Monday, November 16, 2015

Chevron Paying Income Taxes and Salary of Corrupt Witness Who Committed Perjury in Ecuador Case

Without public disclosure, Chevron has re-upped its contract to pay $144,000 annually to former Ecuadorian judge Alberto Guerra after he admitted perjuring himself in a federal court during the company's RICO trial. The perjury happened after Chevron lawyers at the outside law firm Gibson Dunn coached Guerra on his false testimony for 53 consecutive days.

We have no choice but to call this what it is: a witness bribery scheme orchestrated by a major American oil company. Chevron's aim is to evade paying for the clean-up of what could be the world's worst oil disaster, caused deliberately on its watch when it operated in Ecuador (under the Texaco brand) from 1964 to 1992.

The discredited Guerra – who has admitted that he accepted bribes when he was a judge in Ecuador – has become a central figure in Chevron's campaign to evade paying the $9.5 billion environmental judgment in the South American nation. Chevron was found to have deliberately dumped billions of gallons of toxic waste into the streams and rivers of the rainforest. The dumping continues to decimate indigenous groups and has caused an outbreak of cancer, according to the findings of three layers of courts in Chevron's preferred forum of Ecuador.

The Chevron payments to Guerra seem to have earned the company and its ethically-challenged lawyers at Gibson Dunn a fraud and bribery complaint to the U.S. Department of Justice. Amazon Watch, an environmental group that has been fighting to hold Chevron accountable, said it will lodge a formal complaint over the witness payments and falsification of evidence.

Paul Paz y Miño, a director at Amazon Watch, said:
It is unethical, illegal, and utterly shocking that Chevron continues to pay huge sums to a completely discredited witness who has admitted to repeatedly lying and accepting bribes to testify falsely in court. This arrangement is worthy of a criminal investigation and we are asking the Department of Justice to look into it. We consider Chevron to have engaged in witness bribery.
Luis Yanza, a winner of the Goldman Environmental Prize and the longtime leader of the rainforest communities affected by Chevron's pollution, said in reference to Guerra:
Chevron and its lawyers gave a key witness cash out of a suitcase to falsify evidence to taint the Ecuador judgment so the company does not have to pay for the clean-up of oil pollution that is causing grave harm to thousands of people. This is just one example of the company's plan to threaten judges and sabotage the proceedings in Ecuador.
Guerra stunned the legal community after he admitted during a recent international arbitration proceeding that he lied on the stand during the company's retaliatory civil "racketeering" (or RICO) case targeting the lawyers for the villagers who won the historic judgment. Chevron made a mockery of justice in that case after the judge (Lewis A. Kaplan) displayed intense personal animus toward the villagers while hiding his investments in Chevron despite calls for his recusal over bias.

(As background, a federal appellate court in New York unanimously reversed Kaplan in 2011 when he earned the scorn of the international legal community by trying to block enforcement of the Ecuador judgment anywhere in the world. Without a jury or a fair trial, Kaplan then tried to overrule the final decision of Ecuador's Supreme Court by refusing to consider any evidence of Chevron's contamination and claiming the Ecuador decision was the product of racketeering. In the meantime, the villagers recently won a unanimous decision from Canada's Supreme Court authorizing them to seize Chevron assets to enforce their judgment. Here is a summary of the overwhelming evidence against Chevron.)

Guerra also recanted key portions of his testimony in the RICO case claiming that the Ecuadorian trial judgment was ghostwritten by the plaintiffs, according to reports from Courthouse News and Vice. These developments emerged recently when transcripts from the arbitration finally were released after Chevron, in yet another violation of the ethical rules, tried to keep them under wraps for months.

The transcripts show Guerra admitting that Chevron extended his contract for another year. Guerra does no work for Chevron other than make himself available to testify on the Ecuador case – a fact that many observers believe violates federal law and the ethical rules, as this legal brief and this opinion from a prominent ethics expert explain.

Yet Chevron continues to make up its own rules. In 2012, company operatives Andres Rivero and Yohi Ackerman traveled to Ecuador and paid Guerra $38,000 in cash out of a suitcase for his "cooperation" with the company. That included a promise by Guerra to try to bribe the trial judge with a down payment of $1 million with the goal of getting him to recant his decision. "Money talks but gold screams," Guerra said to the Chevron operatives at the time.

Chevron then inked a two-year deal providing Guerra a $144,000 annual salary, full payment of all income taxes, payment for the fees of three personal lawyers, health care, a car, and immigration services. The immigration services have allowed several family members to become residents of the United States after some had been living here illegally for years.

We also believe that Guerra and his team lied to the Department of Homeland Security to legalize the status of himself and his family members. By not disclosing to the U.S. government the many crimes Guerra had committed in Ecuador and later in the United States, Guerra (and Chevron) arguably violated U.S. law and committed a felony. Our investigation of this aspect of the Chevron-Guerra subterfuge continues.

All told, we conservatively estimate Chevron's paid benefits to Guerra amount to at least $250,000 annually. The amount rises considerably when one takes into account benefits paid to Guerra's three adult children and their families. Not bad for a man who testified he had $146 in his bank account when he struck the deal with Chevron.

Even with these extraordinary payments, Guerra seems to have very little skill as a Chevron stooge. Like most liars, he gets twisted into knots during cross-examination. Eric Bloom, a lawyer for Ecuador's government, shredded Guerra on the witness stand during the arbitration proceeding. (See these transcripts for the evidence. For more background on Guerra's admissions as well as the larger implosion of Chevron's RICO case, see this press release.)

Chevron lawyers Randy Mastro and Avi Weitzman coached Guerra for several weeks before letting him testify. Guerra had been removed from the bench in Ecuador for misconduct and was facing criminal prosecution until Chevron agents spirited him out of the country. Mastro also personally negotiated Chevron's payments to Guerra at precisely the same time his team was drafting a sworn affidavit for Guerra to sign that by Guerra's own admissions contained multiple lies.

Guerra admitted in the arbitration that he lied when he told Judge Kaplan he had been offered a "bribe" from the plaintiffs to write the trial court judgment against Chevron. He also confessed that critically important shipping records had nothing to do with the Chevron case, contradicting his prior testimony. He confessed that there were no emails or documentary evidence that the trial court judgment had been drafted by the plaintiffs and then given to the judge on a flash drive, as he had told Judge Kaplan.

The entire saga might expose Mastro and Weitzman to criminal prosecution, according to respected environmental lawyer Marco Simons.

One of the main targets of Chevron's retaliation campaign, U.S. attorney Steven Donziger, has filed the latest evidence of Guerra's collapse before the federal appellate panel reviewing Judge Kaplan's flawed decision. Donziger also turned the tables on Chevron by demanding the company cease the destruction of all documents related to the dispute in anticipation of further litigation by the villagers over the company's worsening misconduct.

The more Chevron fights, the more the company and General Counsel Pate seem to lose ground. Chevron's jurisdictional shell game is getting more exposed. The larger question is when Chevron's top leaders will be held accountable for the destruction of the Amazon and their own gross misconduct in evading court orders to clean up the damage.

Wednesday, November 4, 2015

Businessweek's Paul Barrett Ignores Spectacular Implosion of Chevron's RICO Case

Businessweek reporter Paul Barrett is again taking Chevron's side in the Ecuador pollution litigation by failing to report on the spectacular implosion of the company's RICO case. Readers of Businessweek interested in the latest news on the litigation are getting shortchanged.

We previously reported how Barrett generally frames his stories about the Ecuador litigation in a way that apologizes for Chevron's corruption and betrays a deep animus toward U.S. attorney Steven Donziger, the advisor to the affected rainforest communities that obtained a $9.5 billion judgment against the oil giant. Barrett adopted his flawed narrative in his thinly-sourced book on the case (called Law of the Jungle), which is largely an ad hominem attack against Donziger and is replete with factual errors and made-up scenes.

This "notice of defamation" letter written by Donziger explains some of the details of Barrett's sloppy and unethical journalistic practices. Usually missing from Barrett's stories is that Ecuador's Supreme Court (in the country where Chevron insisted the trial be held) unanimously affirmed the liability against Chevron in a 222-page decision meticulously documenting extensive contamination at hundreds of former company well sites. (See this summary of the overwhelming evidence against Chevron and this affidavit documenting some of the company's corruption.)

Barrett is now refusing to report on explosive new evidence from a related arbitration proceeding that strongly suggests Chevron's retaliatory RICO case has imploded in spectacular fashion. Others are reporting this news fully, but not Barrett. (See this powerful analysis from Amazon Watch, this article from Vice, and this article from Courthouse News.)

Here are some recent developments that severely damage Chevron's litigation prospects but are ignored by Barrett:

  • Chevron's main claim that the trial court judgment in Ecuador was "ghostwritten" by lawyers for the villagers has fallen apart. There was scant evidence of this other than the testimony from a corrupt and impoverished Ecuadorian witness (Alberto Guerra) paid $2 million by the oil company after having only $146 in his bank account; now Guerra admits under oath he lied on the stand during Chevron's RICO case about critical elements of his story.
  • Barrett has completely underplayed evidence from a computer forensic examination requested by Chevron in the arbitration proceeding that found the Ecuador trial judge saved the Word file that became the judgment on his own computer more than 400 times. Guerra had claimed the judgment was given to the judge by the plaintiffs on a flash drive just before it was issued. This evidence has been presented to the appellate court that oversees Kaplan.
  • Barrett also ignored that Guerra testified in Kaplan's RICO proceeding that the Ecuador trial judge promised him 20 percent of an alleged $500,000 bribe. In his arbitral testimony, Guerra confessed it was a total lie.
  • Guerra claimed he played a key role in the so-called ghostwriting. But he admitted he lied before Kaplan by claiming he made two trips to Lago Agrio to work on the judgment; in fact, those trips had nothing to do with the Chevron case. Again, silence from Barrett.
  • Guerra also conceded in his arbitral testimony that there is no evidence corroborating his allegations that the lawyers for the affected communities bribed the trial judge and wrote the judgment, which is Chevron's defense to actions to seize company assets to satisfy the Ecuador judgment. Guerra admitted he lied to Chevron to obtain more money from Chevron. "I lied there," he said. "I recognize it. I wasn't truthful." Again, nothing from Barrett.
In Canada, a trial to seize Chevron assets is proceeding. The villagers have filed a motion for summary judgment to knock out all of Chevron's defenses on the grounds they already were litigated and resolved by the court in Chevron's preferred forum of Ecuador. Barrett has yet to report on this development.

We suspect Barrett's recent retreat into silence has much to do with the fact developments are turning against Chevron. The company's trumped-up "fraud" narrative is the central thrust of Barrett's book and his prior reporting. To report that his main narrative is unraveling would further damage Barrett's credibility and would not be in his commercial interest.

Want to get a sense of what Businessweek's readers who rely on Barrett are missing? Read Eva Hershaw's account in Vice News in an article titled "Chevron's Star Witness Admits to Lying in the Amazon Pollution Case":
In testimony given before the international tribunal... Guerra has now admitted there is no evidence to corroborate allegations of a bribe or a ghostwritten judgment, and that large parts of his sworn testimony, used by Kaplan in the RICO case, were exaggerated and, in other cases, simply not true.
Adam Klasfeld of Courthouse News reported that Guerra "repudiated much of his explosive testimony" and admitted to lying about a number of key facts. Marco Simons, an attorney with Earth Rights International, suggested that two Chevron lawyers, Randy Mastro and Avi Weitzman, might face criminal exposure for coaching Guerra for 53 days to present false testimony. (For more on how Chevron law firm Gibson Dunn has falsified evidence, see here.)

Chevron had no real answer for several days to these devastating setbacks. That's where Barrett stepped in to post a short story on the company's website that is nothing more than a tortured attempt to rehabilite the lying Guerra.

Barrett might be technically correct to point out that Guerra has not recanted his testimony that a bribe occurred, but Guerra has admitted to being such a serial liar about everything else that nothing he claims can be taken seriously. That's especially true when there is no corroborating evidence left to back up the central feature of his story.

Predictably, Chevron spokesperson Morgan Crinklaw has been pushing Barrett's latest defense of Guerra into social media as a surrogate statement for the company. Barrett's colleague Roger Parloff of Fortune -- himself silent about the unraveling of Chevron's "racketeering" case -- tweeted it. (For more on Parloff's own bias in favor of Chevron, see this blog and this analysis.) And Barrett took the extraordinary step of contacting another reporter via Twitter to challenge her reporting contesting Chevron's narrative.

Businessweek needs to assign a truly independent journalist to report this story. In the meantime, Barrett should consider joining Crinklaw in Chevron's public relations department. He could make a lot more money doing the same thing.

Tuesday, October 20, 2015

Chevron's Academic Corruption Over Ecuador Pollution Spreads to NYU School of Law

Chevron's recruitment of academics to promote the oil giant's increasingly hapless attempts to defend its Ecuador pollution disaster appears to have compromised the ethics of two more professors at a prominent institution of higher learning. This time, the credibility blow handed out by Chevron is being suffered by New York University.

We recently exposed how a Notre Dame human rights law professor, Douglas Cassel, was shilling on behalf of Chevron and compromising the academic integrity of his university without disclosing the extent of his relationship with the oil giant or the amount of money he was receiving. Since our expose appeared, Cassel has not written further about the Ecuador matter.

What we know on the NYU front is that Professor Linda J. Silberman, an expert in transnational litigation who has been teaching at NYU School of Law since the 1980s, is using her post to quietly shadow block on behalf of Chevron to prevent long-suffering Ecuadorian rainforest villagers from recovering their $9.5 billion environmental judgment. Silberman's role in the litigation -- managed by the outside Chevron law firm Jones Day -- is part of a larger campaign by the company to evade accountability for the deliberate dumping of billions of gallons of toxic oil waste into the rainforest when it operated in Ecuador (under the Texaco brand) from 1964 to 1992.

The facts of Chevron's reckless misconduct have been confirmed by three layers of courts in Ecuador, including by the country's Supreme Court in a unanimous 222-page decision issued in 2013. That decision meticulously documented extensive pollution that continues to contaminate groundwater and surface water at hundreds of former Chevron production sites covering a huge swath of rainforest that is home to five indigenous groups. A sixth group, the Tetete, disappeared shortly after Texaco arrived on the scene in the early 1960s. Chevron insisted the trial be held in Ecuador and repeatedly praised the country's court system to get the venue shifted out of the U.S.

Almost five decades after the oil production started, Chevron's horrendous operational practices in Ecuador have resulted in skyrocketing cancer rates that have decimated local communities and killed or harmed thousands of people. Chevron executive Rodrigo Perez Pallares flat-out admitted during the Ecuador trial that the company discharged more than 15 billion gallons of toxic waste into streams and rivers that local inhabitants rely on for their drinking water. More than 100 technical evidentiary reports -- most provided by Chevron technicians -- backed up the claims of the villagers. (A summary of the extensive evidence against Chevron relied on by Ecuador's courts is here.)

Silberman's cameo role in this fiasco came to our attention recently when an unpublished essay she authored with an NYU colleague, Aaron Simowitz, arrived in our inbox. Available here, the essay was distributed to an internet community focused on "dispute management" in the energy sector.

We were stunned to notice the complete absence of a proper conflict of interest disclosure in the essay by Silberman and her co-author explaining their ties to Chevron and its law firms in the Ecuador litigation. Both are clearly violating NYU's Code of Ethical Conduct, as we explain below.

At the end of the essay, Silberman meekly notes she is a consultant to the Chevron law firm Jones Day. Really now. Jones Day has played a critical and highly controversial role fighting the indigenous groups with corrupt tactics -- including the use of bribes and the secret videotaping of a trial judge. Jones Day and its lead partner Tim Cullen have reaped millions of dollars in fees for so-called "services" that include paying the rent and laundry bills of a corrupt Chevron operative (Diego Borja) after he was spirited out of Ecuador to live under Chevron's protection in the United States.

Clearly, the exact nature of the Jones Day relationship to Silberman might be something NYU's students and faculty need to know to be able to assess the credibility of her "scholarship" and teaching about the litigation. She might also mention how much Jones Day is paying her to lend her academic credibility as an NYU professor to Chevron's strategy to block the Ecuadorians from entering the courthouse in Canada, where they are trying to seize company assets to pay for their environmental remediation.

Junior writing partner Simowitz has the same problem. He "discloses" at the end of the essay that he used to work for the law firm Gibson Dunn. What he fails to mention is that Gibson Dunn is Chevron's lead outside counsel in the case and was hired to deploy at least 114 lawyers to viciously attack the main U.S. legal advisor to the Ecuadorians, Steven Donziger. Chevron's goal was to kill the case by using false and distorted evidence, a paid fact witness who lied about a supposed bribe, and outright intimidation. (For more on Chevron's unprecedented retaliation campaign, see this article in Rolling Stone, this analysis of how Chevron made a mockery of justice in a U.S. court, and this legal brief by Donziger's counsel Deepak Gupta that summarizes how Chevron abused the civil justice system.)

The lack of disclosure in the Silberman/Simowitz essay is one problem. The intellectual dishonesty by these so-called scholars is another.

In the article, Silberman and Simowitz claim that Canada's Supreme Court got it "wrong" when it ruled unanimously in September that the villagers have the right to try to seize Chevron's assets in that country to satisfy their judgment. The only reason the villagers are trying to seize those assets in Canada is because Chevron -- after 11 years of litigation in its preferred forum of Ecuador -- refuses to pay the judgment despite accepting jurisdiction there as a condition of moving the case out of New York in 2001. Chevron also sold off its assets in Ecuador during the trial as the evidence mounted against it, leaving those affected with almost no options to collect.

Silberman and Simowitz fail to mention that Chevron announced years ago that it would fight the villagers "until hell freezes over" and then "skate it out on the ice." Once it became clear Ecuador's courts might actually hold the company accountable, Chevron's lawyers tried desperately to sabotage Ecuador's court process as we mentioned. The company played an abusive game of forum shopping and sued Ecuador's government in a secret arbitration proceeding that excluded the villagers to try to obtain a taxpayer-funded bailout of its pollution liability.

Instead of explaining this critical context to their readers, the authors attack the Canada Supreme Court's decision on conclusory technical grounds by promoting a legal fiction created by Chevron. The authors repeat Chevron's losing argument before the Canada Court that it would impose a "substantial burden" to force an oil company with $250 billion in annual revenue to defend the Ecuador judgment in Canada because all of its assets there -- estimated to be worth $15 billion -- are held by a wholly-owned subsidiary. The Canada Supreme Court rejected this argument in very plain language by explaining Chevron does have assets in Canada via its subsidiary.

While we believe the Chevron defense promoted by Silberman is preposterous -- any Chevron-owned subsidiary logically is a Chevron asset that can be used to pay off a Chevron debt  -- at a minimum the oil giant's claim will be litigated in Canada now that the Court has ruled the case can proceed. Yet according to Silberman and Simowitz, this technical defense should block the enforcement action from even commencing. Given that Chevron operates around the world only through its subsidiaries, their argument is a stab at obtaining complete impunity for a corporate human rights abuser.

While Silberman and Simowitz have a right to make an intellectually dishonest argument in support of Chevron's abusive litigation strategy, they don't have a right to make it without disclosing their conflicts of interest or otherwise ignoring their ethical obligations in violation of NYU's written Code of Ethical Conduct.

NYU's ethics policy prevents conflicts of interest and requires all faculty to uphold the "highest professional and community ethical standards." We suggest Silberman disclose how much she is making for promoting Chevron's arguments, how long she has been on the Chevron dole, whether Jones Day passes on the costs of Silberman's work to Chevron, and so on. She should disclose whether lawyers at Chevron or Jones Day have the right to review her supposedly "independent" analyses before they are published or otherwise distributed. Her contract with Jones Day and communications with the law firm pertinent to the Chevron matter should be fully disclosed. The same goes for Simowitz and his relationships with Gibson Dunn or any other Chevron law firm.

The writers notably fail to mention that Gibson Dunn lawyers from Simowitz's former firm have committed all manner of ethical violations on behalf of Chevron. This includes the illegal payment of more $2 million to a fact witness for his false testimony, an attempted bribe of the trial judge, using the discovery process to harass the oil company's adversaries, and threatening judges in Ecuador with jail time if they did not grant Chevron motions to nullify the proceeding. Was Simowitz connected to these activities when he worked at Gibson Dunn? Certainly his readers and students have a right to know. (For more on Chevron's attempts to corrupt the judicial process in Ecuador, see this affidavit and these whistleblower videos.)

Again, we question whether these otherwise reputable professors would engage this issue in this way had they not been paid by Chevron or its surrogates.

The issue of corporate corruption of academia has been a hot topic in recent weeks. The New York Times recently exposed how Monsanto pays academics to launder company agitprop to block the labeling of genetically modified foods. A major academic at the Brookings Institute recently lost his job after Sen. Elizabeth Warren nailed him for failing to disclose to Congress that his flawed research was funded by a pro-business lobbying group.

Chevron has a long history in the Ecuador matter of trying to secretly pay academics in service of its litigation positions. The company has hired a global warming skeptic named Douglas Southgate, a former lobbyist for the chemical industry named Ralph Marquez, and a technical consultant named John Conner who wrote a field manual ordering company scientists to lift only "clean" soil samples during the Ecuador trial to hide contamination from the court.

NYU's faculty needs to ensure that Silberman and Simowitz comply with the university's Code of Ethical Conduct. They should be prohibited from trying to hide partisan advocacy in the clothing of independent scholarship. Most of all, they should be barred from letting Chevron stealthily capitalize on NYU's good name to evade accountability for its abuses in the rainforest.

We look forward to see whether NYU as an institution has the backbone to address the very obvious ethical lapses of two of its leading professors.

(Another prominent faculty member at NYU School of Law, Burt Neuborne, has been a stalwart defender of the rights of the Ecuadorian villagers and has represented them pro bono.  Two of Neuborne's legal briefs for the villagers can be found here and here.)

Friday, October 9, 2015

Ricardo Reis Veiga: The Architect of Chevron's Fraud In Ecuador

Chevron CEO John Watson is the one person ultimately responsible for his company's refusal to abide by the rule of law and pay a $9.5 billion court judgment for toxic dumping in Ecuador's rainforest.

But we cannot forget that another high-level Chevron executive currently in Watson's employ --Ricardo Reis Veiga -- did much of Chevron's corrupt "dirty work" in the South American nation and deserves to be held accountable for his leading role in the misconduct. The fact Watson continues to protect Reis Veiga reflects poorly not only on Watson's own lax ethical standards, but it also creates significant risk to company shareholders as we will see below.

First day of Ecuador trial -- October 21, 2003: Chevron's Reis Veiga tries to explain the impossible while his Israeli bodyguard casts a wary eye from behind. Photo by Lou Dematteis.

For years in the 1990s, Reis Veiga was known in Ecuador as the "architect" of the Chevron-Texaco fraud. As Texaco's main lawyer on the case, he was indicted after the villagers presented information about how he had "certified" a fake clean-up to to Ecuador's government in a desperate effort to help the company evade liability. Under pressure from Chevron, prosecutors dropped the criminal charges but the cold hard facts about Reis Veiga's corruption cannot so easily be erased.

(See here for more background on Reis Veiga's checkered past in Ecuador and here for Chevron's attempt to corrupt Ecuador's courts using American drug trafficking felon Wayne Hanson.)

Watson and Chevron's public relations flaks try mightily to keep Reis Veiga out of the public eye. But Watson is more than happy to keep him on the Chevron payroll, no doubt so he won't blow the whistle on the company. (A Chevron whistleblower earlier this year disclosed internal videos showing company scientists trying to hide evidence of oil contamination from the court.)

A lawyer and Brazilian national, Reis Veiga set in motion Chevron's disastrous Ecuador policy when in 1995 he negotiated a "remediation" agreement on behalf of Texaco with certain corrupt officials in the government. (Chevron bought Texaco in 2001 and assumed its liability in Ecuador.) The agreement allowed Texaco to go through the cosmetic motions of a clean-up while spending virtually no money to address the underlying environmental impacts. Those impacts include the abandonment of roughly 1,000 toxic waste pits filled with oil sludge and the dumping of billions of gallons of toxic "water of production" into streams and rivers relied on by local inhabitants for their drinking water.

In exchange for a promise to do a cosmetic clean-up, Texaco received a "release" from Ecuador's government for any claims the government might assert against the company for the environmental damage. The release was given before the first shovel was even put in the ground to do the work. (As a critical aside, the release did not bar -- nor could it under Ecuadorian law -- the claims of the private citizens who had brought the historic lawsuit that 16 years later resulted in the judgment.)

The more salient point is that Reis Veiga's "remediation" was shot through with fraud. Texaco spent only $40 million to address the massive contamination which included hundreds of equivalent U.S. Superfund sites. This is far less than a penny on the dollar of what a real clean-up would cost, according to the later court judgment and various independent analyses. Texaco also spent about one-tenth of one percent of the roughly $50 billion BP has allocated to its much smaller 2010 spill in the Gulf of Mexico.

While Chevron now spends millions of dollars on ads claiming it supports the communities where it operates, Reis Veiga negotiated a deal to screw the affected communities of Ecuador.

What had to surprise Chevron and Reis Veiga is that the trial in Ecuador over the company's dumping -- a trial that the company fought desperately to block -- actually happened. The indigenous communities had the wherewithal to hire lawyers and the funds to hire technical experts. Evidence against Chevron quickly started to mount. And as a result, a Chevron lie that already was visible to the naked eye in the oil fields was verified in laboratories as well.

Scientific sampling data from field inspections during the trial in Ecuador showed exorbitant rates of cancer-causing petroleum hydrocarbons at sites Reis Veiga had claimed were cleaned. As an example, at Sacha 65 -- a former Chevron well site that Reis Veiga had certified as remediated to Ecuador's government back in 1998 -- a soil sample lifted during the trial had 35,380 ppm of petroleum hydrocarbons. That's more than 350 times higher than the maximum amount allowed in most U.S. states. It also exceeded Ecuador's regulatory norms by an order of magnitude.

In fact, there were 54 separate sites supposed "remediated" under the Reis Veiga plan that were inspected during the later trial. All demonstrated the presence of harmful toxins and all but two were above Ecuadorian regulatory norms. Some exceeded the norms by dozens and even hundreds of multiples.

By its own admission, Chevron applied its wholly inadequate clean-up methods to only a small portion of the waste pits it abandoned in Ecuador. Chevron simply excluded 85% of the pits from its flawed action plan altogether. Those pits were left to continue contaminating soils and drinking water for centuries absent compliance with the Ecuador court judgment.

Even if one focuses only on the small fraction of waste pits Chevron took responsibility for under Reis Veiga's plan, many of those were left untouched on the theory they were being used by villagers for fishing. Others were left untouched based on a simple drive-by inspection that involved no actual soil testing. In actuality, all were filled with oil sludge.

For the pits it did address, Chevron used heavy earth-moving equipment to cover up the sludge with dirt without cleaning out the toxins. Reis Veiga's plan was to bury evidence of the crime for the lowest possible cost. He never imagined these hidden pits would be unearthed by scientists working for the villagers during the later trial.

Reis Veiga also duped Ecuador's government. During the negotiation over the clean-up plan, he conspired with certain officials to adopt a clean-up standard for petroleum hydrocarbons 50 times more lax than the typical U.S. regulatory norm. He then used a bogus soil sampling test to measure contamination that captured only a tiny fraction -- often less than one percent -- of the hydrocarbons present. His goal was to "certify" the pits as safe using the fraudulent sampling results. (For more on Chevron's use of the bogus test and its other scientific fraud in Ecuador, see here.)

For the communities in the affected region, Chevron's Potemkin clean-up actually made the matter worse. Many villagers moved next to the newly covered waste pits thinking Texaco must have been acting in good faith when it told locals it was remediating. That's just a sickening level of cruelty even for a company recently named the worst global corporation at a ceremony in Davos.

Aside from the outright fraud in the design and execution of the Reis Veiga plan, the Chevron executive did nothing to address the separate impacts of the billions of gallons of benzene-laden water of production that were discharged into streams and rivers. Reis Veiga also ignored the need for medical care and monitoring to deal with skyrocketing rates of cancer and other oil-related diseases.

The longterm environmental and human toll of this failure to remediate has been staggering. The affected area, home to dozens of impoverished indigenous and farmer communities, has extremely high rates of childhood leukemia and other cancers. There is also virtually no medical care. To be treated for cancer, once has to jump on a bus and travel several hours over tortuous mountain roads to Quito. (Numerous independent studies documenting the cancer can be accessed here. For photos and stories of some of the victims, see this gripping report in The Huffington Post by photojournalist Lou Dematteis.)

The economic impacts also have gutted the communities. While Watson makes approximately $30 million per year in compensation, the average indigenous person in the Amazon is lucky to pull in $1,000. That's after Chevron robbed the communities of access to clean water and most of the other non-monetary riches found on rainforest ancestral lands.

Reis Veiga's misconduct was not limited to the bogus remediation. During the trial, he was heavily involved in the halting of a critical judicial inspection (see paragraphs 18 to 27 of the referenced document) by fabricating a security threat against Chevron lawyers. His fingerprints were all over the work of Chevron consultant John Connor when he wrote a field manual directing company scientists to lift soil samples only from "clean" spots far away from sources of pollution in an attempt to deceive the court.

Given this outrageous and patently criminal conduct, why is Reis Veiga still employed at Chevron?

The reality is that an oil company management team acting Mafi-style in Ecuador cannot afford to let its skeletons migrate out of the closet. This is the same company that recently employed the author of a legal memo (William J. Haynes) justifying the torture of detainees when he was an official at the Pentagon. Other egregious Chevron wrongdoers in the Ecuador matter, such as discredited witnesses Diego Borja and Alberto Guerra, are kept close with fat salaries, homes in gated communities on golf courses, stipends for spouses and family members, and all sorts of luxury perks such as first class air travel that are hidden from shareholders and the public.

Then there are the academics who have humiliated themselves and compromised the integrity of their institutions by trying to defend Chevron's atrocities in Ecuador in exchange for money -- people such as Notre Dame Law Professor Douglas Cassel, Dr. Douglas Southgate of the climate change-denying Heartland Institute, and Dr. Pedro J. Alvarez of Rice University. Their involvement comes from the same dark place in Chevron's legal department where ethical rot has taken hold under the leadership of General Counsel R. Hewitt Pate, and where Reis Veiga hangs out.

Chevron's Board of Directors -- notorious for its lack of independence given that Watson himself is Chairperson -- is letting an environmental liability turn into a major business problem. Company operations in Canada and elsewhere are under seige as the villagers try to collect on their judgment by targeting Chevron's assets. In Canada, the company has an estimated $15 billion worth of refineries, oil fields, office buildings, and intellectual property rights.

Not to be glib, but we suspect the indigenous people of Ecuador are going to own a good chunk of that portfolio if the company does not abide by its legal obligations.

We are still waiting for any sign that the Chevron Board will take the necessary steps to fulfill its fiduciary obligations. It might start much as BP did in the Gulf -- by immediately paying compensation to those affected. It might follow up by ordering an independent review of the legal violations involved -- including the possible bribery of foreign officials -- in the desperate attempts by high-level company officers and employees to extricate themselves from this problem.

On behalf of Texaco and now Chevron, Reis Veiga executed a strategy in Ecuador of cover-up rather than clean-up. The disturbing facts are part of the plain history of Chevron's billion-dollar campaign to obtain impunity.

(For the evidence of Chevron's environmental catastrophe and fraudulent clean-up, see this power point presentation by the former scientist for the affected communities. For a summary of Chevron's forum shopping and jurisdictional shell game, see here. For more on Chevron's efforts to corrupt the Ecuador trial process, see this sworn affidavit and these counterclaims.)

Monday, October 5, 2015

Chevron's Defense In Canada: The Abusive Litigation Strategy Continues

As we predicted, Chevron's jurisdictional shell game to evade its legal obligations to the people of Ecuador has now hit the courts of Canada with full force.

One might remember statements by various Chevron officials a few years ago that the company planned to fight the villagers it poisoned in Ecuador until "hell freezes over, and then skate it out on the ice." This blog describes one way the company tries to make it work in practice.

No doubt that Chevron's filing last week in Toronto of its written defense to efforts by impoverished rainforest villagers to enforce their judgment in Canada is a victory of sorts in that the company tried for three years to block the case from even proceeding.  The villagers had to go all the way to Canada's Supreme Court to force the oil major onto the playing field where neutral judges can actually analyze its outrageous claims. (For more on the unanimous Supreme Court decision and why it poses significant new risk for Chevron, see here.)

That's the good news. The bad news is that the villagers and their counsel once again might have to jump through the same old hoops to convince yet another trial court not to fall prey to Chevron's shell game. These are the same hoops the villagers and their lawyers have been forced to navigate ad infinitum since their claims against Chevron were originally filed in 1993.

For Chevron, the goal in this matter is simple: litigation in perpetuity. The company sold off its assets in Ecuador when it saw the evidence mount against it. The company clearly believes it is cheaper to fight the people it poisoned than to pay for a remediation of their ancestral lands and much-needed cancer treatment. Chevron clearly does not much care whether it loses any particular legal issue as long as its long-term strategy of delay remains viable.

True to this strategy, Chevron lawyers Clarke Hunter and Benjamin Zarnett are using the filing in Canada to repeat the discredited half-truths and outright lies used by Chevron to cover up and distract attention from its environmental crimes and fraud in Ecuador. Said wrongdoing by Chevron has been meticulously documented by more than 100 scientific evidentiary studies of the contamination. Three layers of courts (including five justices on the Supreme Court) in the South American nation have affirmed the fundamental fact of Chevron's liability. (For a summary of the evidence against Chevron, see here. For a summary of Chevron's cancer problem in Ecuador, see here. For the Ecuador Supreme Court decision, see here.)

Chevron's Canada defense makes it clear that the company plans to coax Canadian courts into the trap of re-litigating numerous procedural and substantive issues already decided by courts in Ecuador in the country where Chevron insisted the trial be held.

While the affected communities of Ecuador continue to suffer the shocking health and economic impacts of Chevron's contamination, consider the company's new machinations to delay relief:

  • After vigorously fighting the case in Ecuador's courts for 11 years, Chevron now wants Canada's courts to let it re-litigate whether the company was subject to jurisdiction during that entire time. In its submission, Chevron conveniently fails to mention that it voluntarily stipulated to jurisdiction in Ecuador. Ecuador's courts already ruled against the company on this issue. Chevron knows this claim is a loser, but it will use it to try to buy months of delay if Canada's courts let it.
  • Chevron also claims that a new statute in Ecuador which became law in 1999 (the Environmental Management Act) and was used by the villagers for procedural purposes was applied retroactively in violation of the country's Constitution. In fact, the substantive claims of the case against Chevron in Ecuador are based on a civil statute dating to 1861. Again, Chevron lost this issue in the courts of Ecuador. It is a certain loser in Canada, but of course that's not the point for the oil giant.
  • In another attempt to muck up the Canadian proceeding, Chevron is asking the court to rule that the sham "remediation" it conducted in Ecuador in the mid-1990s that resulted in a release for the company from Ecuador's government should bar the private lawsuit of the villagers. Yet the villagers were not a party to the release and cannot be bound by it. Ecuador's courts rejected Chevron's claim in this regard at every turn. So has an international investor arbitration panel convened by Chevron. Again, this is an opportunity for Chevron to buy time.
  • In what could be its most audacious demand, Chevron is urging Canada's courts to blindly accept the highly flawed findings from the "racketeering" show trial of U.S. trial judge Lewis A. Kaplan. Not only does Kaplan's ruling against the villagers completely contradict the Supreme Court of Ecuador, it is also wrong on the merits. The judge showed his hostility toward the Ecuadorians repeatedly, accepted Chevron's falsified evidence, and refused to even read the Ecuador trial court judgment. More than 35 law scholars from nine countries have filed a brief urging Kaplan's reversal. (For background on the many flaws in Kaplan's decision, see here and here.)

In a contest between Kaplan's judicial imperialism v. Ecuador's Supreme Court, we are siding with Ecuador's Supreme Court and we suspect Canada's courts will too.

Interestingly, Chevron lawyers Hunter and Zarnett are going all in-in on Chevron's corrupt and discredited witness, Alberto Guerra. In the company's defense submission, they repeat Guerra's lies -- made after Chevron paid him $2 million for his testimony -- that the plaintiffs "ghostwrote" the trial court judgment. That allegation has been completely disproven by Guerra's ever-changing testimony and a recent computer forensic analysis. (For background on the Guerra corruption issue, see here.)

Of course, Chevron hopes the day where Guerra has to testify under oath in Canada will never come. The company's plan is for Canada's courts to get so bogged down in the minutia of Ecuadorian law and procedure that the merits of Chevron's horrific contamination in the rainforest and fraudulent cover-up will never see the light of day. The goal is for the lawyers for the villagers to run out of funds before Guerra's bluff is called under oath before a neutral judge.

Canada's courts should be careful not to become complicit in Chevron's attempts to use the country's judicial resources to continue its abusive global demonization campaign. After waiting for 22 years, Ecuador's citizens deserve a final ruling on the merits as soon as possible.

Friday, September 25, 2015

Chevron's Forum Shopping Over Ecuador Pollution Hits Dead End In Canada

It is widely known that Chevron has acted as a serial forum shopper when it comes to trying to evade its liability for creating an environmental disaster in Ecuador's Amazon. But Chevron's game of corporate subterfuge and litigation is clearly unraveling, spelling huge new risks for company shareholders.

In short, Chevron CEO John Watson's billion-dollar campaign to buy impunity for Chevron's human rights abuses in Ecuador is flaming out. Watson himself is at risk of being whipsawed by his own short-sightedness.

Canada's Supreme Court ruled in early September that thousands of Ecuadorian rainforest villagers have the legal right to try to seize company assets in that country to force it to pay for its court-mandated clean-up in Ecuador. This is serious: for the first time in two decades, the villagers have a direct path to a full recovery of their $9.5 billion judgment. (Chevron has an estimated $15 billion of assets in Canada, including a refinery, offshore oil field, and office buildings.)

Ecuador's Supreme Court already ruled in 2013 that Chevron must pay up. True to form, Watson had sold off company assets in Ecuador as the evidence proving the company's pollution poured in to court. Watson's posture of evasion not only has infuriated Chevron shareholders and alienated environmental and human rights groups, but has forced the impoverished villagers to chase down company assets around the world in a cynical game of corporate hide and seek.

In finding that the villagers had jurisdiction over Chevron, Canada's Supreme Court dealt a severe blow to Watson's strategy. In a unanimous decision, the court said this in reference to Chevron and other debtors who try to evade paying foreign court judgments:
Through their own behaviour and legal non-compliance, they have made themselves the subject of outstanding obligations, so they must be called upon to answer for their debts in various jurisdictions... The need to acknowledge and show respect for the legal action of other states has consistently remained one of comity's core components, and militates in favor of recognition and enforcement.
Murray Klippenstein, a Canadian lawyer who represented several human rights groups in the country who submitted a brief in support of the villagers, praised the decision in a legal publication. He said,
Chevron some time ago declared a total war, scorched earth legal strategy against this claim by the Ecuadorian villagers, and in this proceeding in Canada, Chevron was seeking to import into the law of international reciprocal enforcement of judgments an entirely novel test... in its decision the Supreme Court methodically and meticulously analyzed, and rejected, that attempt, based on existing legal principles -- and rightly so.
While Chevron forum shops, thousands of vulnerable people in Ecuador suffer from cancer and other grievous health impacts such as spontaneous miscarriages due to the company's failure to remediate its contamination. Thousands have either perished or face a real risk of death in the coming years. (For background on Chevron's cancer problem in Ecuador as documented by several independent scientific studies, see here.)

Chevron's forum shopping has been well-documented.

Chevron blocked the original case from being heard in U.S. courts (where it was filed in 1993) and insisted the litigation take place in Ecuador. It filed 14 sworn affidavits praising the fairness of Ecuador's courts.

Once in Ecuador, Chevron sold off its assets in the country and tried to get the matter dismissed on jurisdictional grounds even though it had promised U.S. courts it would accept jurisdiction there. When that didn't work, it started to attack the very courts it had previously praised.

At one point, notorious Chevron lawyer Ricardo Reis Veiga corruptly "persuaded" the country's Attorney General to call the trial judge to insist that the case be tossed. (The judge refused the entirely inappropriate request; Reis Veiga still works for Chevron.)

After years of trying to sabotage the proceedings in Ecuador -- Chevron's lawyers threatened judges with jail time and filed thousands of frivolous motions -- the courts ruled against the company based on more than 100 technical evidentiary reports and the company's own internal environmental audits. Despite its earlier promises, Chevron refused to pay and said it would fight the matter "until hell freezes over and then fight it out on the ice."

In Canada, Chevron tried to block the enforcement action by claiming its assets are held by a wholly-owned subsidiary. In Argentina, where another enforcement action was filed, Watson flew to Buenos Aries and met with the country's President. He then invested in a new gas field in exchange for a technical dismissal of the enforcement action.

Back in the United States, Chevron convinced a rogue federal trial judge in Manhattan to issue an unprecedented and illegal order purporting to block the villagers from attempting to enforce their judgment anywhere in the world. The judge, who had undisclosed investments in Chevron when he ruled, was reversed unanimously on appeal. He was also mocked by international law scholars around the world.

Chevron will face major hurdles in Canada if it tries to allege it was the victim of "fraud" by the very people it poisoned in Ecuador. Its evidence in this regard was rejected unanimously by Ecuador's Supreme Court and has been debunked even more since in other legal proceedings. The real fraud is how Chevron uses its fake allegation to retaliate against those who held it accountable.

It turns out that much of Chevron's "evidence" comes from a completely discredited witness paid $2 million by the company in violation of federal law.  Further, new whistleblower videos prove Chevron technicians tried to hide evidence of oil contamination at its former well sites in Ecuador as part of an elaborate scheme to defraud the courts during the trial there. (For more evidence of Chevron's vast corruption in Ecuador, see this affidavit.)

Chevron's two decades of litigation trickery, executed by no fewer than 60 different law firms paid enormous sums by the company, has forestalled justice in Ecuador for far too long. Something tells us the respected courts of Canada understand this point very well.

Friday, September 11, 2015

Chevron Paying Notre Dame "Human Rights" Professor Cassel To Publicly Attack Ecuadorian Villagers

If you want a new example of corruption in legal academia, look no further than Chevron's relationship with Notre Dame "human rights" law professor Douglas Cassel. Chevron is paying Cassel to attack the rainforest villagers and lawyers who have held Chevron accountable in Ecuador for its environmental disaster in one of the great recent successes of the corporate accountability and human rights movements.

As far as we can tell, Cassel never even spoke or wrote about this historic human rights case until Chevron started to pay him in 2012. He now tries to downplay his financial relationship with Chevron when writing bogs that largely regurgitate the company's talking points and are rife with factual distortions and other shortcomings, as this critique to his "Open Letter" points out in detail.

Cassel is being used by Chevron to help it evade paying the $10 billion judgment it owes to the people of Ecuador for dumping toxic waste into the rainforest when it operated in the South American nation between 1964 and 1992.

It is pretty clear that Cassel also is allowing himself to play a central role in a classic oil industry subterfuge. Since the corporation (Chevron) that dumped billions of gallons of oil waste into the rainforest no longer has credibility, it tries to enlist a third party academic to launder its agitprop. It is another example of how Chevron tries to use money to corrupt institutions, whether they be courts or universities as we describe in more detail below.

During the litigation, Chevron was so desperate to avoid losing that it paid $2 million to a discredited witness to present false testimony about a supposed bribe that was later disproven by computer forensic analysis. It also threatened judges in Ecuador with jail time if they did not rule in its favor. Chevron lawyers filed thousands of frivolous motions to delay and sabotage the judicial process. (For more on Chevron's unethical payments of thousands of dollars in cash to key witness Alberto Guerra, see here and here. For a general account of the company's corruption in Ecuador, see this sworn affidavit.)

Chevron has tried to enlist other academics in its cash-for-support propaganda plan. Most have resisted the entreaties, but the results are poor for those who signed on. When in 2008 Chevron tried to use Dr. Douglas Southgate to defend its toxic dumping in Ecuador, it turned out he was affiliated with an institute funded by the oil and gas industry designed to cast doubt on global warning. See here for background.

Chevron also tried to use Dr. Ralph Marquez to "monitor" the science in the Ecuador case during visits by court experts to the company's highly contaminated well sites. Once Marquez was exposed as a former chief lobbyist for the chemical industry in the state of Texas (and a confidant of Karl Rove), he disappeared from the case. (See here for background.)

Chevron's lineage with low-grade "academics" reflects poorly on both Cassel's personal ethics and those of Notre Dame's reputable law school. Notre Dame should not be letting Cassel trade on its credibility to sell his own soul (and by extension the university's) to a corporate human rights abuser -- particularly when there is no real transparency about the amount of money changing hands and the conditions placed by the company on any "research" for publication.

While Cassel reaps cash for the arrangement, Notre Dame must pay a high cost via its harmed reputation and compromised academic integrity. The New York Times just exposed the same type of academic corruption at various universities -- including the University of Florida -- where Monsanto and other companies are battling to stop the labeling of genetically-modified foods by quietly paying academics to advocate their positions without full transparency.

Most universities now require their faculty to be completely transparent about any financial relationships they might have with third parties. Notre Dame needs to get on board. Cassel's failure to be transparent about his financial ties to Chevron creates a conflict of interest given his responsibilities to teach Notre Dame's students consistent with the high standards of scholarship and professional objectivity demanded by a top-flight university.

Does Cassel tell his students that he is taking money from Chevron, a company that multiple courts have found to have committed environmental human rights abuses in Ecuador on a grand scale? When he teaches the case, does he provide the financial details of his conflict of interest? Does he disclose his contract so students can assess if Chevron has editorial control (or influence) over what he publishes as a so-called "academic"? Is anyone at Notre Dame asking these questions?

Cassel's spectacle is made worse by the fact Notre Dame expressly states that its mission is to help combat poverty, oppression, and injustice -- the very life conditions forced on thousands of indigenous persons and farmers in Ecuador by the irresponsible operating practices of Cassel's client. (For background on the overwhelming evidence against Chevron in the case, see here. For the high rates of cancer in the rainforest where Chevron operated, see here. For a legal brief responding in detail to Chevron's allegations of fraud, see here.)

Last week, after Canada's Supreme Court ruled unanimously that the Ecuadorian villagers could try to seize Chevron's assets in that country to pay for their clean-up, Cassel predictably posted a blog trying to minimize the importance of the decision. In fact, the decision is highly significant and was reported in all major media (see here for our take on the significance) for good reason. Which interpretation of the decision does Cassel plan to teach in the classroom -- his "own" version consistent with Chevron's talking points, or the perspective of the Canadian justices and villagers?

It is worth nothing that Cassel is isolated in his pro-Chevron view of the case. At least 35 prominent international law scholars from nine countries have filed a legal brief supporting the villagers as have numerous U.S. environmental and human rights groups. As far as we can tell, Cassel is virtually alone in legal academia as a wholesale backer of Chevron defenses that already have been rejected by multiple courts, including Ecuador's top court. We doubt he would take such a position if he were not being paid.

Notre Dame appears to have a strong "conflict of interest" policy that prohibits any "situation where financial or other personal or professional considerations compromise an individual’s objectivity, professional judgment, professional integrity, and/or ability to perform his or her professional responsibilities to the University." On its website, the law school says a Notre Dame lawyer should embody "exceptional moral and ethical standards" and "compassion" for others.

These standards might be a good starting point for Notre Dame faculty to use when assessing Cassel's behavior.

To be clear, we don't mind taking on Cassel's pro-Chevron arguments and we do not dispute his right to be heard. What we do mind is his lack of ethics and fundamental dishonesty in trying to downplay -- and often hide -- his relationship with Chevron as a way to try to enhance his own credibility.

We are waiting for Cassel to disclose any and all of his written agreements with Chevron. It would be interesting to know how much he charges to compromise his personal ethics, the ideals of the human rights movement, and the academic integrity of a university.

Tuesday, September 8, 2015

Six Reasons Why Chevron's Ecuador Disaster Just Became A Company Nightmare In Canada

Chevron's Ecuador environmental disaster -- called "The Amazon Chernobyl" by its indigenous and farmer victims in the rainforest -- has now spread to Canada in what is fast becoming a business and legal nightmare for company management.

For Chevron CEO John Watson, the news that the company will face a trial in the respected courts of Canada over its toxic dumping in Ecuador could hardly have come at a worse time. Due to the drop in oil prices and other structural problems in the company, Chevron has lost a whopping $100 billion in market value just in the last 12 months. (See here for background.)

Now, Watson must face the frightening fact that seven justices on Canada's respected Supreme Court ruled unanimously last week that Ecuadorian villagers can try to seize $10 billion of Chevron assets in the country to pay for their environmental clean-up as mandated by the very courts in Ecuador where Chevron insisted the trial be held. While legal hurdles remain -- the case now goes back to a trial court in Toronto -- the villagers plan to use any funds collected to remediate what experts believe is the worst man-made oil disaster on the planet.

This is a huge and much-needed legal victory for the affected indigenous and farmer communities and for human rights victims worldwide. It is also the latest in a series of stinging courtroom defeats in the case for Chevron under Watson's leadership.

This is the second time that a respected Supreme Court has ruled unanimously against Chevron's attempts to block the Ecuador judgment. Ecuador's National Court of Justice, in a 5-0 decision in 2013, affirmed the oil company's liability for the deliberate dumping of billions of gallons of toxic waste into the rainforest when it operated hundreds of wells (under the Texaco brand) from 1964 to 1990. That dumping caused a massive outbreak of cancer affecting tens of thousands of people.

There are now four separate appellate courts -- two in Canada and two in Ecuador -- issuing unanimous rulings against Chevron on important aspects of the case. (Intermediate appellate courts in the respective countries each issued separate 3-0 decisions against Chevron.) In Canada, the villagers have gone 10-0 against the oil company before appellate judges; in Ecuador, they have gone 8-0.

The latest decision is not Chevron's only bad news. Just recently, in a related investor arbitration between Chevron and Ecuador's government, the oil company suffered a devastating setback when the three international arbitrators tossed out its main legal defense. (For more, read this.)

The latest Canada ruling is a powerful example of how Chevron's vicious attacks against the very indigenous tribes it poisoned  -- in a strategy orchestrated by Watson and former Bush Administration official and Chevron General Counsel R. Hewitt Pate -- continue to backfire. It seems that the more the money the company spends to fend off the Ecuadorians, the more it ends up chasing its own tail.

Here are six main reasons why Watson and Pate -- despite having spent an estimated $2 billion of shareholder funds to pay 60 law firms and 2,000 lawyers to carry out the company's scorched-earth strategy -- are facing a growing nightmare north of the border:

**Canada has a judicial system respected throughout the world. When Chevron loses in Canada, it cannot attack the credibility of the country's courts as it has unfairly done for years in Ecuador. Nor can it strip its assets from the country, as it sneakily did in Ecuador. Chevron's litigation strategy of gamesmanship and intimidation simply won't work in Canada.

**Chevron will be forced to face its environmental crimes in public. Watson and Pate likely will have to deal with the merits of Chevron's horrific environmental pollution and the cancer fallout before company shareholders and a global audience -- something they and their predecessors have been trying to avoid for two decades.

**Chevron has a critically important pool of assets in Canada. Estimated to be worth $15 billion, these assets can pay for the entirety of the Ecuador judgment. That's a huge business problem for Chevron as Canada is one of the leading energy producers in the world and the source of an estimated $3 billion in annual profits for the company.

**For the villagers, the cost of litigation just got way lower. Given that the entire Ecuador judgment can be recovered in one country, for the villagers the case just became much more viable. Also helping is that any issues that might be raised already have been litigated. Chevron's massive resource advantage is no more.

**Because of interest payments, Chevron's liability is growing. Canada allows interest to run on uncollected judgments. This will severely tax Chevron if it tries to employ its usual strategy of obstructionism. The villagers estimate accrued interest in Canada on the judgment already has cost Chevron an additional $500 million, increasing its Ecuador liability to $10 billion.

**One of the  top trial lawyers in Canada represents the villagers. The highly respected Alan Lenczner has been litigating for 40 years and has argued roughly 20 cases before the Canada Supreme Court. (A leading Canadian newspaper just published this fascinating profile of Mr. Lenczner's extraordinary career.)

Other than Chevron, the big loser from the Canada decision seems to be increasingly isolated New York trial judge Lewis A. Kaplan. Kaplan, who maintains highly questionable personal investments in Chevron and let the company block any airing of the environmental evidence, is Watson's favorite activist jurist. While literally dozens of trial and appellate judges in three countries have now rejected some or all of Chevron's defense claims, Kaplan is the only judge in the world who has embraced Chevron's discredited "fraud" narrative.

The larger point: if Watson thinks Kaplan will be able to bail him out in Canada (or anywhere else for that matter), he should think again. Kaplan's preposterous and arrogant opinions condemning the entire Ecuadorian judiciary based on the testimony of a single political pundit will backfire against Chevron before any fair tribunal and are likely to be reversed on appeal. (For details on Kaplan's personal conflict and his open hostility toward the villagers, read this legal petitionthis analysisthis appellate brief and this article.)

Watson and Pate have other problems. A new computer forensic analysis has destroyed their manufactured allegation that the Ecuadorian judgment was the product of bribery. The forensic analysis demonstrated that Chevron's star witness, the discredited Alberto Guerra, has been lying under oath (after being coached by Chevron lawyers for an astonishing 53 days) about the supposed bribe. Chevron had greased Guerra and his family with roughly $2 million, including a Mafioso-style $38,000 in bills out of a suitcase, for his "cooperation" (i.e., false testimony) in violation of the ethical rules and possibly federal law. For more of the disturbing details, read here.

The options for Chevron are narrowing as shareholders grow ever more furious at the mishandling of the litigation and the unsavory tactics being used. Watson and Pate also has been criticized for using the notorious "transnational practice group" at the controversial law firm Gibson Dunn to help Chevron undermine the rule of law by falsifying scientific evidence, coaching the corrupt Guerra to lie, filing motions to harass its critics, and trying to intimidate judges in Ecuador with the threat of jail time. (See below for details.)

New evidence also emerged recently that Chevron tried to defraud Ecuador's courts by ordering its scientists to engage in an elaborate scheme to hide toxic contamination during the underlying trial, as these whistleblower videos demonstrate.

With Chevron's defenses fraying and the bad news coming in torrents, the more intelligent approach for Watson and Pate would be to respect the Supreme Court ruling in Ecuador and work with rainforest community leaders and their lawyers to solve the pollution problem. Instead, in an era of industry uncertainty produced by low oil prices, Pate and Watson squander precious resources in an all-out litigation war that increases the company's business risk and does nothing to save the many lives that are being lost on Chevron's watch in the forest.

In the end, these two and others associated with Chevron could very well face personal exposure over the Ecuador liability given the unethical, dubious, and potentially illegal tactics being used.

As the enforcement action in Canada proceeds and interest on the judgment runs, we suspect neither Canada's judiciary nor the financial markets will be impressed with Chevron's approach.

(For a summary of some of the gross misconduct from Chevron and Gibson Dunn, see this sworn affidavit from Ecuadorian lawyer Juan Pablo Saenz. Some of the Gibson Dunn lawyers involved in the conspiracy to present false testimony via Guerra include Randy Mastro, Avi Weitzman, Reed Brodsky, William Thomson and Andrea Neumann. In another incident, the High Court of London recently sanctioned a Gibson Dunn lawyer for presenting false witness testimony to try to frame a political enemy of one of the firm's clients, the African government of Djibouti. In the Ecuador case, the firm has been sanctioned by a U.S. federal judge and criticized for using discovery motions to harass Chevron's critics and present false testimony about the case to the U.S. Congress.)

(For a summary of the evidence against Chevron in Ecuador, see here. For a summary of the cancer problem in Ecuador created on Chevron's watch, see here. For photos of the people in Ecuador Chevron says don't matter, see this essay in The Huffington Post. For a 60 Minutes segment on Chevron's pollution in Ecuador, see here.)

Tuesday, August 11, 2015

Chevron's Ecuador Strategy Backfires As Villagers Move to Seize $106m From Company

If you want a vivid example of how Chevron CEO John Watson and General Counsel R. Hewitt Pate continue to step on themselves in Ecuador, look no further than the company's recent arbitration "victory" against the government of Ecuador in a case involving a dispute over oil royalties.

This supposed Chevron "victory" -- in the amount of a $106 million award -- is likely to help Ecuadorian indigenous villagers collect their separate $9.5 billion environmental judgment against the oil giant. It could also disrupt Chevron's operations in other countries where the villagers are trying to seize company assets to force compliance with the environmental judgment.

The villagers won the larger judgment in 2011 in a civil case in Ecuador after Chevron insisted the trial be held in the South American nation. Chevron's attempts to sabotage and corrupt Ecuador's court system throughout that trial have been well-documented. Ultimately, Ecuador's Supreme Court affirmed the judgment in 2013 in a unanimous 222-page opinion that meticulously described -- mostly using Chevron's own evidence -- the company's wrongdoing at hundreds of well sites throughout the Amazon.

(For examples of Chevron's attempts to corrupt the Ecuador proceedings, see this affidavit and how the company falsified evidence by paying a corrupt witness.)

Chevron launched the arbitration case against Ecuador's government in the middle of the environmental trial to gain leverage. It tried to claim its "damages" over the distribution of oil royalties dating from the 1980s were a whopping $700 million. (Chevron and Ecuador's state-owned oil company had been partners in a consortium at the time.)

Chevron's goal was to use the risk of a large judgment over the royalties to pressure Ecuador's government to kill off the environmental case, where the company faced an enormous multi-billion dollar liability. Chevron's plan was an illegal attack on the rule of law and a blatant attempt at extortion. Ecuador's government did not buckle, further infuriating the company.

In the meantime, because Chevron refused to abide by the environmental judgment, the villagers in 2012 quietly secured a court order in Ecuador entitling them to seize company assets to help pay for the remediation of their ancestral lands. Chevron had no real assets in Ecuador at the time, having sold off its Texaco gas stations in 2007 in anticipation of losing the case.

Here's where the law of unintended consequences kicks in. Watson and Pate's arbitration victory over the issue of royalties created Chevron's only real asset in Ecuador. That asset is a debt owed Chevron by the government of Ecuador. But Ecuador's courts -- the very courts where Chevron accepted jurisdiction and wanted the trial held -- have told the government that the asset is now the property of the villagers and cannot be paid to Chevron.

The villagers no doubt plan to use some of the recovered funds to help seize Chevron assets in other jurisdictions such as Canada and Brazil, where collection actions are pending.

The clean-up in Ecuador clearly will require far more resources than the amount of the arbitral award. Chevron abandoned roughly 1,000 toxic waste pits that continue to contaminate soils, streams and groundwater. Each of those sites is akin to a Superfund site in the United States. And by way of comparison, BP has already paid out $54 billion to repair damage and to compensate victims after the much smaller Gulf of Mexico spill in 2010.

The 1,000 or so waste pits are not the only problem. Chevron also discharged billions of gallons of benzene-laden formation waters into streams and rivers relied on by locals for their drinking water. Cancer rates in the area have skyrocketed and untold numbers of people have perished, as this photo essay by journalist Lou Demettais documents.

(For a summary of the overwhelming evidence against Chevron in Ecuador, see here. For a 60 Minutes segment documenting the company's deliberate dumping of oil waste, see here.)

Pablo Fajardo, who represents the villagers, said that any funds collected from the arbitral award will be placed in a trust account set up to administer the clean-up. Actually getting the funds into the account will require a line item in Ecuador's budget. It is unclear how that might play out given Chevron's many prior attempts to disrupt the case in Ecuador, but we are hopeful.

Fajardo was clear about his intentions, saying in a press release:

The Ecuadorian victims of Chevron's toxic dumping have a lawful right to obtain this arbitral award and other company assets until their judgment is fully satisfied. Our people are suffering from a humanitarian crisis and many lives are at stake because Chevron -- unlike BP in the United States -- refused to pay for a clean up of its pollution.

We might add that the Ecuador court order is not the only bad news lately for Chevron.

Chevron's central defense in the Ecuador matter -- that the trial court judgment was "ghostwritten" -- has been unraveling for several months, as this article in The Huffington Post explains. And Chevron's retaliatory "racketeering" case also faces a major risk of reversal, as this brief and this article by American lawyer Steven Donziger and his representatives explain.

Also hurting Watson is the stunning disclosure of internal Chevron whistleblower videos that show company field technicians trying to hide evidence of contamination from Ecuador's courts. These videos were published by VICE News and Amazon Watch and can be seen here and here.

The bottom line is that Chevron is suddenly at risk of becoming the leading financier for its adversaries in Ecuador. Some might call that the very definition of poetic justice.

Monday, July 6, 2015

Chevron's Greed and Racism Highlighted by BP's $18 Billion Settlement

BP's latest settlement for its Gulf of Mexico spill, for the amount of $18.7 billion, further highlights the greed and racism of Chevron for refusing to settle claims over the far worse ecological damage caused by the company to the people of Ecuador's Amazon region.

With the latest settlement, BP estimates its total liability for the 2010 spill to be $54 billion. That's more than five times higher than Chevron's liability for systematically discharging billions of gallons of benzene-lade oil waste into the waterways of Ecuador's Amazon. The dumping happened from 1964 to 1992, when Chevron (operating as Texaco) abruptly pulled out of the country.

Could there be a more brazen illustration of racism and greed than Chevron's despicable refusal to accept responsibility for what it did in Ecuador?

Chevron CEO John Watson has claimed Ecuador's courts gouged the company when they delivered the verdict against the oil giant in 2011. The damages later were upheld in 2013 in a unanimous decision by Ecuador's Supreme Court. To avoid a U.S. jury, Chevron had insisted the trial be held in Ecuador and had accepted jurisdiction there.

While BP compensates its victims in the U.S., Chevron thus far has been able to obtain effective impunity for its crimes against the people of Ecuador. Cancer rates in the affected area have skyrocketed, costing numerous lives. Instead of cleaning up, the company attacks the very villagers it poisoned and sues the lawyers who have led the legal charge demanding adequate compensation.

Chevron's contamination in Ecuador is far more widespread than BP's in the Gulf. It has lasted longer, was planned deliberately, and has decimated indigenous groups. The hard truth is that environmental racism is alive and well in Chevron today and Ecuador is not the only example.

Another is how the company treats the Bay Area community of Richmond. That's where Chevron owns a polluting refinery where a fire recently forced thousands to seek medical attention. When the community stood up to Chevron and demanded changes, the company had the temerity to spend $3 million to fund its own candidates for the town council.

There was a tragic loss of life and a major environmental impact from the Gulf spill. But at least 1,400 people in Ecuador are estimated to have died from cancer and other oil-related diseases. The death toll will rise if there is no clean-up.

Chevron's racism toward the people of Ecuador was on clear display during the trial. Company lawyers proposed that Ecuador's courts adopt a clean-up standard 100 times more lax than that used in its home state of California. For more on how Chevron tried to corrupt the court process in Ecuador, see this sworn affidavit from lawyer Juan Pablo Saenz.

Of course, many of Chevron's victims in Ecuador are indigenous and live in an isolated part of a Third World country. Unlike BP's victims in the U.S., they do not have environmental laws like the Clean Water Act to protect them.

Let's review the facts.

In Ecuador, a major U.S. oil company has refused for almost 50 years to clean up an environmental catastrophe caused by intentional dumping over a period of decades. In the U.S., a British company that had a terrible accident put up $20 billion without as much as a trial and ultimately settled the entire matter for more than $50 billion.

When Chevron CEO Watson claims the Ecuador judgment is too high, what he is really saying is it is unfathomable to him that people in the forest could actually hold his company accountable.

Watson and Donald Trump might have more in common than they realize.