Chevron General Counsel Hewitt Pate said he welcomed the announcement as a sign of the country’s commitment to its 1995 agreement with Texaco.
“Petroecuador’s $70 million remediation budget, which covers an area larger than that of Texaco’s remediation, is within a reasonable cost range under U.N. standards,” he said in a statement.
Petroecuador, Ecuador’s state-run oil company, announces an increase in exports:
Petroecuador posted crude oil export revenues of $1.05 billion in May, a doubling from $516 million in May 2010, Ecuador’s state oil company said Wednesday.
This blogger writes about the environmental record of Petroecuador, Ecuador’s state run oil company:
Lost in the entire Chevron Ecuador PR and legal battles is a little known report that between 2002 and 2010, Petroecuador – the state-owned oil company that took over the oil fields owned by Texaco, just after that company was purchased by Chevron – was responsible for an estimated 1,415 “environmental accidents” according to the Ecuadorian newspaper El Universo.
New about Petroecuador, Ecuador’s state run oil company:
Crude exports by Ecuador’s state oil company Petroecuador fell in April to 8.3 million barrels, from 9.7 million the same month of 2010, it said on Thursday.
This writer says that the referendum, if successful, would seriously curtail the media’s ability to conduct investigative journalism:
I have seen many strange things over the past three decades in Latin America, but Ecuador’s national referendum on May 7 may have been a first: Voters supported a proposal to censure the press, which will encourage government corruption.
I’m not kidding. The 10-point referendum proposed and won by President Rafael Correa included several provisions that amount to giving government officials a license to steal. The clauses would restrict freedom of the press, effectively silencing what in recent times has been Ecuador’s only weapon against government corruption.
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.
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.
