Tuesday, April 5, 2016

Chevron Reeling? Oil Giant Abandons Key Claim In Ecuador Pollution Case

Chevron is reeling again in the Ecuador pollution case. The company's plan to evade paying for a court-ordered clean-up of the billions of gallons of toxic waste it dumped in the Amazon rainforest -- decimating indigenous groups -- seems to be faltering like never before.

After suffering defeats before 18 separate appellate judges, Chevron quietly abandoned its last major claim in Ecuador to challenge the $10 billion environmental liability imposed on the company by Ecuador's Supreme Court in 2013.

Chevron's decision to sit on its hands at such a critical juncture severely damages its prospects in Canada, where the affected communities are targeting company assets to pay for a clean up of their ancestral lands. (Here is background on Chevron's increasing legal difficulties in Canada; here is an explanation of the company's jurisdictional shell game.)

Chevron abandoned its "fraud" allegations in Ecuador by letting the statute of limitation lapse on a key claim under the country's Collusion Prosecution Act (CPA). The move is a flagrant illustration of how the company's evidence has collapsed in recent months. Ignoring the CPA claim all but nullifies Chevron's international arbitration action against Ecuador's government, where the company cynically has been trying to stick taxpayers in Ecuador with its enormous clean-up tab.

Chevron's decision follows a series of devastating courtroom setbacks.

The company's star witness, Alberto Guerra, recently admitted to accepting bribes and then lying under oath after being paid $2 million (see here and here) by the company. Some of the Chevron funds were handed over to Guerra as cash out of suitcase by company lawyers Andres Rivero and Yohi Ackerman.

The company's forensic evidence regarding the supposed "ghostwriting" of the trial court decision also has fallen apart; a new report proved the judge wrote the judgment by saving it 484 times on his office computer. Chevron is also facing negative fallout from a whistleblower video showing its scientists plotting to hide pollution evidence from the Ecuador court.

Caught committing fraud, Chevron paid an estimated $2 billion to dozens of law firms to try to turn the tables on the very people it poisoned by manufacturing false evidence using paid stooges like Guerra. Chevron's strategy is designed to shroud the company's crimes and wrongdoing in a fog so thick that the financial risk can be hidden from shareholders, artificially propping up the company's stock price. In the meantime, Chevron's notoriously passive Board of Directors (with CEO John Watson as Chairman) sits on its hands while villagers suffer and die.

This disastrous corporate strategy, designed and funded by Watson and Chevron General Counsel R. Hewitt Pate, is now in full backfire mode.

The mind-blowing story behind Chevron's latest retreat is in this press release issued by the Amazon Defense Coalition. The ADC represents the 80 impoverished indigenous and farmer communities in Ecuador who obtained the court judgment. Another press release explains how Chevron is facing a potential "litigation catastrophe" in the Ecuador case.

Three layers of courts in Chevron's preferred forum of Ecuador found that the oil giant deliberately dumped billions of gallons of toxic waste into the rainforest, causing an outbreak of cancer that has killed or threatens to kill thousands. (For a summary of the overwhelming evidence against Chevron, see here.)

In another sign of its bad faith, Chevron stripped its assets from Ecuador in 2007 after insisting that the trial take place in the South American nation. Once Ecuador's Supreme Court in 2013 affirmed the final judgment, there was no way to force Chevron to pay up without targeting company assets in other countries, which the villagers are doing in Canada and Brazil.

Chevron's latest decision to give up the CPA claim "is an example of the company bailing out of any court where it knows its incredibly weak evidence will not carry the day," said Luis Yanza, a leader of the affected communities and a Goldman Prize winner.









Thursday, March 24, 2016

Alec Baldwin Helps Expose Chevron's $10 Billion Ecuador Pollution Disaster

Actor and journalist Alec Baldwin has used his popular podcast "Here's The Thing" to interview human rights attorney Steven Donziger about Chevron's pollution disaster in Ecuador's rainforest.

The interview, broadcast on National Public Radio's outlet in New York, is here.

Donziger, who for two decades has helped Ecuador indigenous and farmer communities win a historic $10 billion environmental judgment against Chevron, used the interview to explain the ongoing environmental devastation, high cancer rates, and public health crisis caused by the oil major's decision to discharge billions of gallons of toxic waste into the Amazon rainforest. Chevron operated in Ecuador under the Texaco brand from 1964 to 1992.

Three layers of courts in Ecuador -- the country where Chevron insisted the trial be held -- have found the company guilty. Chevron admitted that it abandoned an estimated 1,000 unlined toxic waste pits in the Amazon that continue to contaminate soils, groundwater, and rivers. Ecuador's Supreme Court unanimously confirmed the judgment against Chevron in 2013.

The affected communities are trying seize Chevron assets in Canada and other countries to force the company to comply with the judgment. Chevron stripped its assets from Ecuador in 2007 in anticipation of losing the case. The Canadian Supreme Court last year unanimously denied Chevron's attempt to block the asset collection action, leading to major new difficulties for the company.

Just recently, Amazon Watch exposed a devastating whistleblower video showing Chevron technicians trying to hide the company's pollution from Ecuador's court. Here is a summary of the overwhelming evidence against Chevron; a summary of the independent media coverage documenting Chevron's wrongdoing; and a 60 Minutes segment on the case.

Baldwin's podcast is enormously popular and often reaches millions of listeners. In recent months, he has interviewed people as diverse as actors Sarah Jessica Parker and Dustin Hoffman, Comedian Amy Schumer, Doctors Without Borders President Joanne Lui, and environmental activist Antonia Juhasz.


Tuesday, February 2, 2016

Chevron At War With Canada Supreme Court; Company Also Faces Accusations of Terrorism and Tax Evasion

As Chevron faces a potential litigation catastrophe over its $10 billion pollution liability in Ecuador, we have decided to publish a news summary from the front lines of the historic battle by indigenous communities to hold the company accountable for its "Amazon Chernobyl" disaster.

The summary will chronicle examples of Chevron's illicit behavior and sub-standard business practices in Ecuador and elsewhere -- including, most recently, the shocking news that the company is being sued for making payments to Saddam Hussein's private slush fund.

We understand that we might have a space problem given the ample material related to Chevron's unethical litigation practices, payments to witnesses, and other fraudulent shenanigans taking place under the regime of current CEO John Watson (annual compensation: $25 million) and his sidekick, Chevron General Counsel R. Hewitt Pate. But we will try.

Here is our first installment of The Chevron Chronicles:

Chevron violating Canada Supreme Court decision: Chevron's arrogance and the moral bankruptcy of its "perpetual litigation" strategy under Watson's leadership is now on full display in Canada. The villagers last week demonstrated in a new legal filing that Chevron yet again is defying a Canada Supreme Court order granting them jurisdiction to try to seize company assets to pay for their $10 billion judgment. Despite the Supreme Court order, Chevron for the fourth time has filed legal papers to nullify jurisdiction.  The company now faces the nullification of its defenses given that it already litigated them (and lost) in Ecuador, where it insisted the trial be held. For background, see here; for the Canada Supreme Court decision against Chevron, see here.

Chevron is now 0-18 among appellate judges in Canada and Ecuador: As further proof that Chevron views courts as little more than pawns in a larger strategy to win by might what it can't win by merit, the company has now lost before all 18 appellate judges in Canada and Ecuador who have heard the case. Using some of the 60 law firms and 2,000 lawyers Chevron has retained to fight the villagers, the company is still trying to re-litigate many of the same issues (including jurisdiction) already decided by the 18 appellate judges. As Alan Lenczner, the Canadian lawyer for the villagers, said in his latest filing: "Deep pockets against the resources of indigenous people in the Ecuadorian Amazon and repeated, interminable delay until 'hell freezes over' are Chevron's weapons." Chevron's desperation in Canada is so palpable that the company enlisted the notorious convicted felon Conrad Black to serve as a spokesman for its cause.

Chevron charged with providing material support to terrorists: Chevron's propensity to put profits in front of people in Ecuador -- which ended up causing numerous deaths from cancer -- are just the tip of the iceberg. Several victims of terrorism sued Chevron in California last October for financing a Saddam Hussein slush fund that was used by the Iraqi government to reward the families of suicide bombers targeting Israeli civilians. Chevron already paid a $30 million fine to the U.S. government for violating the Foreign Corrupt Practices Act in Iraq. The latest civil lawsuit alleges: "Due, in part, to Chevron's substantial assistance, Saddam Hussein had the means to finance and direct over twenty separate acts of violent terrorist attacks inflicting death, disfigurement, and lasting psychological trauma and pain upon plaintiffs, eighteen U.S. nationals and over 300 foreign nationals then living in Israel."

Chevron's fraud in Ecuador proven by whistleblower video: The explosive Chevron whistleblower video that shows company scientists trying to defraud Ecuador's courts continues to gain traction.  The video has now been viewed more than 2 million times on the Internet and does more than anything to illustrate how the devious company uses obfuscation to hide the truth about its toxic legacy.  Combined with the stunning admission by the company's star witness that he lied in open court, Chevron now faces a major uphill battle in Canada even under the best of circumstances.

Chevron faces allegations of tax evasion in Australia and fraud in Tennessee: In Australia-- where Chevron is the largest foreign investor -- a stunning new report details how how the company has become a tax cheat extraordinaire.  Chevron has been ripping off the Australian government by stashing its earnings in a subsidiary in Delaware and using other paper financial transactions to drain profits out of the country to reduce its tax payments. As business columnist Michael West wrote, "Secretive oil major Chevron Corp has taken the art of tax avoidance to its ultimate form thanks to a scheme so aggressive that it goes beyond merely reducing exposure to income tax, but rather, has been designed to make a profit from the Australian Tax Office."

Separately, the Attorney General of Tennessee sued Chevron for fraudulently siphoning $250 million from a state environmental clean-up fund. A 2009 report from award-winning journalist Antonia Juhasz documented Chevron's environmental problems in dozens of countries around the world

Of course, an oil company like Chevron does not run into trouble with the law so frequently unless it is management's policy to see what it can get away with. As it is doing in Canada to evade paying the Ecuador pollution judgment, Chevron is playing a cynical game with courts and regulators. If this was a fair world, Chevron's executives would face prison for their horrific acts.

Instead, for being the Dick Cheney-esque mastermind behind this subterfuge, Chevron's General Counsel Pate reaps millions of dollars per year in compensation while the company's victims around the world suffer illness and death. Most of Chevron's Board puts up with Watson and Pate by turning a blind eye to these repeated acts of wrongdoing.

Judges and regulators need to connect the dots and take notice of the full range of Chevron's wrongdoing around the world. Only then will they not fall prey to the company's cynical and manipulative jurisdictional shell game.

Courts also must reprimand Chevron like any other abusive litigant trying to use its superior resources to evade its moral and legal responsibilities to those it has harmed.



Tuesday, January 5, 2016

Here Are Five Reasons Why 2016 Could Spell Disaster for Chevron's Ecuador Strategy

The year 2016 is shaping up to be particularly dreadful for Chevron in the Ecuador pollution case despite massive expenditures by the company -- estimated to be $2 billion and rising -- to pay dozens of law firms to try to derail the litigation.

Chevron and its CEO John Watson now face potentially catastrophic difficulties given critical setbacks in 2015 suffered by the oil giant both in and out of the courtroom. That's the word from a devastating new press release about Chevron's declining prospects put out by the villagers.

Here are the five main reasons (although there are many others) that explain why Chevron and Watson are moving closer to being forced to pay the full amount of the $10 billion environmental judgment in Ecuador:

  • The oil giant faces a "litigation catastrophe" in Canada due to a blockbuster 7-0 decision by the country's Supreme Court that issued in 2015. The decision rejected all of Chevron's jurisdictional arguments and gives the green light to the villagers to seize company assets to pay for their clean-up. Chevron has $15 billion of assets in Canada.

  • A unanimous 5-0 decision in favor of the villagers by Ecuador's Supreme Court also makes the Ecuador judgment enforceable against Chevron assets in dozens of countries around the world, posing huge risk to company shareholders.

  • Chevron must deal with the negative fallout from the complete collapse of its star "racketeering" witness, Alberto Guerra. Guerra admitted to lying on the stand after being paid $2 million by Chevron and coached for 53 consecutive days by company lawyers; he is also the company's most important witness in the Canada enforcement action.

  • Chevron also must overcome highly embarrassing and rock solid video proof that company scientists tried to defraud Ecuador's courts by hiding massive oil pollution during judicially-supervised field inspections. The videos were disclosed by a company whistleblower.

  • A stunning new independent evidentiary report by a team of prominent American scientists yet again validates the overwhelming scientific proof that Chevron dumped billions of gallons of toxic waste into the rainforest, decimating indigenous groups and farmer communities.
Paul Paz y Miño, a director with the environmental group Amazon Watch, had this to say about Chevron's prospects:
All told, 2015 was a disastrous year for Chevron in the Ecuador pollution case and 2016 might be even more challenging for the company as it tries to dig out of its ever-deeper hole. Make no mistake about it, Chevron is now moving backwards in its abusive campaign to evade the Ecuador judgment despite spending massive sums of shareholder money on an unethical, illegal, devious, and ultimately futile jurisdictional shell game.
Steven Donziger, the longtime U.S. legal advisor to the affected communities and a target of a desperate company espionage campaign, criticized CEO Watson for "marching the company so far out onto a limb it appears there is no longer a viable path to turn back without Watson himself losing face and possibly his job." Donziger said it was clear the company has no coherent exit strategy with Watson at the helm.

That might explain why Chevron under Watson's misguided leadership refuses to cut bait and deal with the obvious risk its reckless scorched-earth strategy has created. The company's Ecuador liability grows larger by the day due to statutory interest while Watson seems to have little clue on how to reverse course. As usual, Chevron's notoriously callow Board of Directors with Watson as "Chairman" does nothing.

Aside from the problems mentioned above, Chevron also faces a shareholder revolt over the pollution liability; new computer forensic evidence from noted authority J. Christopher Racich that puts the lie to the company's claim the Ecuador judgment was "ghostwritten"; increasing protests by environmental groups over the company's human rights abuses in Ecuador and elsewhere; and evidence that Chevron lawyer Andres Rivero tried to bribe the Ecuador trial judge.

In addition, Chevron General Counsel R. Hewitt Pate has been hit with accusations of market manipulation over the Ecuador judgment. That was after a private panel of three arbitrators rejected Chevron's primary defense to the environmental claims. Also in 2015, Chevron's main outside law firm (Gibson Dunn) on the Ecuador case again was blasted by a federal judge for its ethical lapses.

To put it mildly, 2015 was a very bad year for Chevron on the Ecuador pollution case despite the use of 60 law firms and 2,000 lawyers to try to shake the rainforest villagers. Making a bad situation even worse: cratering oil prices have shaved billions of dollars off of Chevron's book value.

Again, all of the juicy details of Chevron's Ecuador setbacks are in the latest press release.

Note to Chevron's Board: figure out a way to get Watson and his team under control or Chevron shareholders will face even greater wrath from the Ecuador judgment in 2016.

Monday, December 21, 2015

Market Manipulation? Chevron General Counsel Pate Has Some Explaining to Do to the SEC

The forum shopping by Chevron's General Counsel R. Hewitt Pate in Gibraltar to evade the company's $10 billion Ecuador liability seems to have backfired. We understand the desperation: largely under Pate's watch Chevron has spent an estimated $2 billion on 2,000 lawyers and 60 law firms in a futile attempt to fend off impoverished villagers who in 2013 won a historic environmental judgment against the company.

Now, Chevron might have to explain Pate's apparent market manipulation to the Securities and Exchange Commission.

Unable to shake the villagers, Pate resorted again to publishing a misleading press release to try to cover up his recent courtroom setbacks that now threaten company assets. These setbacks include the recent meltdown of the company's star witness -- he admitted lying on the stand -- and a unanimous decision against Chevron by Canada's Supreme Court allowing the villagers to try to seize the oil giant's assets to force compliance with their judgment.

The question arises: is Pate putting out misleading press releases to try to save his own skin in the face of increasing angst over the Ecuador liability from Chevron's Board? Or does Chevron's Board actually sanction what appears to be market manipulation from its General Counsel?

The latest misleading Chevron press release -- issued last week with a juicy quote from Pate himself -- had the following headline: Supreme Court of Gibraltar Rules Against Donziger Offshore Company; Awards Chevron $28 Million.

According to thestreet.com, Chevron's stock price bumped up with the publication of the Chevron release. Chevron's misleading interpretation of the default judgment was largely parroted by Paul Barrett of Businessweek and other pro-business journalists.

Let's break it down and assess whether the latest Chevron press release violates the holy grail of securities law which requires a company to be completely honest about any material issue in all of its public statements.

First, we note that the "Supreme Court" of Gibraltar as described by Pate is not really a Supreme Court. The Gibraltar court for purposes of this case consisted of one solitary trial judge. This judge was required by law to rule in favor of Chevron because the case was not defended.

Second, Gibraltar is not a real country. It is a tiny British protectorate of only 30,000 citizens that occupies 2.6 square miles of territory connected to Spain on the southern side of the Iberian Peninsula. A relic of the British Empire, Gibraltar is so small the country's main road doubles as an airport landing strip.

Nevertheless, the elected leader of Gibraltar refers to himself as "Prime Minister" while the local trial court is called a "Supreme Court". Pate thought he would pull a fast one and make it seem like the ruling was a considered decision by several top-ranking appellate justices from a real country; it was decidedly not.

As the villagers pointed out in a devastatingly funny press release, the entire territory of Gibraltar is less than half the size the rural town of Ocala in North Florida. We suspect justice is probably more fair in Ocala than in Gibraltar, but that's a story for another day.

Third, the so-called default "award" is utterly worthless to Chevron. It came against an entity called Amazon Recovery Limited, or ARL. ARL has no money and will never have money. The villagers set up ARL in 2012 to collect the proceeds of their historic judgment that Chevron refuses to pay, despite orders that it do so from the Supreme Court in Ecuador. Given Chevron's targeting of ARL, the villagers long ago said they would no longer use it for its intended purpose nor waste their limited resources defending it.

The purpose of creating ARL in Gibraltar was to ensure that no official in Ecuador's government or in Chevron could interfere with the proceeds before a clean-up could take place. This is understandable given Chevron's history of trying to sabotage and corrupt the proceedings in Ecuador. That plan as envisioned by the villagers obviously did not work because of Chevron's latest subterfuge.

Luis Yanza, an Ecuadorian community leader and a director of ARL, explained it does not matter. "We are too smart to get sucked in by Chevron's abusive attempts to tie up our lawyers in irrelevant proceedings which the company uses to distract attention from its legal obligations to those it harmed," Yanza said.

Good for you, Mr. Yanza.

Fourth, Pate predictably used the latest press release to try to link the default judgment to U.S. human rights lawyer Steven Donziger. Unable to explain away the billions of gallons it dumped into Ecuador's Amazon -- oil waste confirmed by dozens of independent journalists -- Chevron years ago launched a demonization campaign against Donziger and his clients to distract attention from its own crimes and fraud. Donziger, called a "warhorse lawyer" by Rolling Stone, has advised the villagers for two decades and has admirably stood tall in the face of Chevron's attacks.

(For more on Donziger's point of view, see these counterclaims he filed against Chevron outlining the company's long history of illegal behavior in Ecuador.)

Again, we understand Pate's frustration. Donziger works alone out of his apartment in Manhattan while Pate pays dozens of law firms to try to destroy the Ecuador case by targeting him. Everything Pate has done to try to try to bring down Donziger, including an open-ended espionage campaign and launching what is probably the most expensive retaliation campaign in U.S. history, has come up short. Pate initially had Chevron sue Donziger personally for $60 billion dropping all damages claims out of fear a jury would rule against the company.

As the villagers point out, Donziger was not a director of the company against which Chevron has its illusory default judgment in Gibraltar. Nor did he participate in a single meeting. The directors were Yanza, two other villagers, a representative from the internationally respected accounting firm Grant Thornton, and a British barrister. So why other than market manipulation would Pate call it a "Donziger offshore company" in the headline?

In the latest press release from the villagers, Donziger described Pate's strategy better than we ever could:
Pate forum shopped the world to extract a judgment from an irrelevant jurisdiction that commands no respect on the global stage in a case that was understandably and quite properly never defended on the merits because it does not matter. The Gibraltar judgment has zero value to Chevron other than as a public relations stunt to distract attention from its growing financial risk due to advances in enforcement actions targeting company assets in Canada and elsewhere.
Donziger added there was element of racism to Chevron's attempts to discount the ability of the villagers to govern their own affairs:
Pate and his colleagues in Chevron act as if no indigenous person from Ecuador's rainforest has either volition or intelligence. They seem to believe the villagers are simply dumb people manipulated by outsiders. I understand this mentality because that's how Texaco viewed the Ecuadorian people when it deliberately destroyed their lands and waterways. Today, that approach reeks of racism. It is also based on patently false assumptions as anybody can see by simply talking to the internationally recognized community leaders who have battled Chevron so successfully for years.
Chevron shareholders whose dividends are under threat might note that the $28 million default judgment was to obtain partial reimbursement for the exorbitant fees Pate paid to the law firms the company has used to attack the villagers and Donziger. Bills submitted in Gibraltar showed some of these lawyers were charging more than $1,200 per hour to carry out the campaign.

Pate, who earned almost $8 million from Chevron the year he lost the Ecuador case, has gotten in trouble before by trying to make Chevron's litigation position appear stronger than it is. In 2013, Pate put out another press release falsely trumpeting a decision from a private international arbitration as a "victory" in the Ecuador litigation when in fact it was nothing of the sort.

In 2012 and 2013, Pate also had no answer for detailed reports submitted to the SEC showing Chevron was deliberately misleading shareholders about its growing  risk in Ecuador. Those rather harrowing reports of company malfeasance, which prompted a shareholder revolt against CEO John Watson at the 2013 Chevron annual meeting, can be read here and here.

The SEC failed to catch the rather obvious market manipulation before the 2008 financial meltdown. Maybe the agency will do something this time to protect Chevron's shareholders and the financial markets from the obvious misconduct of Pate and other top-level managers.






Wednesday, December 16, 2015

The Real Facts About Gibraltar: Chevron's Lies Boosted by Paul Barrett of Businessweek

Chevron's illusory $28 million judgment for legal fees against an empty shell investment vehicle owned by Ecuadorian villagers in the tiny protectorate of Gibraltar is worthless -- despite the attempt by Bloomberg's Paul Barrett to build it up with his incomplete and dishonest reporting.

After largely ignoring the stunning legal setbacks to Chevron in recent months in Canada and elsewhere regarding the $9.5 billion Ecuador pollution judgment against the company, Barrett this week posted a story about how Chevron won a default judgment in Gibraltar.  Gibraltar has only 30,000 people and four trial judges.

Nobody defended the company because the entire litigation is part of Chevron's nefarious effort to entrap the villagers in meaningless cases in irrelevant jurisdictions. Chevron wants to suck the villagers into doing anything except what really matters -- which is seizing company assets to pay for a long-awaited clean-up of lands where the oil major dumped billions of gallons of toxic waste.

In a misleading press release parroted by Barrett on the Businessweek website, Chevron General Counsel R. Hewitt Pate claimed the "Supreme Court" in Gibraltar ruled in favor of the company. What Pate didn't tell Chevron shareholders is that the Supreme Court of Gibraltar is actually a trial court with fewer judges than most small towns in America.

Pate tried to suggest in his press release that it was the highest appeals court in the country, which it decidedly is not. Pate of course never wants to talk about how Chevron polluted the crap of Ecuador and then tried to corrupt and sabotage the trial where it was held accountable.

The dormant investment vehicle targeted by Chevron was used years ago by the company's victims in Ecuador to fund the prosecution of their environmental claims against the oil giant. The villagers also planned to use it to aggregate proceeds of the judgment that would come with selling off Chevron's seized assets. The idea was to distribute the proceeds for an environmental clean-up in Ecuador without the Ecuadorian government interfering with the process.

The villagers chose not to divert their limited resources from Canada, where they have a real chance of collecting the entirety of their historic judgment. Chevron has $15 billion worth of assets in the country and the Supreme Court recently gave the green light for the villagers to go after them, dealing a devastating blow to Pate's blocking strategy.

"We must be disciplined and focus on seizing Chevron assets to force the company to comply with orders from the courts in Ecuador where the company insisted the trial be held," said Luis Yanza, an Ecuadorian community leader. "We will not fall into the trap of defending against frivolous cases that Chevron chooses to initiate in irrelevant jurisdictions."

With the help of corporate sympathizers in the journalism world like Barrett, Chevron's beleaguered management team is using the Gibraltar ruling to try to present a false picture of "progress" in the litigation. That is all part of an attempt by Pate and Chevron CEO John Watson to keep company shareholders and the financial markets from belching too loudly about the company's growing risk in Ecuador.

Chevron is on its heels in Canada and in the United States. Chevron's star witness in its retaliatory "racketeering" case in the U.S., Alberto Guerra, recently admitted lying on the stand to try to frame New York lawyer Steven Donziger in a bribery scheme in Ecuador. In apparent violation of federal law, Chevron had paid the witness $2 million for his testimony. Chevron lawyers coached Guerra for 53 consecutive days before allowing him to present his false testimony.

A concrete example of Barrett's dishonesty is how he used only a small portion of a written statement given him by Yanza, the internationally renowned Goldman Prize winner. The statement explained why the Gibraltar judgment has no impact on the case.

Here is Yanza's full statement as sent to Barrett:
Chevron's default judgment is against a dormant investment vehicle. We believe this judgment has zero value other than as a public relations stunt designed by Chevron to project the false appearance of 'progress' in a litigation where the company recently suffered multiple setbacks, including an admission by its star witness that he testified untruthfully in the RICO case and a decision by Canada's Supreme Court allowing our communities to try to seize company assets
While after two decades of litigation Chevron has yet to pay even one dollar to the thousands of people in our country that it harmed, it is no small irony that Chevron rushed to a courthouse in a far-flung jurisdiction to try to collect millions of dollars in fees that it has paid to its army of lawyers. Rather than engage in a multi-jurisdictional campaign of evasion, Chevron's management team would better serve company shareholders by complying with the Ecuador judgment so that the humanitarian crisis afflicting our communities can be addressed immediately.
This is the only part of Yanza's statement that Barrett quotes in his story:
While after two decades of litigation Chevron has yet to pay even one dollar to the thousands of people in our country that it harmed, it is not small irony that Chevron rushed to a courthouse in a far-flung jurisdiction to try to collect millions of dollars in fees that it has paid to its army of lawyers. 
Journalists of course have a right to use only parts of statements in their stories. But Barrett's long history of uncritical service to Chevron's narrative understandably makes us skeptical of his motives. In an obvious conflict of interest, Barrett last year testified in favor of Chevron before the U.S. Congress while reporting on the case.

Barrett's latest article repeats yet again a false thematic narrative almost always found embedded in his reporting. Barrett suggests that Chevron's retaliatory racketeering case against Donziger and his clients in the U.S. somehow amounts to an "exoneration" of the company's environmental crimes and fraud. Nothing could be further from the truth.

The reality is that Chevron made a mockery of justice in the RICO proceeding. The trial judge, Lewis A. Kaplan, arrogantly disparaged the affected communities and excluded any evidence of Chevron's toxic dumping in Ecuador. He also refused to seat a jury and then accepted the paid-for testimony of Guerra, Chevron's discredited witness. The judge knew nothing of Ecuadorian law or procedure and let Chevron abuse the process throughout.

Kaplan also failed to disclose his own investments in Chevron when he presided over the case. The entire proceeding reeked of racism and was reverse-engineered to favor the oil company.

Ultimately, the RICO judgment -- like the default judgment is Gibraltar -- does nothing to mitigate Chevron's risk from it pollution in Ecuador. But with Barrett promoting these judgments with a fundamentally false narrative, they do allow Chevron yet another bite at the apple on the public relations front.

That false hope is a major factor that allows Chevron's management team to spend millions on its army of lawyers to keep the litigation going even after it lost the case in its preferred forum.

Good work, Paul. As we have said before, you could make a lot more money by joining Chevron's public relations department.

(For more background on Barrett's distortions of fact and made-up scenes in his book about the Ecuador case, see this "notice of defamation" letter sent to him and his publisher.  For a summary of the overwhelming evidence against Chevron in Ecuador, see here.)

Media Outlets: Chevron Polluted the Crap Out of Ecuador's Amazon Rainforest

According to numerous independent media outlets, Chevron indeed polluted the crap out of Ecuador's Amazon region.

We have long known that three layers of courts and eight appellate judges in Ecuador unanimously confirmed Chevron's responsibility for causing the extensive oil pollution found in the affected area. Less known is the array of respected journalists who independently have confirmed the evidence against Chevron by observing the damage with the naked eye.

These journalists include Scott Pelley of CBS News; Frank Bajak of the Associated Press; Simon Romero of the New York Times; Juan Forero of the Washington Post; and Patrick Radden Keefe of The New Yorker, among others.

Chevron, in what has to be one of the all-time great examples of a corporation sticking its head in the sand, continues to deny it has caused a major pollution problem in Ecuador. While those indigenous and farmer communities affected continue to suffer from high cancer rates, the company has refused to pay the $9.5 billion environmental judgment needed for a clean-up.

Chevron's position that there is "no problema" in Ecuador has no credibility.

Here is a brief summary, culled from the archives of from several major media outlets, of how Chevron impacted and continues to harm the environment in the area where it operated (under the Texaco brand) from 1964 to 1992.

CBS News Anchor Scott Pelley, on 60 Minutes in 2009, at an abandoned Chevron waste pit:

"Well, it rains here in the rainforest all the time, so there's water pouring out of [the waste pit] now. And if you smell the water, you can clearly smell the oil pollution in it. Runs right down the ravine... and right down into the stream, not 50 yards that way."

"Waste pits like those left behind by Chevron are supposed to be temporary and isolated from fresh water but in Ecuador one pit 60 Minutes saw has been there for 25 years and we found it's actually designed to overflow into streams."

Clifford Krauss and Simon Romero, writing in The New York Times in 2009:

Romero visited Chevron's waste pits and found that "black gunk from the pits seeps to the topsoil here and in dozens of other spots in Ecuador's Northeastern jungle."

"Evidence of [ChevronTexaco's] contamination is unavoidable at well sites near Lago Agrio and other towns in the region."

"Some pools of waste dug by Texaco combining noxious drilling mud and crude oil still lie exposed under the sun, seeping into nearby water systems."

Columnist Bob Herbert, writing in The New York Times in 2010:  

"What's not in dispute is that Texaco operated more than 300 oil wells for the better part of three decades in a vast swath of Ecuador's northern Amazon region... Much of that area has been horribly polluted."

Juan Forero, writing for the Washington Post, 2009:

"After a walk along a forest trail, [the guide] stopped at a pool that had been used by Texaco and poked a long stick into the black sludge. Waste also dripped out through a drainage pipe and ran down to a creek below."

"Chevron acknowledges that Texaco used unlined waste pits."

Patrick Radden Keefe, The New Yorker, 2013:

A guide for Keefe dug up "a fistful of black mud and held it so that the sunlight caught the telltale blue-orange tint of petroleum. At one fetid pit... he stepped gingerly onto the surface of the pool, where the solid matter in the produced water had congealed into a tarlike crust that was sturdy enough to support him.  Smiling a little, [the guide] shifted his weight from one foot to the other, until the whole surface began to undulate beneath him. He looked like a kid on a waterbed."

"[The guide] led us down a steep ravine to a creek. In the gauzy light filtering through the canopy, the water, which was only a foot deep, looked crystalline. [The guide] drove a stick into the creek bed and churned the mud until the water grew clouded by sediment... I skimmed my hand across the surface of the creek. My palm was coated in an acrid film."

Jim Wyss, writing for the Miami Herald, in 2011:

The guide "plunges his auger into the ground. Within a few inches the dirt gives off the pungent odor of petroleum. Within a few feet the dirt glistens with oil residue. When a few handfuls of the soil are dropped into a bucket of water, a thick oil slick coats the surface."

Frank Bajak, Associated Press, 2008:

In town of Lago Agrio, the epicenter of the damage, Bajak notes that "when the sun beats particularly hot... the roads sweat petroleum."

The guide "plunges a surgical glove-sheathed hand into the muck of one waste pit. He pulls up rancid, oil-coated leaves from surrounding saplings. A pipe juts out of another pit, dripping what looks like crystalline water that reeks of petroleum hydrocarbons."

Bajak notes "a fresh spill... dark and gooey. Bigger spills have smothered crops, choked birds, killed cattle."

Valerie Pacheco, AFP, 2011:

"[Lead named plaintiff Maria Aguinda] skeptically eyes the ongoing cleanup of a marsh just meters from her house, where workers dressed in oil-stained yellow overalls dredge thick black ooze into suction pipes."

"A strong petroleum smell permeates Rumipampa, home to nine families, some of whom complain of headaches."

Tom Levitt, The Ecologist, 2012:

"Billions of gallons of toxic waste from oil drilling in the 1960s, 70s, and 80s has polluted streams and rivers in the province of Sucumbios, used by indigenous communities for drinking, bathing, and fishing."

James North, The Nation, 2015:

"We set off into the rain forest. Oil pipelines of various sizes run alongside the roads; in one spot, you can count dozens of them, like strands of spaghetti. [The guide] started at Aguarico 2, a well that has been closed for years... The oil residue is still floating to the surface.  Then [we] marched down a steep slope to a stream, where you could see and smell the oil as well."










Tuesday, December 1, 2015

Chevron Enlists Convicted Felon Conrad Black to Help Its Defense in Canada

With evidence against it in the Ecuador pollution case mounting, Chevron has turned to none other than convicted felon and former media titan Conrad Black to help it try to block indigenous villagers from enforcing their environmental judgment in Canada.

A few days ago Black published an op-ed article in Canada that repeated Chevron's talking points and viciously attacked the rainforest villagers and their counsel. The article appeared in the newspaper Black founded in 1998, The National Post. In 2007, Black was convicted on fraud charges in Chicago related to the sale of his various newspapers, which at one point comprised one of the largest English-language media empires in the world.

A jury found that Black misled investors and looted company funds to support a lavish lifestyle that included luxury homes in several cities around the world. He was incarcerated in a federal prison before being deported to Canada and barred from entering the United States for 30 years.

(For more on Black's checkered background, see this story in Vanity Fair. For a summary of the overwhelming evidence against Chevron in Ecuador, see here. For evidence of the high cancer rates caused by Chevron's pollution, see here. For a whistleblower video exposing Chevron's fraud in Ecuador, see here. For a sworn affidavit outlining some of Chevron's efforts to sabotage the Ecuador trial, see here.)

Chevron is up in arms that it might finally be held accountable in Canada and forced to pay the $9.5 billion Ecuador judgment after 22 years of playing a jurisdictional shell game. Canada's Supreme Court ruled unanimously in September that the Ecuadorians could try to enforce their judgment against company assets to force compliance with the court order in Ecuador.

The Canada Supreme Court decision has created major new difficulties for Chevron's avowed strategy to "fight until hell freezes over" and not pay the judgment it owes to those it harmed. After reviewing more than 100 technical evidentiary reports, Ecuador's Supreme Court in 2013 affirmed a lower court judgment that found Chevron had deliberately and systematically dumped billions of gallons of oil waste into streams and rivers relied on by local inhabitants for their drinking water. Cancer rates in the area have skyrocketed and untold numbers of local citizens have succumbed to the disease.

The Canada Supreme Court decision is typical in cases where a scofflaw debtor tries to evade a court judgment by selling off its assets in one country and moving them to another. That's what Chevron did in Ecuador after it fought for years to venue the trial there and accepted jurisdiction.

When a defendant loses a case and runs from the law, the judgment creditor always has a right to ask another country's courts to enforce their judgment against the defendant's assets. But according to Chevron and its new surrogate Mr. Black, an exception to this rule should be made for the long-suffering Ecuadorian villagers.

According to Black, the villagers should be blocked completely from Canada's courts.

Of course, if this were a commercial enforcement case involving one of Black's businesses that was getting stiffed in another country, he would be the first to cheer the Canada Supreme Court decision. He might consider the rank double standard he is proposing for the impoverished villagers who for decades have been victimized by Chevron's gross misconduct, as the U.S. show 60 Minutes documented in this segment.

More interesting to us is how Chevron seems to consider its options so limited in Canada that it turns to a convicted felon to argue its position in the press. Conrad Black likely was not the first person Chevron approached to write an op-ed. But he likely was the only one who agreed to do it.

Chevron recently got major egg on its face after the membership of Canadian Bar Association rejected an attempt by the company to intervene in its internal affairs and enlist the organization to file a "friend of the court" brief before the Canada Supreme Court. When Chevron's secret maneuver became public, the company was forced to withdraw the brief after it had been filed. Oops.

The enlisting of Black is not the only sign of Chevron's jitters in Canada.

The company's star witness, the Ecuadorian citizen Alberto Guerra, recently admitted lying on the stand in a farcical U.S. "racketeering" trial used by Chevron to try to taint the Ecuador judgment. In violation of federal law, Chevron paid Guerra $2 million in cash and benefits for his testimony. The company later conceded its lawyers coached Guerra for 53 days before he was allowed to take the stand. (The highly flawed decision in that case is on appeal.)

Without the discredited Guerra available to testify in Canada, Chevron has no real defense. Which is why Chevron and Mr. Black argue that Canada's courts should not take up the case at all.

For years, it has been obvious that Chevron will do virtually anything to evade paying the Ecuador judgment. That includes threatening judges in Ecuador, drowning the court with duplicative motions, presenting false testimony, paying fact witnesses, trying to bribe Ecuador's government to quash the legal case, obstructing justice, and filing retaliatory lawsuits against dozens of people who worked to hold it accountable. (For more background, see this article in the Huffington Post.)

Chevron's thinking that using a convicted felon will help improve the company's tattered image in Canada suggests a profound disconnect from reality. But it is depressingly consistent with the company's past behavior.

In 2009, Chevron used convicted drug felon Wayne Hansen in a failed attempt to entrap the Ecuador trial judge in a manufactured bribery scheme. Chevron investigators later spirited Hanson out of California to Peru to avoid a subpoena where he would have been forced to answer questions about the company's sordid attempt to undermine a trial it knew it was losing on the merits.

If Mr. Black wants to publicly debate us on Chevron's crimes and fraud in Ecuador without a company apparatchik whispering in his ear, we would be happy to make one of our advocates available.




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.)