Chevron's Legacy

Chevron's Legacy
The Pollution Chevron Left Behind...Shushufindi pit 38. Chevron's scientists found no contamination at this pit.

Wednesday, September 10, 2014

Chevron Racism Toward Ecuador Highlighted by Court Decision In BP Case

A legal decision handed down last week by U.S. federal Judge Carl Barbier found that BP's "gross negligence" caused the Deepwater Horizon blowout in the Gulf of Mexico.  The decision increased the company's liability to roughly $50 billion.

For our purposes, Judge Barbier's decision – which sets an important benchmark for corporate accountability – has a deeper meaning.

Judge Barbier's finding underscores the obvious racism behind Chevron CEO John Watson's claim that the company's $9.5 billion judgment in Ecuador represents some sort of gouging by that country's courts. While BP pays for its spill, Chevron has obtained effective impunity for decades of contamination resulting in disease and death in the rainforest of Ecuador.

Chevron has refused to pay any part of the judgment whatsoever. The company chooses instead to spend many millions on law firms to carry out its threat of a "lifetime of litigation" for the villagers.

It gets worse. BP's liability for the less impactful Gulf spill in the U.S. is now five times higher (and still growing) than Chevron's in Ecuador. Yet Chevron's contamination in Ecuador is more widespread, has lasted far longer, was deliberate, has severely impacted indigenous groups, and is afflicting the world's most delicate ecosystem. Further, responsibility was adjudicated after a long trial.

So what gives?

Well, let's speak the unpleasant truth about environmental racism in the oil industry today.

The truth is that in Ecuador, the victims of Chevron's contamination are Ecuadorian indigenous peoples and poor villagers. In the U.S., the victims are Americans. While there is certainly extensive environmental racism in our country, the discrepancy between BP's payout and Chevron's extraordinary conceit and greed in the face of intense human suffering is a clear illustration of something gone profoundly awry.

This is not to take away from the loss of 11 lives on the Gulf Coast. At the same time, at least 1,400 Ecuadorians have died from cancer and other diseases linked to the contamination and thousands more have had serious illnesses. Far more will likely die if there is no clean-up.

We would submit that there is no way on God's Earth that CEO Watson and the members of the Chevron Board of Directors would dare to treat American victims of the company's pollution as viciously as they treat their victims in Ecuador. If they did, they would be booted out of their country clubs, banished from their churches, and shamed in the town square.

Here's another illustration of this phenomenon. At the same time that Chevron's predecessor company Texaco was systematically discharging billions of gallons of toxic waste into Amazonian waterways, in the U.S. the company was properly re-injecting the same waste into deep underground wells. This was to ensure there were only minimal environmental impacts in the U.S. But clearly the company felt it could get away with NOT doing it in a place where there was little oversight.

Chevron also proposed that the Ecuador court adopt a clean-up standard for oil field hydrocarbons 100 times greater than that used in its home state of California. Put another way: in Chevron's view, an Ecuadorian life is worth 100 times less than an American life in California.  If that is not some form of extreme racism, we would like to know what is.

Of course, Chevron's victims in Ecuador are indigenous and Latino farmers in an isolated region of a Third World country. Unlike the American victims, they do not have a law like the Clean Water Act that if used properly can lead to a penalty that begins to fit the magnitude of the transgression.

Nor do they have an elected president willing to call out the corporate polluter publicly in the strongest possible terms. President Obama, just days after the spill in the Gulf began, said repeatedly that BP would pay dearly – and that's exactly what happened. When Ecuador President Rafael Correa did the same to Chevron decades after the fact, Chevron's legal and public relations machine attacked him mercilessly for "interfering" with legal proceedings.

Chevron has spent years trying to sabotage the trial that it wanted to take place in Ecuador precisely because it thought it could manipulate the result through corrupt means. (For some examples of Chevron's corruption and delaying tactics in Ecuador, see this declaration by Ecuadorian lawyer Juan Pablo Saenz.)

Judge Barbier's finding triggers up to $18 billion in additional penalties for BP under the Clean Water Act. That's on top of the $28 billion BP already has doled out to clean up the environment and to compensate its victims.  Wow.

Chevron's executives must read that number and get down on their knees to thank the gods of corporate greed for their good fortune. Chevron has yet to clean up properly even one of its estimated 1,000 waste pits sitting on the jungle floor in Ecuador that to this day continue to contaminate soils and groundwater.

CEO Watson knows Chevron is getting off easy in Ecuador. But he still presses on with a scorched-earth strategy that includes 60 law firms and 2,000 legal personnel. He wants to send a broader message to restless natives the world over who might have claims against the company. The case will end, he told Fortune magazine, when the lawyers "give up" and go home. That's an effort to buy impunity.

BP still faces lawsuits from various Gulf states such as Alabama and Mississippi that could increase its liability for the Gulf spill to $75 billion or more. To underscore how profitable the oil majors are – and how easily Chevron could pay the Ecuador judgment – BP is still producing profits and dividends for its shareholders.

When Watson (who makes around $25 million in annual compensation) and Chevron General Counsel R. Hewitt Pate claim the Ecuadorian verdict is too high, what they mean is it is too high for the particular people who won it. Consider these facts:
  • Chevron lawyer Rodrigo Perez Pallares admitted during the Ecuador trial that the company deliberately discharged 15 billion gallons of toxic water into fresh water sources in the Amazon rainforest. The amount is an estimated 85 times more oil waste than BP discharged into the Gulf.
  • Chevron's dumping in Ecuador was done by design to increase profits. BP's spill – even though the result of gross negligence – was still an accident.
A case involving Anadarko's recent settlement over 2,700 contaminated sites in the U.S. also underscores Chevron's inexcusable double standard. In that case, Anadarko inherited the polluted sites from Kerr McGee when it bought the company, just like Chevron inherited Texaco's pollution liabilities when the companies merged in 2001.

Like Chevron has done with Texaco, Anadarko tried to spin off the environmental liability into a separate shell company that had little capital. A U.S. bankruptcy judge rejected Anadarko's subterfuge and ordered it to clean the sites. In Ecuador, three layers of courts rejected Chevron's use of the same legal trick to evade liability.

But in the courts of Ecuador, according to Chevron's double standard, that amounts to a violation of "due process" and is an example of a "fraud" against the company.  That reminds us of what a Chevron lobbyist once told Newsweek in reference to the legal claims of the Ecuadorian villagers: "We can't let little countries screw around with big companies like this."

Watson and his army of lawyers have ruthlessly attacked Ecuador's government for not cleaning up Chevron's contamination in Ecuador.   Their goal is a taxpayer funded bailout (in Ecuador) of their own pollution.  But for decades the U.S. government did not lift a finger  to address Kerr McGee's contamination – largely because the issue of liability was still being contested. In the end, Kerr McGee settled the matter for $5.6 billion.  That amount underscores how major polluters routinely pay out large sums to settle their liabilities.

That is, unless you are a major oil company run by predators like Watson and Pate and a Board of Directors that fails to hold its management team accountable for flouting the law.

Let's sum up.

In one country (Ecuador), a U.S. oil major has refused for almost 50 years to clean up its contamination, compensate its victims, or engage in meaningful settlement discussions with the affected communities. In another country (the United States), a British oil major put up $20 billion within days of its spill to compensate its victims and engaged in settlement discussions with the victims that resulted in further liability.

BP has put aside $40 billion in cash to deal with the Gulf spill. Chevron has put aside zero to pay off its Ecuador liability.

Watson and Chevron's Board of Directors owe the people of Ecuador – not to mention their own shareholders – an explanation for this thoroughly disturbing behavior.

Friday, September 5, 2014

Rolling Stone Nails Chevron for Corrupt Acts In Ecuador Litigation


None other than Rolling Stone (with its 4 million Twitter followers) has now weighed in on Chevron's environmental catastrophe and cover-up in Ecuador. The picture is not pretty for company management and shareholders.

The detailed story by Alexander Zaitchik that appeared last week on the magazine's website nails Chevron for trying to sabotage and corrupt the eight-year trial that ended in 2011 with a devastating $9.5 billion judgment against the company. The judgment was later affirmed unanimously by two appellate courts, including Ecuador's highest court. In any event, we are happy to recognize good journalism when we see it.

Even though it wanted the case tried in Ecuador, Chevron now has sour grapes and won't pay up. Thousands of lives are at risk due to the refusal of Chevron management to address the company's legal obligations.

For those counting, a total of nine judges in Ecuador who reviewed the scientific evidence ruled against the company. Contrast that to the ruling in New York by one activist trial judge (Lewis A. Kaplan) who refused to hear any of the scientific evidence of Chevron's contamination and who openly mocked and denigrated the Ecuadorians and their U.S. legal advisor, Steven Donziger.

One might assume that Kaplan – who denied Donziger and his clients a jury trial – knows far less about Ecuadorian law than the judges on the Ecuadorian Supreme Court, which affirmed the decision against Chevron. Deepak Gupta, Donziger's esteemed U.S. appellate lawyer, called Kaplan's trial a shocking example of "judicial imperialism" designed to dictate to all of the world's courts how they should view the judgment against Chevron.

The Rolling Stone article, which gives Donziger and the Ecuadorian lawyers kudos (calling Donziger a "warhorse lawyer") for standing up to Chevron's intimidation campaign, can be read here in full.

Next up for Chevron is argument before the Supreme Court of Canada on December 11. That court will determine whether the rainforest communities can try to seize a sizable portion of the $15 billion worth of Chevron assets in Canada. A separate enforcement action in Brazil is also moving at a far faster clip than Chevron CEO John Watson is disclosing to his company's shareholders.

The immediate objective of these actions is to obtain the funds necessary to fix the massive environmental damage in Ecuador. The larger issue is for courts worldwide to show Chevron and its army of 2,000 lawyers that they are not above the law, as company lawyer Sylvia Garrigo famously asserted to Scott Pelley of 60 Minutes. (Garrigo: "We didn't want to get sued, period. We don't want to be in any court, much less a court with respect to this kind of claim, which we consider to be frivolous.")

None of this sprawling litigation would be necessary had Chevron lived up to its original promises.

Chevron fought from 1993 (when the case was filed in New York) to 2001 to have the trial moved to Ecuador. At the time, it filed 14 separate affidavits praising the fairness of Ecuador's judicial system and promised to abide by any adverse judgment in Ecuador. The promises went out the window when the scientific evidence during the trial pointed to the company's guilt and Chevron realized Ecuador's courts were able to resist its efforts to corrupt the process.

Chevron's big problem in 2015 is that the rule of law is catching up to it. Not only are two foreign courts proceeding against Chevron's assets with a third (Argentina) and possibly others waiting in the wings, but Judge Kaplan's ruling is at great risk of being reversed by a three-judge panel on appeal as Donziger's appellate brief makes clear. Aside from trying to meddle in the judiciary of a foreign country, Kaplan let Chevron pay a corrupt fact witness about $2 million in cash and benefits.

Given Chevron's diminishing returns, is a settlement between the parties now possible?

After two decades of Chevron's litigation abuse, the villagers are publicly insisting that they will not stop until they collect the entirety of the $9.5 billion judgment. We can understand why. For one thing, interest is running. For another, Chevron won't be able to pressure or corrupt the courts of Canada like it thinks it can do in many countries around the world.

The other factor working against Chevron is that the amount of the Ecuador judgment is miniscule compared to BP's enormous liability (now approaching $50 billion) for the far smaller Deepwater Horizon spill in the Gulf of Mexico. Unlike BP's raging spill, what Chevron did in Ecuador was intentional and not an accident. And it has lasted for almost five decades, not five years.

The reality is that Chevron has gotten off easy in Ecuador, given the magnitude of what it did.

We hear that CEO Watson is emitting smoke signals about some sort of exit strategy. We can't say we blame him. If Chevron really wants lasting peace, we strongly suggest to Watson that he not make the same mistake Texaco made in the 1990s by trying to "settle" with Ecuador's government while ignoring the communities.

That mistake by Texaco led only to endless litigation and Chevron's worsening reputation as a leading rogue actor in the oil industry. It also led to huge legal fees – estimated at $2 billion over several years – and major distractions for upper-level management. There is also potential exposure down the road for conspiring to interfere with court proceedings. (Watson himself was deposed under oath in the case while two high-level Chevron officials were indicted in Ecuador for fraud.)

While on the topic of journalism, we want to give a big shout out to William Langewiesche, the writer for Vanity Fair whose brilliant 2007 article on lead Ecuadorian lawyer Pablo Fajardo was the first by a major American magazine to capture the context of Chevron's awful track record in Ecuador.

Like the Rolling Stone article, the earlier Vanity Fair piece is must reading for anybody who wants to understand the reality of Chevron's venality in Ecuador.

Thursday, July 31, 2014

Conflict of Interest: Businessweek's Paul Barrett Now An Advocate for Chevron In Ecuador Dispute

With his track record of bias in favor of Chevron already part of the historical record, Businessweek’s Paul Barrett appears to have become a full-blown public advocate for the oil giant in its legal dispute with Ecuadorian villagers over the massive contamination of their ancestral lands.

Just this week, Barrett testified about his take on the litigation before the House of Representatives in a hearing that was arranged in part by Chevron lobbyists. He appeared at the side of a lawyer from the oil giant’s controversial outside law firm, Gibson Dunn & Crutcher. And he repeated the usual Chevron talking points about the Ecuador case that have been rejected by three layers of courts in Ecuador, including that nation’s highest court in a unanimous opinion last November.

Barrett’s testimony in favor of Chevron – completely improper for any independent journalist – follows multiple reports that Chevron is quietly helping to promote his forthcoming book about the case, Law of the Jungle. We can’t say we are surprised after reviewing an advance copy from a source who indicated Barrett is trying to flog it in Hollywood.

The effort by Barrett to cash in on the misery of Ecuadorian villagers by promoting Chevron’s campaign to evade accountability is hardly surprising. His book falls far short of fact-based responsible journalism. Barrett adopts wholesale most of Chevron’s fraudulent plot points and ignores the overwhelming scientific evidence – most provided by the oil company itself during an eight-year trial in the court of its choosing in Ecuador – that was relied on to determine liability for the dumping of billions of gallons of toxic waste into the rainforest.

(For background on the overwhelming evidence against Chevron relied on by the Ecuador courts, see this document; for an explanation of Chevron’s human rights abuses in Ecuador, see this video; for how Chevron deliberately discharged toxic waste, see this 60 Minutes segment; for a letter signed by 43 civil advocacy groups criticizing Chevron over Ecuador, see here.)

Barrett’s obsession with (and personal animus toward) Steven Donziger, the main U.S. legal advisor to the villagers and the principal target of Chevron’s demonization campaign, drips off the cover jacket and permeates almost every chapter.

Law of the Jungle suffers from some of the same egregious flaws often found in Barrett’s reporting on the Ecuador litigation: sloppy or non-existent research resulting in numerous factual errors; cribbing material from other journalists and court filings; creating fictional scenes that never happened; and demonstrating a shocking disregard of the extensive scientific evidence that contradicts Chevron’s self-serving narrative.

The book reads like a novelist’s re-purposing of Judge Lewis A. Kaplan’s deeply flawed 487-page RICO decision, which is currently hanging on life support during the appellate process. Barrett’s book is as much an affront to serious journalism as Kaplan’s decision is to serious legal reasoning.

A more comprehensive critique of Barrett’s book is forthcoming. Here is a preview of some of its flagrant flaws:

  • Barrett did almost no independent reporting. He let Chevron’s lawyers do almost all of his work for him, effectively letting the oil giant subsidize his so-called “independent” research. Most of the book re-writes Chevron’s court filings and adopts almost wholesale the oil giant’s narrative that it was “victimized” by the very indigenous groups that held it accountable.
  • Barrett spent almost no time reporting on conditions in Ecuador. He never interviewed a single member of the legal team for the villagers. He does not quote any current Ecuadorian government officials. He never attended even a day of the eight-year trial that resulted in a judgment against Chevron. According to his source notes, Barrett never read the 220,000-page Ecuador trial record. Barrett also spent no more than a few days reporting from Ecuador, the epicenter of the two-decade legal dispute and the place Chevron's predecessor company Texaco operated for decades. The book epitomizes secondhand armchair journalism.
  • Barrett’s book reads as though the Ecuadorian people do not exist. Consistent with Chevron’s imperialist and arrogant behavior in Ecuador, there is virtually no mention by Barrett of a single Ecuadorian other than Cofan indigenous leader Ermegildo Criollo, with whom he spent a few hours. In Barrett’s eyes, the people who matter most are Americans like Donziger, Judge Kaplan, and the activists at Amazon Watch. He scarcely mentions lead Ecuadorian attorney Pablo Fajardo (who won the CNN Hero Award for his work on the case) and he ignores Luis Yanza (winner of the prestigious Goldman Environmental Prize). Yanza has been the lead community advocate on the case for over two decades. Almost none of the thousands of affected villagers were even interviewed.
  • Barrett misleads the reader about his sources. In a shocking display of poor journalistic ethics, Barrett repeatedly misleads the reader by cribbing material without citation from journalists who did firsthand reporting. One example: Barrett frequently describes scenes from the award-winning documentary film Crude without mentioning in the text that his source is the film. By so doing, Barrett leaves the reader with the false impression he was reporting firsthand from events that happened years ago and where he was not present. (Some of these suspect narrative techniques seem oddly similar to what got James Frey in trouble in his supposedly non-fiction memoir, A Million Little Pieces.)
  • Barrett fictionalizes events and leaves the false impression he interviewed Donziger. Barrett asked Donziger repeatedly for interviews for the book but Donziger refused to cooperate, acting on advice of counsel and for other reasons related to Barrett’s lack of scruples. So Barrett now pretends that Donziger cooperated with him anyway. Barrett quotes Donziger from private notes turned over in discovery and relays what he thinks is on Donziger’s mind, leaving the reader with the false impression that he interviewed Donziger for the book or had some special access to his private thoughts. Barrett also creates fictional scenes involving Donziger – including one where the lawyer supposedly was trailed by Chevron undercover operatives while riding his bike in Manhattan, which did not happen.
  • To create his fictionalized story, Barrett ignores key evidence. Consistent with Chevron’s self-serving version of events, Barrett completely ignores or distorts key scientific evidence to try to claim that the Ecuadorians could not prove their case. This narrative is contradicted by Chevron’s own evidence submitted to the Ecuador court; by three layers of court decisions in Ecuador; and by the recent analysis but a prominent group of U.S. scientific consultants, the Louis Berger Group. He also ignores persuasive evidence that Chevron tried to cheat during the trial to hide evidence of its own contamination. He ignores the fact that more than 35 scientists – including those hired by both litigants and third parties – have confirmed the oil giant’s pollution.
  • The book is skewed by Barrett’s obvious personal animus toward Donziger. Consistent with Chevron’s strategy to “demonize” Donziger, Barrett subjects the main U.S. legal advisor for the villagers to a host of juvenile epithets. Barrett calls Donziger a “loudmouthed gatecrasher,” “master showman,” and describes him as a lawyer “who’d stop at nothing” to win. He then ignores Donziger’s own narrative about what took place in Ecuador by failing to even mention (much less cite) the attorney’s comprehensive 130-page appellate brief that exposes a good number of Chevron’s lies, misdeeds, and unethical litigation practices. Barrett also ignores Donziger’s own lawsuit against Chevron, which comprehensively documents the company’s deceit in U.S. courts and its plethora of criminal and unethical acts in Ecuador.

Perhaps more disturbingly, we have numerous emails from the last two years or so that show Barrett becoming unhinged over Donziger’s refusal to cooperate with his book. Many people also witnessed a bizarre incident in open court recently where Barrett lost his cool and blew up at Donziger’s lawyers. At times, Barrett made explicit threats to those working for the Ecuadorians that he planned to use his book to “take down” Donziger. He warned other lawyers they should stop working with the New York attorney or they would risk damaging their careers.

We have long suggested that Businessweek editor Josh Tyrangiel has let Barrett get away with this unprofessional behavior for far too long. While Barrett was writing a book that is little more than a continuation of Chevron’s hit job on Donziger, he also was reporting “independently” for Businessweek on Donziger’s role in the litigation. That’s a blatant conflict of interest. Businessweek continues to let Barrett use its web platform to promote the themes of his flawed book and to make snarky attacks against Donziger.

All of this might explain why Chevron’s public relations flaks are pushing Barrett’s book and arranging for his congressional testimony. Granted, it’s only a small part of the company’s gargantuan public relations campaign to distract attention from its ecological calamity in the Amazon. But we have seen how Chevron has convinced other formerly reputable advocates, such as human rights academic Douglas Cassel, to take up arms for a corporate polluter in exchange for money. Cassel has so damaged his reputation that his faculty colleagues at Notre Dame ordered his diatribes about the Ecuador case removed from the law school’s official website.

Barrett is the latest bit player to try to boost his profile and make a buck off of Chevron’s billion-dollar retaliation campaign against the Ecuadorian villagers. The company’s strategy to “demonize" Donziger – outlined explicitly in internal Chevron emails dating back five years – is now a cottage industry that includes no fewer than 60 outside law firms, 2,000 legal personnel, ten investigations firms, at least six public relations firms, and now Barrett. It has to be the most robustly financed corporate retaliation campaign in history.

While Barrett hustles his book, the indigenous people of Ecuador continue to suffer. This is partly because a compromised American “journalist” has now made it a little bit easier for Chevron’s management team to evade its court-mandated responsibilities to the people it harmed.

Businessweek’s readers and the public deserve better. So do the affected communities in Ecuador.

Thursday, July 17, 2014

Chevron's Ill-fated RICO Suit Facing Doom and Gloom


Chevron’s New York RICO lawsuit is fast going from shock and awe to doom and gloom. 

Legal briefs filed this month before a New York federal appeals court appear to dismantle the very foundation of the shameful Chevron-financed “racketeering” show trial that went down in late 2013 in the courtroom of controversial federal judge Lewis A. Kaplan.  By reading the briefs – which are summarized below-- one can gain even more insight into what might have been one of the most abusive trials in recent memory.

What comes through loud and clear is that presiding Judge Kaplan essentially turned over his federal courtroom to a gigantic oil company so some of its 2,000 lawyers from 60 law firms could have a jolly good time billing huge fees to beat up on impoverished Ecuadorian villagers and their U.S. lawyer, solo practitioner Steven Donziger.  Donziger, who for years has worked out of his apartment in Manhattan to hold Chevron accountable for its human rights crimes in Ecuador, is the lead target of what is probably the most well-financed corporation retaliation campaign in history. 

During the RICO trial– attended daily by Chevron’s $7 million-per-year General Counsel R. Hewitt Pate – Kaplan excluded almost all evidence that would have contradicted Chevron’s fake narrative that it was the victim of the very indigenous groups it poisoned. Kaplan not only denied the defendants a jury of impartial fact finders, he excluded the overwhelming scientific evidence of Chevron’s contamination in Ecuador and generally behaved as an overwrought prosecutor for the oil company.

The key takeaway from the briefs is that Kaplan never had the legal right to let the case proceed in the first place.  This is why we repeatedly have called the RICO proceeding a show trial designed to produce bogus “factual findings” to help Chevron evade enforcement of the Ecuador judgment in foreign jurisdictions.  It bears noting that in 2011, Kaplan was unanimously reversed after he tried to impose an unprecedented injunction purporting to block the Ecuadorian villagers from enforcing their judgment anywhere in the world.

Except in rare circumstances not present here, both U.S. law and international law prohibit one country’s courts from trying to rule on another country's final judicial decisions.  This is exactly what the hyper-excited Kaplan purported to do in March is in his bloated 487-page RICO opinion, which reads more like spin from an oil industry talking head than sound legal reasoning.  Having made up his mind, Kaplan clearly started writing his  magnum opus even before the trial started or the evidence came in. 

It is even more clear from the appellate briefs that Kaplan's findings are based on a stinky stew of Chevron lies, distortions, and the judge's obvious ignorance of the law of a foreign nation whose language he does not speak.   Kaplan did not read the 220,000-page Ecuador trial record, the 188-page trial judgment against Chevron, or the country's civil code.  Nor did he see any of the contaminated sites with his own eyes.  Yet Kaplan decided from his Manhattan courtroom that he knows better how to apply Ecuadorian law than the courts of Ecuador.

As Deepak Gupta, Donziger’s appellate lawyer wrote, it would be hard to find a more extreme example of American “judicial imperialism” that Kaplan's handiwork in this case.

Kaplan thought he was clever to reverse-engineer the trial in Chevron’s favor by excluding key evidence.  But the briefs, which confirm what we have been saying all along about Kaplan’s intellectual dishonesty as a jurist, show him (at least in this case) to be the trickster that he is.   

You heard it here first: after reading these briefs, it is simply inconceivable that Kaplan’s decision survives appeal.  Those journalists who for years have been shamelessly cheerleading the Chevron/Kaplan sideshow – we are thinking mostly of Business Week’s Paul Barrett, Michael Goldhaber of American Lawyer Media, and the once-esteemed Roger Parloff of Fortune who refuses to even print our responses challenging his misleading reporting – better inch back off the Chevron limb if they want to retain even of smidgeon of credibility going forward.

Consider the contents of some of the submissions to the Second Circuit Court of Appeals from the principal defendants and their supporters, who filed “friend of the court” or amicus briefs:

New York Lawyer Steven Donziger:  Donziger, the main target of Chevron’s retaliation campaign, explains in his fact section how the company pays the investigations company Kroll to spy on adversary counsel – including himself and his family.  The brief exposes the dirty tricks used by Kaplan and Chevron’s lawyers to try to prejudice him at every turn – from presenting misleading film outtakes, to ordering him to turn over his entire privileged case file, to forcing him to sit for an American record 19 days of sworn depositions.  He also points out how Kaplan let Chevron use a clearly corrupted witness bribed with more than $1 million of company  money to falsely claim Donziger bribed a judge.   The brief demonstrates how Kaplan denied the defendants their right to a jury; how he never had jurisdiction; how he let Chevron unlawfully use the RICO statute to attack lawyers; and how he simply made up out of whole cloth – after the trial -- a common law fraud claim that Chevron never even asserted as part of a preposterous effort to salvage the company’s weakened legal position.  The brief also points to internal company emails to demonstrate how Chevron mounted a campaign to “demonize” Donziger and ruin his reputation, of which the RICO case was a central feature.

Donziger’s brief, prepared by rising appellate star Gupta of Gupta Beck and John Campbell and Justin Marceau, two young law professors at the University of Denver, can be read here.

Ecuadorian villagers:  Javier Piaguaje and Hugo Camacho, the two Ecuadorians who appeared in the RICO case (45 others rejected Kaplan’s jurisdiction), pointed out that Kaplan did not understand some of the basic differencse between a civil law system used in Latin America and the common law system of the U.S.  As a result, Kaplan spent his 487 pages attacking the wrong judgment – the one from the trial level, rather than the de novo appellate court judgment that was unanimously affirmed by Ecuador’s Supreme Court and is the only relevant decision at this point in the case.  A copy of the brief, prepared pro bono by noted law scholar Burt Neuborne from New York University, can be read here.

International law scholars:  More than 35 prominent international law experts from 11 countries – including Australia, Austria, Spain, the U.S., and Israel – submitted an amicus brief that explains the many ways that Kaplan’s decision violates international law.  The scholars accused Kaplan of trying to unlawfully “dictate” to judges in other countries how they should rule on the enforceability of the Ecuador judgment, in direct contravention of the sovereignty of those countries and U.S. domestic law.  That brief can be read here; a press release about it is here.

U.S. civil society organizations:  Several prominent U.S.-based non-profit organizations -- including Amnesty International, Friends of the Earth, and Amazon Watch – lambasted Kaplan for letting Chevron  use the RICO statute as a weapon to trample on the First Amendment rights of the numerous critics of the company’s Ecuador environmental disaster.  The brief persuasively demonstrates that Chevron used the RICO case as a SLAPP suit designed to harass and silence its critics, in violation of the Constitution.  They also point out that Kaplan, in a clear case of reversible error, never even considered the First Amendment implications of the defendants and their supporters before deciding the case.  That brief can be read here.

Government of Ecuador:  In urging reversal of the RICO decision, the government of Ecuador directs fire at Kaplan’s unprecedented frontal attack on the judiciary of a democratic nation, U.S. ally, and commercial trading partner.  The brief points out that Kaplan’s “finding” that Ecuador’s entire judicial system falls below international standards was based largely on the discredited testimony of Dr. Alvaro Grau, an Ecuadorian politician who is an opponent of the current President of Ecuador and who formed his conclusions based on newspapers stories from the opposition press.   The government also points out that Chevron repeatedly had praised Ecuador’s court system in the 1990s to transfer the matter from U.S. federal court (where it was originally filed in 1993) to the South American nation, and therefore should be prohibited now from complaining about Ecuador’s courts.  Only when the scientific evidence of toxic pollution began to mount against Chevron did the company switch gears and begin to attack Ecuador’s courts in a clear case of sour grapes, argued the government.   The brief, prepared by the American law firm Winston & Strawn, can be read here.

Earth Rights International:  This brief, filed by one of our nation’s most prominent environmental and human rights legal organizations, urges reversal on the grounds that Chevron agreed to submit to jurisdiction in Ecuador and therefore should be bound by the rulings of its courts.  For more on this brief, read here.

As compelling as they are, these briefs capture only a portion of Kaplan’s abuse.  For example, there is no mention of how Kaplan let Chevron pay 100% of the legal fees of his former law partner Max Gitter to serve as “Special Master” during the discovery phase of the RICO trial, but then let Gitter hide his actual invoices from Donziger and the Ecuadorians.  Chevron surely paid Gitter millions of dollars, but due to Kaplan the amount remains a secret.  Whatever the amount, this back-slapping relationship between a supposedly neutral jurist and Chevron is ugly.  And it helps explain why Gitter repeatedly ruled in favor of Chevron and ordered the wholesale disclosure of Donziger's privileged documents, while blocking Donziger from getting almost all of Chevron's documents.  See this analysis for more background on Gitter's biased behavior.

We have come a long way from the “shock and awe” days in 2010 when Chevron claimed every new piece of discovery was somehow proof of the “fraud” that never was.   Chevron CEO John Watson and Pate launched discovery suits in more than 20 federal courts to try to intimidate the villagers and their allies.  The Cabrera damages report ended up being a non-issue, as the Ecuador court refused to consider it; in any event Donziger and several prominent Ecuadorian law scholars stand by it.  The video outtakes of Donziger criticizing Ecuador’s courts are not relevant, and in any event they were manipulated by Chevron to try to taint Donziger’s image and mislead courts throughout the country.  And we now know that the real bribery in the case was Chevron’s -- of its star witness, crooked former judge Alberto Guerra.

It can’t be fun for Watson and Pate to go from shock and awe to doom and gloom, but that indeed is what has happened.  The RICO games don't much matter given that foreign courts are not bound by anything Kaplan orders, and it is likely he will be reversed yet again.  But the meltdown sure is interesting to watch.

Desperate to protect its favorite judge, Chevron has retained former Solicitor General Theodore Olsen to argue its case before the Second Circuit.  As we pointed out before, not even the great Supreme Court orator and now ersatz filmmaker is capable of putting lipstick on Chevron’s pig. 

Once the appellate court rules, Chevron likely will have lost not only in the courts of its chosen forum of Ecuador, but also in the U.S. where it enjoyed a home field advantage.  At that point, enforcement actions targeting billions of dollars of Chevron assets (and currently pending in Canada and Brazil) will be given a huge boost.

In the meantime, the human consequences of Kaplan's folly grow more acute.  Because Kaplan essentially gave Chevron’s management a false sense of confidence, thousands of rainforest villagers now have to put up with life-threatening levels of contamination on their ancestral lands for years longer.  Ultimately, the responsibility lies at the foot of Chevron CEO and Chairman Watson and the notoriously passive members of the company’s Board.  These mostly pale people of privilege, who collect huge fees for serving largely as “yes men” to company management, have done nothing to try to ameliorate a humanitarian disaster created on their watch.

Lance Ito let the O.J. case spiral out of control because of his failure to manage the proceedings.  What is most disturbing from the new briefs is how Kaplan so clearly orchestrated the entire process, even indicating to Chevron’s lawyers how they should present evidence, how they should modify their claims, and what he needed (wink wink) to best put the screws to Donziger, against whom he had a clear personal vendetta.  (See these briefs here and here for Kaplan’s disparaging and inappropriate comments about Donziger and his clients.)

The final death spasms of this sordid chapter in U.S. legal history are in motion.  Kudos to the excellent appellate lawyers who are fighting on, despite Chevron’s pressure campaign.

Tuesday, July 1, 2014

How Chevron Cheated Ecuador's Courts From Hearing Evidence of Its Contamination


Remember the names Sarah McMillan, John Conner, and Bjorn Borkman.  

They are Chevron scientific consultants who tried to defraud Ecuador’s courts with trickery and flat-out lies.  Their dishonest work likely will be viewed with great interest in foreign courts that are looking to seize Chevron assets to pay for the company's liability in Ecuador.

We practically fell off our chair when we read the details of this group's subterfuge in a recent court filing (see pp. 33-85 of this legal brief).    Chevron is certainly creative when it comes to cheating.

None of this should come as a surprise.  

We recently reported that a new study by a prominent U.S. scientific consultancy (the Louis Berger Group) yet again confirms that Chevron is responsible for discharging billions of gallons of toxic “water of formation” into the streams and rivers of the rainforest in order to artificially inflate its profits.  The consultancy also confirmed the gritty details of how Chevron tried to trick judges during the Ecuador trial, which concluded in 2011 with a stunning judgment against the company.  

We note that Chevron’s trickery is on top of the company's intimidatin campaign  -- including efforts to threaten Ecuador’s judges with jail time and to paralyze the court by drowning it with frivolous motions.  

The deceptions deployed by McMillan (who is Chevron’s chief scientist) and tainted consultant John Conner have come to light in a legal brief filed by Ecuador’s government in its arbitration dispute with Chevron.  The American law firm Winston & Strawn (which represents Ecuador) quietly has been forcing Chevron to disclose documents that prove the company tried to corrupt the Ecuador trial.

Examples of Chevron’s tricks as described by Winston & Strawn include:

** Conner wrote a playbook directing the company’s field technicians to find only “clean” soil during the judicial inspections by sampling in areas up-gradient from visibly contaminated waste pits.  Chevron’s technicians then tried to act like they were engaging in “random” sampling in front of the judge.

**As confirmed by Bjorkman, Chevron conducted secret pre-inspections of several of the company’s former well sites where it found numerous dirty soil samples that far exceeded Ecuadorian regulatory norms.  Rather than report these samples to the court, the company hid the results.

(This critical data as well as the evidence of Chevron's corruption was not reviewed by U.S. Judge Lewis A. Kaplan is his tainted and farcical RICO trial against the Ecuadorians and their counsel.  This evidence will be reviewed by enforcement courts that are being asked to seize Chevron’s assets to force the company to comply with the Ecuador judgment.)

**Chevron’s Ecuadorian lawyers  -- led by the notorious Adolfo Callejas -- lied to the Ecuador court by claiming the company never performed the tests during its secret pre-inspections.  (See p. 65 of the aforementioned legal brief.)

**During the official judicial inspections (when the judge was present), Chevron tried to take soil samples from the shallow surface layer of dirt that it used to cover its oil waste pits during a sham remediation in the mid-1990s.  Yet data showed that several feet below where Chevron was sampling, the waste pits were saturated with oil that was contaminating soils and groundwater.

**A Chevron operative, Diego Borja, confessed on tape that he would often switch dirty samples for clean ones before submitting them to laboratories for analysis.  He also confessed that the company set up dummy “independent” labs that  actually were controlled by Chevron.  For more on Borja and his corrupt activities, see here

**McMillan’s team also mixed dirty soil with clean soil from the same site so as to artificially lower the average of the contamination found.

**Chevron never tested for key markers of oil contamination, such as Total Petroleum Hydrocarbons.  Instead, it tested for more narrow constituent elements that made the contamination appear less extensive than it really was.

**Chevron used two inappropriate laboratory tests (TCLP and Method 8015) that made it virtually impossible to detect illegal levels of contamination, even from oil-saturated soil.  Method 8015 counts only 50% of the hydrocarbons in petroleum, while the TCLP test often captures less than 1% of the actual contamination. 

(The TCLP test runs water over soils contaminated with hydrocarbons, and measures the amount of hydrocarbons in the runoff.  Because water and oil don’t mix, the runoff contains almost none of the oil in the soil.)

**Chevron’s team also refused to test for an extremely toxic class of Polycyclic Aromatic Hydrocarbons that are harmful to human health -- apparently knowing that such tests would point to its guilt.

**Chevron blamed high cancer rates and other health problems on the presence of fecal matter even though there is no scientific evidence connecting fecal matter with cancer.  The high rates of cancer and risks to human health have been confirmed in several peer-reviewed studies by independent doctors.  

The legal brief captured the company’s subterfuge:

Chevron has expended tremendous sums on expensive experts, laboratories, and technology.  Armed with its deep resources, Chevron systematically and deliberately devoted time and money to detect where contamination exists and where it does not.  Chevron then systematically did everything in its power to avoid sampling at the most contaminated locations, thereby seeking to minimize its findings of contamination, all the while contending that its anything-but-random samples [during the official judicial inspections] were “representative” of the whole.  They were not.

We admire the restraint of the writer.  It’s not often one can clinically describe an outright fraud by an American oil company designed to hide one of the world’s worst ecological catastrophes.  

Despite the trickery, Chevron still submitted enough soil samples to the Ecuador court from the official inspections to prove the claims against it.  This underscores just how saturated with oil waste Chevron's facilities are years after it fled the country.

Incredibly, additional proof of Chevron’s deceit was captured by the oil company itself on videos it made of its secret pre-inspections.  

Chevron’s video outtakes – which the company has asked courts to seal – show field technicians laughing at the contamination and mocking the Ecuador court process.   A Chevron whistleblower turned them over to a U.S.-based environmental organization.  It is highly doubtful the company can keep them under wraps forever.
  
As we have reported, the LBG report validates the decisions of three layers of courts in Ecuador that found the company liable and imposed the damages award.  The amount ($9.5 billion) surely must sting in the Chevron boardroom.  But it is actually a modest penalty taking into account the venality of the company’s misconduct and the magnitude of the damage.  BP’s liability is three times higher (and rising) for the far smaller Deepwater Horizon spill.

Chevron of course admitted to deliberately dumping at least 16 billion gallons of oil-laced produced water when it operated in Ecuador from 1964 to 1992.  The company also abandoned more than 900 unlined waste pits gouged out of the jungle floor.  Cancer rates in the region, where an estimated 200,000 people live, have skyrocketed

We note that McMillan, Conner, and Bjorkman are not the only “academics” willing to sell their integrity to Chevron for money and make themselves complict in human rights abuses.  The company also has submitted to courts reports from Douglas Southgate, who is associated with a think tank that denies conventional theories about global warming; and the infamous Ralph Marquez, formerly the lead lobbyist for the chemical industry in the state of Texas and a Chevron consultant. 

When Chevron management decides to do business with dogs like this, everybody associated with the company gets fleas.  No reputable academic would even think of working under McMillan, whose entire purpose is to obfuscate the truth and to cast doubt on the overwhelming scientific evidence of the company's crimes.