Tuesday, June 28, 2016

U.S. Supreme Court Decision Undermines Chevron's Defense in Ecuador Pollution Case

Reposted from The Chevron Pit.

Chevron's faltering "racketeering" (or RICO) case against the Ecuadorian villagers the company poisoned with its toxic dumping was just rendered a nullity by the U.S. Supreme Court, dealing another major blow to the oil giant as it attempts to evade paying the $11 billion pollution judgment.

(For full background on last week's U.S. Supreme Court decision in the RJR Nabisco case and how it hurts Chevron in the Ecuador case, see here.)

Chevron in 2010 deployed hundreds of lawyers to attack and try to demonize indigenous villagers who has just won a multi-billion dollar judgment in Ecuador against the company. Three layers of courts in Ecuador had found Chevron guilty of dumping billions of gallons of toxic waste. Chevron was also reeling after having been embarrassed by brutal exposes of its jungle misconduct in prominent media outlets, including 60 Minutes, Vanity Fair, and The New York Times.

Chevron of course believes the rule of law should apply only when it wins in court, not when it loses.

Angry and desperate, Chevron went on the counterattack. It sold its assets in Ecuador and then filed a retaliatory RICO action in the United States against the villagers and their lawyers claiming the entire judgment was a product of "sham" litigation despite overwhelming evidence against the company. (See here for photos and testimonies of some of Chevron's victims in Ecuador.)

Rather than being assigned randomly, Chevron's RICO case was grabbed by a headline-hungry U.S. judge who never disclosed he had personal investments in Chevron when he presided over the case, despite clear signs he was motivated by bias.

The judge, Lewis A. Kaplan, constantly disparaged the villagers and their country from the bench. A prominent law scholar, New York University Professor Burt Neuborne, blasted Kaplan for engaging in "judicial slander" to undermine Chevron's victims. Other international legal scholars and U.S. civil society groups such as Amnesty International and Earth Rights blasted the judge for his intellectual dishonesty and animus toward the indigenous groups.

A subsequent bench proceeding (Kaplan refused to seat a jury of impartial fact finders) looked more like a Soviet-era show trial. Chevron corporate executives cheered from the gallery and virtually every ruling went in favor of the company. Meticulously choreographed, the Chevron-Kaplan show trial was a mockery of justice from the start, and the case should have been thrown out immediately, as underscored by the U.S. Supreme Court decision.

Aaron Page, a U.S. lawyer who represents the Ecuadorians, put it perfectly:
Chevron's RICO case in Ecuador already was doomed because of its countless legal excesses and absurd factual findings. Now, the Supreme Court has ruled you can't bring a RICO case, even a legitimate one, based on harm that took place abroad. This is another example of why Chevron's RICO case should have been thrown out on day one.

It is worth reviewing a few of the lowlights of what can only be described as a hostile takeover of our taxpayer-funded federal court system by a wealthy private corporation:

  • Chevron and its investigators (Yohi Ackerman and Andres Rivero) paid $38,000 in cash out of suitcase and more than $2 million overall to an admittedly corrupt former judge in Ecuador, Alberto Guerra. In exchange, Guerra became Chevron's star witness and lied on the stand by claiming he had been in a meeting where a "bribe" was discussed.

  • Subsequent to the RICO trial, Guerra admitted admitted under oath that he made up key parts of his testimony. He also confessed to accepting bribes when he was a judge, and paying bribes to judges when he was practicing law. It also emerged that Guerra admitted lying to Chevron to induce the company to pay him more money for his testimony. "Money talks, but gold screams," Guerra told Chevron in a taped conversation.

  • Chevron put Guerra on the stand in the RICO case after the company's lawyers at the U.S. firm of Gibson Dunn coached him for 53 consecutive days. After the coaching, Guerra began to claim he had information the plaintiffs wrote the trial court judgment. The claim was a lie, as an independent forensic analysis later proved. Neither Chevron nor its outside lawyers have been held accountable for coaching a witness to lie in a federal court.

  • The judge also let Chevron pay more than $15 million to Kroll, a private investigations service populated by former FBI and CIA agents, to spy on lawyers for the villagers – a clear violation of the law and professional ethics. U.S. attorney Steven Donziger was followed and harassed by six separate Kroll agents in Manhattan. Kroll also admitted it prepared 20 to 30 reports on Donziger in an attempt to dig up dirt and discredit him.

  • Chevron also convinced Kaplan – who has a long history of hostility toward plaintiff's lawyers – to actively promote its scheme. Kaplan denied the Ecuadorians a jury so he could write the decision himself, which was largely cribbed from Chevron's briefs. Kaplan also allowed secret witnesses and refused to consider any of the environmental evidence (such as soil and water samples) that clearly proved the oil company was guilty. For a deep dive into Kaplan's miscarriage of justice, read the 65-page factual summary in this appellate brief.
In short, from his Manhattan trial court, Judge Kaplan tried to rule that Ecuador's entire judiciary was illegal. Worse, he tried to singlehandedly overturn a critical ruling from another country's Supreme Court. And he allowed Chevron's made-up facts into his courtroom to justify a defective ruling that has embarrassed the federal judiciary and been lambasted by legal scholars from nine countries around the world. Although Guerra was busted for perjury, Chevron has kept him on its payroll to this day. The $2 million in payments is only what Chevron disclosed it had paid Guerra as of 2013. Today, that number is surely an order of magnitude greater, but Chevron refuses to disclose the real value of the slew of benefits it has bestowed on this tawdry criminal. When the dust clears and the villagers collect on their judgment – most likely in Canada, where they are advancing toward a seizure of company assets after winning a unanimous decision before the country's Supreme Court – that will not be the end of the story. The people in and out of Chevron responsible for this abuse of power need to be held accountable. They include, most notably, Chevron CEO John Watson, Chevron General Counsel R. Hewitt Pate and Randy Mastro, Andrea Newman, and Avi Weitzman from the outside firm of Gibson Dunn. The villagers plan to do their damn best to see that it happens. Chevron's RICO case and the bombastic, inaccurate, and pre-ordained factual conclusions of Judge Kaplan's show trial are currently being reviewed by a New York federal appellate court. That court had a relatively easy job to begin with, given the many fatal flaws in Chevron's case. The U.S. Supreme Court's latest decision on the RICO law just made that job even easier.

Monday, June 27, 2016

Chevron’s Garbage Fire Sale

Chevron's Richmond refinery flare at 9:30 pm. Photo credit: Jeremy Miller

Reposted from Eye on the Amazon.

Chevron sending up massive flares in Richmond is not the only sign things are getting hot for the oil giant on the run from a $11 billion verdict.

On June 19th, Chevron's Richmond refinery erupted a torrent of flames and black smoke into the air and terrified local residents. The community remembers all too well when 15,000 people were sent to the hospital when that same refinery exploded in 2012. Unfortunately, since then the public hospital in Richmond has closed. They can't afford another explosion as the closest public emergency room services are now thirty to forty minutes away in Oakland.

But that's not the only thing "on fire" at Chevron lately. Similar to the company's claims that it needs massive flares to burn off excess gas, Chevron claims there's "nothing to see here" as it tries to sell off US $5 billion in assets in its Burnaby oil refinery in British Columbia. But the company's actions and track record tell a different story. Realizing it was going to lose in its legal battle and be forced to accept responsibility for deliberately dumping 18 billion gallons of toxic waste into the Ecuadorian Amazon, Chevron instead sold off all its assets and fled that country. It's been a corporate criminal on the run ever since, but the law is finally catching up with Chevron – in Canada.

In September, the Ecuadorian plaintiffs – bolstered by a unanimous decision in their favor by Canada's Supreme Court – will begin their trial to seize Chevron's Canadian assets to cover its US $11 billion debt to the affected communities in Ecuador.

Chevron currently holds approximately US $15 billion of assets in Canada, almost all of which is at risk due to this enforcement action. Chevron refuses to acknowledge its full liability to the SEC and to its shareholders, and this latest move may give a clue as to why. Unable to replicate its customary racist attacks against Ecuador's judiciary and legal system, Chevron has to dream up new methods in Canada.

The Ecuadorians have defeated Chevron in every single legal contest which has considered the evidence of their crimes in Ecuador (Chevron's singular victory – a retaliatory RICO SLAPP suit in the US – notoriously forbade any evidence of contamination in its proceedings and is still under appeal). The writing is on the wall in Canada, and Chevron is trying to slip out quietly and escape justice once again.

To make matters worse for the oil giant, a recent U.S. Supreme Court decision on the use of RICO may preemptively doom its defense before the Second Circuit Court of Appeals in New York. As respected appellate attorney Deepak Gupta wrote, the Supreme Court decision "further limits private RICO actions by requiring proof of a quantifiable, redressable and domestic injury – something Chevron has steadfastly refuse to identify." The decision also made clear that the RICO statute could not be used to attack a final judgment from a foreign court, as Chevron has tried to do in the Ecuador case. Aaron Page, a U.S. lawyer for the Ecuadorians called it a "nail in the coffin" of Chevron's RICO case. He added, "Now, the Supreme Court has ruled you can't bring a RICO case, even a legitimate one, based on harm that took place abroad. This is another example of why Chevron's RICO case should have been thrown out on day one."

Bottom line on these developments: no matter how desperate it gets, Chevron can't hide its actions in Canada or its pollution in Ecuador or Richmond.

Thursday, May 26, 2016

Chevron CEO Watson Shows He Is Out of Touch on Ecuador Litigation, Fossil Fuels

Reposted from The Chevron Pit.

Chevron CEO John Watson and his Board of Directors seemed terribly out of touch at the company's annual meeting this week where they were once again pounded by the environmental group Amazon Watch and its allies. Watson simply refused to deal with his two key challenges: the $11 billion Ecuador pollution judgment, and climate change.

For shareholders, it was hardly a performance that inspires confidence in the future. Chevron's revenues are down 75% compared to last year and its stock price continues to lag behind other oil majors. Nobody wants a Luddite running an oil company, but that is what Watson is in danger of becoming.

On Ecuador, Watson arrogantly dismissed renowned indigenous leader Humberto Piaguaje. A Secoya elder who has seen his village devastated by Chevron's pollution, Piaguaje had traveled from his jungle home to company headquarters to confront Watson directly about the enormous court judgment won by thousands of villagers in 2013. The decision against Chevron has been confirmed by no fewer than 18 appellate judges in Ecuador and Canada. Yet Watson refuses to pay up, prompting the villagers to try to seize company assets in Canada .

After Piaguaje asserted that Chevron's "blame the victim" strategy in Ecuador was racist, Watson became visibly flustered and turned off the microphone after saying, "I've been trying to answer questions on Ecuador for seven years. I am not going to take any more questions." (For more details, see this account from Amazon Watch and this article by Courthouse News.)

Watson -- who received $22 million in compensation last year -- was even more arrogant on the climate change issue. In contrast to several European-based oil majors, Chevron under Watson's leadership opposed all six resolutions designed to drag the company into the modern world on the issue. The company seems incapable of dealing with its stranded asset problem as the world transitions to clean energy. That's how poor corporate citizenship and flawed business decision making combust into a perfect storm of stupidity.

Here are some more signs from the annual meeting that Watson has his head in the sand:

**He did not acknowledge that Chevron faces the seizure of billions of dollars of company assets in Canada, where the country's Supreme Court recently ruled for the villagers. Chevron is on the firing line of one of the most important environmental cases in history, yet Watson was mum about what appears to be a very serious threat to the company's business model.

**Watson was silent on how Chevron's key witness from Ecuador has repudiated his own testimony and admitted lying to get more money from the company. Chevron has paid the witness at least $2 million and moved his entire family to the U.S.

**Watson completely ignored a whistleblower video that shows Chevron scientists trying to defraud Ecuador's courts by hiding evidence of the company's pollution.

**Watson failed to beat back a shareholder resolution from Newground Social Investment critical of Chevron's mishandling of the Ecuador litigation. The resolution received support from 30% of all shareholders -- a biting rebuke to company management, which has spent an estimated $2 billion and used 60 law firms to fight the villagers.

**Watson also refused to discuss how the company recently dropped a key legal claim against the villagers because its arguments were certain to be rejected by courts.

**Finally, Watson again failed to acknowledge the humanitarian catastrophe in the area of Ecuador where the company operated from 1964 to 1992. Cancer rates have skyrocketed and hundreds if not thousand of people have died from oil-related diseases since Texaco (bought by Chevron in 2002) started systematically dumping toxic waste into the Amazon in the 1960s.

Watson was the Chevron executive who in 2001 fought hard for the merger with Texaco knowing that it had left billions of gallons of toxic waste in its wake. Watson didn't respect the sophistication and determination of indigenous groups at the time; he obviously still doesn't.

Chevron Board members who are paid around $400,000 per year remain silent in the face of this fiasco.

What a sorry commentary on the company and its leaders.

Tuesday, May 24, 2016

Chevron CEO To His Board: Our Ecuador Problem Just Won’t Go Away

Reposted from Eye on the Amazon

Chevron CEO John Watson

[Of course, we don't have access to Chevron's internal communications. But if we did, this "memo" is what we imagine we might see. It's hard to peek into the mind of someone who is responsible for massive environmental destruction and human rights violations, but based on John Watson's actions as Chevron CEO this should be about right.]

Chevron Toxico

Dear Chevron Board of Directors and Senior Management:

This Wednesday will mark my sixth Annual Shareholder Meeting as your Chair and Chief Executive Officer. I want to thank you for the complete trust and lack of oversight you have given to me and our legal team headed up by Hew Pate in handling the ongoing Ecuador matter. Regretfully, I must inform you that we will once again have to deal with representatives of the indigenous and farmer communities of the Ecuadorian Amazon and their many misguided allies at the meeting on Wednesday.

As you know, our primary strategy since Chevron merged with Texaco (thanks in great part to my work as chief architect of the merger) is to spare no expense in dragging out legal proceedings as long as possible (and given our hefty bank accounts, that could last longer than all the remaining oil reserves, am I right?). We will continue that approach in Canada and anywhere else, or as our PR team so aptly put it: "until hell freezes over."

However, there are a number of developments since the meeting last year. I have anticipated some of your questions and will endeavor to respond to them below:

Yes, the Canadian Supreme Court sided unanimously with the Ecuadorians to allow their enforcement proceeding to begin there this Fall. Not to worry, we have hired multiple firms in Canada and we fully expect to be able to drag that trial out for many more years in hopes our opponents finally run out of funding to continue the fight.

No, we have not reported this $11 billion liability to the SEC for this case. Of course, we will stand by our claims that Chevron-Canada can never be held liable for Chevron's actions. (Don't worry, we still get to list all the assets of Chevron-Canada as ours in our annual report). Sure, someone at the SEC or Department of Justice might figure out that we're trying to have it both ways. But I'm pretty sure our bylaws allow for having our cake and eating it too.

Yes, there's risk we will have to 'clean up' and ‘pay up' as the activists say. And this whole Canada thing could affect our existing operations and new upstream development plans. But, no matter what happens, I look forward to receiving a generous bonus and I promise to give you a few weeks notice before I "float away on my golden parachute."

Yes, we are still awaiting the decision of the Second Circuit of Appeals on that RICO case that Judge Kaplan so graciously advised us to file. It is true that if we win it doesn't prevent the communities from continuing their enforcement actions, but we're happy to have paid Gibson Dunn so much money that the firm opened a new international litigation spin-off to help companies like us get off the hook for paying for things like environmental remediation and rights abuses.

No, even though Judge Wesley suggested it, we will not be forced to try the original case all over again in front of the Second Circuit in New York. Ted Olson has assured me that they can't actually force us do that. Quite a relief, what with the pollution, cancers, and stuff.

No, our case is not dead just because our star witness Judge Alberto Guerra admitted to lying on the stand and forensic evidence shows that the Ecuador judgment was indeed written by the presiding judge. I mean, sure, it's not great, but to quote my buddy Don Rumsfeld, ‘you go to war with the army you have, not the army you might want'. Probably shouldn't have given him a backpack full of cash, though. I'm going to add a note to self here that we've got to be more creative when bribing people.

Yes, in the "bribery" column of your report you will see that we will continue to pay the housing costs and "stipend" for Judge Guerra for at least another year. If we failed to continue this support it might look like we were only paying him to testify in our favor, so his admission of lying under oath in the RICO case actually demonstrates that the $2 million he has received from Chevron can in no way be seen as a bribe. Good news! And of course, we don't want him to turn on us and further, so consider it well invested hush money.

Yes, it is true that our legal team verified the leaked inspection videos from 2005 released by Amazon Watch. (No bonuses for those involved!) Those videos show our technicians finding toxic waste at sites we defended as clean in the Ecuadorian trial. Fortunately, we have successfully kept them off mainstream media in the US with some well written letters from our lawyers and the protection of Judge Kaplan's verdict. As such, they have only been viewed a few million times on the internet.

If you are confronted by any Ecuadorian "natives" at the meeting, I recommend you take my posture of simply dismissing them as naive people who have been manipulated by "greedy New York lawyers". If they have water with them, DO NOT DRINK IT.

Once again, just as we expect this divestment movement to fade away, we estimate that eventually the Ecuadorians and their lawyers will run out of support and be forced to abandon their case. I promise you that day is coming... they can't live forever after all, especially given that water they have to drink.

Let's just get through this meeting on Wednesday and engage as little as possible with people from Ecuador, Richmond, Canada, Nigeria, Argentina, Brazil, Australia, Romania... and anywhere else our operations generate "protest".

Remember what I said last year, "the path to prosperity is through fossil fuels." For most of the world it may be an oil soaked path through a desert world, but just look at how good it has been to all of us!


John Watson
Chief Executive Officer AND Chairman of the Board
(It's good to be your own boss!)

With Assets Under Threat, Chevron CEO Faces Judgment Day Over Ecuador At Annual Meeting

Reposted from The Chevron Pit

Chevron CEO John Watson is getting roughed up in the days leading up to the company's annual shareholder meeting this week as risk related to his historic $11 billion environmental liability in Ecuador continues to increase. The judgment has now been confirmed unanimously by Ecuador's Supreme Court while Canada's Supreme Court has ruled the affected communities can try to seize some of the company's $15 billion worth of assets to pay for a clean-up.

(For background, see this press release put out by the environmental group Amazon Watch.)

In all, 18 consecutive appellate judges in Ecuador and Canada have rejected Chevron's arguments and ruled in favor of indigenous and farmer villagers from the Amazon who first brought suit in 1993. Chevron's global game of forum shopping is running out of steam -- the company is facing a true litigation catastrophe in Canada -- and Watson no doubt will be called out by shareholders at the meeting for his abhorrent and irresponsible mistreatment of indigenous groups in the Amazon.

The annual meeting, at company headquarters in San Ramon, will be highlighted by a face-to-face showdown between Watson and renowned Ecuadorian indigenous leader Humberto Piaguaje. Piaguaje, a Secoya elder, has traveled from his jungle home to attend the meeting. He is being hosted by Amazon Watch, an environmental group that is organizing a major protest outside during the meeting.

Watson and Chevron's Board will be on the hot seat over a number of issues:

**The company's Ecuador liability -- originally $9.5 billion -- is getting worse by the day as statutory interest in Canada (where the villagers are trying to enforce their judgment against Chevron's assets) has pushed up the amount to roughly $11 billion. Just last week, two top Chevron executives were forced to answer questions under oath in a deposition in Canada; a critical court hearing is scheduled for September that has the chance of knocking out all of the oil giant's defenses.

**Under Watson's leadership, Chevron is flailing not only over the Ecuador issue but over its core business. The company recently reported its first quarterly loss in 13 years; revenue is down 75%; and climate change threatens to leave shareholders with billions of dollars of "stranded assets" as the world moves away from fossil fuels.

**A major Chevron shareholder, Newground Social Investment, has filed a resolution that asserts that Watson's management team "has mishandled a number of issues in ways that significantly increase both risks and costs to shareholders. The most pressing of these issues is the ongoing legal effort by communities in Ecuador to enforce a $9.5 billion Ecuadorian judgment for oil pollution." The resolution follows a complaint to the SEC by a U.S. Congresswoman that suggests the company is trying to downplay its Ecuador liability to shareholders.

**It is increasingly clear that Chevron is responsible for one of the world's most dire humanitarian catastrophes in Ecuador. Numerous independent studies confirm that cancer rates in the region where Chevron operated have skyrocketed; thousands of indigenous peoples and farmers have died of cancer and other oil-related diseases. Yet at great cost, Watson continues to pay 2,000 lawyers from 60 law firms to fight some of the most vulnerable people on the planet.

In the press release put out by Amazon Watch, Piaguaje said
Our leaders plan to confront Mr. Watson with judgments from multiple courts mandating that the company pay its pollution bill to the people of Ecuador.  Mr. Watson needs to accept responsibility for Chevron's environmental crimes in Ecuador, apologize to the company's victims, and abide by court orders that compensation be paid. Until he abides by the rule of law, Mr. Watson and Chevron's Board members will be considered by us to fugitives from justice subject to arrest for crimes against humanity under principles of universal jurisdiction.
Well said, Humberto. Perhaps you should consider making a citizen's arrest of Watson at the meeting.

In previous shareholder meetings, Watson has suffered a series of biting rebukes over the Ecuador liability. One resolution critical of Watson's mishandling of the case received a whopping 38% support from shareholders.

In addition, in 2011 several of Chevron's institutional shareholders with more than $580 billion in assets under management sent Watson a letter urging settlement of the Ecuador case. Amazon Watch also sent a letter to Chevron signed by 43 corporate accountability and human rights groups blasting the company for trying to silence its critics.

Chevron's shareholders should use the annual meeting to re-assess whether the conflicted Watson -- who made $22 million in compensation last year from a Board that he controls -- has the vision to fully grasp what it means to serve shareholder interests.