Tuesday, October 7, 2014

Did Chevron Just Fund Its Legal Opponents in Ecuador?

Reposted from the CSR Strategy Group

Did Chevron just hand its legal opponents in Ecuador $106 million?

That appears to be the case according to a press release put out this week by the communities that have sued Chevron for oil pollution in the Ecuadoran rainforest.

In what could be a huge boost to their campaign to force Chevron to comply with a $9.5 billion environmental judgment in Ecuador, rainforest villagers plan to enforce a court order directing them to take possession of a $106 million arbitral award won recently by the oil giant from Ecuador’s government in a case that recently became final in Dutch courts….

The $106 million figure comes from the amount of an arbitral award that Chevron won from Ecuador under the U.S.-Ecuador Bilateral Investment Treaty in an unrelated series of commercial disputes dating to the early 1990s between the American company and Ecuador's state-owned oil company, Petroecuador. A Dutch court last week denied Ecuador's last appeal of the award, rendering the arbitral decision final.

One of Chevron's principal tactics in this litigation has been to starve the Ecuadoran communities of the money that they need to pursue their case. Chevron has flipped two of the financiers of the case: Burford Capital and Patton Boggs. The oil company has also sued two others: Russell DeLeon and Woodsford Litigation Financing. But, if the Ecuadoran government hands over the $106 million arbitral award to the Ecuadoran communities, it would completely replenish the plaintiffs' legal war chest.

The likelihood appears high that the Ecuadoran government will indeed give the money to the plaintiffs. Firstly, the Ecuadoran courts have already ruled that the rainforest communities can seize all of Chevron's assets in Ecuador. Secondly, after Chevron's relentless attacks against Ecuador, it is hard to imagine that the Ecuadoran government would give Chevron any money that it could more appropriately channel to the plaintiffs.

The rainforest communities would likely make very good use of the $106 million. It could be used in part to pay for remediation of the oil pollution, as the Clean Water is already doing. Another portion could be used to fund new legal enforcement actions to seize Chevron's assets outside Ecuador to collect fully on the $9.5 judgment.

If the government of Ecuador gives the $105 million to the plaintiffs, Chevron management only has itself to blame for this possibly game-changing defeat. After all, it was Chevron that successfully petitioned to have the case moved from New York to Ecuador only to lose badly. If there's one thing that Chevron CEO John Watson does well in this case, it is making mistakes that cost millions to Chevron's shareholders.

Is it any wonder that Chevron's own shareholders have questioned management's competence in this case?

Chevron Lawyer Randy Mastro Resorts to Dirty Tricks in Ecuador Pollution Case

Reposted from The Chevron Pit

Chevron lawyer Randy Mastro again appears to be engaging in dirty tricks in a last-ditch effort to rescue the oil company from its worsening legal troubles related to its $9.5 billion liability in Ecuador.

Through backdoor manuevering, Mastro is trying to influence the New York federal appellate court that is hearing Chevron's defense of its ill-fated RICO case.

We hear from a little birdie that Mastro's latest trick involves an apparent unauthorized ex parte contact by his office with a clerk in the appellate court. Mastro's goal was to convince the clerk to change the caption of the RICO case on appeal to produce a more favorable review panel for Chevron.

Ex parte contacts with the court? Isn't that exactly the kind of behavior Mastro claimed repeatedly (albeit without legal basis) was "fraudulent" when it took place in Ecuador?

First, a little background. We already reported that Chevron never had a legal basis to bring the RICO case, as this document explains in detail. RICO never has been used to impose an injunction to block lawyers and impoverished indigenous villagers from bringing their claims against a corporate polluter, as Chevron tried to do in the case.

We might add that Chevron's fabricated complaints of "fraud" and "ghostwriting" were rejected by eight different appellate judges in Ecuador. Even so, controversial federal Judge Lewis A. Kaplan decided in favor of the company after a deeply flawed civil RICO trial based on corrupt witness testimony paid for by Chevron, among other problems.

Ultimately, Ecuador's highest court – the equivalent of our Supreme Court – affirmed Chevron's liability for causing massive pollution in a 5-0 decision last November. One would think the game would be over for Chevron and it would pay up, much as BP did after its Gulf spill.

Led by Mastro, who never saw a billing opportunity he didn't like, Chevron in 2010 came storming back to the same U.S. court where it earlier had tried to block the claims of the indigenous groups. On the verge of losing in Ecuador after an arduous eight-year trial, Chevron now wanted a second bite at the apple in the same court it had turned its back on years ago.

This was Chevron's ultimate act of forum shopping.

Judge Kaplan, a former corporate defense lawyer with a libertarian bent, was all too happy to indulge Chevron. In the process, he assigned his former law partner Max Gitter to serve as "Special Master" and reap enormous fees. The secret bills were paid exclusively by Chevron.

Encouraged by Kaplan's and Gitter's obvious hostility toward the Ecuadorians and their American lawyer, Chevron dispatched at least 114 lawyers from the Gibson Dunn firm to take over the jurist's giant federal courtroom and mount a retaliatory attack against the Ecuadorians and their counsel. Kaplan had invited Chevron to file the RICO case and then assigned the matter to himself. The courtroom was packed with Chevron executives and lawyers, including company General Counsel R. Hewitt Pate.

As presiding judge, Kaplan denied the defendants a jury on the eve of trial. He also excluded all evidence of Chevron's wrongdoing. He refused to read the Ecuador evidentiary record and he let the company present secret witness testimony.

Kaplan's proceeding was a show trial through and through, not to mention an utter embarrassment to the entire federal judiciary. The spectacle attracted the criticism of dozens of law scholars worldwide.

How things can change when you get to a real appellate court.

The  defendants in the RICO case – including New York lawyer Steven Donziger and two Ecuadorian villagers, Hugo Camacho and Javier Piaguaje – have slowly turned the tables on Chevron. Their appellate briefs (see here and here) have exposed Mastro's Trojan Horse case for what it is.

Not surprisingly, Mastro is now backing away from his previous bombast. He is claiming to reporters that Chevron's only real interest is in preserving Kaplan's flawed factual "findings" even if the RICO case gets thrown out.  Memo to Mastro: when a case gets thrown out on jurisdictional grounds, its factual findings go away.

Regardless, Kaplan's "findings" are so tarnished by his obvious bias that they will be worth far more to the Ecuadorians (as an example of U.S. judicial imperialism) than they will to Chevron.

Mastro probably cannot believe that Donziger and his clients secured competent appellate counsel.  One (Burt Neuborne) is a law professor at NYU who helped to settle the Holocaust cases. He is representing the villagers pro bono.  Donziger is represented by Deepak Gupta, a rising young star in the world of appellate advocacy who has argued multiple cases before the U.S. Supreme Court.

Chevron's management team – whose strategy all along was to win by might what it could not win on merit – is none too happy about the laser focus of Gupta and Neuborne on the weaknesses in the company's case. It should be no surprise that Chevron is again turning to Mastro to try to trick up the process.

The call by Mastro's office to the clerk is most impolitic and unethical. In any event, Mastro's team filed a brief last week where the caption of the case suddenly changed from Chevron v. Naranjo to Chevron v. Donziger.

Why does it appear that Chevron unilaterally decided to change the caption of the case?

The answer is simple and provides insight into Mastro's devious approach.

Chevron was reversed by the same federal appellate court in 2011. At that time, a three-judge panel threw out an unprecedented injunction imposed by Kaplan at Mastro's request that purported to block enforcment of the Ecuador judgment anywhere in the world. The title of that case: Chevron v. Naranjo.

If the appellate court keeps the same caption for the current appeal – as it should given that the issues are the same  -- then Chevron likely will face the same three judges as before. These are judges who will not easily be deceived by Chevron's hijinks.

If Chevron gets the caption changed to Chevron v. Donziger, Mastro would claim that it is a different case warranting different judges. It also would allow Chevron to better align the case with its demonization campaign against Donziger, the lawyer who for two decades has prevailed time and again against Chevron and who has driven the company near mad in the process. (Chevron has used no fewer than 60 law firms and 2,000 lawyers on the case since its inception in 1993 while Donziger works from his kitchen table.)

When Mastro tried to defend Kaplan's illegal preliminary injunction before the appellate court in 2011, he was de-pantsed and literally laughed out of the courtroom. At the time, Mastro could not answer the most basic questions posed by the panel. That's one reason why Chevron wants to start anew.

To do so, Chevron has enlisted none other than star Supreme Court lawyer Ted Olson to try to put lipstick on its Ecuador pig. Olson is slated to make a rare appearance in a lower court and argue for the oil company. (It would be great for the villagers if Mastro argues.  Chevron might be stupid, but not that stupid.)

For background on Olson's previous failed attempts to save Chevron in the case, see here and here.

This ex parte lobbying is the modus operandi of Mastro and the litigation team at Gibson Dunn. Mastro and his teammates brag to scandal-plagued corporations about their uncanny ability to mount "rescue" operations. (The motto of the firm: "When the law is in the way, we change the law.")

What that really means is the firm uses corporate power, intimidation, and backdoor gamesmanship to get what it wants for clients willing to pay exorbitant fees. Usually it involves accusing opposing counsel of fraud or unethical behavior so the victims are left defenseless.

But Mastro's "dream team" already has run into major troubles given its own lack of ethics. Andrea Neumann and Kristin Hendricks were found by federal judges to have engaged in unethical behavior. Scott Edelman sued a lawyer for the Ecuadorians in California with no legal basis and was fined by a state court judge for violating the First Amendment.

Gibson Dunn's intimidation template was attractive to Chevron CEO John Watson until it started to unravel. We understand that company management is looking for an exit strategy.

It is increasingly clear that the  RICO case will not determine the outcome of the dispute. The Ecuadorian indigenous groups are pursuing multiple actions to seize the company's assets in foreign courts. There is nothing Chevron or any U.S. judge can do to stop the enforcement process.

We look forward to explaining to the appellate panel more details of the ethically-challenged Mastro's backdoor maneuvering. That will happen regardless of the caption of the case.

Sunday, October 5, 2014

Chevron Faces Risk of "Spectacular Implosion" In Ecuador Pollution Case

Reposted from The Chevron Pit

One of Chevron's many dark secrets – one company management desperately tries to hide from shareholders – is that its RICO defense in the Ecuador pollution case faces the risk of a "spectacular implosion" in the coming months.

At least that's the informed opinion of somebody in one of the best positions to assess the case.

That person is none other than Aaron Page, a young law professor and practitioner who has represented the indigenous and farmer communities of Ecuador since 2005. That's when Page joined the case in Quito as an intern just out of law school at the University of Michigan.

In between, he had a stint at a large corporate law firm before returning to work fulltime on his passion of human rights law.

Page now runs Forum Nobis, a law firm and consulting service dedicated to the advancement of international human rights. Page also was a member of the defense trial team in Chevron's RICO case last year in New York before judge Lewis A. Kaplan.

While Page did not stand up in court, he was part of the "brain trust" behind the scenes that fought Chevron's army of 114 lawyers at every turn. Though grossly outmatched in terms of resources, it is now clear that the trial team actually set up Chevron for the possibility of a spectacular fall on appeal.

(For the details of Chevron's many problems on appeal, read the appellate brief of New York attorney Steven Donziger; this brief from Professor Burt Neuborne of NYU school of law; and this brief from international law scholars criticizing Judge Kaplan.)

In a blog posting earlier this week on the Forum Nobis site, Page explained why Judge Kaplan's decision is unlikely to protect Chevron. He demonstrates how Chevron's attorneys – led by the ethically-bereft Randy Mastro from Gibson Dunn – seem desperate to salvage anything they can out of the case knowing a reversal is likely.

Page also explains how Kaplan's bloated 500-page "findings" in the RICO matter were based on tainted evidence, cultural ignorance, and a heavy dose of intellectual dishonesty as well as the judge's bullying of the Ecuadorian villagers and their counsel.

Here's Page in his own words:

While Chevron tries to pretend that Kaplan's decision is a juggernaut, it is increasingly apparent that it is really a Hindenberg, likely facing a spectacular implosion on appeal. It is too controversial on too many fronts: too many sweeping jurisdictional assertions and novel legal conclusions; too little concern for core constitutional rights; too easy an embrace of deeply disturbing evidence, like the paid fact witness testimony; and ultimately, so much raw hostility directed at the defendants, on every page for 500 pages, that it starts to feel unseemly, no matter what your view of the facts.

Page also points out that Chevron, in its 185-page responsive brief, gives away its entire game in a single footnote.

In that footnote (#19 for the wonks among us), the company seems to prostrate itself before the appellate court and begs to let Kaplan's "freestanding" factual findings stand no matter what. Ouch.

Of course, Chevron ignores that Kaplan's factual findings are the result of a deeply flawed proceeding that excluded all evidence of the oil giant's contamination in Ecuador. The findings also purport to overturn a 5-0 decison by Ecuador's Supreme Court affirming Chevron's liability. (Ecuador is the venue where Chevron insisted the trial be held as a condition of the transfer of the litigation out of U.S. courts in 2001.)

Our apologies to Judge Kaplan, but we think Ecuador's Supreme Court might just know a little bit more than you about how to apply Ecuadorian law to the facts.

Page also quotes Judge Kaplan pontificating from the bench as to what he thought of Donziger and the historic enviroinmental litigation. Kaplan spouted on about the merits of the case even though the veteran jurist had not even held an evidentiary hearing.

Here is Page quoting Kaplan's own words:

The imagination of American lawyers is just without parallel in the world. It is our absolutely overwhelming comparative advantage against the rest of the world, apart from medicine. You know, we used to do a lot of other things. Now we cure people and kill them with interrogatories. It's a sad pass. But that's where we are. And Mr. Donziger is trying to become the next big thing in fixing the balance of payments deficit. I got it from the beginning.

Yes, we got it from the beginning too, Judge Kaplan. Your attitude is a most vivid example of U.S. judicial imperialism. It is also an embarrassment to the entire federal judiciary.

The entire blog can be read here.

Tuesday, September 30, 2014

Business Journalists Rush to Rescue Chevron from Its Ecuador Disaster

Reposted from Eye on the Amazon

Paul Barrett of Businessweek, Roger Parloff of Fortune Magazine and Michael Goldhaber of American Lawyer, all eager to tell Chevron's side in its Ecuador disaster.

On the run from a landmark $9.5 billion judgment in Ecuador, fighting enforcement actions in three countries that threaten strategic company assets, and gearing up for make-or-break appellate hearings does not bode well for the prospects of Chevron CEO John Watson and his management team.

No worries. Chevron got a little help from its friends in the corporate media last week. The resulting echo chamber is a startling reminder that, like the big banks, Chevron is considered by many to be too big to fail. It is clear that business journalists will come out of the woodwork to defend the company from attacks on their own kind, even if the truth about Chevron's human rights violations is sacrificed in the process.

The lawsuit brought by Ecuadorian rainforest communities against the oil giant is seen not only as a singular threat to Chevron's bottom line, but a historic symbol for corporate accountability. This is an unwelcome message to the oil-industrial complex which assumes that environmental damage and human rights abuses can be externalized and that justice can be so delayed that affected communities will never receive the redress or remediation they deserve. After all, Chevron has vowed to fight the Ecuadorians "until hell freezes over, and then we'll fight it out on the ice."

In a case like this with global implications for the environment, human rights, and corporate accountability, it's telling to see who Chevron's bedfellows are.

Over the 21 years of the Aguinda v. Chevron litigation, the list runs long. It includes people and institutions that have run to the company's defense, or outright done its dirty work – Ecuadorian government officials, military, judges, junk scientists, convicted felons, the U.S. Chamber of Commerce, and the U.S. Embassy in Ecuador, among others.

We can now add a trifecta of reporters to that list – two of whom have just published new books. These reporters have swallowed Chevron's narrative raw and whole. Sadly, this is not so surprising, coming as they do from Fortune Magazine, Businessweek, and American Lawyer (the latter considered the right wing litigation bible of corporate America) Roger Parloff, Paul Barrett, and Michael Goldhaber respectively, have been tripping over themselves to promote their books and articles, referencing, cross-referencing, citing, quoting, and linking to each other, to dizzying, albeit deceitful effect.

Let's focus on Paul Barrett of Businessweek, whose book "Law of the Jungle" (get it, there's no law in the jungle. Ha!), is a pro-Chevron tour de farce of the Aguinda v. Chevron litigation, as well as Chevron's countersuit using the RICO statute in New York Federal Court. He plays lip service to one of the indigenous leaders who lost two children due to oil contamination and builds up U.S. lawyer Steven Donziger, only to then take him and his clients down using Chevron's deceitful narrative. The majority of Barrett's book is written as if he spent extensive time on the ground in Ecuador, and was at many of the events described. However, he wasn't.

Barrett watched the documentary film, Crude, by Joe Berlinger. He then wrote as if he was standing right there in front of toxic waste pits, or in the judge's office, or at the hotel preparing Emergildo Criollo for the shareholders meeting. It's a deceitful tactic that purports to lend "jungle cred" to Barrett, as if his book is some kind of in-depth investigation from the sweaty Amazon court room or next to rusting Chevron pipelines that siphon off overflowing oil sludge into streams below, to be drunk later by unsuspecting villagers downriver.

Watching another journalist's film is no substitute for actual reporting. The reality is that Barrett spent precious little time in the Ecuadorian rainforest – two weeks at most. He did not speak to the lawyers for the communities, let alone Donziger, for the book. He never attended even a day of the trial. Barrett speaks no Spanish, so a thorough review of the 200,000 plus Ecuadorian trial record was out of the question. Ultimately, the book is mostly taken from Chevron's legal briefs.

A revealing example of Barrett's pro-Chevron bias occurs in Chapter Two. He begins by describing an entire scene from the film Crude as if he were there. As evidence of his simple acquiescence to Chevron's arguments, Barrett uses Chevron's deceptively edited outtakes from the film to paint a sinister scene of Donziger bullying and pressuring a judge. Barrett's citation is as follows:

We're going down to have a little chat with the judge. This is something that you would never do in the United States. But in Ecuador this is how the game is played, it's dirty. We have to – occasionally – use pressure tactics to neutralize their corruption. And today is one of those examples.

Except the actual transcription is as follows:

We're going to confront the judge who we believe is paid by Texaco. We believe he is corrupt, and we're gonna confront him, ah, with – with our suspicions about his corruption and let him know what time it is. And, ah, you know, this is something that you would never do in the United States. I mean, this is something you would, I mean, this is just out of bounds, both in terms of judicial behavior, and what – what lawyers would do. But Ecuador, you know, there's almost no rules here. And this is how the game is played, it's dirty. And, you know, they're playing dirty, we're honest, they're dirty. They play dirty, we have to occasionally use, um, pressure tactics to neutralize their corruption. And today is one of those examples.

Barrett left out the bolded text above, changing the context and intent of what was said into its opposite. That's not reporting; that's hit job journalism.

That is not the only instance where Barrett obfuscates the facts, turning what are decidedly black and white issues into murky grey – another Chevron tactic. One of the company's trademark products, beside crude, is doubt. Doubt has long been the go-to tool of big business litigators to turn the tables on their adversaries by flipping logic and reason of disciplines like epidemiology on its head. The intentional manipulation of facts creates just enough second guessing of the dangers of chemicals and toxins to allow said guilty company off the hook.

This tactic was used by Chevron in the Ecuador case. What about the causation between sick communities and the waste pits they live on top of? Well, hydrocarbons aren't necessarily toxic, claims Chevron. According to Chevron's Manager of Global Issues and Policy, Silvia Garrigo in an interview with 60 Minutes:

"I have makeup on, and there's naturally occurring oil on my face. Doesn't mean that I'm going to get sick from it."

Interesting though, that when you enter a gasoline station in California there's a sign disclosing that your mere presence at the pump could expose you to carcinogens. But in Ecuador's Amazon, you can live on top of a Chevron waste pit and any causality link to carcinogens is questioned.

Barrett avoids the truly scandalous and criminal examples of Chevron's tactics to hide contamination during the Ecuador trial, like swapping toxic soil samples with clean ones, and avoiding sampling at depths at which Chevron knew contamination existed, at locations Chevron knew were still contaminated, and were downgradient from known contamination. You'd think that a book purportedly covering the largest environmental litigation in history would merit a real review of the evidence, much of which was provided by even the skewed soil and water samples taken by the company.

Other corrupt and illegal acts that were Chevron's standard practice during the Ecuador trial are glanced over or omitted by Barrett. This includes the company's successful cancellation of a judicial inspection of a major toxic site through collaboration with the Ecuadorian military to produce a phony security threat. Perhaps most audaciously, Barrett fails to adequately mention a sting operation where Chevron employees posed as remediation contractors in an attempt to entrap the presiding judge.

Barrett also overlooks all the arguments that render Chevron's fraud claims ridiculous. If the trial was marred by fraud, why hasn't Chevron filed an action to nullify the judgment under the fraud protection statute in Ecuadorian courts? Three layers of Ecuadorian courts – eight appellate judges – reviewed and upheld the $9 billion verdict, and threw out Chevron's claims of fraud. But for Barrett, apparently U.S. courts are the only legitimate court system in the world. Barrett lets Judge Kaplan off the hook for his colonial overreach in judging a country's legal system that he knows nothing about. Kaplan can't read the native language, nor did he read the trial record. On top of that, Barrett seems unconcerned that Chevron's star witness received some $300,000 in payments for his testimony, plus a new life for him and his family in the United States, thanks to a Chevron financed and supported asylum bid. Even Kaplan called it a corporate witness protection plan.

Not only does Barrett's bias show throughout the book, his extracurricular activities lay bare his leanings. On July 20, 2014, Barrett joined Chevron and its legal team from Gibson, Dunn, and Crutcher for a Congressional subcommittee hearing organized by Chevron lobbyists on Latin American democracy. Alongside a Chevron lawyer, and a representative from the American Enterprise Institute, Barrett played the role of expert on Latin America, lamenting Chevron's legal plight in the country jurisdiction of its choosing, without irony.

So what we're left with is a book that's a copy-paste job from Chevron's legal briefs and reads as if the case, and the plight of the affected communities, is over. Peter Maass, author of the book "Crude World: The Violent Twilight of Oil," reviewed Barrett's book for Outside Magazine, and concluded: "There are two sides to the story of the biggest environmental lawsuit ever, but a new book tells only one of them."

Parloff, Barrett, and Goldhaber are quick to claim that from the outset they had high hopes for the Ecuadorian villagers. They had hope that U.S. courts could be used to hold corporations accountable for human rights violations abroad. But given the overwhelming evidence against Chevron, we have to seriously question these claims. Two of the pillars of American business reporting, and a conservative legal magazine hoped that the Ecuadorian rainforest communities who procured the largest environmental judgment in history from the second largest U.S. oil company would prevail? That's doubtful. The reporters have held on to that story merely to give the appearance of objectivity and to reinforce their framework claiming Chevron as the true victim. Immediately after publishing a number of articles, their "journalist" buddies began chiming in. Thus, the pro-Chevron feedback loop was set in motion.

For example, after Barrett's book launched on Sept. 23, Joe Nocera, a columnist for The New York Times, wrote a piece about Barrett's account. Nocera unquestioningly sides with Barrett and Chevron, while failing to mention that his wife's law firm represented Chevron in a discovery matter directly related to the Ecuador litigation. Shouldn't a journalist cite such an obvious conflict of interest?

Then cue Debra Saunders, the "token conservative" columnist for the San Francisco Chronicle. Saunders writes an article the next day about Nocera's article about Barrett's book. Feeling dizzy?

Saunders ends her piece quoting Nocera, with an alleged quote from Donziger, excerpted from the movie Crude, and edited and used by Chevron during the RICO trial. The quote is this: "Facts do not exist. Facts are created." Sounds incriminating, right? Except Donziger goes on to say, "...and you talk to Texaco, because they create facts. Texaco creates facts. They create standards. … That's what I am saying. They create fiction."

This is how the Chevron media echo chamber continues to feed itself. A book repeats Chevron's flawed arguments during the RICO trial almost verbatim, which produces articles and reviews of the book, which then produces yet more articles about articles about the book – all recycling and reinforcing Chevron's false and misleading narrative. The great irony is that Nocera, Saunders, and Barrett and the others accuse Donziger of trying the case in the media, when in fact it's Chevron and its minions who continue to prop up the company's crumbling house of cards in the court of public opinion, because its legal case is meritless.

We all know that a good "David vs. Goliath" story sells. But what sells better is the 'Hero's fall from grace' frame that Chevron's defenders are pushing about Donziger. Except, the demonize Donziger narrative is not new. In fact, it's been part of Chevron's playbook long before the New York RICO trial began

Enter Sam Singer, from Chevron's PR firm Singer and Associates. Singer is not merely Chevron Apologist-in-Chief; he's a long time Bay Area PR hit man who prides himself on cleaning up the image of his corporate clients. He's like the "Wolf" in Pulp Fiction – the guy you call to clean up your mess, hide the bodies, or whatever other unmentionables are needed. A recent piece in SF Weekly, "Trust Me: Who Are you Gonna Believe, San Singer or Your Own Eyes?" exposes Singer and his tactics:

When your workspace is engulfed in flames; when your mistress threatens to reveal your illegitimate family; when your restaurant serves up E. coli burgers; when your employees inadvertently kill a young child; when a wild beast rampages through your place of business – you better call Sam Singer. "When things go bump in the night," assures Singer, "we are there."

"The truth, after all, isn't exactly Singer's milieu. His mission is to push ‘the facts as our clients see them,'" writes Joe Eskenazi for the Weekly. That's what Singer does for Chevron.

According to internal Chevron emails with Singer, the plan was to target Donziger from the get go. Singer's strategy was to paint Ecuador "as the next major threat to America" like Iran or a "Cuban missile crisis in the making" and Donziger as "the most powerful man in Ecuador, pulling the strings of an emerging banana republic." Indeed, another Chevron strategist in an internal memo to colleagues was more blunt, noting that the company's [long-term] strategy is to demonize Donziger."

But even Singer and Chevron's strategy was wearing thin after Donziger and the Ecuadorians proved more resilient that Chevron thought possible. A recent article in Rolling Stone was a turning point, finally putting the spotlight on Chevron's phony narrative and the vacuousness of its arguments for anyone willing to look past Chevron's talking points. Despite this, Parloff, Barrett, and Goldhaber have been quick to take up the slack.

In the meantime, Chevron was unhappy with the unfavorable coverage it continued to receive in Richmond, California, home to the company's largest and oft exploding refinery. Richmond's mayor traveled to Ecuador to tour Chevron's toxic legacy and saw firsthand the company's impact on the rainforest and human health. Since then, she has been a vocal critic of Chevron's disaster in Ecuador. Combined with coverage of a controversial $1 billion refinery expansion plan and Chevron dumping $1.6m into local elections, there was little positive traction for the company in the local press. What was Chevron to do? If you can't influence the media, become the media!

Thus, the Richmond Standard was born. A Chevron-funded daily, the Richmond Standard is an Orwellian extension of the corporate media. An LA Times piece by Michael Hiltzik titled, "A Chevron PR website pretends to be an objective news source," explains:

This is what the news business has come to in communities where economics have wiped out traditional local newspapers. Self-interested corporations have stepped into the vacuum. You'd be hard-pressed to find a case as flagrant as Richmond's.

As the Financial Times describes it:

The Richmond Standard is one of the more polished sites to emerge in the age of hyper-local digital news brands such as Patch and DNAinfo.com. That may be because it is run and funded by Chevron, the $240bn oil group which owns the Richmond refinery that in August 2012 caught fire, spewing plumes of black smoke over the city and sending more than 15,000 residents to hospital for medical help.

The only writer for the "paper" is an account executive for Singer and Associates, Mike Aldax. According to Aldax, "my function is to report the news you're not seeing in Richmond." Translation: pro-Chevron stories. Hiltzik reports:

Aldax says Chevron doesn't review or edit his stories, but it doesn't have to. It provides his paycheck, and even subconscious self-censorship can undermine news gathering – especially if one defines news as information its subject doesn't want the public to know.

According to Singer, the Standard has at least found some support. "The rappers...They love us!"

For Chevron and the Ecuador case, there's no need to bypass corporate media when you have Parloff, Goldhaber, and Barrett. As the company's prime cheerleaders, they give voice and credibility to Chevron's recycled claims that were rejected by Ecuadorian courts. Meanwhile, the voices of indigenous and farming communities, who continue to suffer on the ground in Ecuador, are largely drowned out in the U.S.. These three pro-business American reporters give cover to Chevron's board of directors whose oversight of the liability has been called out by its own shareholders. Parloff, Goldhaber, and Barrett help immunize CEO John Watson who, as Chief Architect for the Texaco acquisition, has let the Ecuador issue come to define the company, while the liability has ballooned into the billions. And they've wrongly lifted the spirits of Chevron's stockholders who are led to believe that the issue is over.

But here's the rub. Chevron never intended to file a RICO suit, nor did Watson ever think it would get this far. The company's strategy has always been to outlast and out-resource the Ecuadorian communities and their legal team. It was Judge Kaplan who, presented with edited outtakes from the movie Crude that Chevron now admits were not properly translated or did not include the full transcript, asked, "does RICO play here at all?" A U.S. federal judge suggested that Chevron ought to file RICO charges, and the company quickly obliged. Kaplan navigated Chevron and its legal team through the trial, and issued a ridiculous verdict ripe to be overruled.

Which is why, during the four years in the run up to and during the trial, Chevron has sought to eviscerate the plaintiffs, their legal counsel, their funders, NGOs, or anyone who has ever dared to support the communities. The company hoped to outlast Donziger and the plaintiffs in a resource and PR battle, because they know exactly how hard it is to win the case on the merits. Ironically, given the tremendous amount of resources and time Chevron has invested in its scorched earth strategy, the communities and their counsel are not only still alive, they are in a remarkably good position.

The seven-week bench trial that Kaplan presided over – and that Parloff, Goldhaber, and Barrett sat through – may have generated back slaps and high-fives from San Ramon to Midland, Texas. But it was never built to last. Which is why, at least according to the rumor mill, Chevron is looking for an exit strategy. The company likely hopes the Ecuadorian government will play a role in its hoped-for rescue.

With a panel from the Second Circuit Court of Appeals looming over the company, Watson has reason to be worried.. The last time the Second Circuit had a crack at Judge Kaplan, it vacated his preliminary injunction in the case almost immediately. It was also an embarrassing public depantsing of Gibson Dunn lawyer Randy Mastro, who was literally laughed out of court. Don't expect to see Randy making the oral arguments this time.

But before the Second Circuit hearing, another critical hearing is slated for December. In Canada, the country's Supreme Court will hear arguments on whether the Ecuadorian communities can indeed go after Chevron's massive assets as a way of enforcing their judgment. These are major, make-or-break hearings for Chevron. But you wouldn't know that by reading the work of Parloff, Barrett, or Goldhaber. These three gringos who have been guzzling Chevron's Kool-Aid for the last four years may very soon wake with a hangover of a lifetime.

Sunday, September 28, 2014

How Reporter Paul Barrett Got It Wrong on Chevron's Calamity in Ecuador

Reposted from The Chevron Pit

Chevron's $9.5 billion environmental liability in Ecuador, affirmed by eight separate appellate judges, has been haunting company CEO John Watson and his shareholders for years. In a new book on the litigation – one replete with factual errors and lacking even a single footnote – Businessweek reporter Paul Barrett largely adopts the myopically narrow perspective of the U.S. business community.

Barrett's analysis in the book, called Law of the Jungle, falls far short of a balanced assessment of the dispute even though it has one good chapter on the company's extensive contamination of Ecuador's rainforest. (For a summary of the overwhelming evidence against Chevron relied on by Ecuador's courts, see here.)

That's not suprising given Barrett's sympathies. He recently testified in favor of Chevron's litigation position before Congress. He also spent only ten days in Ecuador "researching" two decades of litigation. It is clear that he cribbed much of his material from Chevron's legal briefs. He also failed to convince a single lawyer involved in the litigation to grant him an on the record interview.

Barrett does not speak Spanish nor the languages of the affected indigenous groups. Not surprisingly, he talked to virtually nobody in the 80 or so rainforest communities devastated by the oil pollution.

Barrett clearly wants to cash in on the high-profile case and become the resident "expert" on the issues involved. But he does this by giving Chevron every benefit of the doubt. He also adopts almost wholesale the company's narrative that it was the victim of the indigenous groups and their lawyers.

Aside from its many factual errors – outlined in a "notice of defamation" letter cited below – the fundamental problem with Barrett's book is its obsessive focus on American human rights lawyer Steven Donziger rather than on Chevron's systematic toxic dumping and fraudulent remediation.

Chevron's top legal representative in Ecuador, Rodrigo Perez Pallares, admitted openly during the eight-year trial in Ecuador that the company deliberately and systematically discharged more than 15 billion gallons of bezene-laden toxic oil waste into the rainforest during roughly two decades of operations. It would be hard to find such a frank admission by a major American corporation of industral homicide on a mass scale. Multiple peer-reviewed health studies – largely ignored by Barrett – confirm dramatically high rates of cancer in the region where Chevron operated.

Yet Barrett suggests Chevron should not pay the $9.5 billion Ecuador court judgment even though it insisted the trial take place in that venue. In contrast, back in his home country, Barrett seems totally unbothered by BP's $46 billion liability for its far smaller and accidental spill in the Gulf of Mexico. (For an analysis of Chevron's stingy behavior in Ecuador compared to BP's large payouts in the U.S. for its Gulf spill, see here.)

Making indigenous persons invisible or treating them as second class citizens is the sort of colonial mentality that got Chevron in trouble in Ecuador. Barrett falls into the same trap. He continues Chevron's pattern of arrogance by conceding he never read the 220,000-page Ecuador evidentiary record. Nor did he attend a single day of the Ecuador trial from its start in 2003 to its finish in 2011. But that did not stop Barrett from issuing "reports" from the trial in his book by describing scenes from the documentary film Crude without citation in the text.

Even the book's title suggests Barrett runs too easily in the world of stereotypes. In his mind, it appears most Ecuadorians are little more than savages incapable of running their own affairs who are constantly being manipulated by gringos, be they oil companies or lawyers.

Barrett's overwrought focus on Donziger undermines the upside from his one decent chapter on Chevron's contamination. Yet even this chapter – where Barrett interviews Cofan indigenous leader Emergildo Criollo – serves as little more than a foil for the author's later assault on Donziger's integrity and his distortion of the scientific evidence.

Donziger was hardly alone in battling Chevron. But you would never know it from Barrett's account, where Ecuadorians simply disappear.

Donziger worked closely with lead lawyer Pablo Fajardo and a team of Ecuadorian scientists, lawyers, and community leaders whose names don't make it in to Barrett's book. Two of the local leaders – Fajardo and Luis Yanza – were recipients in San Francisco of the prestigious Goldman Environmental Prize and its $150,000 cash prize. The award, considered the “Nobel” of the environment, so angered Chevron that it took out full-page newspaper ads in the San Francisco Chronicle accusing the Goldman jury of being duped by the villagers.

Consider a few more of the shortcomings in Barrett's account:

  • There is nothing in the book about the scientific evidence against Chevron in its two internal environmental audits that confirm the company's extensive contamination at 158 of 163 well sites inspected. These reports – both paid for by Texaco, Chevron's predecessor company – are readily available in the trial record but were ignored by Barrett.
  • There is nothing about how Chevron scientists John Conner and Sarah McMillan designed and executed a plan to cheat Ecuador's courts by secretly pre-inspecting contaminated sites to identify “clean” sampling areas. When the judge showed up later for the official judicial inspection, the company would act like it was engaging in random sampling. In reality, it was lifting soil from places it knew would turn up clean.
  • Barrett also ignores the entirely inappropriate – it not outright corrupt – attempts by Chevron lawyers Ricardo Reis Veiga and Jaime Varela to use the U.S. embassy Quito to float various bribe offers to Ecuador's government to coax it to illegally kill off the case. This has been confirmed by wikileaks cables and Chevron's own internal documents. (Reis Veiga was later indicted by Ecuador's government for fraud on a sham remediation.)
  • Barrett also ignores the appeal by the Ecuadorians and Donziger of the deeply flawed RICO decision by U.S. Judge Lewis A. Kaplan that purports to overturn a unanimous decision by Ecuador's Supreme Court affirming Chevron's liability. (Donziger's brief appealing that decision, which shreds Chevron's fallacious factual arguments, can be seen here).
  • Barrett is silent on the fact that 43 prominent U.S. civil society organizations have blasted Chevron for abusing the racketeering statute to target the human rights advocates defending the Ecuadorian communities. He tries to leave the false impression that Donziger and his colleagues lack support, when in fact support for the case and its lawyers is strong and growing stronger.
  • Finally, Barrett appears to have a myopically provincial perspective. He barely acknowledges that the final decision on recovery will be made not in the U.S., but by courts in various enforcement jurisdictions (including Canada, Brazil and Argentina) that are being asked to seize Chevron's assets to pay for the court-mandated clean up. There is no evidence Barrett traveled to those countries or read the relevant legal papers.
  • Barrett also ignores or mischaracterizes the intense pressure Chevron's management is under from its own shareholders to settle the Ecuador case, given the huge risk of business disruption around the world. Chevron CEO Watson has been strongly rebuked over the case by a series of shareholder resolutions.

Boiled to its essence, Barrett's book is a corporate perspective on a successful American plaintiff's lawyer who with his Ecuadorian colleagues pioneered a new model of funding for a mass-scale human rights litigation. The fact the lawyers had the trial judgment affirmed unanimously by two separate appellate courts in Ecuador – including by the country's highest court – only seems to infuriate Barrett all the more.

Even worse for Barrett is that Chevron's 60 law firms and 2,000 legal personnel have been unable to halt the march toward recovery. Barrett's genetic code as a longtime business reporter does not account for even the possibility that indigenous groups could amass scientific evidence and use it to humble America's third largest corporation in court.

We might add that while BP already paid out billions in the U.S., Chevron continues to seek a taxpayer-funded bailout of its clean-up costs by suing Ecuador's government in international arbitration. Imagine the outcry from U.S. citizens if BP did the same to the Obama Administration.

Again, you won't hear this perspective from Barrett.

(For more background on the flaws in Barrett's book, see this critique and Donziger's “notice of defamation” letter to the author and his publisher. For balanced reporting on the case, we recommend this recent article by Alexander Zaitchik in Rolling Stone, this 2007 article about Fajardo by William Langeweische in Vanity Fair, or this segment about Chevron's deliberate toxic dumping in Ecuador on 60 Minutes. For the human impact, see this compelling photo essay by Lou Dematteis in The Huffington Post documenting Chevron's cancer epidemic in the affected area.)