Have No Evidence of “Poisoned” Water

The Lago Agrio plaintiffs’ lawyers repeatedly assert that “toxic and in many cases carcinogenic, chemicals continue to lace the waters that thousands of indigenous persons and farmers depend on for every facet of their lives.”  But when plaintiffs’ experts found no evidence of harmful contamination from oil production, they stopped testing groundwater and drinking water.

Even Ecuadorian President, Rafael Correa said recently in his weekly nationwide broadcast: “The biggest contaminating factor for our fresh water is waste, sewage from the cities… Like the contamination of the Tena River, it’s not oil. It’s not mining.

The Lago Agrio Plaintiffs’ Lawyers Have No Evidence of Agricultural Soil Contamination

The Lago Agrio plaintiffs’ lawyers claim that “tens of thousands of men, women, and children . . . are still waiting for . . . unpoisoned soil in which to grow their crops.” They decry a “Rainforest Chernobyl” with “contamination . . . covering an area of rainforest the size of Rhode Island.”  But even their own consultant, Doug Beltman of Stratus, conceded that “I do not think that contamination sufficient to impact the ecology extends very far beyond the pads, pits, and spills at the wells.” Even the fraudulent Cabrera Report, secretly written by the plaintiffs’ representatives, estimates the area requiring remediation as only 0.37 square miles. And the plaintiffs’ former expert, David Russell, who coined the phrase “Rainforest Chernobyl,” has renounced his findings and his association with the LAPs.

The Lago Agrio Plaintiffs’ Lawyers Have No Evidence of an Elevated Cancer Rate

The Lago Agrio plaintiffs’ lawyers label the former concession area a “death zone” and a “cancer zone,” claim “increased rates of cancer, leukemia, birth defects, and a multiplicity of other health ailments,” and assert that oil contamination has caused “1,401 excess cancer deaths.” But the Lago Agrio plaintiffs’ lawyers own experts admit that the 1,401 number has “little validity” and that “no one has studied” the causality between oil production prior to 1992 and any illnesses in Ecuador.

The Lago Agrio Plaintiffs’ Lawyers Have No Evidence That Texaco’s Remediation Was “Fraudulent”

The Lago Agrio plaintiffs’ lawyers persuaded the government of Ecuador to bring baseless criminal charges against Chevron attorneys involved in the Texaco remediation, and to assert a “fraud” counterclaim against Chevron in litigation in the Southern District of New York—which Donziger described as a “hammer” to leverage a payoff. But plaintiffs’ expert Doug Beltman himself found no “clear instances where Texaco did not meet the conditions required in the cleanup.” Former plaintiffs’ experts Dave Russell and Charles Calmbacher said the same thing. Ecuador ultimately withdrew the fraud counterclaim it had asserted because it lacked evidence.

The plaintiffs’ experts have repeatedly challenged these unsupported allegations.  When former expert Russell sent Donziger a “cease-and-desist” letter demanding that he stop using Russell’s remediation estimate of $6 billion (which Russell described as “too high by a substantial margin, perhaps by a factor of ten, or more”), Donziger’s response was blunt: “I don’t care what the fuck that guy says.” When plaintiffs’ experts, including Stratus’s Ann Maest, told Donziger they had no evidence of contaminants migrating into the groundwater, he replied:

Hold on a second, you know, this is Ecuador, okay, . . . You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want. . . . Therefore, if we take our existing evidence on groundwater contamination, which admittedly is right below the source . . . [a]nd wanted to extrapolate based on nothing other than our, um, theory . . . [w]e can do it. And we can get money for it. . . .  Because at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bullshit.

When one expert pushed back, explaining that “there is not enough information on that groundwater,” Donziger instructed the camera crew to stop filming, stating, “[T]here’s another point I got to make . . . to these guys, but I can’t get this on camera.”

Facts are stubborn things and there’s no escaping the fact that the plaintiffs’ lawyers’ case is meritless.

In response to media reports that the Lago Agrio plaintiffs’ lawyers have initiated recognition and enforcement actions of their fraudulent judgment in Brazil, Chevron Corporation issued the following statement:

“The Ecuador judgment is a product of bribery, fraud, and it is illegitimate.  The company does not believe that the Ecuador judgment is enforceable in any court that observes the rule of law.

“If the plaintiffs’ lawyers believed in the integrity of their judgment, they would be seeking enforcement in the United States – where Chevron Corporation resides.  In the U.S., however, the plaintiffs’ lawyers would be confronted by the fact that seven federal courts have already made fraud findings related to the plaintiffs’ lawyers’ scheme.”

Today, The D.C. Circuit unanimously affirmed the district court’s dismissal of Patton Boggs’s claim against Chevron and Gibson Dunn for tortuous interference with Patton Boggs’s alleged contract with the Ecuadorian plaintiffs. It also affirmed the district court’s decision not to issue a declaratory judgment that Patton Boggs had no conflict of interest in representing the Ecuadorian plaintiffs in any court in the country.

Chevron is pleased with the decision unanimously upholding the lower court’s dismissal of Patton Boggs’ meritless claims. This is now the fourth time that a court has rejected Patton Boggs’ unfounded contentions. This frivolous suit was filed solely as an attempt to divert attention from the mountain of evidence demonstrating the fraudulent nature of the Ecuador case Patton Boggs has decided to support.

See the previous decisions here, here and here.

Permanent Court of Arbitration Panel Establishes Jurisdiction Over Claims Against Republic of Ecuador

Chevron Corp. (NYSE: CVX) today announced that an international arbitration tribunal, convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty (the “BIT”) and administered by the Permanent Court of Arbitration at The Hague, ruled that it has jurisdiction to hear Chevron’s claims against the Republic of Ecuador. Chevron filed its request for arbitration in 2009, claiming that the Republic violated its obligations under the BIT and international law.

Chevron’s arbitration claim stems from the government of Ecuador’s exploitation of the ongoing environmental lawsuit against the company in Ecuador and its courts’ failure to administer justice in a trial that has been marred by fraud. Additionally, Chevron maintains that the government of Ecuador has failed to uphold prior settlement and release agreements that the government of Ecuador entered into with Texaco Petroleum Company (now a Chevron subsidiary) when the consortium between Texaco Petroleum and Petroecuador was terminated.

“With today’s decision, Chevron will proceed to the merits of its arbitration to hold Ecuador responsible for the fraud being committed through its judicial system. The documentary and video evidence of that fraud is irrefutable. The dysfunction of Ecuador’s judiciary is well documented in both the Lago Agrio case and the recent El Universo case involving a ghostwritten judgment against journalists,” said Hewitt Pate, Chevron vice president and general counsel. “Rather than allow American plaintiffs’ lawyers to cause even more damage for which Ecuador may ultimately be held responsible, the Republic should take this opportunity to pursue a more constructive course.”

Chevron’s claim will now proceed to the merits phase of the arbitration. In prior rulings, the tribunal has put the Republic on notice that if Chevron’s arbitration ultimately prevails, “any loss arising from the enforcement of (the Lago Agrio judgment) may be losses for which the (Republic) would be responsible to (Chevron) under international law.”

On Feb. 16, 2012, the tribunal issued a Second Interim Award ordering the Republic of Ecuador—and all of its branches, including the judiciary—to prevent enforcement and recognition of the $18.2 billion Lago Agrio judgment, both within and without Ecuador. The award expands upon a prior award requiring Ecuador to “take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment.”

In August 2011, a different international arbitration tribunal convened under the BIT awarded Chevron and Texaco Petroleum $96 million in a claim against the Republic of Ecuador related to past oil operations. The tribunal found that Ecuador’s courts violated the BIT and international law through their decade-long delays in ruling on certain commercial disputes between Texaco Petroleum and the Ecuadorian government.

The tribunal’s decision on jurisdiction may be accessed here. A copy of Chevron’s 2009 arbitration claim may be accessed here.

Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company is involved in virtually every facet of the energy industry. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and lubricants; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

In the past week, there have been notable developments in the various Ecuador cases: the international tribunal hearing Chevron’s arbitration claim issued a Second Interim Award directing the Republic of Ecuador and all of its branches—including the judiciary—to prevent the Lago Agrio judgment from being enforced, Chevron’s RICO claims  were restarted, and Chevron’s appeal is advancing to Ecuador’s National Court of Justice.  The appellate court in Lago Agrio also declined Chevron’s request to suspend the bond requirement and declined to abide by the tribunal’s First Interim Award instructing the Republic to take measures to prevent enforcement.  And while these events have been widely covered, there are additional aspects to the overall Ecuador story worth noting:

  • Impact of the Second Interim Award: While the Sucumbíos court has defied the First Interim Award issued by the international tribunal, it did not address the Second Interim Award issued on February 16.  It remains to be seen what the Republic will do to comply with the tribunal’s Award, but the tribunal has put Ecuador on notice that if Chevron is ultimately successful in its arbitration, the Republic may ultimately be liable for any damages Chevron incurs.
  • The President’s Control of Ecuador’s Judiciary: The world was given a vivid example of corruption in Ecuador courts last week when Ecuador’s National Court of Justice upheld President Correa’s $40 million award and confirmed a three-year prison sentence for three directors and a journalist from El Universo—for criticizing President Correa.  “The handling of the case by the judiciary was,” in the words of the Washington Post, “alas, worthy of a banana republic.  After four changes of judge, a ‘temporary’ magistrate took over the case, held one hearing, and—33 hours after his appointment—issued the 156-page ruling.  A subsequent independent investigation determined that he did not write it, and that the author was probably Mr. Correa’s attorney.”
  • Ghostwriting of the Lago Agrio Judgment: The case against Chevron is similarly fabricated and illegal under Ecuadorian law.  The plaintiffs’ own documents reveal that they secretly wrote a report by a purportedly “independent” court expert upon which the judgment is based, and then ghostwrote the judgment itself, all the while admitting internally that the evidence did not support their allegations and that they could “all go to jail” if their wrongdoing was revealed.  The plaintiffs’ lawyers have never provided an explanation as to how their internal work product found its way into the Lago Agrio judgment.
  • Enforcement: The plaintiffs’ representatives have repeatedly stated that they intend to proceed with enforcement of their fraudulent judgment around the world.  Yet, contrary to past assertions, the plaintiffs’ representatives are cooling to the idea of enforcement in the U.S.  Perhaps that’s because seven federal courts that have found the plaintiffs’ representatives engaged in fraud during the Lago Agrio trial.  That theory is reinforced in the plaintiffs’ lawyers’ Invictus strategy memo suggesting the most efficient approach is to focus on countries that don’t have the authority to consider doubts about “the integrity of the rendering court.”  The memo also discusses a preference to keep any funds recovered “outside the reach of Ecuadorian law.”
  • Collusion with the Government: While the plaintiffs’ lawyers don’t seem to trust Ecuador with their money, they’ve happily solicited the government’s interference with “Ecuador’s independent courts.”  A 2007 e-mail between the plaintiffs’ spokeswoman in Ecuador and lead American lawyer Steven Donziger recaps a meeting the plaintiffs’ representatives held with President Correa, the Attorney General, and the Minister of the Environment.  The report to Donziger relays that the President “asked the Attorney General to do everything necessary to win the trial” and stated that the President “would call the judge” presiding over the case.  According to the e-mail, the President gave the plaintiffs “fabulous support.”

The plaintiffs’ lawyers’ documented fraud and the acknowledged interference of Ecuador’s government long ago compromised the integrity of the Lago Agrio trial.  But these facts raise a new set of questions.  If the plaintiffs’ lawyers had confidence in their judgment, why wouldn’t they seek to enforce it in the U.S.?  Likewise, if there was merit to their case, why engage in fraud?  Finally, does attempting to enforce a fraudulent judgment in a new jurisdiction constitute another fraud on a new court?

The answers appear self evident but it seems the plaintiffs’ representatives have evaded answering these questions so far.  It would be interesting to know what they have to say.

Yesterday an international arbitration tribunal issued a Second Interim Award ordering Ecuador to prevent enforcement and recognition of the $18.2 billion Lago Agrio judgment, both within and without Ecuador. The tribunal, convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty (the “BIT”) and administered by the Permanent Court of Arbitration at The Hague, is considering the claims of Chevron Corporation and TexPet (a Chevron subsidiary) that Ecuador has breached its obligations under the BIT and international law through the Lago Agrio litigation, the resulting judgment, and the appellate decision upholding the judgment.

“Both Chevron and the Republic of Ecuador benefit from today’s award, which upholds the rule of law and prevents enforcement of the fraudulent Lago Agrio judgment. Chevron welcomes the constructive steps that Ecuador has recently taken, such as the announcement that Petroecuador will remediate sites impacted by oil production and the acknowledgement that the tribunal’s Award applies to all branches of the Ecuadorian State,” said Hewitt Pate, Chevron vice president and general counsel. “We will continue to seek opportunities for constructive discussion with the Republic of Ecuador to resolve this pending BIT arbitration. Rejecting the fraudulent claims and misconduct of the corrupt American plaintiffs’ lawyers is the best way to end the harm they are causing to the people and reputation of Ecuador.”

The Second Interim Award directs the Republic of Ecuador, including “its judicial, legislative, or executive branches” to “take all measures necessary to suspend or cause to be suspended the enforcement and recognition within and without Ecuador” of the Lago Agrio judgment. In particular, the tribunal states that these measures must “preclude any certification” by Ecuador or its courts that would cause the judgment to become enforceable (referring to a procedural step in Ecuador in which a party must obtain a certification from the courts in order to enforce a judgment). Yesterday’s Award is “immediately final and binding” on the parties and Chevron will promptly post a $50 million bond required by the tribunal. The Award expands on the tribunal’s prior Interim Measures Order dated February 9, 2011 and First Interim Award dated January 25, 2012, which remain in effect.

The tribunal’s Second Interim Award can be accessed at http://www.chevron.com/ecuador/ .

Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company’s success is driven by the ingenuity and commitment of its employees and their application of the most innovative technologies in the world. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com .

Filing Asks National Court of Justice to Review and Overturn Appellate Judgment

Chevron Corporation today announced that it has filed an appeal seeking review by Ecuador’s National Court of Justice of the adverse appellate judgment issued against the company in early 2012 by a panel of three temporary judges in the environmental lawsuit in Ecuador.

“Today’s appeal gives the National Court of Justice an opportunity to correct the grave injustices that have occurred in this case.”

Chevron’s appeal, called a petition for cassation, details multiple legal grounds for reversal of the January appellate court decision. The appeal establishes that the lower courts violated the Ecuadorian constitution by refusing to take any corrective action in response to the extensive fraud and corruption committed by plaintiffs’ lawyers and their representatives. The filing goes on to outline several other fundamental points, including: that the lower court’s judgment is unlawfully premised on fraudulent and scientifically baseless evidence; that the judgment is illegally based upon the retroactive application of law; that it ignores the releases of liability granted to Texaco Petroleum Co. (Tex Pet) by the government of Ecuador following a cleanup of Tex Pet’s share of remediation sites in the 1990s; and that the judgment awarded punitive and other damages never requested in plaintiffs’ complaint and not allowed under Ecuadorian law.

“Throughout the course of this litigation, judges corruptly operating in concert with the plaintiffs’ lawyers have created, rather than corrected, injustice,” said Hewitt Pate, Chevron vice president and general counsel. “Today’s appeal gives the National Court of Justice an opportunity to correct the grave injustices that have occurred in this case.”

In addition to the cassation appeal filing today, Chevron continues to seek recourse through legal proceedings outside of Ecuador. In the arbitration proceedings Chevron instituted against Ecuador in The Hague under the U.S.-Ecuador Bilateral Investment Treaty (BIT), the Tribunal issued an order on February 9, 2011, requiring Ecuador to take all measures at its disposal to suspend enforcement of the Lago Agrio judgment until further order of the Tribunal. The Tribunal also recorded that if it were established that any judgment made by an Ecuadorian court in the Lago Agrio case was a breach of an obligation Ecuador owed to Chevron as a matter of international law, any loss arising from the enforcement of such judgment (within and without Ecuador) may be losses for which Ecuador would be responsible to Chevron under international law.

Based on the Tribunal’s order, Chevron has asked that the Ecuadorian appellate court take all steps to suspend enforcement of the Lago Agrio judgment until further order of the Tribunal, including suspension of any requirement that Chevron post a bond to prevent enforcement of the judgment during the cassation appeal. Any demand that Chevron post a bond in this case would be a violation of Ecuador’s international obligations under the order of the BIT Tribunal, and Chevron has no obligation to post such a bond.

The plaintiffs have indicated that they will seek to have Ecuador defy the BIT Tribunal’s order by pursuing enforcement of the corrupt judgment outside of Ecuador before the BIT Tribunal has an opportunity to review the merits of the case. In the event the plaintiffs carry through on their threats to file enforcement actions against Chevron affiliates in other countries, Chevron will take appropriate steps to defend against this fraud.

Chevron also is pursuing an action in the U.S. District Court for the Southern District of New York against the Lago Agrio plaintiffs’ representatives for violations of the federal racketeering statute, common-law fraud and other relief based upon the overwhelming evidence of their fraud and corruption.

A copy of Chevron’s cassation appeal can be accessed here.

Chevron Corporation today announced there has been an adverse ruling by the panel of three temporary judges presiding over appellate proceedings in the Provincial Court of Justice of Sucumbios in Lago Agrio, Ecuador in an environmental lawsuit involving Texaco Petroleum Company, upholding a lower court’s ruling from February 2011.

Chevron continues to seek recourse through legal proceedings outside of Ecuador. In the arbitration proceedings Chevron instituted against Ecuador in The Hague under the U.S.-Ecuador Bilateral Investment Treaty, the Tribunal issued an order on February 9, 2011 requiring Ecuador to take all measures at its disposal to prevent enforcement of the Lago Agrio judgment until further order of the Tribunal. The Tribunal also recorded that if it were established that any judgment made by an Ecuadorian court in the Lago Agrio case was a breach of an obligation Ecuador owed to Chevron as a matter of international law, any loss arising from the enforcement of such judgment (within and without Ecuador) may be losses for which Ecuador would be responsible to Chevron under international law. Chevron also is pursuing an action in the U.S. District Court for the Southern District of New York against the Lago Agrio plaintiffs’ representatives for violations of the federal racketeering statute, common-law fraud, and other relief based upon the overwhelming evidence of their fraud and corruption.

In response to the ruling, Chevron issued the following statement:

“Today’s decision is another glaring example of the politicization and corruption of Ecuador’s judiciary that has plagued this fraudulent case from the start. The Lago Agrio judgment was procured through a corrupt and fraudulent scheme, much of which was captured on film and memorialized in the plaintiffs’ representatives’ own emails and correspondence. Their misconduct includes fabricating expert reports, manufacturing evidence, bribing and colluding with court officials, waging a campaign of intimidation against judges, and even ghostwriting parts of the verdict itself.

“Evidence of these crimes has been provided to Ecuador’s courts and prosecutors, but authorities there have taken no corrective actions. In the United States, however, no less than eight federal judges have found that the trial in Ecuador has been marred by the fraud and misconduct of the plaintiffs’ representatives. And an international Tribunal presiding in the Permanent Court of Arbitration in The Hague has ordered Ecuador to take all measures at its disposal to suspend enforcement of the Lago Agrio judgment within and without Ecuador.

“Chevron does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law. The company will continue to seek to hold accountable the perpetrators of this fraud.”

Background:

Chevron is defending itself against false allegations that it is responsible for environmental and social harms in the Amazon region of Ecuador. Chevron has never conducted oil production operations in Ecuador, and its subsidiary, Texaco Petroleum (TexPet), fully remediated its share of environmental impacts arising from its participation in an oil producing consortium with Petroecuador prior to 1992. After the remediation work was certified by all agencies of the Ecuadorian government responsible for oversight, TexPet received a complete release from Ecuador’s national, provincial and municipal governments prior to being acquired by Chevron in 2001. Petroecuador was the majority owner of the consortium in which TexPet participated until 1992 and has been the sole owner of greatly expanded oil operations in the former concession area over the past two decades. Last month, Petroecuador announced it will complete its remediation of the sites it is responsible for at a cost of $70 million. This figure stands in contrast to the multi-billion dollar judgment affirmed today.

Company Submits Evidence of Fraud and other Crimes to Ecuador’s Prosecutor General

Chevron Corporation today published a letter submitted to Galo Chiriboga, Ecuador’s Prosecutor General, documenting evidence of fraud and corruption in the litigation against Chevron in Ecuador.  The company called on Ecuadorian authorities to investigate the misconduct of the plaintiffs’ lawyers and the presiding judge, Nicholas Zambrano, in the drafting of the fraudulent judgment rendered against Chevron earlier this year.

Chevron submitted evidence showing that plaintiffs’ representatives—including Steven Donziger, Pablo Fajardo, Juan Pablo Sáenz, Julio Prieto, and Luis Yanza—covertly worked with Judge Zambrano to draft the judgment.  The letter states that the fraudulent conduct “is causing serious, ongoing harm to Chevron Corporation and to the Republic of Ecuador.”

“To date, the plaintiffs’ representatives have failed to offer any explanation for how their internal, never-filed documents came to appear in the fraudulent Lago Agrio judgment,” said Hewitt Pate, Chevron vice president and general counsel.  “Nor has the Judge explained how the plaintiffs’ private work came to be included in the decision bearing his name.  In the interest of justice and due process, it is incumbent upon the authorities in Ecuador to investigate the full extent of this misconduct.”

There is substantial and unrefuted evidence that the judgment against Chevron is fraudulent. The evidence provided to the Prosecutor General includes:

  • The judgment copies exact language from a June 2009 email that Fajardo sent to Donziger, Sáenz, and Prieto.  The body of the email includes a short memo from a not-yet identified third party and a “transcri[ption]” of a published Ecuadorian court opinion.  That “transcription” contains numerous mistakes not found in the published court opinion itself.  The judgment repeats all of these mistakes, exactly, as well as a citation error Fajardo made in his email.
  • The judgment also refers to several test samples by names that are not found in the record, but rather in private spreadsheets created by the plaintiffs, which contain information from the plaintiffs’ own database.  The judgment replicates errors contained in the plaintiffs’ database and replicates errors in the database attributing data to the wrong experts and confuses measurement units.
  • The judgment contains language from a private memorandum authored by plaintiffs’ attorney Juan Pablo Sáenz and other members of plaintiffs’ legal team around November 2007 regarding a Chevron subsidiary’s merger with Texaco.  No fewer than fifteen instances, significant portions of the Sáenz memorandum, including entire sentences, appear verbatim or nearly verbatim in the judgment.

Much of this evidence is corroborated by expert analyses commissioned by Chevron that found the similarities between the plaintiffs’ documents and the judgment are too great to be coincidence, and concluded that either plaintiffs wrote at least part of the judgment, or the author(s) of the judgment had access to documents prepared by the plaintiffs’ representatives and lawyers that were never submitted during the trial.

“This evidence raises disturbing questions about who is really behind the Lago Agrio judgment,” added Pate.  “This is just the latest chapter in an established pattern of fraud being carried out by plaintiffs’ lawyers and their representatives.”

In addition to the letter, Chevron has submitted corresponding evidence including video outtakes, emails, and other documents to prosecutors in Ecuador.

Chevron Corporation today released the following statement from Hewitt Pate, vice president and general counsel, regarding the recent announcement by Ecuador’s state oil company, Petroecuador, that the company will complete its remediation of the sites it is responsible for under a 1995 agreement entered into with Texaco Petroleum Co. (TexPet) at the conclusion of an oil-producing consortium:

“Chevron welcomes Petroecuador’s announcement that it will remediate the remaining sites it is responsible for under the remediation agreement. Petroecuador’s $70 million remediation budget, which covers an area larger than that of TexPet’s remediation, is within a reasonable cost range under U.N. standards. This figure stands in contrast to the multi-billion dollar claim fabricated by American plaintiffs’ lawyers to extort money from Chevron through a ghost-written judgment.

“The Ecuadorian government deserves credit for taking positive steps to help the people and environment of the Oriente and to break the cycle of corruption and misinformation caused by the fraudulent case against Chevron.

“Petroecuador’s remediation should be completed without further interference, and the perpetrators of the fraudulent litigation — who have lobbied to delay the remediation — should be brought to justice. Chevron would welcome a constructive dialogue with the government of Ecuador on both topics.”

Chevron has filed in the U.S. District Court for the Southern District of New York a motion for attachment, seeking to prevent the Lago Agrio plaintiffs, lawyers, and financiers from collecting and dissipating monies based upon the fraudulent judgment that they have obtained through collusion with a corrupt Ecuadorian court. This motion relates to Chevron’s fraud and RICO claims against those pursuing sham environmental claims against it.

In a separate proceeding, Chevron awaits the opinion of the Court of Appeals for the Second Circuit with respect to its suit seeking a declaration that the fraudulent judgment is unenforceable.

The motion for attachment can be downloaded here.

On October 7, 2011, Chevron submitted to the office of the New York State Comptroller a request under New York’s Freedom of Information Law (FOIL) for documents regarding connections between the Comptroller’s office and plaintiffs’ representatives. Chevron is seeking documents under FOIL in order to shed further light on the assistance provided by Comptroller DiNapoli and his predecessor, Alan Hevesi, to the plaintiffs’ lawyers and consultants involved in the fraudulent litigation against Chevron. Documentary evidence obtained through U.S. court-ordered discovery reveals a connection between financial contributions made by the Lago Agrio plaintiffs’ representatives and the Comptroller’s issuance of official public statements in support of the plaintiffs.

A copy of Chevron’s FOIL request may be downloaded here along with supporting documentation at here and here.

Additional documents from Chevron’s court filings that detail the relationship between New York elected officials and the plaintiffs’ representatives can be found here:

[FAC Ex. EW] WOODS-HDD-0091355.pdf
[FAC Ex. EX] DONZ-HDD-0099646.pdf
[FAC Ex. EY] DONZ00030903.pdf
[FAC EX. CZ] WOODS-HDD-0101539.pdf
[FAC Ex. DV] Tab – 14.pdf
[FAC Ex. DW] Tab – 17.pdf
[FAC Ex. EC] Tab – 13.pdf
[FAC Ex. ED] Tab – 01.pdf
[FAC Ex. EE] Tab – 02.pdf
[FAC Ex. EQ] DONZ00095954.pdf
[FAC Ex. EV] WOODS-HDD-0101564.pdf

This past weekend, Australia’s Channel 7 program Sunday Night ran a biased and misleading report on the long-running lawsuit against Chevron in Ecuador. The story was solicited by Zoe Tryon, an activist associated with the lawyers suing Chevron, who is featured prominently in the segment making a series of outright false statements. In email correspondence produced pursuant to a court-ordered subpoena, Ms. Tryon told the plaintiffs’ lead U.S. lawyer, Steven Donziger, that she had approached Channel 7 reporter Mike Munro to do the story because he was a “great friend” of her family, and that she could “vouch for [Munro and his producer] completely.” As might be expected under such circumstances, the report was sensationalized, biased, and factually inaccurate.

The Channel 7 program omitted key information that was made available to Channel 7. Texaco Petroleum Company held only a 37.5% interest in the consortium in Ecuador while state-owned Petroecuador owned 62.5%. At the end of its participation in 1992, Texaco Petroleum fully remediated its contractual share of environmental impacts in a program approved by all pertinent local, provincial and national authorities in Ecuador. All remaining impacts are the legal responsibility of Ecuador’s government and its national oil company, Petroecuador, which has been the sole owner and operator of greatly expanded operations in the region for the past two decades.

At Chevron’s request, many of the world’s top toxicologists, epidemiologists, ecologists, anthropologists and geoscientists have considered the evidence, including more than 1,500 environmental samples, and have concluded that there is no scientific support for plaintiffs’ claims of social, health and environmental harms caused by the operations in which Texaco Petroleum participated prior to 1992.

The program included only a highly edited and improperly juxtaposed interview with Chevron’s spokesman in Ecuador, and made no effort to fact check information supplied by Ms. Tryon or the plaintiffs’ lawyers with Chevron. On many occasions, Chevron attempted to convey the facts of the case [see here and here] and bring evidence of the plaintiffs’ lawyers’ fraud and misconduct to the attention of Channel 7, only to be rebuffed at every turn. There is overwhelming evidence that the plaintiffs’ lawyers have engaged in a fraudulent scheme in Ecuador. They ghostwrote the official damages report of a court-appointed expert who was supposedly neutral but actually was hand-selected by the plaintiffs’ lawyers and clandestinely paid from a “secret account,” and submitted other fraudulent expert reports presenting false findings of contamination that were contrary to those their expert testified he actually reached. Evidence showing that the plaintiffs’ attorneys went so far as to ghostwrite significant portions of the judgment issued by the Ecuadorian court in February remains undisputed by the plaintiffs and unmentioned by Channel 7. The facts uncovered regarding this massive litigation fraud have been covered by major media outlets for over a year, and U.S. federal courts have recognized the overwhelming evidence of fraud marring the case, remarking that “what has blatantly occurred in this matter would in fact be considered fraud by any court” and “there is ample evidence of fraud in the Ecuadorian proceedings.”

The network’s lack of interest in the facts of the case and in the fraud findings of court after court made sure that the program would not be objective, let alone accurate or even relevant to the ongoing dispute. A transcript of the questions posed to Chevron by Mr. Munro can be found here, together with a side-by-side presentation of information responding to his assertions. As one can see, the interviewer was poorly informed about the facts of the case and instead was simply repeating the plaintiffs’ lawyers’ baseless and fraudulent claims.

It is disappointing that Channel 7 failed to develop a basic understanding of the case and allowed misinformation to shape its reporting. We remain confident, however, that objective observers of the Ecuador litigation will come away with a different point of view. For instance, they may well be interested to know that eight different U.S. federal judges have found evidence of fraud by the plaintiffs’ lawyers in connection with the trial in Ecuador and that, after extensive hearings, an international tribunal presiding in the Permanent Court of Arbitration in The Hague ordered Ecuador to suspend any enforcement of the Lago Agrio judgment. It was facts like these that Sunday Night knowingly withheld from its viewers.

The Channel 7 story also ignored Chevron’s strong environmental record in Australia. Chevron is proud of its environmental record in Australia. We have demonstrated our commitment to environmental stewardship through our management of the Western Australia (WA) oil asset on Barrow Island for the past 45 years, and we will continue to do so with the Gorgon and Wheatstone projects.

Barrow Island has been recognized internationally as an outstanding example of the coexistence of industry and the environment on a Class A nature reserve while contributing to the economic well-being of the WA community. Our quarantine management system was acknowledged by the Western Australian Environmental Protection Authority as world class and was recently awarded a prestigious WA engineering award.

Chevron Australia is committed to maintaining the island’s biodiversity and conservation values while making an even bigger contribution to Western Australia’s economic growth and well-being in the future. For more information on Chevron in Australia, please visit: http://www.chevronaustralia.com/home.aspx

The United States Court of Appeals for the Second Circuit today issued an order denying the Ecuadorian plaintiffs’ attempt to recuse Judge Lewis Kaplan, vacating Judge Kaplan’s preliminary injunction against enforcement of the Ecuadorian judgment against Chevron, and staying Chevron’s claim for a declaratory judgment that the Ecuadorian judgment is unenforceable.

In denying the Ecuadorian plaintiffs’ mandamus petition, the Second Circuit rejected accusations that Judge Kaplan is biased and refused to recuse him or otherwise reassign the case. The Second Circuit vacated the preliminary injunction after receiving on September 16, 2011 a written representation from the Ecuadorian plaintiffs’ lawyers that they would not attempt to enforce the Ecuadorian judgment during the pendency of the first instance appeal in Ecuador — a promise the Ecuadorian plaintiffs repeatedly refused to make to the trial court before and since the preliminary injunction first issued. Chevron’s lawsuit against the Lago Agrio plaintiffs and their representatives for violations of the federal RICO statute, common law fraud, and other laws will continue. Chevron’s claims are supported by overwhelming evidence — documented in the Ecuadorian plaintiffs’ lawyers’ own documents and in their lawyers’ own statements caught on videotape — that the Lago Agrio plaintiffs’ lawyers made corrupt payments to an Ecuadorian court official from a secret bank account, forged expert reports that were submitted in the name of court experts and contained fraudulent data, and even participated in the fraudulent drafting of the Ecuadorian court’s judgment. There is no legitimate evidence supporting any finding of liability against Chevron because Texaco Petroleum Company cleaned up its share of environmental impacts in Ecuador and the remaining impacts are the responsibility of the government of Ecuador and its state-owned oil company, Petroecuador.

Chevron is disappointed that the trial scheduled for November has been stayed, but remains committed to its consistent goal — obtaining judicial review on the merits of the Ecuadorian plaintiffs’ lawyers’ fraud before they are allowed to attempt enforcement of the Ecuadorian judgment. Chevron remains confident that once the full facts are examined, the fraudulent judgment will be found unenforceable and those who procured it will be required to answer for their misconduct.

The Second Circuit’s order has no effect on the February 9, 2011 Order for Interim Measures issued by the Bilateral Investment Treaty Arbitration Tribunal presiding over Chevron’s claims against Ecuador in the Permanent Court of Arbitration in The Hague. The Treaty Arbitration Tribunal’s order continues to require Ecuador to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment against Chevron in the Lago Agrio case pending further order of the Tribunal.

International Tribunal Finds Ecuador Courts Failed to Administer Justice

An international arbitration tribunal has awarded Chevron Corporation and Texaco Petroleum Company $96 million in a claim against Ecuador related to past oil operations by Texaco Petroleum, which is now a Chevron subsidiary. The tribunal, administered by the Permanent Court of Arbitration in The Hague, found that Ecuador’s courts violated international law through their significant delays in ruling on certain commercial disputes between Texaco Petroleum and the Ecuadorian government. The final award also takes into account taxes, compound interest, and costs associated with the preliminary award announced in March 2010.

Chevron and Texaco Petroleum filed the international arbitration case in December 2006 under the Rules of the United Nations Commission on International Trade Law (UNCITRAL). The Permanent Court of Arbitration is an intergovernmental organization with over one hundred member countries established by international convention in 1899 to facilitate arbitration and other forms of dispute resolution. The United States acceded to the Court’s founding convention in 1900 and Ecuador acceded in 1907.

The decision by the arbitration tribunal resolves seven commercial claims that Texaco Petroleum filed in Ecuador between 1991 and 1993. Ecuadorian courts continually delayed and refused to rule on the seven cases, which the tribunal determined was a violation of Ecuador’s obligation under its Bilateral Investment Treaty with the United States to provide effective means for U.S. investors in Ecuador to assert claims and enforce their rights.

“This ruling confirms that Ecuador can be held accountable for its obligations under international law,” said Hewitt Pate, Chevron vice president and general counsel. “Since Ecuador’s politicized court system has failed to provide impartial tribunals and due process, Chevron has had to seek international remedies. Chevron will continue to pursue enforcement of the agreements entered into by Ecuador and its state-owned oil company, Petroecuador, when they were members of a producing consortium with Texaco Petroleum.”

The Treaty arbitration tribunal is not alone in highlighting the Ecuadorian courts’ failure to provide justice. In April 2011, the United States Department of State released its human rights report for Ecuador which states, “The media reported on the susceptibility of the judiciary to bribes for favorable decisions and resolution of legal cases and on judges parceling out cases to outside lawyers, who wrote the judicial sentences and sent them back to the presiding judge for signature.” Likewise, the World Bank’s latest Worldwide Governance Indicators ranked Ecuador below the 10th percentile of all countries surveyed with respect to the rule of law, placing it behind North Korea.

Recent events in Ecuador demonstrate the continuing deterioration and political subjugation of the justice system there:

  • After a leading Ecuadorian newspaper, El Universo, ran an opinion column critical of President Rafael Correa, an Ecuadorian judge–at Correa’s insistence–sentenced three newspaper executives and the columnist to jail for three years and fined the newspaper $40 million.
  • According to The Economist, “It took Juan Paredes, replacing the intended judge who was on holiday, less than two days to read through the case’s 5,000-page file” and issue the ruling. President Correa personally attended the hearing, “accompanied by a small crowd of supporters that pelted the defendants and their lawyers with eggs and bottles outside the courthouse. The media were barred from attending.” International observers, including Human Rights Watch, called the ruling “a major setback for free speech in Ecuador.”
  • President Correa’s Legal Secretary, Alexis Mera, issued an official proclamation, “by order of the Constitutional President of the Republic,” requiring Ecuadorian Government ministries to immediately file suits for damages holding any judge who enjoins Government projects personally liable if their injunctions are subsequently overturned by a higher court.

Patton Boggs, one of the law firms purporting to represent the Lago Agrio plaintiffs, and a named co-conspirator in Chevron’s RICO case, has lost another court decision. The firm claimed that Chevron and its law firm, Gibson Dunn, as a result of their success in U.S. courts, have interfered with Patton Boggs’s relationship with its alleged clients.

Judge Henry H. Kennedy, Jr. of the District Court in the District of Columbia dismissed a previous Patton Boggs complaint filed against Chevron, stating “Patton Boggs misunderstands the law.”  On Friday, Judge Kennedy denied their motion to reconsider the dismissal of its complaint. He writes that “Patton Boggs’s argument is a day late and a dollar short.”

Click here to read Judge Kennedy’s order.

Chevron has submitted new filings in the U.S. Court of Appeals Second Circuit which further expose fraud and misconduct by the plaintiffs’ legal team:

– Two forensic linguistics specialists, Robert A. Leonard, Ph.D and Professor M. Teresa Turell, Ph.D, uncover irregular writing patterns in the verdict which indicate plagiarism. Leonard writes that “portions of the Sentencia are plagiarized from Plaintiffs’ unfiled work product.” Read Leonard’s exhibit 11 and Turell’s exhibit 13. Read the declaration which outlines each of the exhibits Chevron submitted.

Gerald R. McMenamin uncovers evidence of fraud in the report of the supposed “independent expert” Richard Cabrera. He writes that “there is substantial external linguistic evidence that Cabrera is not the author of the Cabrera Report or Supplemental Report attributed to him.” Read his exhibit 15 here.

– A brief that Chevron filed in support of the injunction which bars enforcement of the Ecuador judgment further exposes the trial lawyers’ extortion plot.

According to Chevron’s brief filed yesterday, the plaintiffs’ legal team is “painting a false picture of the proceedings [and] in the process smearing a highly respected federal judge” who issued the injunction which bars enforcement of the judgment. Read Chevron’s brief here.

The brief adds that behind the lawsuit are “nearly 100 lawyers throughout the country, who cannot help but be motivated by their contingent pieces of an $18.2 billion judgment” and that “numerous other courts – and an international bilateral investment treaty arbitration tribunal – have ruled in Chevron’s favor…citing uncontroverted evidence of fraudulent conduct.”

Document Summary:
Chevron brief opposing Lago Agrio Plaintiffs’-Donziger stay motions
Declaration of Randy Mastro in support of Chevron’s brief
Exhibits 1-10
Exhibits 11-12
Exhibits 13-20
Exhibits 21-27

A diverse coalition has filed a series of amicus briefs stating their support for the injunction blocking enforcement of the judgment against Chevron in Ecuador.

Briefs have been filed by: The U.S. Chamber of Commerce, the Business Roundtable – joined by a distinguished group of international law scholars, the National Association of Manufacturers and the National Foreign Trade Council, Dow Chemical Company, Shell Oil Company, and Dole Food Company, Inc., and the Washington Legal Foundation – an organization dedicated to maintaining the integrity of the judicial process.

In defense of that injunction, they write that:

  • Injunctions are widely recognized by civil and common law countries as a reasonable method of preventing the enforcement of fraudulent judgments.
  • The U.S. judge did not abuse his discretion when he issued a preliminary injunction after being presented with credible evidence of an imminent plan to utilize an “unlawfully procured foreign judgment” to freeze the worldwide assets of a U.S. corporation in order to extort a settlement.
  • Steven Donziger and the other Appellants have not only abused the Ecuadorian court system, but are attempting to disable U.S. courts from preventing that abuse from spreading to courts worldwide.
  • The Ecuador case is an example of litigation in a judicial system that has become so politicized and corrupt that it no longer provides a forum for impartial adjudication of disputes.
  • There are woeful shortcomings of the Ecuadorian court system.

Click here to read summaries of each brief and find links to the court filings.

Chamber of Commerce

In its amicus brief, the Chamber of Commerce of the United States of America argues that Judge Kaplan did not abuse his discretion when he issued a preliminary injunction after being presented with credible evidence of an imminent plan to utilize an “unlawfully procured foreign judgment” to freeze the worldwide assets of a U.S. corporation in order to extort a settlement. Noting the “deep roots” for the “modern-day American antisuit injunction,” the Chamber of Commerce argues that the Second Circuit should continue to utilize the equitable factors developed in this Circuit and others for evaluating a foreign antisuit injunction action. Br. at 4, 6-8. However, to use the rigid approach urged by Appellants, rather than a functional approach to analyzing these factors, “would create tension within this Circuit’s doctrine, would be inconsistent with the equitable underpinnings of antisuit injunctions and would throw this Circuit out of alignment with the prevailing contemporary view among other federal courts.” Br. at 10-11. In examining the application of these factors to this case, the brief notes that the “evidence provides compelling proof of the need for an injunction to protect Chevron from ‘trumped-up’ multi-billion dollar claims.” Br. at 21 (emphasis in original). Specifically, the Invictus Memorandum cited by Chevron in its district court filings supplies “critical evidence” both that the Appellants “were poised to execute a strategy” that would undermine the ability of the U.S. court to arrive at a final judgment (by extorting a settlement from Chevron) and that “the injunction is necessary to prevent vexatious litigation in foreign forums.” Br. at 21-22.

The Chamber further argues that Appellants’ assertion that the current non-enforcement action is inconsistent with a position Chevron took in the mid-1990s, when it sought to dismiss the Aguinda action filed in New York in 1993 on forum non conveniens grounds, is flawed factually and legally. The Chamber argues that Appellants’ position, if accepted, would create bad policy in the form of perverse incentives for parties to “engage in all sorts of questionable and corrupt behavior to secure a favorable legal result in the foreign forum” following a dismissal on forum non conveniens grounds, just as the Appellants have done here. Br. at 29.

The Chamber of Commerce is represented by Professor Peter B. Rutledge of the University of Georgia School of Law.

Read the amicus brief here


Business Roundtable and International Law Scholars

In their amicus brief, the Business Roundtable, joined by a distinguished group of international law scholars, argue that antisuit injunctions do not violate international law or principles of comity, and that such injunctions are widely recognized by civil and common law countries as a reasonable method of preventing the enforcement of fraudulent judgments. The amici, noting that non-intervention has typically only applied to actions involving “either military force or other physically coercive measures that put pressure on a State to change its practices or policies,” argue that the principle of non-intervention is inapplicable in this case. Br. at 6. The amici explain that, because “[t]he underlying policy [of requiring exhaustion of local remedies] is to give the State an opportunity to remedy any violation before a claim is put forward against it on the international level,” “the invocation of the principle of exhaustion of local remedies is entirely inapposite here,” as the litigation is between two private parties, and not against the State. Br. at 9–10.

The amici further argue that principles of international comity as applied by the Second Circuit, not non-intervention, are most applicable here. Br. at 12. Accordingly, the amici explain that, although “courts are cautious in issuing such injunctions,” the antisuit injunction in this case does not offend principles of international comity because there is no “true conflict” between American law and Ecuadorian law, and adjudication by the district court does not offend “amicable working relationships of other countries;” indeed, no other country has been affected by, or objected to, the district court’s actions. Br. at 13–15.

The amici also observe that jurisdictions around the world widely recognize and accept the use of antisuit injunctions. Br. at 15–29. The amici note that, while “[e]very major common law system . . . authorizes the use of antisuit injunctions to prevent injustice,” courts in civil law jurisdictions typically do not. Br. at 15–16. They do, however, recognize “the use of antisuit injunctions by courts in common law countries to restrain proceedings in civil law countries,” and have thus “developed other tools to achieve the equivalent of an antisuit injunction.” Br. at 16–17. Finally, the amici explain that, although European Union (EU) law prohibits the use of antisuit injunctions between EU member states, it does allow EU member states freedom to recognize such injunctions issued by non-member states. Br. at 27–29.

The Business Roundtable is represented by Professor Roger Alford of Pepperdine Law School. The International Law Scholar amici include: Professor Rudolf Dolzer (Professor of Law and Director, Institute of International Law, University of Bonn); Professor Burkhard Hess (Professor of Law and Executive Director, Institute for Foreign and International Private and Commercial Law, University of Heidelberg); Professor Herbert Kronke (Dean and Professor of Law and Director, Institute for Foreign and International Private and Commercial Law, University of Heidelberg); The Honorable Davis Robinson (Former Legal Adviser to the United States Department of State); Professor Christoph Schreuer (Former President of International Law, University of Vienna, Of Counsel, Wolf Theiss Rechtsanwalte); and Professor Janet Walker (Professor of Law, Osgoode Hall School of Law, York University). They are represented by Professor Julian Ku of Hofstra Law School.

Read the amicus brief here


NAM/NFTC

In their amicus brief, the National Association of Manufacturers and the National Foreign Trade Council explain their strong interest in ensuring the fair and predictable application of legal standards governing anti-foreign-suit injunctions under international law. They emphasize that Steven Donziger and the other Appellants have not only abused the Ecuadorian court system, but are attempting to disable U.S. courts from preventing that abuse from spreading to courts worldwide. They argue that, under the prevailing legal standard, the preliminary injunction currently in place respects the shared jurisdiction of Ecuador and the U.S. over the controversy under international law—known as “concurrent prescriptive jurisdiction”—because the injunction only applies to outside nations known as “bystanders”; it does not purport to enjoin Ecuadorian courts from enforcement. Moreover, they further explain that even under the legal standard articulated by the Second Circuit in the China Trade case that Appellants say they prefer, the district court has already found—correctly—that the applicable test is satisfied because, among other things, the Appellants intend to pursue a vexatious multi-jurisdictional litigation strategy and the S.D.N.Y.’s resolution will be dispositive. Finally, the amici note that principles of international comity do not require U.S. courts to sit on their hands and wait for courts in bystander nations to determine enforcement in the first instance when the United States shares primary jurisdiction over the dispute under international law.

The NAM and NFTC are represented by Joseph Guerra and James Owens of Sidley Austin LLP.

Read the amicus brief here


Dow Chemical, Shell Oil, and Dole

In their brief, amici Dow Chemical Company, Shell Oil Company, and Dole Food Company, Inc., all major international companies in their respective industries, report that they have each faced similar litigation challenges around the world and been subject to suit in the U.S. for events transpiring abroad, including proceedings to enforce judgments entered in foreign courts. As such, each of these corporations has a distinct interest in the meticulous, exacting, and stable application of the doctrine of forum non conveniens and the standard for enforcement of foreign judgments. These companies explain that, given the vitality of international commerce and its ever increasing sensitivity to the effects of foreign judgments, sometimes, as here, totaling in the billions of dollars, the role of the U.S. courts in ensuring that foreign judgments are born of a system embodying the fundamental tenets of due process, impartiality, and fair play is increasingly crucial. The amici further explain that their recent experience in Nicaragua litigating claims alleging injury to farmworkers exposed to the pesticide DBCP is a chilling example of “litigation in a judicial system that has become so politicized and corrupt that it no longer provides a forum for impartial adjudication of disputes.” There, “[t]he poisonous combination of political influence and outright fraud…allowed plaintiffs and their counsel to secure billions of dollars in judgments against U.S. corporations, none of which received meaningful process in the Nicaraguan courts.” Moreover, these amici explain that, for the purposes of a motion under forum non conveniens, a court’s limited, front-end inquiry into the adequacy of a forum as a realistic situs for plaintiff to litigate its claims does not, and cannot, provide assurance that the ultimate judgment produced there will reflect the hallmarks of a true adversary proceeding evidencing adequate due process safeguards and adjudication before an impartial tribunal. These amici also argue that, while the Appellants and their amicus, EarthRights International, would prefer that the Court “conflate two judicial inquiries,” a determination on forum non conveniens grounds is not to be employed as a rubber stamp of approval when it comes to the question of enforcing a foreign judgment in U.S. courts. These amici explain that political winds blow in drastically different directions, often in a short period of time, leading to substantially changed circumstances, including corruption, in many foreign fora. Thus, any meaningful and searching judicial inquiry into whether a foreign judgment is worthy of international recognition must be targeted to the sufficiency of process and impartiality at the time the judgment was rendered. These amici argue that decisions originating in foreign courts should be held to the same standards of fair play and substantial justice as domestic decisions in order to ensure stability, safeguard independence and the rule of law, and promote international comity and reciprocity. These amici, still facing $15 billion in claims pending in Nicaraguan courts today, urge that “where the potential for corruption of judicial officers is significant, the enormous financial stakes make unjust outcomes all but inevitable in the absence of well-established traditions and mechanisms of judicial independence.”

The amici are represented by David W. Ogden, Edward C. DuMont, Jeffrey W. Gutchess, and Patrick F. Philbin.

Read the amicus brief here


Washington Legal Foundation

In its amicus brief, the Washington Legal Foundation (the “Foundation”), an organization dedicated to maintaining the integrity of the judicial process, argues that (1) the anti-suit injunction entered by Judge Kaplan did not violate international comity, (2) this is an appropriate case for declaratory relief, and (3) the Ecuadorian judgment is likely unenforceable under New York’s Recognition Act. The Foundation first argues that comity is not offended where, as here, parties “who do not seriously dispute that they have been engaged in a massive fraudulent exercise” attempt to enforce that judgment. Br. at 6. The injunction in this case “simply prevents Appellants from continuing to engage in their fraudulent scheme” until a trial on the merits. Id. at 7. The Foundation further argues that the district court properly exercised its broad discretion to enter declaratory judgments, because the declaratory judgment will “completely resolve” the dispute in the United States and prevent Appellants from perpetrating their fraud in numerous courts around the world. Id. at 8. Finally, the Foundation argues that, “[g]iven the district court’s numerous findings regarding the woeful shortcomings of the Ecuadorian court system” and the “largely uncontested” findings that “Appellants actively defrauded the Ecuadorian court,” the district court rightly determined that Chevron would succeed in proving that the Ecuadorian judgment is unenforceable under New York’s Recognition Act. Id. at 8-9. Here, the “evidence is overwhelming that the entire proceedings before the Ecuadoran court” were “infected by Appellants’ fraudulent activities.” Id. at 18.

The Washington Legal Foundation is represented by Daniel J. Popeo, Richard A. Samp, and Michael Wilt.

Read the amicus brief here

The following Chevron video is an overview of the recent developments in the case against Chevron in Ecuador. Learn why the judgment against the company is illegitimate and unenforceable. For more information about the Ecuador lawsuit, please visit www.chevron.com/ecuador.

Company submits new evidence of misconduct by plaintiffs’ lawyers and Ecuadorian court in U.S. suit seeking to block enforcement and recognition of fraudulent judgment

Chevron Corporation has filed an amended complaint in its lawsuit in federal court in New York seeking to block enforcement and recognition of a judgment entered against the company in Lago Agrio, Ecuador.  The amended complaint cites newly discovered evidence that the Lago Agrio plaintiffs’ lawyers and consultants, at a minimum, provided clandestine assistance to the Ecuadorian court in drafting the judgment against Chevron.

Through its U.S. discovery efforts, Chevron has obtained previously private files belonging to the Lago Agrio plaintiffs’ lawyers and their co-conspirators.  These files contain numerous and unique errors, large and small, and the same errors and irregularities now appear in the Ecuadorian court’s judgment despite never having been entered into the trial record.

“There is no apparent explanation as to how the judgment would have incorporated these errors and irregularities without cooperation between the Ecuadorian court and the plaintiffs’ representatives,” stated R. Hewitt Pate, Chevron vice president and general counsel.  “This is another instance of the fraud and corruption that have permeated the Ecuadorian judicial proceedings.”

Examples of the overlap between the judgment and the plaintiffs’ private files include:

  • The judgment repeatedly uses an irregular naming scheme for sampling data that is unique to a convention used in the Lago Agrio plaintiffs’ lawyers’ non-public files.
  • The internal files erroneously replace “micrograms” with “milligrams” for certain sample reports, and the judgment makes the same error for the same samples.
  • The Lago Agrio plaintiffs’ lawyers’ private files present data in a manner that can make it appear that certain test results showed the presence of mercury, even though the actual laboratory reports indicate that no mercury was detected.  The judgment incorrectly reports the presence of mercury in these same samples.
  • The judgment repeats errors found in other internal documents prepared by the Lago Agrio plaintiffs’ lawyers and their co-conspirators, including citations to the wrong page in the Ecuadorian court record, and other grammatical and substantive errors.

This latest evidence adds to a record that already has led to fraud rulings against the plaintiffs’ representatives in discovery proceedings before multiple U.S. federal courts over the past year.  The filing of the amended complaint also follows recent notable federal court decisions in New York and Washington, D.C.:

  • On March 7, 2011, Judge Lewis A. Kaplan of the Southern District of New York entered a preliminary injunction barring attempts to enforce the Ecuadorian judgment outside of Ecuador.
  • On April 15, 2011, Judge Kaplan granted Chevron’s motion to bifurcate its claims under Racketeer Influenced and Corrupt Organizations Act (RICO) and other state and federal laws, and set an early trial date on Chevron’s claim seeking a declaration that the Ecuadorian judgment should not be recognized or enforced.
  • On April 18, 2011, Judge Kaplan rejected a request to stay the preliminary injunction, finding that “It is difficult to see any substantial reason to allow the defendants and others bound by the preliminary injunction to prepare to enforce a judgment that the Court already has held they probably never will be permitted to enforce outside Ecuador.”
  • On April 19, 2011, Judge Henry H. Kennedy, Jr. of the District Court in the District of Columbia dismissed a complaint previously filed against Chevron by the law firm Patton Boggs LLP, one of the Lago Agrio plaintiffs’ law firms named as a non-party co-conspirator in the RICO action.  In denying Patton Boggs leave to assert a tortious interference claim against Chevron and its counsel at Gibson Dunn & Crutcher LLP, Judge Kennedy wrote, “Patton Boggs misunderstands the law.”

 

Chevron Corporation has appealed the judgment entered last month against the company by the Provincial Court of Justice of Sucumbíos in Lago Agrio, Ecuador in a lawsuit alleging that Texaco Petroleum Company’s participation in a state-controlled oil consortium prior to 1990 makes Chevron responsible for environmental impacts in the area. In the filing, Chevron details the pattern of fraud by the plaintiffs’ lawyers, supporters and others that has corrupted the trial, as well as the numerous legal and factual defects in the judgment.

In addition to its appeal in Ecuador, Chevron continues to seek recourse through legal proceedings outside of Ecuador. In an arbitration Chevron initiated in 2009 under the U.S.-Ecuador Bilateral Investment Treaty (BIT), a Tribunal in The Hague issued an order on Feb. 9 requiring Ecuador to take all measures at its disposal to prevent enforcement of the Lago Agrio judgment until further order of the Tribunal, including the Tribunal’s final award on the merits. On Mar. 7, the U.S. District Court for the Southern District of New York issued a preliminary injunction against the Lago Agrio plaintiffs, their lawyers, and those in concert with them, barring them from attempting to enforce the Lago Agrio judgment pending resolution by the U.S. court of Chevron’s claims that the Lago Agrio judgment is unenforceable.

Through discovery proceedings in the United States, Chevron obtained thousands of documents that memorialize the plaintiffs’ lawyers’ efforts to pressure judges to rule in their favor, corrupt expert reports, and manufacture evidence.

Chevron’s appeal points to evidence that the plaintiffs’ lawyers falsified data and pressured scientific experts to “find contamination” where none existed. The plaintiffs’ lawyers also procured the appointment of a supposedly neutral “global expert” who was recruited and paid by the plaintiffs’ lawyers to pass off as his own ghostwritten damages report. As this scheme was being exposed through discovery proceedings in U.S. courts, the plaintiffs’ lawyers later attempted to conceal the fraud by hiring another U.S. firm to repackage the data and conclusions under new names. Even though the court claims that it cured this misconduct by not considering the fraudulent “global expert” report, the judgment relies on data and conclusions produced in that report.

As the company states in its appeal, the court ignored the valid scientific evidence. All legitimate expert reports in the case concluded that the areas remediated by Texaco Petroleum Company pose no significant risk of harm to human health or the environment. Besides the evidence of fraud and corruption, Chevron’s appeal sets forth numerous additional grounds for reversal, establishing that the judgment is contrary to the facts and law, including:

  • The court disregarded the effect of prior settlement agreements between Texaco’s subsidiary, Texaco Petroleum Company and the national, provincial and municipal governments of Ecuador, which released Texaco Petroleum Company and its affiliates, including Chevron, from all further environmental liability.
  • The court based its judgment on an unlawful, retroactive application of Ecuador’s Environmental Management Act, which was enacted in 1999, after Texaco Petroleum Company ceased operations in Ecuador and after it was released from all potential liability for environmental impact.
  • The court refused to consider Petroecuador’s responsibility for environmental impacts as the majority owner of the consortium from 1976 to 1992, and as the sole and exclusive owner and operator of greatly expanded operations in the area from 1992 to the present.
  • Disregarding evidence submitted by Chevron, the court instead relied on biased and unreliable evidence submitted by the plaintiffs’ nominated experts — evidence the plaintiffs themselves have admitted is deficient. On multiple occasions, the court claimed that samples showing no contamination provided evidence of contamination, reporting, for example, “alarming levels” of mercury where the cited test results show no mercury was detected.
  • The court awarded $5.396 billion for soil remediation, nearly double the grossly inflated amount in the fraudulent “global expert” report, five to eleven times greater than what plaintiffs’ own specialist proposed, and 171 times higher than the amount Petroecuador estimated was necessary to remediate a larger area.
  • The court awarded $600 million for remediation of claimed groundwater contamination without citing a single sample of groundwater showing oil-related contamination, and ignoring plaintiffs’ repeated admissions that there is no such evidence.
  • The court awarded $1.4 billion for “mitigation measures” to address public health — despite the court’s admission that no individual health problems had been identified, and without providing any basis for the amount of the award. Indeed, the court added an equally arbitrary $800 million for alleged “excess” cases of cancer, even though the court admitted that no individual claims of cancer had been made, and there is no proof in the record of the case showing a cause-and-effect relationship between proximity to oil-producing activities and an increased risk of cancer.
  • The court’s additional award of $8.646 billion unless Chevron issues a public apology is an award of punitive damages, in violation of Ecuadorian law which does not recognize such damages. By imposing this award, the court, in effect, penalized Chevron billions of dollars for exercising its fundamental right to defend itself.

 

The Wall Street Journal writes about the Chevron Ecuador judgment:

http://online.wsj.com/article/SB10001424052748703652104576121941625806096.html?mod=googlenews_wsj

Woody Allen made “Bananas” in 1971 about a South American banana republic, but as a slapstick comedy it’s hard to beat this week’s $8.6 billion judgment against Chevron by a provincial court in Ecuador. The only thing more preposterous than the case is that the plaintiffs want more.

The suit, filed in an Ecuadorian court in Lago Agrio in 2003, charges that Texaco (since merged with Chevron) failed to clean up oil spills from wells it drilled in the 1970s, and thus should be liable for as much as $113 billion. The fact that Texaco cleaned up its sites and was released from liability by the government of Ecuador and state oil company PetroEcuador didn’t stop the plaintiffs, led by attorney Steven Donziger, from concocting a case through legally dubious tactics.

Consider the tale of Richard Cabrera, an ostensibly “neutral” expert for the Ecuadorian court tasked with writing a report to estimate the potential cost of environmental damages for which Chevron could be held accountable, a figure he ventured at $27 billion. (The figure was later inflated further.) Chevron has produced evidence that his findings were shaped in collaboration with Stratus, a Colorado-based environmental consulting firm that was working for the plaintiffs.

Exhibit B is a vast archive of shady remarks in clips and outtakes from “Crude,” a documentary on the case that captures potential misconduct by both the plaintiffs and the government of Ecuador. At one point in the film, Mr. Donziger calls all Ecuadorian judges corrupt and notes that “The only language that I believe this judge is going to understand is one of pressure, intimidation and humiliation. And that’s what we’re doing today.”

In the U.S., four federal courts have already said there is evidence that the behavior of the plaintiffs amounted to fraud. While many corporate defendants settle to avoid headline risk, Chevron has fought back, most recently with a RICO suit against the attorneys and consultants who have been its tormentors.

According to Chevron’s complaint in federal court in New York, the plaintiffs falsified evidence in an attempt to extort a settlement. Egged on by American NGOs that know they can’t prevail in U.S. court, the plaintiffs’ PR campaign targeted investors with scare tactics about Chevron’s potential foreign liability. They demanded investigations by the Securities and Exchange Commission and reached out to the Department of Justice and New York Attorney General Andrew Cuomo to intervene on their behalf. Mr. Cuomo obliged, writing a letter to Chevron CEO David O’Reilly in May 2009.

Last Tuesday, New York federal district judge Lewis Kaplan issued a temporary restraining order that bars the RICO defendants, including Mr. Donziger, from collecting monetary damages anywhere in the world. An arbitration panel at the Hague followed on Wednesday, instructing the Ecuador government to bar enforcement of any judgment pursuant to its Bilateral Investment Treaty with the U.S.

There’s more at stake here than one company’s bottom line. The Ecuador suit is a form of global forum shopping, with U.S. trial lawyers and NGOs trying to hold American companies hostage in the world’s least accountable and transparent legal systems. If the plaintiffs prevail, the result could be a global free-for-all against U.S. multinationals in foreign jurisdictions.

Chevron has no assets in Ecuador and the stock market gave the judgment a collective yawn on Monday, suggesting that few investors expect the plaintiffs will ever pocket the far-fetched billions bestowed by the Ecuador court. We hope the company’s refusal to surrender to lawyers in league with a banana republic sends a message to other aspiring bounty hunters.

Chevron Corporation today announced there has been an adverse judgment from the Provincial Court of Justice of Sucumbíos in Lago Agrio, Ecuador in an environmental lawsuit involving Texaco Petroleum Company.

In response to the ruling, Chevron issued the following statement:

“The Ecuadorian court’s judgment is illegitimate and unenforceable. It is the product of fraud and is contrary to the legitimate scientific evidence. Chevron will appeal this decision in Ecuador and intends to see that justice prevails.

“United States and international tribunals already have taken steps to bar enforcement of the Ecuadorian ruling. Chevron does not believe that today’s judgment is enforceable in any court that observes the rule of law.

“Chevron intends to see that the perpetrators of this fraud are held accountable for their misconduct.”

Chevron Corporation today filed a civil lawsuit under the Racketeer Influenced and Corrupt Organizations Act (RICO) as well as other federal and state laws against the trial lawyers and consultants leading a fraudulent litigation and PR campaign against the company.  Through the lawsuit, Chevron seeks a court declaration that any judgment against Chevron in the Ecuador lawsuit is the result of fraud and therefore unenforceable.  Chevron is also seeking damages associated with the cost of defending the Ecuador litigation.

Chevron’s RICO claim addresses pervasive misconduct relating to the named defendants’ efforts to extort money from Chevron using the pendency of a lawsuit in Lago Agrio, Ecuador, directed and funded by American trial lawyers and their allies.  Chevron’s suit alleges that the named defendants, and certain non-party co-conspirators, have used the Ecuador lawsuit to threaten Chevron, mislead U.S. government officials, and harass and intimidate Chevron employees, all in order to extort a financial settlement from the company.  Among those named in Chevron’s complaint are New York City-based plaintiffs’ lawyer Steven Donziger; his Ecuadorian colleagues Pablo Fajardo and Luis Yanza; their front organizations, the Amazon Defense Front and Selva Viva; and Stratus Consulting, a Boulder, Colo.-based consulting firm retained by the plaintiffs’ lawyers to secretly prepare a damages report that was then presented as having been written by an allegedly independent, court-appointed expert.

“The Lago Agrio plaintiffs’ lawyers’ aim has been to extort a multi-billion dollar payment from Chevron through fabricated evidence and a campaign to incite public outrage.  Chevron has no intention of giving these plaintiffs’ lawyers the payday they seek.  Rather, we intend to see the RICO defendants held accountable for their misconduct,” stated R. Hewitt Pate, Chevron vice president and general counsel.

Recent U.S. court proceedings initiated by Chevron have produced overwhelming evidence of fraud, collusion, corruption, and other misconduct on the part of those pressing the Lago Agrio plaintiffs’ case.  In the Western District of North Carolina, for instance, the federal court found that “what has blatantly occurred in this matter would in fact be considered fraud by any court.”  The District Court in the District of New Jersey held that the conduct of the plaintiffs’ lawyers in the furtherance of the Lago Agrio lawsuit could not constitute “anything but a fraud on the judicial proceeding.”

Today’s filing before the United States District Court of the Southern District of New York lays out overwhelming evidence demonstrating that the Lago Agrio plaintiffs’ lawyers and consultants have engaged in a sustained pattern of racketeering, including attempted extortion, mail and wire fraud, witness tampering, obstruction of justice, and money laundering.  Proof of misconduct on the part of the named defendants and their associates includes:

  • Documents, sworn deposition testimony, and outtakes from the movie Crude showing Donziger and his environmental consultants, including Stratus Consulting, plotting to secretly write the report of the supposedly “neutral” Ecuadorian court expert—Richard Stalin Cabrera Vega—who was appointed at the plaintiffs’ lawyers’ insistence to serve as the Lago Agrio court’s sole, “global damages expert.”  The ghostwritten “Cabrera” report would serve as the basis for the plaintiffs’ lawyers’ demands for more than $27 billion in damages—a figure that later was inflated to more than $113 billion after evidence of the Cabrera fraud emerged.
  • Documents and e-mails demonstrating that, after ghostwriting Cabrera’s initial report recommending more than $16 billion in damages, Donziger, Stratus and their co-conspirators pretended to criticize “Cabrera’s” report and demand that the damages be increased.  The conspirators then prepared “Cabrera’s” responses to their own criticisms, increasing the initial damages estimate by more than $10 billion.  The scheme culminated in a fraudulent “peer review” conducted by Stratus staff in which they pretended to perform an “independent” review and validation of the reports that they had ghostwritten for Cabrera’s signature.
  • Plaintiffs’ documents, including Donziger’s own detailed notes, as well as outtakes from Crude revealing a campaign of judicial intimidation by Donziger and his colleagues.  On film, Donziger declared, “the only language that I believe, this judge is gonna understand is one of pressure, intimidation and humiliation.  And that’s what we’re doin’ today.  We’re gonna let him know what time it is . . . .  We’re going to scare the judge, I think today.”  These tactics were employed because, according to Donziger, judges in Ecuador “make decisions based on who they fear the most, not based on what laws should dictate.”  When it was suggested to Donziger that no judge would rule against them because “[h]e’ll be killed,” Donziger replied that, though the judge might not actually be killed, “he thinks he will be…  Which is just as good.”
  • Evidence of a concerted effort by the named defendants and others conspiring with them to deceive members of the U.S. Congress, U.S. and state government regulatory agencies, and others into believing that the company faces a multibillion-dollar liability and has sought to mislead investors-all with the aim of forcing Chevron to settle. The campaign has included demands for Securities and Exchange Commission investigations, lobbying of government officials, including the U.S. Department of Justice and New York Attorney General, direct targeting of others with misinformation, and overt threats directed at Chevron’s Board of Directors.
  • Correspondence, memos, emails and agreements documenting the financing of the fraudulent scheme and the planned division of the windfall.  The evidence reveals that the real parties standing to gain from the Lago Agrio lawsuit are U.S. law firms and investors, not indigenous rainforest residents.  These U.S lawyers have also schemed to divvy up the proceeds of any recovery they extract from Chevron outside of Ecuador and beyond the reach of Ecuadorian law.

Chevron’s Pate also stated: “It is sad to see American citizens organizing a shakedown of a U.S. company while pretending to be helping Ecuadorians and the environment.  Equally sad is the pattern of fraud and obstruction in multiple U.S. federal courts in a vain attempt to try to keep the truth from coming out. But now, the truth has been revealed.”

Chevron’s RICO complaint can be accessed at http://scr.bi/hTrcy0.

In 2008, Ecuador’s Prosecutor General opened an investigation of two Chevron attorneys associated with the lawsuit filed against the company in Ecuador. The politically motivated charges marked a renewal of the Ecuadorian government’s attempts to disavow contractual obligations owed to Chevron from contracts signed in 1995 and 1998. The actions also ignored the findings of prior Ecuadorian prosecutors who repeatedly investigated the same fraud allegations and found them to be meritless.

The following is an excerpt from a November 10, 2010 opinion issued by Judge Lewis Kaplan of the Southern District of New York. The excerpt discusses the role played by the plaintiffs’ representatives in advancing sham criminal charges against Chevron’s lawyers:

“In 2003, the same year in which the Lago Agrio litigation was filed, the government of Ecuador (GOE) filed a criminal complaint against the Individual Petitioners and former GOE and Petroecuador officials, alleging that they had falsified public documents in connection with the Settlement and Final Release and had violated Ecuador’s environmental laws.

“In 2004, the Ecuadorian Prosecutor General began an investigation of the criminal charges. The Ecuadorian Deputy Attorney General explained in an email to plaintiffs’ counsel in the Lago Agrio litigation that the criminal prosecutions were potentially a ‘way to nullify or undermine the value of the’ Settlement and Final Release, though ‘evidence of criminal liability established by the Comptroller [General’s] Office was rejected by the prosecutor’.

“Two years later, however, the District Prosecutor found that ‘there [was] not sufficient evidence to pursue the case against . . . Mr. Ricardo Reis Veiga and Mr. Rodrigo Pérez Pallares, representatives of TEXPET.’ As we shall see, the same District Prosecutor in his subsequent capacity as national Prosecutor General later decided to reopen the criminal investigation and charge the Individual Petitioners based on the same allegations that he had previously dismissed for lack of evidence.

“In 2006, while the Lago Agrio litigation was still pending, Rafael Vincente Correa Delgato was elected president of Ecuador on a platform of economic and social reform. President Correa, who describes himself as a ‘humanist,’ a ‘Christian of the left,’ and a proponent of twenty-first century socialism, condemned Ecuador’s oil contracts as ‘true entrapment for the country.’  The election appears to have marked a turning point for the prospects of a criminal prosecution of the Individual Petitioners.

“Crude outtakes include a brief interview with [Steven] Donziger on his way to President Correa’s January 2007 inauguration.  Donziger boasted that President Correa’s inauguration was a potentially ‘critical event’ for the outcome of the Lago Agrio litigation.”

“Soon thereafter, Donziger explained that the Lago Agrio plaintiffs and the GOE had ‘been really helping each other.’ The outtakes depict Donziger discussing the importance of working his contacts in the new government.  And work them he did.”

“On January 31, 2007, Donziger met with Joseph C. Kohn of Kohn Swift & Graf, P.C., a U.S. law firm providing financial support for the Lago Agrio litigation. The outtakes depict Donziger explaining that the plaintiffs had been working with the Prosecutor General’s office and that, although the criminal proceedings were closed, there is ‘no finality’ in Ecuador.”

“Approximately a week later in a radio segment, plaintiffs asked President Correa to bring criminal charges against Chevron’s attorneys. Donziger specifically suggested filing criminal charges against Pérez.”

“This campaign continued. The outtakes show Donziger and others planning a press conference to pressure the Prosecutor General to bring criminal charges.”

“On the following day, Donziger asked that posters be made of ‘Texaco’s four accomplices,’ including the Individual Petitioners – posters that later were displayed at a press conference and a demonstration.”

“In March 2007, President Correa pledged his full support for the Lago Agrio plaintiffs. He followed that pledge with a meeting with Luis Yanza, co-founder of the Amazon Defense Front and a close ally of Donziger. In a telephone conversation on or about April 23, 2007, Yanza reported to Donziger and Fajardo on a conversation he had had with President Correa. To the extent that his report may be gleaned from the outtakes, Yanza told Donziger that President Correa had an interest in learning more about the alleged environmental harm and ‘fraud in the field.’ Yanza added to Donziger that President Correa ‘insist[ed]’ that he continued to ‘[think] about doing something in the Prosecutor’s Office.’  A day or two later, Yanza again reported to Donziger and Fajardo, asserting on that occasion that Yanza had ‘coordinat[ed] everything’ with President Correa.”

“Within a day or two, President Correa, Yanza, Fajardo, and others boarded a government helicopter together to tour the Oriente region.  In a voiceover in Crude, Donziger bragged: ‘We have achieved something very important in the case. We are now friends with the President.’ That ‘friendship’ immediately became apparent. On the same day as his visit to the Oriente region, President Correa issued a press release ‘urg[ing] the Office of the Prosecutor to permit the Prosecution of the Petroecuador officials who accepted the remediation carried out by Texaco.’

“The fact that there was no mention of the Texaco lawyers apparently bothered Donziger. In a telephone conversation the next day that was captured by Berlinger’s cameras, Donziger said that ‘perhaps it is time to ask for the head of Pérez Pallares – given what the President said’.”

The unfounded and corruptly filed charges are still pending against Chevron’s lawyers in Ecuador.  In his November 2010 order, Judge Kaplan wrote:

“The Lago Agrio plaintiffs are attempting to procure the criminal prosecution of the Individual Petitioners. The reason they do so relates to the fact Texaco long ago entered into a settlement with the GOE, signed on its behalf by the Individual Petitioners, which may well have released the claims upon which the Lago Agrio plaintiffs sue. A criminal prosecution of the Individual Petitioners, especially a successful one, would overcome or at least help to overcome that obstacle – especially in a country in which, at least according to Donziger: ‘You can solve anything with politics as long as the judges are intelligent enough to understand the politics . . . . [T]hey don‘t have to be intelligent enough to understand the law, just as long as they understand the politics’.”

As the New York federal court recognized in its November order, finding that “The criminal charges at least in part are a result of an alliance between the Lago Agrio plaintiffs and the Ecuadorian government, which has both financial and political interests in the success of the lawsuit.”

This is the fourth in a series of posts that highlight the degree to which the trial in Ecuador has been compromised by the misconduct of the plaintiffs’ lawyers.  These concerns are conveyed in the words of a U.S. Magistrate Judge in New Mexico who found:

“The release of many hours of the outtakes has sent shockwaves through the nation’s legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct.”

In outtakes from the movie Crude, plaintiffs’ lawyers and representatives are caught planning to organize an “army” intended to pressure the court in Lago Agrio. Plaintiffs’ representatives also assert that “[judges] make decisions based on who they fear the most, not based on what laws should dictate.” In a separate conversation, a plaintiffs’ representative states that “the only language that I believe, this judge is gonna understand is one of pressure, intimidation and humiliation. And that’s what we’re doin’ today. We’re gonna let him know what time it is . . . . We’re going to scare the judge.”

The following excerpt is taken from a November 10, 2010 opinion issued by Judge Lewis Kaplan of the Southern District of New York. The excerpt discusses the plaintiffs’ lawyers plot to intimidate the Ecuadorian judiciary:

“The outtakes depict Donziger and other plaintiff’s representatives traveling to an ex parte meeting with a judge on March 30, 2006. At least parts of the meeting appear in Crude.

“Prior to the meeting, Donziger described his plan to ‘intimidate,’ ‘pressure,’ and ‘humiliate’ the judge.”

 

“‘The only language that I believe this judge is going to understand is one of pressure, intimidation and humiliation. And that’s what we’re doing today. We’re going to let him know what time it is. . . . As a lawyer, I never do this. You don’t have to do this in the United States. It’s dirty. . . . It’s necessary. I’m not letting them get away with this stuff. ’

 

“Donziger repeatedly referred to the Ecuadorian judicial system as ‘weak,’ ‘corrupt,’ and lacking integrity. He further explained to the camera:

‘The judicial system is so utterly weak. The only way that you can secure a fair trial is if you do things like that. Like go in and confront the judge with media around and fight and yell and scream and make a scene. That would never happen in the United States or in any judicial system that had integrity.’”

“The Plan to Pressure the Court With an ‘Army’

“Over a year later, the Crude crew filmed a conversation between Donziger and Fajardo in which Donziger and Fajardo discussed the need to ‘be more and more aggressive’ and to ‘organize pressure demonstrations at the court.’ In the same clip, Donziger referred to the litigation as a ‘matter of combat’ that requires ‘actually . . . put[ting] an army together’.”

 

“The outtakes captured a June 6, 2007 meeting in which Donziger outlined a strategy to pressure an Ecuadorian court. Donziger told those present that the Lago Agrio plaintiffs needed to ‘do more politically, to control the court, to pressure the court’ because Ecuadorian courts ‘make decisions based on who they fear most, not based on what the laws should dictate.’ Donziger expressed concern that no one feared the plaintiffs, and he stated that the plaintiffs would not win unless the courts begin to fear them. Donziger described also his desire to take over the court with a massive protest as a way to send a message to the court of ‘don’t *uck with us anymore – not now, and not – not later, and never.’

He then proposed raising ‘our own army’ to which Yanza interjected ‘a specialized group . . . for immediate action.’ At that point, Atossa Soltani of Amazon Watch interrupted and asked whether ‘you guys know if anybody can, uh, subpoena these videos.’ Donziger responded, ‘We don’t have the power of subpoena in Ecuador.’ Soltani then asked ‘What about U.S.?,’ but Donziger interrupted her and ignored the question. She persisted, saying ‘I just want you to know that it’s . . . illegal to conspire to break the law’ to which Donziger said, ‘No law’s been conspired to be broken.’ The conversation about raising an army to pressure the court then continued, with Yanza waving the camera away as he told Donziger that the ‘army’ could be supplied with weapons.”

“Two days later, speaking directly to the camera, Donziger continued to emphasize the importance of pressuring the judge in the Lago Agrio litigation. According to Donziger, the plaintiffs’ ‘biggest problem’ had been their inability to pressure the judge. He explained that suing Chevron for moral damages or pressuring the Prosecutor General to open criminal investigations was not sufficient to make the judge feel pressure. Donziger asserted that the plaintiffs needed to do things that the judge would ‘really feel’ such as being ‘called out’ by the president of the country or the supreme court, implying that Donziger and others could develop strategies that would result in such actions.”

“Finally, Donziger participated in a dinner conversation about what might happen to a judge who ruled against the Lago Agrio plaintiffs. One or more other participants in the conversation suggested that a judge would be ‘killed’ for such a ruling. Donziger replied that the judge ‘might not be [killed], but he’ll think – he thinks he will be . . . which is just as good’.”

This is the third in a series of posts this week that will highlight the degree to which the trial in Ecuador has been compromised by the misconduct of the plaintiffs’ lawyers.  These concerns are conveyed in the words of a U.S. Magistrate Judge in New Mexico who found:

“The release of many hours of the outtakes has sent shockwaves through the nation’s legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct.”

Chevron has submitted to courts in the U.S. and Ecuador video outtakes and transcripts from the movie Crude that show the Lago Agrio plaintiffs’ lawyers, consultants, and associates meeting with the Ecuadorian court’s supposedly neutral “Global Expert,” Richard Stalin Cabrera Vega, to plan and ghostwrite the $27.3 billion damages report that Cabrera would later present to the court as his own. The video evidence proves that plaintiffs’ lawyers and consultants colluded with Cabrera to present a fraudulent report and proves that the plaintiffs’ and Cabrera’s denials of their collusion have been false. Documents produced during discovery also show that plaintiffs’ consultants wrote objections to the report they had ghostwritten, wrote “Cabrera’s” responses to their own objections, then published a fraudulent “peer review” of “Cabrera’s” report in which they claimed to find the work, of which they were the true authors, to be scientifically accurate and in line with remediation projects elsewhere in the world.

The following excerpt is taken from a November 5, 2010 opinion issued by Judge Lewis Kaplan of the Southern District of New York:

“The outtakes reveal Pablo Fajardo, one of the Lago Agrio plaintiffs’ Ecuadorian lawyers, describing several apparently ex parte meetings he had with an Ecuadorian judge – before Cabrera was appointed – regarding the global assessment and the appointment of a neutral and impartial expert to conduct it. In the course of doing so, he stated that he had a pretty good idea of who would be appointed. This appears to have been an understatement.

“Donziger boasted in the Crude outtakes that Cabrera ‘never would have [been appointed] had we not really pushed him.’ And the outtakes confirm that the Lago Agrio plaintiffs indeed did know in advance that Cabrera would be the appointee.”

 

“On March 3, 2007, more than two weeks before the appointment, they held an all-day meeting – attended by Cabrera, Donziger, plaintiffs’ Ecuadorian counsel, and partisan experts retained by the plaintiffs – to plan the report that Cabrera would issue. During that meeting, Fajardo informed the group that the goal of the meeting was to ‘define the overall structure of [the] comprehensive expert examination.’ Donziger later clarified that the plaintiffs’ work plan would involve not only evidence and remediation, but also writing the expert’s opinion.”

Cabrera

“The Crude outtakes reveal that Fajardo presented a PowerPoint presentation during the morning session that outlined the Plan Para Examen Pericial Global, or Plan for the Global Expert Assessment. He emphasized that everyone would contribute to the report, explaining: ‘And here is where we do want the support of our [i.e., the Lago Agrio plaintiffs’] entire technical team . . . of experts, scientists, attorneys, political scientists, so that all will contribute to that report– in other words – you see . . . the work isn’t going to be the expert’s. All of us bear the burden.’ Someone asked whether the final report would be prepared only by the expert. Fajardo responded that the expert would ‘sign the report and review it. But all of us . . . have to contribute to that report.’ Plaintiffs’ consultant Ann Maest said, ‘Together?,’ which Fajardo confirmed. Maest then stated, ‘But not Chevron,’ a comment met with widespread laughter.”

 

“In the afternoon session, the group discussed the ‘work plan,’ the first document that Cabrera would be required to sign and file with the Ecuadorian court Donziger proposed that he and the U.S.-based consultants form a ‘work committee’ to present a ‘draft plan’ in a few days. Looking at Cabrera, Donziger then said, ‘and Richard, of course you really have to be comfortable with all that. And we’ll also define the support the expert needs.’ The recording of the meeting ended with Donziger commenting, ‘We could jack this thing up to $30 billion in one day’.”

“Outtakes recorded on the following day reveal that Donziger made clear to one of plaintiffs’ U.S. environmental consultants that everything the plaintiffs were doing was to be concealed from Chevron, his ‘goal [being] that they don’t know *hit.’ During the same lunch, the consultants told Donziger that there was no evidence that contamination from the pits had spread into the surrounding groundwater. Donziger responded, saying ‘You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want,’ and ‘[t]herefore, if we take our existing evidence on groundwater contamination, which admittedly is right below the source . . . [a]nd wanted to extrapolate based on nothing other than our. . . theory,’ then ‘[w]e can do it. And we can get money for it.’ He went on saying, ‘[T]his is all for the Court just a bunch of smoke and mirrors and bull*hit.’ When one consultant argued that ‘there is not enough information on that groundwater’ and that ‘the one hole in the remediation is the water,’ Donziger broke off the discussion, stating, ‘There’s another point I got to make to these guys, but I can’t get this on camera,’ and the footage ended.”

“Nor was that the only occasion during lunch in which Donziger asked to go off the record. When one expert commented that it had been ‘bizarre’ to have Cabrera present at the meeting the day before, Donziger instructed the expert not to talk about that fact and told the camera operator that those comments were off the record. The expert elaborated that he was surprised that there had been a meeting during which ‘everything’ had been laid out while the expert was present.

This is the second in a series of posts this week that will highlight the degree to which the trial in Ecuador has been compromised by the misconduct of the plaintiffs’ lawyers.  These concerns are conveyed in the words of a U.S. Magistrate Judge in New Mexico who found:

“The release of many hours of the outtakes has sent shockwaves through the nation’s legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct.”

In May 2010, the Southern District of New York (SDNY) ordered the release of outtakes from the movie Crude after Chevron demonstrated that the raw footage compiled by the filmmaker would be “unimpeachably objective” evidence of any misconduct on the part of plaintiffs’ lawyers, expert witnesses, or the government of Ecuador.

In the more than 500 hours of outtakes from the movie Crude produced, the plaintiffs’ lawyers and representatives were caught, amongst other things, planning to organize an “army” to pressure, intimidate, and humiliate Judges in Ecuador.  Plaintiffs’ representatives even go as far as to discuss the possibility of a judge being killed if he ruled in favor of Texaco.

On November 10, 2010, after reviewing the Crude outtakes, the SDNY issued an opinion granting discovery and deposition of Steven Donziger, the lead American trial lawyer behind the Ecuador lawsuit.  In the opinion, the presiding judge stated, “The [Crude] outtakes are even more disturbing. They contain statements by Donziger that the Ecuadorian court system is corrupt, that the Lago Agrio plaintiffs can prevail only by pressuring and intimidating the courts and that the facts have to be twisted to support the plaintiffs’ theories. Donziger’s own words raise substantial questions as to his possible criminal liability and amenability to professional discipline. Among his other statements in the outtakes are these:”

 

“They’re all [i.e., the Ecuadorian judges] corrupt! It’s – it’s their birthright to be corrupt.”

 

“The only language that I believe this judge is going to understand is one of pressure, intimidation and humiliation. And that’s what we’re doing today. We’re going to let him know what time it is. . . . As a lawyer, I never do this. You don’t have to do this in the United States. It’s dirty. . . . It’s necessary. I’m not letting them get away with this stuff.”

“At the end of the day, this is all for the Court, just a bunch of smoke and mirrors and bull*hit.”

This is the first in a series of posts this week that will highlight the degree to which the trial in Ecuador has been compromised by the misconduct of the plaintiffs’ lawyers.  These concerns are real and are conveyed in the words of a U.S. Magistrate Judge in New Mexico who found:

“The release of many hours of the outtakes has sent shockwaves through the nation’s legal communities, primarily because the footage shows, with unflattering frankness, inappropriate, unethical and perhaps illegal conduct.”

Chevron Corp. has obtained through U.S. court-ordered discovery correspondence revealing that lawyers suing the company admit to illegal conduct in the trial against the company in Lago Agrio, Ecuador and fears that they may go to jail for their actions.

In a March 30, 2010 e-mail, Lago Agrio plaintiffs’ lawyer Julio Prieto expresses his concern that an order from a U.S. federal court in Denver, Colorado will force representatives of Stratus Consulting to reveal documents and correspondence exposing fraud and collusion committed by the plaintiffs’ team. Stratus is the plaintiffs’ environmental consulting firm that secretly wrote much of a $27 billion damages assessment for the Ecuadorian court’s supposedly independent expert, Richard Stalin Cabrera Vega.

The following is a certified translation, followed by the original email in Spanish, of the exact text of the e-mail Prieto sent to Steven Donziger, U.S. lawyer and head of the plaintiffs’ legal team, lawyers Pablo Fajardo and Juan Pablo Saenz (“Juanpa”), as well as plaintiffs’ legal coordinator Luis Yanza. The Certificate of Accuracy of this translation is available here:

julio prieto steven donziger email chevron ecuador

Ten days after sending the e-mail, on April 9, 2010, the plaintiffs’ petitioned the Provincial Court of Sucumbios asking the judge not to accept evidence obtained by Chevron in American courts and to write to those courts urging them to halt discovery proceedings begun by Chevron in the U.S.. The judge in Ecuador has not ruled on the plaintiffs’ motion and discovery has progressed in the U.S.  Those discovery proceedings have yielded irrefutable proof – outtakes from the movie Crude, letters, e-mails, diary entries, plaintiffs-authored drafts of “Cabrera’s” report and sworn testimony of plaintiffs’ lawyers and technical experts – of the fraud, collusion and other illegal and possibly criminal actions of the plaintiffs’ representatives in the trial in Ecuador.  In short, exactly what Mr. Prieto feared would occur.

Chevron has provided much of this evidence to the Lago Agrio court and called on the court to address the fraud by dismissing the plaintiffs’ case and punishing the plaintiffs’ lawyers for their misconduct.

Admissions during court-ordered depositions of the plaintiffs’ own consultants confirm there is no scientific basis for the $113 billion damages claim in litigation pending in Lago Agrio, Ecuador.  Over the last two weeks, attorneys for Chevron Corporation questioned the six consultants credited with the latest damage assessment.  The sixth consultant was deposed yesterday.

In filings this week in Lago Agrio, Chevron submitted deposition transcripts to the Court and called for the damages assessment to be rejected in its entirety.  Among the most obvious flaws with the assessment is the consultants’ overwhelming reliance on the discredited “Cabrera Report,” a court-ordered “independent” assessment of environmental conditions of the Oriente region of Ecuador.  The report was allegedly authored by Richard Stalin Cabrera, a mining engineer.  In recent months, however, “Cabrera’s” report has been shown to be a fraud.

“These new assessments are an attempt to bring the plaintiffs’ lawyers’ false evidence back into the Lago Agrio Court under the cover of new names and indefensible numbers,” stated R. Hewitt Pate, Chevron vice president and general counsel.  “At this point, the plaintiffs’ lawyers have no legitimate evidence to advance their claims, so they’ve resorted to a shell game.”

Under direct questioning from Chevron attorneys, the five plaintiffs’ consultants conceded that their work is factually baseless and does not support the plaintiffs’ absurd financial claims.  More specifically:

  • When asked what the scientific basis was for assuming that an excess risk of cancer existed in Lago Agrio from 1967 to 1987, Dr. Daniel Rourke, who wrote the plaintiffs’ $69 billion submission about excess cancer risk, testified, “It’s an assumption of the calculations.  There is no scientific basis.”  Dr. Rourke said that he was “not offering the opinion that Chevron took any action that actually caused anybody to get cancer.”  Rourke explained that he was never even asked to try and estimate any number of excess cancers allegedly caused by Texaco oil operations.
  • Consultant Jonathan Shefftz testified under oath that he was “not making any sort of analysis” of alleged “unjust enrichment” in the case, despite the fact that the plaintiffs’ lawyers claimed his report assessed up to US$37.86 billion in unjust enrichment.  Rather, Shefftz used “random” numbers for his mathematical calculations because he did not have “any opinion on—on what the true underlying values are.”
  • Douglas Allen, another of plaintiffs’ consultants, refused to say that the alleged $1.86 billion remediation costs in his report reflected actual costs: “I am not telling you these are actual costs, I’m telling you that this is the conceptual and potential range of costs for cleaning up soil in the concession area … based upon the assumptions and the uncertainties and limitations of my valuation.”  Mr. Allen repeatedly described his report as merely “conceptual.”
  • Dr. Lawrence Barnthouse, testified that he reviewed the Cabrera Report but performed no damages assessment of his own.  He admitted that the methodology Cabrera used was “an unreliable indicator,” “[s]uboptimal[, and] inadequate,” and he “did not conclude anything about the validity” of the Cabrera Report’s claim of $1.7 billion in ecosystem damages, other than that the numbers in the Cabrera Report “were uncertain.”
  • Dr. Emilio Picone admitted that the methodology used in his report, which the plaintiffs lawyers use to claim $1.4 billion in health care costs, was “rudimentary at best,” and “doesn’t provide you any estimate of the amount of health care costs associated with petroleum exposure.”  In fact, Dr. Picone “didn’t reach the conclusion that health care needs of the population in the Oriente can be tied to Texaco’s operations.”  He further conceded, when confronted by the lack of evidence for his opinion, that “for American courts, you truly need to have more data to support whatever you’re indicating.”

Deposition testimony further revealed that the plaintiffs’ lawyers’ $113 billion assessment relies extensively on the Cabrera Report.  Allen, for example, testified that the plaintiffs’ representatives said that he should use the Cabrera Report as a “starting point.”  Shefftz’s report likewise depends upon “data and cost figures from the Cabrera report.”  Dr. Barnthouse also conceded that much of the information he used was “only available from the Cabrera Report,” And, like other consultants, Dr. Barnthouse did nothing to assess the validity of any of the assumptions made in the Cabrera Report, he simply “assume[d] that [Cabrera] was correctly characterizing” relevant environmental standards. Shefftz admitted that he “was not engaging in any exercise to verify [Cabrera's] data series or his cost figures.  I was just using them in my report.”   In fact, he confessed that he did not “know one way or the other whether they’re correct or not,” conceding that his “results depend, in part, on the accuracy of [Cabrera's] data series and [Cabrera's] cost figures.”

It is now indisputable that the plaintiffs’ lawyers’ September 16, 2010 filing with the Lago Agrio Court is an attempt to whitewash their prior, unlawful collusion with the court-appointed “independent” expert.  The new, $113 billion “assessments” are even more extreme and scientifically unreliable than the fraudulent $27.3 billion Cabrera report from which they admittedly are derived.  By ignoring the role of Petroecuador as the majority owner of the consortium during Texaco’s time in Ecuador and as the sole owner and operator of the oil fields for the last 20 years, the new reports continue the joint efforts of the plaintiffs and the government of Ecuador to deflect attention from the state-owned oil company that bears sole responsibility for all remaining environmental impacts outside the scope of Texaco’s remediation in the 1990’s.  The plaintiffs’ consultants conceded under oath that Petroecuador’s role in oil production should not have been overlooked and that, had it been considered, it would have affected their reports.

Copies of the Chevron filings and the deposition transcripts can be accessed at http://scr.bi/hWSbi3.

Chevron Corporation today submitted expert analysis from a leading forensic specialist demonstrating that many of the signatures on the document purporting to authorize the lawsuit against Chevron in Lago Agrio, Ecuador, were forged. According to Chevron’s filing, this newly uncovered evidence of forgery and fraud makes clear that the lawsuit has been tainted with corruption from the very beginning and must be terminated.

Internationally renowned forensic document examiner Gus R. Lesnevich has determined that at least 20 of the 48 signatures on the document that purported to ratify the 2003 complaint and appoint Ecuadorian lawyer Alberto Wray as plaintiffs’ counsel were faked. Lesnevich, who is in the process of analyzing other key documents in the case, discovered the forgeries by comparing the signatures on the document with known copies of the plaintiffs’ signatures from their national identification cards. He also conducted an indentation analysis of the court document using an electrostatic detection device, which revealed the paper bore indentations “consistent with someone practicing the writing of a signature before actually simulating the signature.”

Signatures

The forensic analysis was filed today in the Provincial Court of Sucumbios along with a motion calling on Judge Nicolas Zambrano to declare the lawsuit “null and void” as required by Ecuadorian law. The company also asked the judge to forward the matter to Ecuador’s Prosecutor General’s Office for criminal investigation.

“The Ecuadorian authorities cannot continue to ignore the mounting evidence of fraud in the Lago Agrio litigation without violating their duties under the Ecuadorian constitution and international law,” stated R. Hewitt Pate, Chevron vice president and general counsel. “We intend to seek full redress against the harm that has been done in the name of the Ecuadorian plaintiffs and to hold accountable all of those who have knowingly participated in this unlawful scheme.”

The forensic expert’s analysis and Chevron’s motion to nullify the Ecuadorian lawsuit can be accessed at http://scr.bi/faTsoS.

The forgery of the plaintiffs’ signatures is only the most recently discovered fraud on the part of plaintiffs’ lawyers and their cohorts in both the United States and Ecuador. Through a series of discovery actions filed in U.S. federal courts, Chevron in recent months has uncovered overwhelming evidence, including video “outtakes” from the film Crude, of blatant misconduct on the part of plaintiffs’ counsel, including:

-       The submission of fraudulent expert reports purportedly written and signed by Charles W. Calmbacher, Ph.D, a U.S. biologist and industrial hygienist, who later testified in a court-ordered deposition that the reports submitted by plaintiffs’ counsel to the Lago Agrio court in his name were done so without his knowledge or consent, and contradicted his scientific conclusions that he had seen no evidence of any risk to human health at any site remediated by Texaco Petroleum Company;

-       Improper, secret collusion between plaintiffs’ counsel and paid consultants and the Lago Agrio court’s supposedly neutral “Global Expert,” Richard Stalin Cabrera Vega, to create the $27.3 billion damages report that Cabrera fraudulently presented to the Lago Agrio court as his own;

-       Fabrication of scientific evidence of supposed environmental contamination by plaintiffs’ paid consultants and experts; and

-       Intimidation, threats and political pressure directed at Ecuadorian judicial officers and government officials designed to secure a judgment in favor of plaintiffs despite a lack of any legitimate scientific evidence supporting their claims.

Earlier today, the Second Circuit Court of Appeals affirmed a Southern District of New York order granting discovery and depositions from Steven Donziger, the lead Lago Agrio plaintiffs’ representative.  In his prior ruling, District Judge Lewis A. Kaplan ordered Donziger to turn over all documents and materials that complied with a 1782 discovery motion filed by Chevron.  In considering Chevron’s petition, the District Court found:

  • The government of Ecuador “has been working closely with Donziger for years and stands to gain billions for Ecuador if the Lago Agrio plaintiffs prevail against Chevron.” (View memorandum opinion)
  • “The evidence before this Court shows that Donziger has attempted to (1) intimidate the Ecuadorian judges, (2) obtain political support for the Ecuadorian lawsuit, (3) persuade the GOE to promote the interests of the Lago Agrio plaintiffs, (4) obtain favorable media coverage, (5) solicit the support of celebrities (including Daryl Hannah and Trudie Styler) and environmental groups, (6) procure and package ‘expert’ testimony for use in Ecuador, (7) pressure Chevron to pay a large settlement, and (8) obtain a book deal.”
  • “There is evidence obtained in other Section 1782 actions brought by Chevron that Donziger and others associated with him have presented false evidence and engaged in other misconduct in Ecuador.”
  • “In this Court’s judgment, the need (for discovery) is extremely great in view of the extraordinary evidence already before it. To turn a blind eye to evidence suggesting improper influence on and intimidation of the Ecuadorian courts by both Donziger and the GOE, improper manipulation of the criminal process in that country, knowing submission by the Lago Agrio plaintiffs of at least one fraudulent report, and improper collusion with Cabrera, the supposedly neutral court-appointed expert, could defeat the purpose of Section 1782, deprive the Individual Petitioners of evidence needed for their defense in a criminal case, and frustrate the BIT arbitration.”
  • “Donziger’s own words raise substantial questions as to his possible criminal liability and amenability to professional discipline.”

Today’s Second Circuit decision not only affirmed the District Court’s prior orders, but lauded Judge Kaplan’s analysis.  The panel wrote, “in light of the complexity of this case and the urgency of its adjudication, we wish to note the exemplary manner in which the able District Judge has discharged his duties. There is no question but that all concerned, not least this Court, are well served by the careful and comprehensive analysis which is evident repeatedly throughout the many memoranda and orders of the District Court, many of which were produced with rapidity in the context of the District Court’s daunting schedule in this and other important cases.”

On Nov. 30, the Amazon Defense Front issued a press release stating that Chevron attorneys are violating a court order by failing to pay for the work of an Ecuadorian court-appointee.  The assertion is false. Proper fact-checking would have shown that appointee Marcelo Munoz was paid by Chevron nearly a week earlier. This fact could have been easily ascertained by a review of Court records. In fact, Mr. Munoz said that the payment was made in a Nov. 25 letter to the court – five days before the Amazon Defense Front issued its release. Chevron also notified the court of the payment before the Amazon Defense Front’s release. Further, Judge Nicolas Zambrano confirmed the payment to Munoz as well as Chevron’s compliance with his Nov. 22 order.

The Nov. 30 release continues a pattern of misleading media communications from the Amazon Defense Front and its representatives.  On Nov. 19, the Amazon Defense Front issued a release claiming that a Chevron lawyer was “sanctioned” by a U.S. federal court in Colorado for questioning in a deposition. After Chevron brought the Amazon Defense Front’s misleading press release to the Court’s attention, Magistrate Judge Michael E. Hegarty issued a clarifying order, stating that he had in fact denied the Amazon Defense Front’s motion “to the extent it sought sanctions.”

While aware of the truth, the Amazon Defense Front has yet to make a good faith effort to correct the record or retract its inaccurate press releases.  Rather, the press releases aim to obscure overwhelming evidence of fraud on the part of Amazon Defense Front representatives.  This goal is served neither by truth or accuracy.

For more on the fraud that has been committed by the plaintiffs’ representatives, please visit: http://www.chevron.com/ecuador/background/patternoffraud/.

Click here to read full legal rulings:

http://www.scribd.com/TexacoEcuador

A week after the first video outtakes of the documentary film Crude were posted on Law.com, four more clips are now available at Corporate Counsel:

  • Latest Chevron Outtakes I: ‘Killing the Judge?’ : At a dinner party, the woman next to Donziger suggests that the Ecuadorian judge presiding at the end of the trial might fear for his life if he rules against plaintiffs. Donziger responds that the judge “might not be [killed], but he’ll think — he thinks he will be … which is just as good.” Judge Kaplan recounted this scene without commentary in his Nov. 5 ruling under the heading “Killing the Judge?” The bracketed text is from his opinion. Plaintiffs have dismissed the conversation as meaningless banter.
  • Latest Chevron Outtakes II: ‘It’s Dirty … It’s Necessary’ :  On March 30, 2006, Donziger is in a car en route to a confrontation with Judge Germán González of Pichincha Civil Court. Chevron has asked the judge to inspect a laboratory used by plaintiffs to analyze soil samples, but the plaintiffs are about to block the judge from entering the laboratory. Donziger repeatedly expresses disgust over the techniques to which he says he must resort. Says Donziger: “The only language that I believe this judge is going to understand is one of pressure, intimidation, and humiliation. And that’s what we’re doing today. … As a lawyer, I never do this. You don’t have to do this in the United States. It’s dirty. … It’s necessary. I’m not letting them get away with this stuff.”
  • Latest Chevron Outtakes III: ‘Brute Force’ : At the start of this clip, Donziger continues his meditations on the theme of law and politics. The case against Chevron, he proclaims, is “about brute force” rather than “all this bullshit about the law and facts,” which only “affects the level of force.” He adds: “It’s the only way to litigate a case against a powerful company on behalf of people with no power.”
  • Latest Chevron Outtakes IV: Calling for Heads to Roll : In this scene from March 2007, Donziger is euphoric about the news that newly elected Ecuadorian President Rafael Correa has recommended prosecuting the government lawyers who released Texaco from liability when it left the country. Donziger appears to suggest on the phone that a lawyer who worked for Texaco, Rodrigo Pérez Pallares, should also be prosecuted. “[P]erhaps it is time to ask for the head of Pérez Pallares,” he says. Judge Kaplan adds in his Nov. 5 ruling that President Correa called the next day for prosecution of the Texaco attorneys, whom Correa called the “Chevron-Texaco … homeland-selling lawyers.”

Excerpts from the documentary “Crude” are now available online. Here’s an excerpt from an article that has just posted:

In the final version of Crude — the 2009 Joel Berlinger documentary on the epic environmental suit brought by Amazon tribespeople against Chevron Corporation in Ecuador — lead U.S. plaintiffs’ attorney Steven Donziger remarks: “This is something you would never do in the United States, but Ecuador, you know, this is how the game is played, it’s dirty.”

If Donziger would say something so provocative for the final cut, reasoned Chevron’s lawyers at Gibson, Dunn & Crutcher, then just imagine how outrageous he must look in the extra footage.

Well, the public no longer needs to use its imagination.

These videos can be viewed here:

VIDEO I: Planning for the Expert’s Report

VIDEO II: The Morning After

VIDEO III: A Message to the Court: Don’t F— with Us

VIDEO IV: ‘A Political Force’ to Protect Against Corruption

VIDEO V: ‘Smoke and Mirrors and Bulls—’

VIDEO VI: A Vision of the Future


Click here
to read the full article in American Lawyer.

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.

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:

Yesterday, Chevron Corp. (NYSE: CVX) submitted expert testimony from leading scientists to the Provincial Court of Sucumbíos in Lago Agrio, Ecuador demonstrating that there is no evidentiary basis for the lawsuit against the company.  Chevron also has renewed its motion for dismissal of the case because there is no evidence of liability and because there is overwhelming proof of fraud on the part of the plaintiffs’ lawyers.

In response to a parallel filing by the plaintiffs’ lawyers, the company issued the following statement:

“Numerous Federal Courts in the United States have stated that the trial in Ecuador is marred by fraud and misconduct.  The views of these Courts speak for themselves.  Chevron views the latest filing by the plaintiffs’ lawyers as a continuation of a strategy to commit fraud.”

Key Excerpts from U.S. Courts Follow

Over the last several months, Federal Courts throughout the United States have authorized discovery producing an overwhelming record of misconduct on the part of the Lago Agrio plaintiffs’ lawyers.  The evidence, in the form of film outtakes from the movie Crude, sworn deposition testimony from the plaintiffs’ own consultants, and documents produced through discovery has led United States Federal Judges and Magistrates to declare that the trial in Ecuador has been marred by fraud that goes to the heart of the case:

A Magistrate in New Mexico wrote, “The release of many hours of the outtakes has sent shockwaves 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. They show how non-governmental organizations, labor organizations, community groups and others were organized by the Lago Agrio attorneys to place pressure on the new Ecuadorian government to push for a specific outcome in the litigation, and how the Ecuadorian government intervened in ongoing litigation.”

Subsequently, the Magistrate wrote that, “The undersigned viewed those outtakes and finds that they are sufficient to establish a prima facie case of attempted fraudulent activity by attorney Donziger, including directing Respondents to ‘extrapolate’ scientific evidence that does not exist, and having a purportedly neutral expert sign his name to a report that was actually prepared by Plaintiffs’ attorneys and experts without Chevron’s knowledge.”

A Magistrate in North Carolina wrote, “While this court is unfamiliar with the practices of the Ecuadorian judicial system, the court must believe that the concept of fraud is universal, and that what has blatantly occurred in this matter would in fact be considered fraud by any court. If such conduct does not amount to fraud in a particular country, then that country has larger problems than an oil spill.”

In New Jersey, a Judge stated that, “The provision of materials and information by consultants on the litigation team of the Lago Agrio plaintiffs in what appears to be a secret and an undisclosed aid of a supposedly neutral court-appointed expert in this Court’s view constitutes a prima facie demonstration of a fraud on the tribunal.”

In California, a Magistrate stated that, “I feel that the crime fraud exception is implicated by the ghost writing that was done. The two orders from the Ecuadorian tribunal were very clear that Mr. Cabrera was to give to the Court his independent intellectual work, and while he may adopt certain findings and conclusions of other experts, that adoption may occur only after he has independently assessed the integrity and validity of those findings and conclusions and notified the Court of such adoption, the reason for his adoption, and the process by which he came to the conclusion that such adoption was consistent with his own duties to the Court.

“It appears that Mr. Cabrera has failed to do that, implicating the crime fraud exception, and Chevron has a right to explore whether there has indeed been a violation of the — whether indeed the crime fraud exception is implicated as directly as the evidence suggests it has been.”

Subsequently, a Judge in California ruled that “The Court is persuaded by the reasons explained by Magistrate Judge McCurine as well as other U.S. courts who have addressed the issue, that the crime-fraud exception applies. There is ample evidence in the record that the Ecuadorian Plaintiffs secretly provided information to Mr. Cabrera, who was supposedly a neutral court-appointed expert, and colluded with Mr. Cabrera to make it look like the opinions were his own.”

Meanwhile, the outtakes from Crude reveal the plaintiffs’ lawyers’ true damages strategy.  On film, plaintiffs’ lawyer Steven Donziger states, “We ask for much more than what we expect. If for example, if we believe three million to clean and we ask for eighteen billion, are they going to regard us as if we’re crazy, or will the judge see, ‘eh, I can give Texaco about eighty percent of what they want, then I’m going to give them three billion.’  Then, if we ask for eighteen billion…  But as a concept, I ask, do we ask for much more than what we really want as a strategy?  Do we ask for eight and expect three, so that [the judge] says, ‘Look, Texaco, I cut down the largest part.’”  It is clear that the plaintiffs’ lawyers’ latest filing is a continuation of this strategy.

Evidence now before the Lago Agrio court demonstrates that the plaintiffs’ lawyers have engaged in fraud through the use of forged testimony, fabricated evidence, intimidation and threats against judges, and collusion with purportedly “impartial” court experts to “jack up” a damages claim that far exceeds the scope of their complaint.  The only reliable evidence in the record exonerates Chevron and Texaco from any liability, showing that Texaco properly performed the agreed remediation of its share of oil sites in Ecuador, and that any remaining remediation in Ecuador is the responsibility of Petroecuador.  Accordingly, Chevron has petitioned the Lago Agrio court to dismiss the lawsuit, and to refer the matter of the plaintiffs’ lawyers’ fraud to Ecuador’s Office of the Public Prosecutor for criminal investigation.

Copies of Chevron’s filings and court rulings can be accessed at www.chevron.com/ecuador/background/patternoffraud/.

20 years ago this month, Petroecuador assumed operation of the Oriente oil fields from Texaco Petroleum.  During this time, Petroecuador has generated more than $50 billion in oil revenue for the Republic.

This wealth has not come without a cost – Petroecuador’s operating and environmental record has been poor.  More recently, however, it must be acknowledged that the company is trying to do better:

  • In 2002, Petroecuador developed a remediation plan for its Oriente operations.  In 2005, Petroecuador’s government-approved clean-up began.
  • In 2007, Petroecuador reported that the remediation cost for the 370 pits within the former concession area is $31.45 million.  So far, at least 86 reserve pits have been remediated.
  • Petroecuador has stated that its goal is to complete all remediation work by the end of 2013.

This is good news and it is clear that Petroecuador has the ability, the expertise, and the responsibility to clean up the Oriente oil fields.  And, most importantly, Petroecuador appears to have the government’s support.

But the American trial lawyers behind the Lago Agrio lawsuit have interfered with Petroecuador.  They have opposed the company’s clean-up and petitioned the Lago Agrio court to halt Petroecuador’s work – not out of concern for the environment but for fear that Petroecuador’s remediation “is changing the case.”

The lawyers’ case has harmed Ecuador as well.  The Lago Agrio trial has been corrupted by the very lawyers who initiated it.  They have filed falsified expert reports with the court.  They have submitted phony evidence.  They have secretly colluded with court experts.  This is the definition of fraud and it’s not only being perpetrated at the expense of Ecuador’s courts, but also Ecuador’s government and its citizens.  Moreover, the trial has impacted Ecuador’s international reputation with respect to corruption and judicial fairness.

The Lago Agrio lawsuit and its lawyers are an impediment to the solutions the Oriente and its people deserve.  It is time that the trial lawyers put their own financial interests aside.  Texaco Petroleum fulfilled its obligations – now it’s time to let Petroecuador do the same.

A recent delegation led by the Amazon Defense Front traveled to Louisiana in attempt to draw a parallel between a lawsuit backed by U.S. trial lawyers against Chevron and the Gulf of Mexico oil spill.

There is no question that the people of Oriente face difficulties. However, there is no valid comparison with the oil spill in the Gulf of Mexico and the trial that is currently taking place in Ecuador. It is disappointing that the Amazon Defense Front (the named financial beneficiary in the Ecuador trial) and its supporters would take advantage of the people of the Gulf and their tragedy in an attempt to legitimize their fraudulent lawsuit against Chevron. But this is no surprise. This is the same type of deceit and manipulation they have used for years to exploit their own countrymen’s hardships in the Amazon.

In fact, many of the difficulties faced by the people of the Oriente have been exacerbated by the Amazon Defense Front, which has opposed the clean up in the region, harming the interests of the very people they claim to represent.

Texaco Petroleum ceased operating on behalf of a state-controlled consortium in the Oriente 20 years ago this month. The company left Ecuador after performing $40 million in environmental remediation that was approved by the government, releasing the company of all future obligations.

Since 1990, Petroecuador, Texaco’s majority partner, has been the exclusive operator of the oil fields, drilling an additional 414 new wells and amassing a poor environmental record. The state-owned oil company acknowledges its responsibilities and has begun its own clean-up. Petroecuador plans to remediate 370 pits, at a cost of $31.5 million, by 2013. So far, it has remediated 86 pits. It has the ability, expertise and, most importantly, the government’s support to complete the job.

However, U.S. trial lawyers behind the Lago Agrio lawsuit against Chevron and the Amazon Defense Front have interfered with Petroecuador’s cleanup.  They have petitioned the court to halt the cleanup– not out of concern for the environment but for fear the remediation was harming their case against Chevron.

In pursuit of their meritless complaint, the Amazon Defense Front lawyers have harmed Ecuador in many ways.  They have corrupted the trial, not only through publicity stunts like the one they exported to Louisiana recently, but also by falsifying expert reports, fabricating evidence, making unsubstantiated health claims and colluding with court experts. This fraud on Ecuador’s courts, government and citizens has damaged the nation’s international reputation with respect to corruption and judicial fairness.

In truth, the lawyers behind the Lago Agrio lawsuit are a barrier to the solutions that the people of the Oriente deserve. It is time they put their own financial interests aside.

Chevron Corp. (NYSE: CVX) has uncovered new evidence that Ecuadorian court appointee Richard Cabrera, the so-called “independent expert” claiming that Chevron should pay $27 billion in damages, has had ongoing and surreptitious contacts with plaintiffs’ representatives and that a substantial portion of Cabrera’s court-ordered analysis is based on materials that could only have been provided by the plaintiffs’ representatives outside of the court proceeding. Additional new evidence shows that Cabrera allowed his supposedly independent assistants to work directly with the plaintiffs’ lawyers. Chevron made a filing in Ecuador on Friday informing the court of this new evidence of misconduct.

“This direct evidence of fraud and ex parte contacts further demonstrates the illegitimacy of the fictitious $27-billion number the plaintiffs’ lawyers have created for the purpose of extracting money from Chevron and its shareholders,” Chevron Vice President and General Counsel Hewitt Pate said. “Despite years of denial by Mr. Cabrera and the plaintiffs’ lawyers, one of their own consulting firms has now admitted in a U.S. court proceeding that they dealt directly with Mr. Cabrera. We also now know that Cabrera himself was previously employed by one of the plaintiffs’ lawyers in another case prior to being appointed in Lago Agrio and that he never disclosed that fact to Chevron or the Lago Agrio court.” In his November 2008 damages report, Cabrera exclusively attributed pollution and associated impacts in Ecuador’s Amazon to Texaco Petroleum Company while absolving state-owned Petroecuador. Cabrera was appointed in 2007 to serve as an officer of the court to perform an independent, impartial, and transparent investigation of the environmental effects of oil operations. He repeatedly asserted under oath that he was independent and had no relationship or links with plaintiffs’ lawyers:

  • In a June 13, 2007 sworn statement, Cabrera declared that “he is not under any legal impediment whatsoever and swears to perform his duties faithfully and in accordance with science, technology, and the law, with complete impartiality and independence vis-à-vis the parties.”
  • In a July 23, 2007 sworn statement, Cabrera declared, “I should clarify that I do not have any relation or agreements with the plaintiff, and it seems to me to be an insult against me that I should be linked with the attorneys of the plaintiffs.”
  • In an October 8, 2008 sworn statement, Cabrera stated, “I am an honest man with nothing to hide, and my conduct as an expert in this case has been as professional, impartial and objective as possible, as can be seen from my expert report.”

The evidence newly discovered by Chevron and admitted by plaintiffs’ consultants in court filings, however, shows that Cabrera violated his legal duties and worked directly with the plaintiffs’ lawyers and consultants:

  • Documents filed in Colorado federal court last week reveal that consultants working for the plaintiffs’ lawyers have had direct ex parte communications with Cabrera. Lawyers for Stratus Consulting, paid litigation consultants working for the American trial lawyers directing and funding the Lago Agrio case, retracted their prior denials and admitted that “there were communications between Cabrera and two Stratus representatives.” Cabrera incorporated virtually verbatim portions of undisclosed “studies” furnished by Stratus employees and subcontractors in his damages assessment.
  • In a separate proceeding in Texas federal court seeking related evidence from a Stratus subcontractor, 3TM Consulting, the judge presiding over the matter concluded last week that it was clear from the record that “plaintiffs provided some or all of 3TM’s report to Cabrera” even though “it appears Cabrera denies this occurred.” Such collaboration clearly violates the Lago Agrio court’s order that Cabrera work independently and “be responsible for all information and conclusions contained in the expert report.”
  • Chevron recently has learned that at the time that he became a court appointee in the Lago Agrio litigation, Cabrera was already in the employ of the plaintiffs’ original counsel, Cristóbal Bonifaz (Bonifaz was dismissed from the Lago Agrio case and was sanctioned for presenting separate, false cancer claims against Chevron in federal court in California) . Specifically, Cabrera served as a paid expert in litigation (Arias v. DynCorp) that Bonifaz and other lawyers brought in Washington, D.C. federal court on behalf of a group of Ecuadorian plaintiffs. The DynCorp plaintiffs assert that they were harmed by herbicide spraying in the same region of Ecuador at issue in the case against Chevron, and Cabrera’s DynCorp report concludes that herbicide exposure is the primary cause of alleged harms in the region. In the Chevron case, however, Cabrera’s report attributes many of those same harms exclusively to alleged petroleum exposure. Cabrera never disclosed his prior relationship with plaintiffs’ counsel to the Lago Agrio court, nor did he disclose the existence of his DynCorp report which contradicts important parts of his supposedly independent report in the case against Chevron.
  • The U.S. federal court proceedings in which Chevron seeks hidden evidence of corruption and misconduct captured by filmmaker Joe Berlinger have also centered on evidence of collusion in connection with the Cabrera’s damages report. Parts of Berlinger’s film Crude show plaintiffs’ lawyers Steven Donziger and Pablo Fajardo working with Carlos Beristain, one of the supposedly neutral experts on Cabrera’s team, at a focus group meeting related to Beristain’s supposedly independent “health survey.” Cabrera relies on Beristain’s survey for his assessment of $9.5 billion in damages for “excess cancer” claims. While, at the direction of the plaintiffs’ lawyers, Berlinger edited the DVD version of Crude to conceal Beristain’s involvement with the lawyers, the unedited scene remains in a recently released internet version of the film. This documentation of collusion supported Chevron’s successful argument to a federal court in New York that other Crude outtakes should be reviewed for further evidence of misconduct. In its recent order, the New York court ruled that the fact that this scene was cut from the final version of the DVD at the direction of plaintiffs’ lawyers is “a fact suggestive of an awareness of questionable activity.”

“It is clear from the evidence that Cabrera’s claims of neutrality and independence in the Ecuadorian court are false,” added Chevron’s Pate. “The misconduct of the plaintiffs’ lawyers and Cabrera constitutes a fraud against Chevron, against the Ecuadorian court system, and against the Government of Ecuador. Courts in the U.S. are beginning to expose this fraud, and authorities in Ecuador should want to do the same.”

In its filing with the Lago Agrio court, Chevron is seeking the dismissal of Cabrera as a court appointee as well as the rejection of the entirety of his work. Chevron has also requested that the court initiate a full inquiry into the conduct of Cabrera and the plaintiffs’ lawyers to determine the full extent of the collusion and fraud that has been perpetrated.

Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company’s success is driven by the ingenuity and commitment of its employees and their application of the most innovative technologies in the world. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

The Amazon Defense Front is back at it, trying to distract attention from revelations that its lawyers submitted fabricated expert reports to the court in Lago Agrio.

In the latest volley, the Front’s publicist, Karen Hinton, revisits the $3 million bribery scandal that entangled the judge presiding over the Lago Agrio trial as well as individuals representing themselves as members of the Ecuadorian government and its ruling political party.

After failed attempts to question the legitimacy of the videotape evidence, the Front is now taking aim at outside counsel for Chevron.  In its latest attack, the Front’s lawyers accuse Chevron counsel of concealing that Diego Borja, one of the men who recorded the meetings in which the bribery plot was discussed, had previously performed contract work for Chevron.

Yet, when Chevron announced that it had provided copies of the videotapes to authorities in the United States and Ecuador, Chevron stated in its press release that, “Evidence of the bribery plot was brought to Chevron’s attention in June by an Ecuadorian, who was pursuing business opportunities in Ecuador with an American businessman. The Ecuadorian, Diego Borja, has performed work for Chevron as a logistics contractor.”

This fact was widely reported by American media outlets like the Wall Street Journal, the New York Times, the Washington Post, and the San Francisco Chronicle.  In Ecuador, papers such as El Comercio, El Universo, La Hora, Expreso, and Hoy also reported that Mr. Borja had been a Chevron contractor.

Chevron counsel also disclosed this fact to the Lago Agrio court in multiple filings.

Diego Borja, in a sworn statement provided to authorities, also disclosed that he had previously performed work as a contractor for Chevron.

It’s unclear why the Front’s lawyers want to keep talking about government-authenticated videotapes that depict judicial misconduct, especially when Karen Hinton has stated that the Front has “full confidence in the Ecuadorian judicial system.”  It would seem that, in light of the facts, this position is just as misguided as the notion that Diego Borja’s prior work as a contractor is some sort of secret.  However, when faced with the choice of having to explain why their lawyers submitted fabricated expert reports to the court, perhaps a $3 million bribery scheme looks like a better topic of conversation.

The Chevron Pit, a blog “maintained by the team suing Chevron,” has dedicated two consecutive posts to unfounded allegations that Chevron “lied to Columbia Journalism Review writer Martha Hamilton.”  Clearly unhappy with a Columbia Journalism Review critique of “60 Minutes’” coverage of the Ecuador lawsuit, the Amazon Defense Front’s current efforts are only displaying the organization’s complete lack of credibility.  The first round of misrepresentations are documented here. In the latest barrage of misinformation, the “Pit” claims that “it looks like Chevron also lied to her about the drinking water well site near the oil well site.”

According to the Front: “A water sample taken in the trial directly from this freshwater well showed toxic levels of likely carcinogens and harmful heavy metals that are derived from oil, including benzo[a]pyrene, indeno[1,2,3]pyrene, and cadmium. The U.S. government has determined that each of these chemicals are likely or probable carcinogens, as reflected in a toxic substance registry maintained at the Centers for Disease Control in Atlanta.”

We are at a loss to identify the “water sample taken in the trial.” Chevron’s data does not support this assertion and neither does the Front’s.  In fact, the following is a copy of the Front’s water data for samples collected at well site Shushufindi-38. The analysis was performed by Quito-based HAVOC laboratory and row “SSF38‐A2‐GW1‐NF(1.50)m” is their sample from the water well.

There’s a reason the Front makes claims without showing any data – the water well shows no exceedances of United States Environmental Protection Agency (USEPA) drinking water criteria.  As displayed below, the Front’s result for cadmium (cadmio in Spanish) is 0.001 milligrams per liter (mg/L).  The USEPA National Primary drinking water regulation for cadmium is 0.005 milligrams per liter (mg/L).

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Likewise, the following are the Front’s PAH (polycyclic aromatic hydrocarbons, or HAPs in Spanish) results.  Column “A051124” refers to results from the water well.

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The Front’s result for benzo[a]pyrene (pireno in Spanish) is 0.000031 milligrams per liter (mg/L).  The USEPA limit is 0.0002 mg/L.

The Front’s result for indeno[1,2,3]pyrene is 0.000012 mg/l.  There is no USEPA drinking water standard for indeno[1,2,3]pyrene.

So if the Front’s own data undermines the assertions it makes through its blog, what other accusations are being made that can’t be supported?  We already know that the Front’s lawyers submitted fabricated expert reports at the beginning of the trial.   If there was any merit to the Front’s lawyers’ case, they wouldn’t need to resort to making up evidence as they go along.

Last week, we posted a blog entry that detailed two recent Petroecuador spills. In the post we asked why the Amazon Defense Front, Amazon Watch and the Rainforest Action Network have never condemned Petroecuador for the company’s spills and ongoing environmental mismanagement.

After learning about the spills, these groups, who claim to “work to protect the rainforest and advance the rights of indigenous peoples in the Amazon Basin” largely remained silent.  No press releases issued.  No press conferences held.  No campaigns mobilized.  No lawsuits filed.  Instead, only Amazon Watch spoke up, choosing to respond by blog post. Below is an excerpt from the posting, where the author states that the Amazon Defense Front has in fact gone after Petroecuador:

“First of all, the Amazon Defense Coalition – or the Frente – as well as indigenous groups throughout the area have in fact gone after Petroecuador and other oil companies operating in the region on numerous occasions, demanding clean-up of spills, and a general increase in responsible operations.”

This is a dubious claim as we know of no instance in which the Frente has taken on Petroecuador for its operational practices.  In fact, a lawyer for the Frente, Pablo Fajardo, is on the record calling for Petroecuador to stop its long overdue remediation work in the region because it was hurting his case against Chevron. The Frente assuming such a position is not especially surprising since it is the named financial beneficiary of the lawsuit in Ecuador.  Moreover, another lawyer for the Frente, Cristobal Bonifaz, told reporters in Ecuador that his clients had provided a sworn declaration to the government of Ecuador that they would refrain from suing Petroecuador in return for the government’s assistance with their lawsuit.

Meanwhile, Amazon Watch has continually turned a blind eye to events in Ecuador.  Could that be explained by the fact that Amazon Watch has been continually funded by the American trial lawyers suing Chevron?  Could this ongoing financial relationship also explain why Amazon Watch has never called on Petroecuador to clean up its portion of the oil fields, as the company has repeatedly promised to do?

Rather than provide factual information to support its claims, Amazon Watch resorts to the “trust us” retort.

Until there is evidence of these groups going after Petroecuador, one has to question if these lawyers and activists really are advocates of the environment and the indigenous people they claim to represent. Maybe they are more interested in taking Chevron to the cleaners than actually cleaning up the Amazon.

The Amazon Defense Front’s public relations efforts have been in high gear trying to discredit a Columbia Journalism Review critique of “60 Minutes” coverage of the Ecuador lawsuit.  In doing so, the Front’s spokesperson, Karen Hinton, has misrepresented the factual record as it relates to a particular well site, Shushufindi-38.

Shushufindi-38 entered production in 1974 and was ultimately shut down in 1984.  To hear Ms. Hinton tell the story, that’s where the history ends.  Yet, her claim that Petroecuador, Ecuador’s state-owned oil company, did not have any operations at the site after 1992 is false.

The Front ignores the fact that in 1994, and after the expiration of the Petroecuador-Texaco Petroleum Consortium, Petroecuador converted Shushufindi-38 to an injection well, a type of well that returns byproducts from oil production to the geologic formations from where they came.  In fact, 119 pages of Petroecuador maintenance logs demonstrate ongoing Petroecuador activity at the site as recently as 2008.  Petroecuador was performing maintenance at Shushufindi -38 in November 2005 on the very day that a judicial inspection of the site was to occur.  The Front was at the inspection and witnessed Petroecuador’s work first hand and yet continues to make inaccurate statements.

Shushufindi-38 remains in operation today.  However, that is not the limit of Petroecuador activity at the site.  Indeed, since at least 2007, Petroecuador has been performing remediation work at the site.  Why?  Because the site was not assigned to Texaco-Petroleum as part of the company’s remediation program.  Rather, as Petroecuador acknowledges, it is solely responsible for any remediation or clean-up efforts required at Shushufindi-38.  The ongoing work at the site was captured by a Reuters photographer earlier this year.

Ms. Hinton’s Shushufindi-38 media missives also point to existing hydrocarbons at the well site.  The presence of oil at an active Petroecuador well site should come as no surprise to anyone, and further explains why Petroecuador is in the process of cleaning up the site.  Moreover, Petroecuador’s extensive and ongoing maintenance work at Shushufindi-38 explains why the reserve pits at the site remained active and contained freshly deposited crude at the time of the judicial inspection.

Likewise, Ms. Hinton has been highlighting for the media the dubious scientific results the plaintiffs’ lawyers claim came from analysis of soils at Shushufindi-38.  Putting the Front’s misrepresentation of regulatory standards aside, the plaintiffs’ analytical results simply confirm what is already common knowledge, and common sense – that Petroecuador needs to complete its remediation of the site.

The Front’s denial of more than 16 years of Petroecuador activity at Shushufindi-38 is disingenuous.  The truth about Shushufindi-38 is well-documented and Petroecuador’s ongoing clean-up at the site is simply further evidence that Petroecuador is responsible for remediating Shushufindi-38.  Promoting outright falsehoods in an attempt to sway public opinion, as the Front and Ms. Hinton repeatedly do, helps no one, least of all the people of Ecuador’s Amazon.  The Front needs to stop its campaign of misrepresentations, and come clean about Shushufindi-38 as well as its meritless lawsuit.

Reeling from the public revelation that they submitted fraudulent expert reports to the court in Lago Agrio, the Amazon Defense Front’s lawyers are trying to change the topic of conversation.  In doing so, however, they are only making things worse.

On April 20, 2010 Karen Hinton, the Front’s publicist,  responded to a Washington Times editorial critical of the trial lawyers’ misconduct by stating, “contamination results submitted to the Ecuadorian court by Chevron itself show illegal levels of contamination dangerous to human health and the environment at the very pits Texaco said it cleaned.”  This statement is false:

  1. There is overwhelming scientific evidence demonstrating that Texaco Petroleum’s remediation work was effective and complies with the applicable standards established by the government of Ecuador at the time of the remediation.
  2. Independent scientific analysis of every remediated site performed by technicians working for the government of Ecuador at the time of the clean-up further corroborates the effectiveness of the remediation.
  3. Subsequent to the remediation, Ecuadorian Prosecutors General serving two separate administrations have commissioned additional scientific analysis of Texaco Petroleum-remediated sites.  In both instances, the scientific results demonstrate that Texaco’s remediation met and complied with applicable standards.

As the basis for their claims, the plaintiffs’ lawyers point to a 1,000 parts per million (ppm) total petroleum hydrocarbon (TPH) standard in Decree 1215, a regulation enacted by Ecuador’s Ministry of Environment in 2001.  While Decree 1215 was intended to govern environmental aspects of hydrocarbon production, the Ecuadorian constitution prohibits the unfair and retroactive application of a 2001 standard to remediation that was completed in 1998.  Moreover, the 1,000 ppm standard only applies to “patrimony national natural areas or others identified in a corresponding environmental study”—national parks or other designated protected areas.  At no point in time did the remediated oil fields at issue meet this definition.  Further, not even Petroecuador, Ecuador’s state-owned oil company uses this standard.  Petroecuador currently remediates below 2,500 ppm TPH (1215’s agricultural land standard) with the full approval of the government of Ecuador.

In trying to shift public attention away from their own misconduct, the Front and its lawyers are attempting to conceal the truth, only reinforcing their reputation as a one-stop-shop for misinformation. Indeed, instead of explaining why the Front’s lawyers submitted fabricated evidence to the court in Lago Agrio, Ms. Hinton instead questions why the plaintiffs’ former expert, Dr. Charles Calmbacher, who until his recent deposition was unaware that the plaintiffs lawyers had filed fabricated expert reports in his name, “wait[ed] six years to speak up.”  Facts are stubborn things, and it is time for the contingency-fee lawyers behind the Front to end their game of misdirection, and answer for their misconduct in Lago Agrio.

The Ecuadorian government and American trial lawyers are combining forces to influence the outcome of the lawsuit against Chevron in Ecuador. This interactive diagram documents the relationships, the politics and the flow of money.   A newly added dimension in this Web of Influence illustrates the community of interests and how the groups are working together in the hopes of compelling Chevron to settle a meritless lawsuit.  Click here to view this web of influence.

webofinfluence

The silence is remarkable

DATE: Apr. 21, 2010 POSTED IN: Chevron Ecuador Blog Posts

In the space of a week, a Chevron technical team has discovered two fresh oil spills in Ecuador’s oil-producing Amazon region. One covers three hectares (7.4 acres) near state-owned oil company Petroecuador’s Guanta production station in the heart of Cofan indigenous country. The other impacts half a hectare (1.2 acres) in the Sacha field, an area operated by the Rio Napo joint venture.  The spill is near the village of San Carlos where plaintiffs’ lawyers and activists claim oil has caused an outbreak of health problems.

Yet the Amazon Defense Front, Amazon Watch and the Rainforest Action Network – groups backing a meritless lawsuit against Chevron – have said nothing. Despite claiming to advocate on behalf of the environment and the people of Ecuador’s Oriente, there have been no expressions of outrage. No denouncements of the companies operating in these areas. No indignant press releases. No press conferences. And, of course, no lawsuits.

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April 17_2010: Photo facing northwest. General view of Petroecuador’s spill

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April 17_2010: Photo facing southeast showing a berm built to dam fluids as part of the remediation activities by Petroecuador in the spill area located approximately 1 km North of Guanta Production Satation.

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April 10_2010: Remediation activities of recent Petroecuador oil spill from production line near San Carlos.

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April 10_2010: Remediation activities of recent Petroecuador oil spill from production line near San Carlos.

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Location of Recent Oil Spills Occurred in the Former Petroecuador-Texpet Concession Area

Yet this behavior is consistent with an ongoing pattern of ignoring the conduct of Petroecuador and opposing Petroecuador’s clean-up efforts.  Given their track record, one has to ask if these lawyers and activists are really advocates of the environment or the indigenous people they claim to represent?

It very well may be that the Amazon Defense Front, Amazon Watch, and the Rainforest Action Network are more interested in taking Chevron to the cleaners than actually cleaning up the Amazon.

On August 31, 2009, Chevron provided to Ecuadorian authorities and the U.S. Department of Justice video recordings of meetings between the judge presiding over the litigation against Chevron in Lago Agrio, Ecuador and other individuals.  Within days after the video recordings were disclosed, Ecuador’s Prosecutor General asked the judge in Lago Agrio to step down due to his participation in two of the recorded meetings.  Ecuador’s Judiciary Council is currently investigating the judge’s conduct to determine if sanctions are warranted.

The Amazon Defense Front, the named financial beneficiary of the Lago Agrio lawsuit, has sought to discredit the video recordings for months, falsely claiming that the video recordings had been manipulated or edited.  Despite more than seven months of investigation spanning at least two continents and more than five countries, the Amazon Defense Coalition’s investigators have failed to cast any doubt on the authenticity of the videos or explain the judge’s improper participation in the meetings.  Indeed, the Amazon Defense Front investigative efforts further confirm that Chevron had no involvement whatsoever in planning or recording the meetings.

Chevron delivered the video recordings provided by Diego Borja to authorities in Ecuador as well as the United States and called for the appropriate parties to investigate the matter.  The videos showing the participation of Judge Nunez and others in a bribery scheme have been confirmed to be authentic by the forensic expert retained by Ecuador’s Judiciary Council and by an independent forensic expert retained by Chevron.

Through their exploits, the Amazon Defense Front has also tried to attack the evidence Chevron has submitted to the court in Lago Agrio.  Chevron stands by the integrity of its analytical results, which meet the highest scientific standards.  The fact of the matter is that the plaintiffs’ lawyers have tried unsuccessfully for years to prove contamination and harm without any legitimate tests or medical records to support their claims.  Meanwhile, it is clear that the plaintiffs’ lawyers have been falsifying reports from the outset of the trial because the scientific evidence in the trial proves Chevron’s case.

In Sworn Deposition, Expert Denies Authoring Reports Submitted in His Name

SAN RAMON, Calif., Apr. 5, 2010 – Lawyers for the plaintiffs suing Chevron Corp. (NYSE: CVX) submitted fraudulent reports to an Ecuadorian court claiming dangerous contamination was found at Amazon oil well sites, the original technical expert for the plaintiffs revealed in sworn testimony last week.

Charles W. Calmbacher, Ph.D, a U.S. biologist and industrial hygienist who was the first expert appointed on behalf of the plaintiffs in the litigation pending against Chevron in Lago Agrio, Ecuador, testified in a court-ordered deposition last week that reports associated with inspections of the Sacha 94 and Shushufindi 48 well sites were submitted in his name without his knowledge or consent. Dr. Calmbacher said he had never concluded the sites posed a risk to human health or the environment and that his opinions were known to the plaintiffs’ legal and technical teams in Ecuador. Nevertheless, the plaintiffs’ lawyers submitted reports contradictory to Dr. Calmbacher’s conclusions, fraudulently using his signature months after he ceased his participation in the case.

“Their own expert has testified that two of the plaintiffs’ earliest reports are fraudulent, confirming that the trial in Ecuador has been tainted from the outset,” said Hewitt Pate, Chevron vice president and general counsel. “Chevron will petition the Lago Agrio court to strike the plaintiffs’ false Sacha 94 and Shushufindi 48 reports and call on authorities to investigate the misconduct.”

After the lawsuit was filed against Chevron in 2003, the plaintiffs’ lawyers nominated Dr. Calmbacher, and the court appointed him to conduct judicial inspections of oil well sites in the former Petroecuador-Texaco Petroleum Co. concession area to assess alleged environmental damage. Dr. Calmbacher led those inspections for the plaintiffs, supervising the taking of soil and water samples, from August to October 2004.

The fraudulent reports were filed in February and March 2005, and later used by Lago Agrio court appointee Richard Cabrera in his $27 billion damage assessment against Chevron. Cabrera never investigated Sacha 94 or Shushufindi 48, yet specified more than $101 million damages based on the fabricated findings. Dr. Calmbacher also inspected Sacha 6 and Sacha 21, yet the plaintiffs’ lawyers failed to submit reports containing his conclusions regarding those well sites. Dr. Calmbacher testified that he did not find a risk to human health or the environment, or a need for further clean-up, at any of the Texaco Petroleum-remediated sites he inspected. He also said he never concluded that Texaco Petroleum’s remediation in Ecuador in the 1990’s was not successful.

In his March 29 deposition ordered by a U.S. federal court, Dr. Calmbacher said he sent signed signature pages and initialized blank pages to the plaintiffs’ legal team by overnight courier in late 2004 for the submission of reports he thought would contain his true findings. Dr. Calmbacher also testified that the plaintiffs’ lawyers never informed him that the Lago Agrio court had ordered him to answer questions on the reports after they were submitted under his signature in 2005.

Chevron has long claimed the lawsuit is baseless and tainted by scores of irregularities and fraud. The company last September filed a demand for arbitration with the Permanent Court of Arbitration at The Hague asserting that Ecuador’s handling of the Lago Agrio litigation amounts to a breach of the U.S.-Ecuador Bilateral Investment Treaty.

To view Dr. Calmbacher’s full sworn deposition, see www.chevron.com/ecuador/depo.pdf. Additional information on the Ecuador lawsuit can be found at www.chevron.com/ecuador.

Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company’s success is driven by the ingenuity and commitment of its employees and their application of the most innovative technologies in the world. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

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SAN RAMON, Calif. – Mar. 30, 2010 – An international arbitration tribunal has ruled in favor of Chevron in a claim against Ecuador related to past oil operations by Chevron’s subsidiary, Texaco Petroleum Company. The tribunal, administered by the Permanent Court of Arbitration in The Hague, found that Ecuador’s courts violated international law through their delays in ruling on certain commercial disputes between Texaco Petroleum Company and the Ecuadorian government.

Today’s ruling is distinct from arbitral claims Chevron and Texaco Petroleum filed against Ecuador in 2009 in connection with the Lago Agrio litigation.

In its decision, the tribunal found that Ecuador had violated the United States-Ecuador Bilateral Investment Treaty by failing to provide effective means of asserting claims and enforcing rights. As a result, the tribunal awarded Chevron and Texaco Petroleum Company approximately US$700 million in principal damages and interest as of December 22, 2006, pending further proceedings to determine applicable taxes, compound interest, and costs.

“This ruling demonstrates that the government of Ecuador is not above the law,” said Hewitt Pate, Chevron vice president and general counsel. “We have maintained for some time that Ecuador’s courts are failing to administer justice when it comes to Chevron and its affiliates, and an international tribunal has now agreed. We hope this ruling will help move Ecuador towards proper treatment of foreign investors and respect for the rule of law.”

The arbitral award partially resolves seven commercial claims that Texaco Petroleum Company, now a Chevron subsidiary, filed in Ecuador between 1991 and 1993. Ecuadorian courts continually delayed and refused to rule on Texaco Petroleum’s cases, which has been found to constitute a breach of Ecuador’s treaty with the United States.

Chevron and Texaco Petroleum Company filed the arbitration in December 2006 under the Rules of the United Nations Commission on International Trade Law (UNCITRAL). The Permanent Court of Arbitration is an intergovernmental organization with over one hundred member countries established by international convention in 1899 to facilitate arbitration and other forms of dispute resolution. The United States acceded to the Court’s founding convention in 1900 and Ecuador acceded in 1907.

The tribunal is not alone in highlighting the Ecuadorian courts’ failure to provide justice to foreign investors. In February 2009, the United States Department of State released its Investment Climate Statement for Ecuador, which stated, “Systemic weakness and susceptibility to political or economic pressures in the rule of law constitute the most important problem faced by U.S. companies investing in or trading with Ecuador.” The report went on to state, “corruption is a serious problem in Ecuador,” and that, “the courts are often susceptible to outside pressure and bribes.”

Ecuador is defending the second largest arbitration docket in the world with more than 11 claims seeking more than US$6.5 billion in damages. Ecuador has withdrawn from the World Bank’s arbitration program, making it the second country ever to do so, and has indicated its intention to cancel scores of bilateral investment treaties that provide for international arbitration of investment disputes. The country has also fallen out of favor with international financial markets since defaulting on more than $3 billion of foreign debt after a government-appointed panel declared the debt to be “illegitimate.”

Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company’s success is driven by the ingenuity and commitment of its employees and their application of the most innovative technologies in the world. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

# # #

On Thursday, a U.S. judge granted Chevron’s motion to dismiss the government of Ecuador’s attempt to block the company’s international arbitration claim from proceeding. In his decision, Judge Sand declined to stay international arbitration in a dispute between Ecuador’s government and Chevron. Stating in his ruling that, “a stay of arbitration is inappropriate.”

Chevron is pleased that the Bilateral Investment Treaty arbitration can proceed.  Chevron is seeking to hold Ecuador and its government owned oil company, Petroecuador, to the promise they made to complete the environmental cleanup of the Amazon.

Texaco Petroleum did its share of the cleanup as promised, and Petroecuador now needs to own up to its promises and address the environmental problems wrongly being blamed on Chevron.

Only the international arbitration panel can bring Ecuador to the table and compel Petroecuador to do the right thing and clean up its oil fields. With today’s decision, we are one step closer to making that a reality.

This past Tuesday, executives from Chevron hosted a meeting in San Ramon including Cofan representative Emergildo Criollo and advocates from the Rainforest Action Network (RAN) as well as Amazon Watch.  Following the meeting, Chevron’s Manager of Global Issues and Policy, Silvia Garrigo posted the following comment to RAN’s blog:

“This is Silvia Garrigo from Chevron.  I want to thank RAN for the opportunity yesterday to meet with Emergildo, Maria, and Mitch.  Spending an hour together in our headquarters and hearing Emergildo’s story was a valuable experience.  We can all agree that his personal story is moving and heartfelt.  And we can all agree that there are unacceptable environmental conditions in Ecuador’s Amazon.  While there may be many areas where we do not agree, it is important for us to listen to each other.  We believe RAN and Chevron can share common ground on some important points.  Thank you again for meeting with us.  We look forward to continuing a constructive dialogue.”

Chevron views Tuesday’s meeting as an important first step towards building trust.  It is our hope that subsequent meetings can move future conversations past rhetoric and towards a constructive dialogue about solutions.

An independent expert working for Ecuador’s Judiciary Council has filed a report stating that the videotapes Chevron provided to the government of Ecuador and the U.S. Department of Justice are authentic and unaltered.

In late August of last year, it was revealed on video that Judge Juan Núñez, who was then presiding over the lawsuit against Chevron in Ecuador, had prejudged the case (even though evidence was still being submitted and final arguments had not been held) and may be involved in a $3 million bribery scheme.

The judge was willing to talk about his pending decision with businessmen (Hansen) seeking post-verdict remediation contracts. The following is a transcript of that conversation:

- Núñez: “Any other questions for me as a judge?”

- Hansen: “Oh no, I, I know clearly how it is, you say, Chevron is the guilty party?”

- Núñez: “Yes Sir.”

- Hansen: “And the, the, the act (decision) is October or November of this year?”

- Núñez: “Yes Sir.”

- Hansen: “And it’s …?”

- Núñez: “No later than January.”

- Hansen: “January 2010. And the money is twenty-seven (billion dollars)?”

- Núñez: “It might be less, and it might be more.”

After analyzing the videos from which this conversation was transcribed, the expert found that:

  1. The videos were authentic and showed no evidence whatsoever of any kind of manipulation.
  2. The videos were proven to a scientific certainty to contain the unaltered voices of purported government officials and others who participated in the meetings.

The expert report puts to rest the false claims that the plaintiffs’ lawyers and Judge Núñez himself have made in attempts to cover up this abuse of the judicial system. Judge Núñez insisted to the Wall Street Journal that he could “see things that have been erased” and that someone “cut and pasted certain things.”

In calling into question the authenticity of the video tapes, the plaintiffs’ representatives had also insisted that the tapes had been digitally altered.

The expert’s report further emphasizes the improper conduct on the part of Judge Núñez as well as individuals affiliated with Ecuador’s ruling political party. To date, Judge Núñez has not been sanctioned for his misconduct and his prior rulings in the Chevron lawsuit remain part of the record.

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.

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 interestThis 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 has revealed new information showing that the author of a report recommending the company 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 that stands to gain financially from a judgment against Chevron.

Records from 2003-2008 show that Cabrera is co-founder, general manager, majority stockholder, and legal representative of an oilfield remediation company, CAMPET, which is registered to perform oilfield remediation and other services for Petroecuador.  Cabrera failed to disclose these business interests as required by law.

In his report, Cabrera absolves Petroecuador of any responsibility or remediation obligations associated with past or present oil operations.  Yet, Petroecuador was the majority owner of the Petroecuador-Texaco Petroleum consortium which operated until mid-1992.  Moreover, there is substantial evidence that Petroecuador has spilled millions of gallons of oil since taking over exclusive ownership and operations.

Instead, Cabrera exclusively attributes pollution in the Amazon region of Ecuador to Texaco Petroleum, now owned by Chevron.  Cabrera’s report says Chevron, because it acquired Texaco Petroleum in 2001, is solely liable for $27 billion in damages, citing grossly inflated remediation costs while ignoring Petroecuador’s role in oil operations and its well-documented poor environmental performance. These findings make no sense as a matter of Ecuadorian law or common sense, but are consistent with furthering the interests of Petroecuador, as well as Cabrera’s.

Not only did Cabrera hide his financial interests in the remediation company, he affirmatively represented to the court that he did not have any impediment or conflict that would affect his performance as an “independent” court-appointed witness.  Moreover, Cabrera knowingly omitted his interest in CAMPET, as well as CAMPET’s status as a registered Petroecuador contractor, in his submissions to the court.  Finally, Cabrera further misled the court by accepting his appointment, which required an explicit acknowledgment of his duties to the court as an impartial analyst—something Cabrera could not have done in good faith, given his financial interests.

Due to the remediation company’s relationship with Ecuador’s state-owned oil company, Petroecuador, Chevron has called upon the court to immediately reject the work of Richard Cabrera on the grounds that he knowingly hid his relationship and that he stands to gain from what was supposed to be unbiased work for the court.

Lawyers for the Government of Ecuador Engage in Revisionist History- Myth of Jurisdiction Exposed
“In a lawsuit filed Thursday, the plaintiffs say Chevron broke a promise Texaco Inc. made in 1999 to a New York federal court to abide by the Ecuadorean legal system if the court dismissed the environmental case.” – Wall Street Journal, 10/14/10
Chevron has never operated in Ecuador, a fact that cannot be disputed. Texaco’s role in oil operations in the country ended in 1992. Since then, Ecuador’s government owned oil company, Petroecuador, has been the exclusive operator of the oil fields and has amassed a deplorable environmental record.
The claim filed against Chevron on January 14 is erroneous and subsequent media statements by the plaintiffs are incorrect and misleading. Chevron did not agree to any stipulation concerning jurisdiction in Ecuador. In fact, Chevron was not a party to the prior New York action. American trial lawyers are once again distorting the record. To clarify, the case that was brought against Texaco in New York is totally different than what has been brought against Chevron in Ecuador. The case against Chevron in Ecuador does not seek an award for the 48 named plaintiffs. Rather, it seeks to force Chevron to pay for the remaining remediation work that the government of Ecuador has never performed. Under an agreement with the government of Ecuador, Texaco spent $40 million performing its agreed-upon share of the clean-up work. Texaco obtained full and complete releases after meeting all the requirements placed upon it by the government of Ecuador.  The remaining remediation work required is the exclusive responsibility of the government of Ecuador. The case against Texaco in New York was dismissed. Period.  It was not moved, transferred, or refilled. A brand new and totally different case was brought against Chevron in Ecuador. There are no stipulations from the New York action that cover a different claim against a different party in Ecuador. Texaco never waived its rights to seek the enforcement of valid agreements and contracts with the government of Ecuador. Texaco has never waived its rights to resist a verdict that is the product of fraud and a broken legal system.
It is important to understand that the two cases are very different. The case brought against Texaco in New York was about alleged personal injuries and alleged personal damages. The case against Chevron in Ecuador is exclusively about alleged damages to public lands. Of the 48 plaintiffs in the Ecuador case, there are no claims for personal injury or personal damages of any kind.

“In a lawsuit filed Thursday, the plaintiffs say Chevron broke a promise Texaco Inc. made in 1999 to a New York federal court to abide by the Ecuadorean legal system if the court dismissed the environmental case.” – Wall Street Journal, 1/14/10

Chevron has never operated in Ecuador, a fact that cannot be disputed. Texaco’s role in oil operations in the country ended in 1992. Since then, Ecuador’s government owned oil company, Petroecuador, has been the exclusive operator of the oil fields and has amassed a deplorable environmental record.

The claim filed against Chevron on January 14 is erroneous and subsequent media statements by the plaintiffs are incorrect and misleading. Chevron did not agree to any stipulation concerning jurisdiction in Ecuador. In fact, Chevron was not a party to the prior New York action. American trial lawyers are once again distorting the record. To clarify, the case that was brought against Texaco in New York is totally different than what has been brought against Chevron in Ecuador. The case against Chevron in Ecuador does not seek an award for the 48 named plaintiffs. Rather, it seeks to force Chevron to pay for the remaining remediation work that the government of Ecuador has never performed. Under an agreement with the government of Ecuador, Texaco spent $40 million performing its agreed-upon share of the clean-up work. Texaco obtained full and complete releases after meeting all the requirements placed upon it by the government of Ecuador.  The remaining remediation work required is the exclusive responsibility of the government of Ecuador. The case against Texaco in New York was dismissed. Period.  It was not moved, transferred, or refilled. A brand new and totally different case was brought against Chevron in Ecuador. There are no stipulations from the New York action that cover a different claim against a different party in Ecuador. Texaco never waived its rights to seek the enforcement of valid agreements and contracts with the government of Ecuador. Texaco has never waived its rights to resist a verdict that is the product of fraud and a broken legal system.

It is important to understand that the two cases are very different. The case brought against Texaco in New York was about alleged personal injuries and alleged personal damages. The case against Chevron in Ecuador is exclusively about alleged damages to public lands. Of the 48 plaintiffs in the Ecuador case, there are no claims for personal injury or personal damages of any kind.

In 1993 Ecuador and United States inked a bilateral investment treaty (BIT) designed to encourage private sector development in Ecuador and to protect U.S. investment in the country.

But the government of Ecuador has long sought to evade its BIT obligations. In fact, Ecuador clearly broke this treaty when the country pursued a bad-faith, coordinated strategy with the Lago Agrio plaintiffs to use them as “stalking horses” in an attempt to avoid its own remediation responsibilities and contractual obligations, and instead to impose public environmental liabilities on Chevron only a few years after having settled and released Chevron from such liabilities. Chevron was therefore compelled to file an international arbitration claim against Ecuador under the BIT.

This filing likely came as no surprise to Ecuador. In fact, the government of Ecuador is notorious for unilaterally breaking contracts and evading its obligations. It was not until 2001 that the country of Ecuador was sued for the first time by a foreign company. However, since 2008, the year after President Rafael Correa took office, a large number of foreign companies began to file lawsuits. Currently, Ecuador is 2nd in the world in terms of pending international arbitration claims against the country; so much so that the cumulative sum of the 11 pending lawsuits would now equal nearly one-half of the country’s annual budget.

Desperate to avoid arbitration, Ecuador petitioned to have a U.S. court halt Chevron’s BIT claim. In doing so, Ecuador is seeking to delay arbitration and avoid ever having to own up to its treaty obligations. Further, it has become clear that Ecuador is aware that the country’s  repudiation of its contractual obligations — combined with its denial of due process to foreign investors litigating in its courts — will not stand up to international scrutiny. Given the volume of international arbitration currently pending against the government of Ecuador, its action was unsurprising and suggests that the government must recognize that it will lose if this case proceeds before a legitimate and impartial forum.

There is no basis in fact or law for Ecuador to get a federal judge to stay arbitration that Ecuador agreed to by treaty with the United States. For that reason, on Jan 19th, Chevron filed a motion to dismiss the government of Ecuador’s opposition to international arbitration. More importantly, Chevron’s arbitration claim should proceed and the government of Ecuador should abide by its treaty and contractual obligations.

The government of Ecuador and the American trial lawyers behind the lawsuit have colluded yet again in their attempt to extort $27 billion from Chevron.

Fenton Communications, the public relations agency that the government of Ecuador has paid $30,000 per month to “polish” President Rafael Correa’s public profile in the United States, and to lobby the U.S. Congress on its behalf, is now colluding with trial lawyers who are trying to extort money from Chevron Corporation.

On January 13, Correa’s PR firm issued a press release in an effort to tear down, with false accusations, new Chevron chairman and chief executive officer John Watson, just days into his term. In doing so, Fenton partnered with Amazon Watch, a San Francisco-based activist group that has partnered with and donated at least $67,889 to the Amazon Defense Coalition, the named financial beneficiary in the environmental lawsuit in Ecuador.

The New Yorker described Fenton Communications as a “firm that the government of Ecuador has hired to help Correa polish his profile in America,” while the agency’s own website touts its strategy to push for Ecuadorian trade benefits in Washington, D.C. over the past several years.

Time and again, President Correa has openly sided with the plaintiffs who are suing Chevron. This latest revelation weaves the web of connections even tighter between the forces that have levied fraudulent claims against Chevron and the supposedly impartial government of Ecuador.

This episode also further reinforces the fact that Chevron cannot receive a fair trial in Ecuador. It is clear the Government of Ecuador, its consultants and activist NGO partners are driving an illegitimate court process that will likely result in an unjust and unsubstantiated verdict against Chevron.

U.S. trial lawyers representing 48 Ecuadorian plaintiffs (not 30,000) are attempting to hold Chevron liable for more than $27 billion. Amazingly, this astronomical number mostly goes unquestioned. So what goes into creating a figure that is 10 times the cost to remediate the nation of Kuwait post Gulf War?

First, one must consider its origin.  The $27 billion was presented by Richard Cabrera, a mining engineer with no oilfield remediation experience.  Cabrera was named by the court to assess possible environmental damage in the former concession area and, if any, determine the cause and work needed to fix it. In addition to being unqualified, Cabrera ignored court instructions and improperly expanded his work scope to invent categories of damages unrelated to the issues raised by the lawsuit or with environmental remediation. Not surprisingly, his appointment was fully supported by the plaintiffs’ representatives who ultimately paid Cabrera more than $200,000 for his work.  Perhaps most egregious, however, is the fact that Cabrera staffed his technical team with plaintiffs’ representatives and portions of his “independent” report were developed by organizations affiliated with the plaintiffs [click here] and [here].

Following is a breakdown of Cabrera’s fraud:

Pit remediation: Proposed damages ($2.743B)

Petroecuador has publicly acknowledged responsibility for remediation of all existing oilfield pits associated with their nearly 40 years of operations in the Oriente region of Ecuador, including all of the remaining pits in the former Petroecuador-Texaco concession.  In 2005, Petroecuador initiated a $121-million remediation program, termed the “Pit Remediation Project of the Amazon District” (PEPDA), with the goal of completing the closure of all pits, spills, and other affected areas in accordance with applicable Ecuadorian regulatory standards by 2010.  As of December 2007, the PEPDA program had initiated and/or completed remediation of more than 40% of the 370 open pits identified in the former concession area, with formal inspection and approval by the government regulatory agency, DINAPA (Dirección Nacional de Protección Ambiental).  Under a new program, designated UMR (Unidad de Mitigación y Remediación), a successor program to PEPDA, Petroecuador remains committed to completing the remediation of all remaining pits and oil spill areas in the Oriente within the next few years.

In the Chevron case, the plaintiffs have charged that the oilfield pits in the Oriente pose a grave danger to local residents and the environment, and they have demanded that Chevron, whose subsidiary Texaco Petroleum served as a minority partner of Petroecuador nearly 20 years ago, pay the plaintiffs for the cost of remediation – regardless of the fact that these same pits have already been or will soon be remediated by Petroecuador.  Indeed, the lead attorney for the plaintiffs, Pablo Fajardo, has even protested the Petroecuador cleanup program, complaining that it is “changing the lawsuit” and “hiding” evidence.  In October 2007, he submitted a formal letter to the court demanding that the remediation be stopped.

Coincidentally, Cabrera’s $2.743 billion estimate for pit remediation, over 150 times the Petroecuador budget of $18 million for this work, is based upon a highly inflated unit cost (over 36 times the actual per pit cost reported by Petroecuador) as well as a highly inflated estimate of the number of pits (over 4 times the actual number of oilfield pits remaining in the former concession).

Groundwater remediation: Proposed damages ($3.236B)

Cabrera arrives at this figure with no evidence to substantiate a damage claim. He took NO samples from rivers, streams, wells or potable water sources.  His handful of “groundwater samples” in the former concession area, actually come from borings taken from within pit areas and are in no way representative of what geologists or hydrologists would consider groundwater.

Healthcare system: Proposed damages ($480 MM)

While health is a serious concern in the region due to widespread fecal contamination of drinking water, the construction of a health care system is clearly not Chevron’s responsibility, nor has it ever been part of the litigation. Plaintiffs’ attorney Julio Prieto underscored this in a recent Radio Majestad interview when he said, “in the claim we have not requested any health issue in particular.”

It’s the sole responsibility of Ecuador’s government, which encouraged massive migration to the region and failed to provide the most basic sanitation services like sewage treatment.

Impacts on indigenous populations: Proposed damages ($430 MM)

Populations of all indigenous groups in the region have grown markedly throughout the period since oil was discovered in Ecuador’s Amazon. Meanwhile, deforestation and encroachment on indigenous lands by settlers was a direct result of the Ecuadorian state’s colonization policy, not oil development. When oil exploration began in the 1960′s, the population of the region was approximately 25,000 – largely native peoples and missionaries. Today, the region is among the fastest growing in Ecuador, home to more than 300,000 citizens who have converted jungle to agricultural lands at the government’s behest.

Potable water system construction: Proposed damages ($428 MM)

Numerous potable water systems exist in the region, but Cabrera failed to take samples from them. Likewise, Cabrera failed to sample rivers, streams, or wells.  So, how does he know more potable water systems are needed? And how does he justify holding Chevron liable for creating a potable water system for the entire region when the main problem with drinking water is bacterial – not hydrocarbon – contamination?

Petroecuador’s infrastructure: Proposed damages ($375 MM)

Ecuador’s government and state took in approximately $25 billion over the 20-year life of the consortium. Texaco Petroleum earned $490 million, its contract expired in 1992 and it left Ecuador after successfully conducting remediation, carrying out social programs and upgrading equipment under an agreement with the state. For two decades, Petroecuador has been exclusive operator of the former consortium oilfields, earning 100 percent of an estimated $50 billion in additional revenue. So, having earned some $75 billion, shouldn’t Petroecuador maintain, replace and build out its own infrastructure?

Excess cancer deaths: Proposed damages ($9.527B)

Neither Cabrera, nor the plaintiffs’ lawyers, have ever presented to the Lago Agrio court the name of a single cancer victim, a single medical report or a single death certificate to substantiate this claim. What’s more, official cancer mortality statistics in Ecuador reveal that, not only are Cabrera’s assertions false, but the cancer rate in the oil-producing region is actually lower than in non-oil producing regions of the country. Finally, the only time a lawyer for the plaintiffs presented specific cancer claims before a court (in U.S. federal court in San Francisco), the claims were thrown out after Chevron showed them to be false.  The lawyer, the originator of the Lago Agrio case, was fined $45,000 and sanctioned for the fabrications.

Deforestation of stations, wells and roads: Proposed damages ($875MM-$1.697B)

Ecuador’s government required that the consortium construct roads throughout the region to facilitate the state’s colonization program. Moreover, the total footprint of actual oil operations in the former concession area amounts to roughly 6.8 square kilometers. If roads are included, the footprint grows to just over 44 square kilometers. This is an important fact to consider in a concession area of 4,429 square kilometers that produced approximately $25 billion for the Republic of Ecuador.

Unjust enrichment: Proposed damages ($8.421B)

Central Bank figures show that Texaco Petroleum earned $490 million while the Republic of Ecuador received, through taxes, royalties, internal market subsidies, dividends from Petroecuador’s majority stake and other revenue, approximately $25 billion during the 20-year consortium.

Problems with Cabrera’s work are not limited to his absurd damage recommendations. The reports themselves are filled with mathematical and scientific errors. On a number of occasions he simply fabricates evidence. He gathered much of his “evidence” with the help of the plaintiffs’ technical team. He copied into his reports whole blocks of text from the plaintiffs’ court filings to justify some of his most outlandish assertions, such as his cancer claims and the remediation estimates. He fails to mention Petroecuador’s responsibility for environmental problems in the region despite its 62.5-percent majority stake in the consortium and its status of exclusive operator in the former concession area for almost 20 years.

Cabrera also fails to acknowledge Texaco Petroleum’s $40 million remediation related to its approximate one-third stake in the consortium, or the 1998 release from future claims granted to the company by the government and Petroecuador. Finally, the court’s appointee is unconstrained by the fact that the plaintiffs are suing Chevron strictly for environmental remediation costs. “So,” you may ask, “with all of the above in mind, how could a law-abiding, fair-minded, and independent court allow such absurd damage claims stand as the basis for a verdict?” The answer is, “a law-abiding, fair-minded, and independent court couldn’t.”

Chevron supports the legislation passed today to extend trade preference programs including GSP and the Andean Trade Preferences program.  We have long supported trade preference programs for the important benefits they bring to U.S. firms, workers and to the beneficiary countries.  We are pleased that Congress has seen fit to include an accelerated review of Ecuador’s compliance with the program, which will provide the Administration with the opportunity to continue to monitor the issues raised about Ecuador in its June 30th report to the Congress on the operation of the Andean Trade Preferences Program.

Concerns about the rule of law, politicization of the judicial process and treatment of U.S. companies in Ecuador require regular monitoring to ensure that Ecuador meets the obligations required in order to enjoy these trade benefits.  We also believe the shorter term extension provides an opportunity for the program’s important benefits to be extended while Congress undertakes a broader review of the programs.

“It will be very expensive to clean up, but far less than the profits they took out of Ecuador.” – Steve Donziger, lead trial attorney.  Commondreams.org: 10/29/09.

Mr. Donziger’s math is finally adding up and, perhaps unintentionally, Mr. Donziger has exposed one of the most fraudulent aspects of the Ecuador trial – the $27 billion damage recommendation known as the “Cabrera Report.”

The assessment developed by the plaintiffs’ representatives and delivered to the court by mining engineer Richard Cabrera looks to hold Chevron liable for more than $27 billion in damages. In part of the dubious $27 billion claim, Cabrera recommends Chevron pay damages of $2.743 billion for pit remediation.  In comparison, Petroecuador, the government-owned oil company responsible for the current condition of Ecuador’s oil fields, remediates pits to current laws and standards at a cost of $85,000 per pit. Cabrera’s estimates imply a per-pit remediation cost of up to $3 million per pit. This recommendation is more than 30 times higher than the cost the state pays for pit remediation.

Meanwhile, Texaco Petroleum made less than $500 million during the days of the consortium.  The vast majority of the proceeds, approximately $25 billion, went to the government of Ecuador.  And, at the conclusion of the consortium, Texaco Petroleum performed remediation work at 108 of 321 well sites – work that corresponded with the company’s 37.5% stake in the consortium. The remaining remediation is the admitted responsibility of Petroecuador.

So, no matter how you slice it, Mr. Donziger has finally conceded the truth about remediation costs.  Any realistic assessment of the conditions in Ecuador clearly shows that the remediation work for which Petroecuador is responsible would cost a fraction of what Mr. Donziger and his colleagues have contended.  Now, if they would only focus their efforts on the responsible party rather than the deep pockets, some solutions might actually occur.

“This lawsuit started in the United States and is financed by a law firm.” – Julio Prieto, plaintiff’s attorney

In a December 7th interview with Ecuadorian radio station Majestad, plaintiff’s attorney Julio Prieto makes mention of a law firm bankrolling the environmental lawsuit currently pending against Chevron in Ecuador.

The referenced firm is Kohn, Swift & Graf PC of Philadelphia, the primary entity providing a majority of, if not all of the funding for the lawsuit against Chevron.

When U.S.-based trial lawyer, Cristóbal Bonifaz, first concocted the original lawsuit against Texaco in 1993, he contacted Harold Kohn, a Philadelphia class-action lawyer. Shortly thereafter, Kohn’s son, Joe, who later became a partner at Kohn Swift & Graf, signed on. Subsequently, Kohn enlisted Steven Donziger, a New York-based trial lawyer who went to law school with Bonifaz’s son.

When asked about his motivation for taking on the case against Chevron in the movie Crude, Joe Kohn candidly stated, “it was not taken as a pro bono case, you know, a lot of my motivation is, at the end of the day… it will be a lucrative case for the firm.”

As part of the Kohn, Swift and Graf financed PR campaign to take Chevron’s reputation hostage and ransom it back to the company in the form of a large settlement, Kohn has hired DC lobbyist Ben Barnes to lobby the US Congress on “environmental matters resulting from oil exploration in Ecuador.” Barnes then hired DC based PR representative Karen Hinton to spread misinformation and distort the facts of the case.

Years of misinformation and distortion spread by U.S. trial lawyers and their PR cohorts lead the public and media to believe that 30,000 indigenous Amazonians are behind this lawsuit, and that any financial award from a settlement or verdict would go to the indigenous peoples of the Oriente.

However, the truth tells a different story.  Kohn’s firm has coordinated a series of economic and political relationships between the Ecuadorian government, U.S. trial lawyers and activist groups in an effort to put pressure on a small rural courtroom in Lago Agrio, Ecuador, to find Chevron guilty in an environmental lawsuit. Any financial awards as a result of a settlement or judgment against Chevron would invariably go only to the Ecuadorian government and the U.S. contingency fee lawyers driving this frivolous lawsuit. In fact, Washington Pesántez Prosecutor General of Ecuador confirmed that “90% [of any judgment against Chevron] would be delivered to the State…”

One thing is certain, Chevron will continue to fight this misguided and disingenuous lawsuit until justice prevails.

A recent Los Angeles Times editorial on Ecuador’s trade preferences with the United States curiously ignores evidence of Ecuador’s hostility to the United States and erroneously asserted that Chevron is calling for an end to beneficiary status for Ecuador under the Andean Trade Preferences Act.  While more than one organization is calling for “halting the trade agreement” with Ecuador, Chevron is not.  Chevron argues that countries should not be unconditionally rewarded with unilateral trade benefits even as they flout commercial obligations with the United States.  Because Ecuador has taken a series of actions to undermine trade and investment rules, Chevron is calling for treating Ecuador differently under the Andean trade act than the other two countries included in the act, Peru and Colombia.  Chevron is proposing several ways for Congress and the administration to treat Ecuador differently, including statutory periodic reviews or limiting preferences to private entities and firms in Ecuador, not to government-owned entities such as Ecuador’s state-owned oil company, Petroecuador.

The claim made by the Los Angeles Times, that Ecuador has “demonstrated a willingness to work with the U.S.” does not reflect what is actually happening with the bilateral relationship.  In the last year alone, Ecuador has taken a variety of actions that demonstrate its hostility to U.S. interests.  For example, it evicted the United States from an air base where it ran drug interdiction efforts for at least a decade.  It also became only the second country in history (after Bolivia) to withdraw from a 156-member international dispute settlement body after calling the body “an atrocity” that “signifies colonialism” and “slavery . . . to Washington.”  It also announced intent to withdraw from investment treaties with the United States and a dozen other countries, and it provided Ecuadorian interests a roadmap for using U.S. intellectual property rights without permission.  The situation in Ecuador has gotten so bad that in November, Transparency International called Ecuador one of the most corrupt governments in the Americas, with a score worse than 27 of the 31 countries tallied in the Hemisphere and 146th out of 180 countries total worldwide.

Ecuador once was a U.S. ally that respected the rule of law, but that has not been the case in recent years, and its treatment of U.S. investors and its obligations on investment and contractual matters reflects that change.  The U.S. government, Transparency International, and the World Bank have all noted serious concerns with Ecuador’s judicial system and adherence to the rule of law.  Contrary to the editorial’s assertion, Chevron is not asking the U.S. to force a favorable outcome in the case.  It asks for a fair hearing, a hope that Ecuador will honor its contractual obligations, and consideration of Ecuador’s actions on well-established trade and investment treaties and guidelines.

Chevron has been a longstanding supporter of trade preferences program.  However, we believe that extending unilateral trade preferences should carry with it some type of recognition that the recipient countries must adhere to the rule of law and trade and investment obligations.  We would hope that U.S. policymakers, and Los Angeles Times editorial writers, believe in this same standard.

“By commencing the arbitration, it is Chevron that is trying to escape its commitments,” – Eric Bloom, attorney representing the Government of Ecuador

On the contrary, the Republic of Ecuador’s complaint against Chevron in the Southern District of New York is frivolous in much the same way as the lawsuit against Chevron in Ecuador.  Both are based on the made-up idea that Chevron agreed in 2001 to submit itself to the jurisdiction of Ecuador’s courts.   But Chevron, which was in no way involved in the proceedings in 2001, never consented to anything, and Texaco certainly never agreed to submit to jurisdiction in Ecuador to face fabricated claims, biased courts, and corrupt proceedings being dictated against it by Ecuador’s government.  That is precisely why Chevron initiated its BIT arbitration.  The arguments made by the Republic in its New York lawsuit ignore these basic truths and are not grounds for enjoining arbitration anyway.   Given the extensive docket of international arbitration claims challenging Ecuador’s repeated disregard for its legal obligations and the rights of investors in its country, it is not surprising that Ecuador would seek to evade another reckoning by an honest, international panel.

Above Board?

DATE: Nov. 16, 2009 POSTED IN: Chevron Ecuador Blog Posts

In a statement from the pages of Politico.com, Amazon Defense Coalition PR representative, Karen Hinton asserts that the ADC’s tactics are “above board.”  Does Hinton’s definition of “above board” include repeatedly lying about a murder to gain the sympathy and support of a well-intentioned, unsuspecting public? Hinton once again misrepresents a subject we’ve covered here before: the 2004 murder of Wilson Fajardo, brother of plaintiffs’ lawyer Pablo Fajardo.

Hinton asserted her side’s tactics have been above board, adding that, though “no one knows who murdered [the lawyer’s] brother,” the killing came at a time when the lawyer “and other members of the plaintiffs’ legal team had received a number of anonymous death threats connected to the work on the case.”–Politico.com, November 16, 2009

That sounds a lot like the line Pablo Fajardo himself told an audience in Zaragoza, Spain in 2008:

Fajardo has denounced “many problems” during the lawsuit. He mentioned telephone calls, letters and threats. He even said that his brother was murdered during the process. “I cannot say that Chevron killed him, nor can I say they did not.” –EFE Newswire, September 2, 2008

It’s also the same line the Goldman Foundation embraced when it awarded Fajardo its 2008 Environmental Prize:

Fajardo’s brother was killed just months after he joined the legal team; no investigation has taken place and no one has been arrested for the homicide. — Excerpt of narrative from Goldman Environmental Prize

And it’s the line Amazon Watch has disseminated for years:

Fajardo and Yanza have received death threats in Ecuador during their work on the case, and the brother of Fajardo was murdered in 2004 in what observers think may have been a case of mistaken identity. – Amazon Watch Press Release, April 16, 2008

In reality, Wilson Fajardo’s death has been thoroughly investigated and police reports have identified the local individuals responsible. For those interested in the truth, check out a prior post on subject, as well as documents dating back to 2004 that include reports from the police, prosecutors, witnesses and the forensic analysis. You will also find Fajardo’s August 2004 letter asking authorities to investigate his brother’s tragic death, where he identifies the people involved in the crime and never once mentions any connection to Chevron or the Lago Agrio litigation.

With facts and science against them, this is just another example in a long line of lies and fabrications perpetuated by U.S. trial lawyers in an attempt to hold Chevron’s reputation hostage and  ransom it back to the company in the form of a settlement.

The U.S. trial lawyers behind the environmental lawsuit in Ecuador consistently assert that Chevron, a company that has never operated in Ecuador, is somehow responsible for the current state of Petroecuador’s environmental mismanagement. Moreover, when confronted with the reality of Petroecuador’s reckless performance over the last two decades, the lawyers try to claim that Petroecuador’s pollution is Chevron’s responsibility because (as they put it) Petroecuador “inherited” a “flawed production system” from Texaco Petroleum.

Such claims are patently false.

(1)   It is well documented that Texaco Petroleum, now a fifth tier subsidiary of Chevron, operated in Ecuador as a minority partner with state owned Petroecuador. All consortium decisions were made jointly by Petroecuador, the Government of Ecuador and Texaco Petroleum. In fact, the system that Petroecuador assumed full responsibility for in 1992 was constructed in a manner consistent with applicable Ecuadorian regulations and with industry practices that are still in use in many places in the world today.

(2)   In the last two decades, Petroecuador has spent over a billion dollars to more than double the size number of wells in the concession area. In an effort to increase oil production, Petroecuador has drilled more than 400 wells, which represent a cost of more than $1.2 billion and performed thousands of well workovers (250 at an approximate cost of $170,000 each in 2009). Yet, Petroecuador has spent little on corrosion prevention and maintenance which is critical to prevent oil spills. They also continue to use unlined pits, having constructed at least 270 pits (over 90% of which are located in the former concession area) in the last 3 years.

ecuadormediaclipsspills

Montage of Ecuador media headlines showing numerous spills.

In the early 1990’s, after the Government of Ecuador made the decision not to renew the concession agreement, Texaco Petroleum spent $40 million remediating its share of the consortium operations. The Government of Ecuador then signed off on this remediation and granted Texaco a full release of liability from any future claims. Petroecuador has repeatedly acknowledged that it is their responsibility to remediate the rest of the sites in the concession area including “all of the pits.”

Since assuming complete control over Oriente oilfield operations, Petroecuador’s operations have generated over 1.2 billion barrels of crude oil and 260 million cubic feet of natural gas, representing a market value of over $57 billion. While the company has recently funneled more than a billion dollars into drilling new wells to maximize oil profits, they have spent little on environmental remediation and socioeconomic projects in the area. The lack of spending on maintenance and proper safeguards against spills has led to crumbling flowlines and pipelines, which has resulted in a deplorable record of oil spills.

Despite Petroecuador’s ongoing pollution, neither the Amazon Defense Coalition nor Amazon Watch has made Petroecuador a focus of their Oriente clean-up campaign, and they have never pursued any legal action against the state oil company. In fact, when Petroecuador began remediating pits in 2006, the Amazon Defense Coalition demanded that the company stop their long awaited cleanup plans as these efforts were “changing the lawsuit.”

While the U.S. trial lawyers and their partners consistently portray Petroecuador’s ongoing environmental mismanagement as the responsibility of Chevron, it is clearly not. The facts are clear – Texaco Petroleum acted responsibly and cleaned up its share of the consortium years ago, while the Government of Ecuador and Petroecuador have chosen profits over environmental stewardship.

An elaborate series of relationships between the Ecuadorian government, U.S. trial lawyers and activist groups show that strong economic and political ties exist in their efforts to put pressure on a small rural courtroom in Lago Agrio, Ecuador, to find Chevron guilty in an environmental lawsuit.

This interactive diagram highlights these relationships and provides an examination of the forces behind the lawsuit. The Web of Influence diagram shows that the legal case against Chevron in Ecuador is a coordinated effort by U.S. trial lawyers and activist NGOs working with the executive branch of the Ecuadorian government to influence the Ecuadorian judiciary to ensure a guilty verdict against Chevron.

Click here to view this web of influence.

Chevron is being blamed for a situation that is the sole responsibility of the Ecuadorian government and Petroecuador.

Petroecuador, Ecuador’s state-owned oil company, was the majority partner in the consortium with Texaco Petroleum. Today, Petroecuador still owns and operates the oilfields in the former Concession area as well as other fields in the Amazon. Petroecuador took over consortium operations in 1990 and became the sole owner of the consortium fields and installations when Texaco Petroleum’s concession contract expired in 1992. Since that time, Petroecuador has developed a widely acknowledged record of operational and environmental mismanagement, due to, among other things, widespread corruption, a lack of investment in, or proper maintenance of its equipment and installations, and numerous spills.

Petroecuador’s environmental record is alarming.  The company has been responsible for more than 1,400 spills between 2000 and 2008.  According to media reports, Petroecuador has spilled over 4.4 million gallons of oil at oil production and storage sites and along its various pipelines.

Meanwhile, Petroecuador has significantly increased the footprint of oil operations within the former consortium fields.  For instance, the company has drilled more than 400 new wells since taking over while the consortium operated 321 wells.  Likewise, Petroecuador has constructed more than 270 new reserve pits in the last three years alone.  All the while, the company has largely ignored its obligations to clean up its portion of the consortium operations based on the remediation agreement with Texaco Petroleum.

View a photo gallery or watch a video of Petroecuador’s environmental mismanagement.

Despite Petroecuador’s dismal environmental record, neither the Amazon Defense Coalition nor Amazon Watch has made Petroecuador a focus of their Oriente clean-up campaign, and the plaintiffs and their lawyers have never pursued any legal action against the state oil company. To the contrary, Petroecuador stands to benefit, directly and indirectly, more than any other Ecuadorian entity if the cost for widespread remediation is shifted to Chevron by:

  • Forcing Chevron to pay for remediation work that is clearly the responsibility and obligation of Petroecuador, both under the Settlement and Release entered into by Texaco Petroleum, the Government of Ecuador and Petroecuador, and as the sole owner and operator of the former consortium fields for the past two decades.
  • Requiring Chevron to refurbish and upgrade Petroecuador’s deteriorating infrastructure even though Texaco Petroleum transferred all of that property to Petroecuador in good operating condition almost 20 years ago and has had no say in any of Petroecuador’s operational decisions since 1992.

See these photographs of Petroecuador’s operations in Ecuador:

petroecuadoroperations1petroecuadoroperations3

 

There is no question that the people of the Oriente region of Ecuador face a series of challenges regarding health in their communities.  However, they are being deceived by the trial lawyers and activists who have brought this lawsuit.

The major health concerns in the Oriente region are not the result of oil operations, but are related to a lack of water treatment infrastructure, a lack of sufficient sanitation infrastructure and inadequate access to medical care.  (Read about Texaco Petroleum’s past operations and questions of health.)

Drinking water samples taken during court-ordered inspections of sites remediated by Texaco Petroleum found high levels of bacterial contamination from human or animal waste in 90 percent of the samples, indicating widespread microbial contamination of the water sources.

While the samples contained a high level of microbial contamination, results showed little evidence of contamination from oil. Court-ordered inspections found that 98 percent of surface water and 99 percent of drinking water samples meet international drinking water standards for petroleum hydrocarbons.  Those few samples indicating petroleum-related impacts were from areas where Petroecuador’s poor operations had resulted in contamination.

In addition, sworn declarations filed in April 2013 by environmental consultants from Boulder, Colo.-based Stratus Consulting testify that the plaintiffs’ lawyers not only contrived to falsify environmental damages claims, but that “Stratus is not aware of any scientific evidence that people in the former concession area are drinking water contaminated with petroleum” and that “at no time while working on the Ecuador Project did I see any data supporting a finding of groundwater contamination from TexPet operations…”

The Government of Ecuador has not fulfilled its obligation to remediate the environmental impacts that it has caused, much less to modernize or even maintain its facilities to mitigate further impact.  Nor has the government provided any sewage treatment in the region with raw sewage being discharged directly into streams and rivers used for bathing and drinking water by the local communities.  As a result, many rural residents do not have access to potable water.

The judicial system in Ecuador is not fair and is far from independent.

Since assuming office in January 2007, President Correa has consolidated his power over all of Ecuador, including its political, financial, and media institutions:

Correa consolidated political power when the Constituent Assembly, which is dominated by his political party, Alianza PAIS, drafted a new constitution, dissolved the National Congress and announced that its decisions were superior to any other ruling by the judicial system.

He threatened that “[j]udges and tribunals that process any action contrary to the decisions of the Constituent Assembly shall be dismissed from their post and subject to corresponding prosecution” and has since made clear that this threat extends to judges that rule against state interests.

Correa claims that the “Executive Branch [can] exert pressure on the Judicial Branch to get the courts to “respond to the needs of the country” and that, as President, he “is not only the leader of the Executive Branch [but] of the entire State and the State is made up of the Executive, the Legislative, and the Judicial branches.”

Correa has also cancelled foreign corporations’ contracts and seized their assets while simultaneously foreclosing their possibilities for a fair resolution of the disputes by rejecting the jurisdiction of international arbitral tribunals and refusing to comply with their orders. He has also taken steps to control the media, which Correa considers “a corrupt instrument of the oligarchy” and the main “enemy of change,” including threatening to revoke hundreds of radio and television licenses because of alleged “irregularities.”

There is evidence going back to previous administrations that the lawyers representing the Lago Agrio plaintiffs and the Government of Ecuador are working together to ensure a verdict against Chevron in the Lago Agrio lawsuit. The Correa Administration has maintained and furthered this arrangement, converting the lawsuit against Chevron from a legal matter to a political cause.

The Government of Ecuador could benefit greatly from a decision against Chevron, which would absolve it of its own remediation obligations and result in the transfer of an enormous amount of money to Ecuador (the proposed $27 billion judgment would represent half of Ecuador’s GDP). Politically, the Lago Agrio case diverts attention and responsibility for environmental conditions away from Petroecuador and allows Correa to blame all social ills in the Oriente on Chevron.

Correa has publicly prejudged Chevron’s liability in the ongoing case, even taking the unfounded and highly offensive position that Texaco Petroleum was guilty of “crimes against humanity.” Ecuador’s Attorney General confirmed that “the Correa administration’s position in this case is clear: ‘The pollution is the result of Chevron’s actions and not of Petroecuador.’”

Correa has thrown the support of the Government behind the plaintiffs, even offering them “assistance in gathering evidence” against Chevron. In April 2007, just months after assuming office, President Correa took a media tour of the Amazon accompanied by the plaintiffs’ lawyers and representatives, calling plaintiffs’ attorney Pablo Fajardo and Amazon Defense Coalition leader Luis Yanzareal heroes…who have fought for years for their people, their Amazon.” He has also repeatedly referred to Fajardo and Yanza in Ecuador’s national press as “our compañeros” (“comrades”) and his “dear friend[s].”

Correa has called on Ecuador’s Prosecutor General to initiate criminal prosecution against the Chevron attorneys who signed the settlement and release agreements on behalf of Texaco Petroleum. Two previous Prosecutor Generals serving the Correa Administration, called for the criminal charges to be dismissed on three separate occasions. However, the next appointee, Washington Pesántez, then issued baseless indictments despite three earlier opinions that charges be dropped, without pointing to any new evidence, and notwithstanding his earlier opinion, as a District Prosecutor, that found no evidence to support the criminal charges and affirmed the recommendation to dismiss the criminal complaint.

Recently, Correa’s legal advisor, Alex Mera, and Correa’s sister, Pierina, were implicated in a $3 million bribery scheme aimed at guaranteeing remediation contracts that would result from a verdict against Chevron by one of the scheme’s organizers, Patricio García, who stated that he was a political operative for the ruling Alianza PAIS party. García also stated during one of the videotaped meetings that executive-branch lawyers would be sent to Lago Agrio to help Judge Núñez (who was also implicated in the scheme) draft his opinion.

Correa confirmed his alliance with the plaintiffs again after the bribery scheme was revealed, stating unequivocally “[o]f course I want our indigenous companions to win.” And as further proof of the Government’s control over the judicial process, despite repeated claims that the Government has no role in the litigation, Prosecutor General Washington Pesántez announced that he asked Judge Núñez to excuse himself from continuing in the process in order to “ensure that the ruling will not be delayed any longer” and so as not to allow Chevron “to avoid paying the compensation we believe is more than fair because it caused a lot of damage in our country.” Pesántez then confirmed the estimate that “90% [of any judgment against Chevron] would be delivered to the State for remediation and bio-remediation activities.”

The cancer claims made by Richard Cabrera is one of the most shocking examples of the absurdity of his work.  Cabrera, a mining engineer with no experience or training in oilfield remediation work, was appointed by the court to assess possible environmental damage.

This is an environmental remediation case, and none of the 48 named plaintiffs have claims for cancer or related damages.

In fact, in sworn declarations (see here and here) filed in April 2013 by environmental consultants from Boulder, Colo.-based Stratus Consulting, the Stratus scientists testify that the plaintiffs’ lawyers not only contrived to falsify environmental damages claims, but that “…the conclusion that there were 1,400 ‘excess cancer’ deaths near the oil operations area is invalid and unsupported.” A Stratus scientist further claims not to be “aware of any credible scientific evidence that supports the statement that cancer rates were up to 30 times higher than normal, or that the incidence of childhood leukemia was found to have reached alarming levels.”

Nonetheless, Cabrera assessed more than $9.5 billion in damages for “excess cancer deaths,” yet failed to identify a single victim or provide any corroborating documentation, such as death certificates or medical diagnoses.

Instead, Cabrera based his cancer claims on self-serving answers to ad hoc surveys administered to the local population in secrecy by unknown individuals. The survey asked leading questions like “what [do] you think should be demanded of Texaco Petroleum as relief of the damages suffered?”

Additionally, Mr. Cabrera makes obvious math errors in his calculations and incorrectly interprets his own survey data to obtain falsely high rates of cancer.  He lumps all types of cancers together, even though there is no evidence linking components of crude oil to most of the cancer types reported, including stomach and uterine cancer – the two most common cancers reported in the surveys. These are also the two most common types of cancers in Ecuador.

Cabrera’s conclusions are contradicted by official Ecuador statistical data on cancer mortality, which show there is no increased cancer risk in the oil-producing areas compared to non-oil producing regions of the Ecuadorian Amazon.  The cancer rate calculated by Cabrera is more than 250 times higher than the rate reported by Ecuador’s government.  View an analysis of cancer mortality and oil production in the Amazon Region of Ecuador.

This isn’t the first time lawyers who have been involved in this case have tried to bring cancer claims against Chevron. In 2007, a U.S. federal court for the Northern District of California threw out a similar complaint against Chevron allegedly filed on behalf of Ecuadorians from the Oriente region.  The case was dismissed after it was discovered that the plaintiffs had never been diagnosed with cancer and they testified that they did not even know that a suit had been filed in their names.

And they’ll keep telling their story over and over again with more and more embellishment until someone either confronts them with the truth or pays them to stop.

Here is one of the major myths the US-based trial lawyers and environmental activist groups have spun in a naked attempt to tarnish Chevron’s reputation in the U.S. and pressure the company into an unjust settlement in the lawsuit against Chevron in Ecuador:

Myth 1:  Chevron is responsible for $27 billion worth of damages to the Amazon.

The $27 billion assessment against Chevron was concocted by Richard Cabrera, a mining engineer with no experience or training in oilfield remediation work.

Cabrera was appointed by the court to assess possible environmental damage in the former Concession oilfields, if any, the cause, and remediation projects to remedy those damages.  His selection was fully supported by the Amazon Defense Coalition over the opposition of Chevron.

In addition to being unqualified for the task he was given, Cabrera ignored directions from the court and improperly expanded his work scope to invent categories of damages that have nothing to do with the issues raised by the lawsuit or with environmental remediation of the former Concession area.

Nearly 90 percent of his $27 billion figure is allocated to issues unrelated to the actual claims in the case:

  • Cabrera provided no medical records or death certificates to support his recommendation for more than $9.5 billion in compensation for “excess cancer deaths” and did not name a single victim or identify any family members as beneficiaries. He has no public health training or expertise in diagnosing the epidemiology of cancer, nor can he point to anyone on his team who does. Rather than relying on an expert, Cabrera based his cancer claims on self-serving answers to ad hoc surveys administered to the local population in secrecy by unknown individuals.
  • Cabrera also claims $1.7 billion in damages for improvement of oil infrastructure sites, which have been operated exclusively by Petroecuador since Texaco Petroleum ceased operating in 1990.  The sites are the sole property of Ecuador, and are currently in use and even being expanded by the state-owned oil company.
  • He assessed more than a billion dollars in soil remediation for sites he never visited and grossly inflated the calculation to arrive at a suggested per-pit remediation cost that is 25 times greater than the current costs for Petroecuador’s own remediation program.
  • He assessed $428 million to improve the potable water system in the Oriente and $3.2 billion for groundwater remediation even though he did not take any samples of streams, rivers, municipal water sources or drinking water wells, did nothing to assess whether other factors (such as fecal contamination) were contributing to health problems, and states in his own report that he did not have enough data to develop a groundwater remediation plan.
  • He also calls for $320 million for the creation of an animal husbandry farm to raise and release wild animals for indigenous people to hunt.

So far, Cabrera has refused to answer questions about his methodology, identify additional team members, explain their responsibilities and contributions, or produce supporting documentation, specifically regarding the survey that supports his cancer-related damage assessment.

Cabrera’s work was far from independent.

A number of indicators suggest that Cabrera worked closely with the plaintiffs’ lawyers to prepare his last report:

  • He received payments of at least $200,000 for his work from Selva Viva, an Ecuadorian company that serves as the financial and logistical intermediary for the Amazon Defense Coalition. The checks were apparently signed by Luis Yanza, legal coordinator for the Amazon Defense Coalition and general manager of Selva Viva.
  • He benefited from the assistance of members of the Amazon Defense Coalition during his field work, as demonstrated by photographs and video taken at the time, while Chevron observers were prevented from even observing Cabrera’s work.
  • He even copied sections of his $27 billion report word-for-word from observations submitted to the court by the plaintiffs’ lawyers.

 

In yet another fabrication put forth to mislead the public, the American trial lawyers behind the Chevron case in Ecuador and their activist NGO partners continue to claim that the indigenous tribes in the former consortium region are “near extinct.” However, this claim could not be any further from the truth.

Dr. Robert Wasserstrom, a former professor of Anthropology and Public Health at Columbia University and a Chevron expert, stated in a 2008 report that:

“Beginning around 1950, growth rates among native groups in Ecuador have followed the same trends as indigenous populations throughout the Amazon Basin – in areas with oil production, mining and timber extraction as well as in undeveloped regions.”

His entire report is available here. Additional information about the history of the indigenous tribes is available here.

In fact, Ecuadorian government census statistics and all peer-reviewed published data agree that the population of the five indigenous groups identified by the plaintiffs has either increased in numbers or remained stable since Texaco began operations in Ecuador.

The indigenous population experienced a massive decline, long before oil was discovered in Ecuador. Yet the plaintiffs’ attorneys conceal the well documented fact that this drop began when Europeans arrived in the Oriente hundreds of years ago, bringing foreign diseases with them. So much so that the Cofán nearly did go extinct in 1923 (approximately 40 years before Texaco arrived) when a measles outbreak killed over half of the remaining population, leaving only a few hundred alive.

Demographic studies presented by Dr. Eduardo Bedoya (a Ph.D. in Anthropology from New York University who has consulted for the ILO, CARE-Perú, WINROCK Corporation, the World Bank, and the IUCN) indicate that the indigenous groups (especially the Cofán) – are far from “facing extinction” as has been claimed. In reality, the indigenous population has more than tripled from about 300 inhabitants in 1960 to 1,044 in the official government of Ecuador census of 2001.  This chart further demonstrates the population growth.

The “decimation” of indigenous population blamed on Texaco by the plaintiffs and aligned NGOs couldn’t be further from the truth. The government statistics and independent anthropological studies all draw the same conclusion: The population of the five indigenous groups in the region has increased for over sixty years.

In virtually every public statement and news release, the plaintiffs’ lawyers and their activist NGO partners claim that the remediated sites that Texaco was responsible for under the 1995 Remediation Action Plan (RAP) “contain cancer-causing toxins at levels hundreds of times higher than U.S. and Ecuadorian law allows.”

Not surprisingly, the plaintiffs’ lawyers fail to mention that they are attempting to apply remediation standards that were passed in 2001, three years after Texaco Petroleum’s remediation work was completed and certified by the government of Ecuador.

For the basis of their argument the plaintiffs’ lawyers point to the 2001 standard, as outlined in Decree 1215 of the environmental regulations of Ecuador’s Ministry of Environment, which is intended to govern environmental aspects of hydrocarbon production. An important point to note is that the Ecuadorian constitution prohibits retroactive application of the 2001 law.

Nonetheless, the plaintiffs’ lawyers point to the 1,000 parts per million (ppm) total petroleum hydrocarbon (TPH) standard as outlined in Decree 1215 as the basis of their statements. Not only can this standard not be applied retroactively, the 1,000 ppm figure only applies to “patrimony national natural areas or others identified in a corresponding environmental study.”  This means a national park or a designated protected area. At no point in time were remediated areas designated as national parks. Further, Petroecuador currently remediates below 2,500 ppm TPH (1215′s agricultural land standard) with the full approval of the government of Ecuador.

chart

The remediation work that Texaco performed was and is consistent with what was required by the government of Ecuador. Texaco’s remediated sites have been conclusively shown to pose no threat to human health or the environment. Regrettably, the plaintiffs’ lawyers are engaged in an exercise to misrepresent not only the standards of the time, but the remediation standards that govern Petroecuador’s remediation work today. Further, they are inventing new remediation standards (100 ppm TPH) that no one in Ecuador is required to meet in order to mislead the public, the media, and the court to achieve personal financial gain.

“Since Texaco left, Petro[Ecuador] has produced even more damage and many more disasters than Texaco.”
– Pablo Fajardo, member of plaintiffs legal team

Ever wonder why the U.S. trial lawyers in the Ecuadorian Amazon litigation case against Chevron choose to sue Texaco, the minority partner in the consortium that launched the country’s energy industry, and not Petroecuador? After all, Petroecuador, the state owned oil company, was the majority partner and became 100% responsible for the oil production in the concession area in 1992.

Here’s why.

According to Ecuadorian news sources, the plaintiffs’ lawyers in the lawsuit against Chevron promised the Quito government they would not sue Ecuador’s state oil company Petroecuador over environmental damage in the Amazon.

Lawyer Cristobal Bonifaz, one of the architects of the lawsuit, has given written assurances to Ecuador’s government that Petroecuador would be spared a lawsuit if government officials threw their clout behind the plaintiffs.

In a 1997 interview appearing in the Ecuadorian newspaper Hoy, Bonifaz said, “There is no reason for the Government to worry because the plaintiffs and their lawyers have undertaken in legal documents to refrain from suing the Government if it is ultimately held to be jointly liable with Texaco for the environmental damage caused.”

A week later, Bonifaz told the Ecuadorian newspaper El Comercio, “I delivered notarized documents to the Attorney General confirming the indigenous people’s commitment to refrain from suing the Government.”

However, none of the plaintiffs’ attorneys have ever reported this arrangement or provided these documents to the Superior Court of Nueva Loja, which is overseeing the current trial. Nor have Chevron’s attorneys been able to obtain a copy.

Instead of taking on Texaco Petroleum and Petroecuador, U.S. trial lawyers have sought to sue only Chevron for environmental issues they say were left behind in Ecuador by Texaco (which Chevron acquired in 2001). Moreover, they knowingly ignore Petroecuador’s ongoing pollution and environmental mismanagement.

Meanwhile, the case in Ecuador has been marred by excessive government interference – interference that has prompted a warning by the U.S. government trade representatives.

On October 8th, six major U.S. business organizations- Business Roundtable, National Association of Manufacturers (NAM), U.S. Chamber of Commerce, Nation Foreign Trade Council (NFTC), Emergency Committee for American Trade (ECAT) and the U.S. Council for International Business (USCIB) sent a letter to key Congressional offices and the Obama Administration calling for the cancelation of Ecuador’s trade preferences under the Andean Trade Preferences Act (ATPA). In calling for the cancelation of Ecuador’s trade preferences under ATPA, the letter references President Obama’s June 30, 2009 report to Congress on Ecuador’s ATPA eligibility and a 2009 U.S. Department of State Investment Climate report. Each report notes several issues of serious concern with respect to Ecuador.

Chevron has consistently maintained that rule of law in Ecuador has been compromised. The following letter further underscores the fact that it has become impossible for Chevron to receive a fair trial in Ecuador.

Read the letter here.