Friday, January 23, 2015

In Davos, Chevron Crowned Worst Corporation of the Year for Ecuador Disaster

Reposted from The Chevron Pit

Chevron's battered image over its Ecuador disaster has taken another big hit – this time in Davos in front of the world's political and policy elite attending the World Economic Forum. That's where Chevron CEO John Watson was crowned today with the humiliating Public Eye award given annually to the world's worst corporation.

Actually, Chevron won the Public Eye award way back in 2006 for dumping billions of gallons of toxic waste into Amazon waterways in Ecuador, decimating five indigenous groups and causing a severe outbreak of cancer and other oil-related diseases. It is a powerful illustration of Chevron's warped culture that almost ten years later the same company wins the same award for the same atrocious conduct.

This year, Public Eye upped the ante by giving Chevron a "lifetime achievement" honor for its continued refusal to clean up its toxic pollution in the South American nation despire various court orders that it do so. (Chevron operated in Ecuador from 1964 to 1992 under the Texaco brand.)

According to a press release published today by the American environmental group Amazon Watch:

Prominent Swiss environmental organizations have crowned Chevron with an embarrassing "lifetime achievement" award for dumping billions of gallons of toxic waste into streams and rivers in Ecuador's rainforest relied on by local indigenous communities for their water.

Several independent health evaluations submitted to courts have confirmed high rates of childhood leukemia and other cancers in the area where Chevron operated. More than 2,000 people are estimated to have died from cancer with another 10,000 currently at risk of contracting cancer because of continued exposure to carcinogenic chemicals in surface waters, groundwater, food, and in the air.

"Chevron is a recidivist toxic polluter that deserves condemnation from the world community for its horrific acts against the vulnerable indigenous peoples of Ecuador," said Paul Paz y Mino, of the U.S.-based environmental and human rights group Amazon Watch.

The full copy of the Amazon Watch press release can be read here.

Chevron beat out several competitors for what is surely seen inside corporate headquarters as an unwanted accolade. Those challenging it included Goldman Sachs, Dow Chemical, and Gazprom. Open voting took place on the internet.

In a sign of the growing support around the world for the indigenous communities in Ecuador, Chevron received more than twice as many votes as the second-place finisher. Just a few months ago, citizens from 20 countries on five continents organized a day of protest against the oil giant's failure to adhere to basic environmental standards in the communities where it operates.

We of course are all too familiar with Chevron's questionable conduct in destroying a large swath of Ecuador's Amazon. The company not only deliberately dumped billions of gallons of toxic waste into the forest, it has fought for years to evade paying a court-ordered $9.5 billion judgment that it clean up its mess. Locals call the disaster the Amazon Chernobyl.

As Amazon Watch pointed out in its press release, Chevron has engaged in what is likely the most well-funded corporate retaliation campaign in history. It has admitted using at least 60 law firms and 2,000 lawyers to attack and try to silence those who have held it accountable.

Those targeted by Chevron with harrassing lawsuits include community leaders, their lawyers and financial supporters, environmental activists, bloggers who expose Chevron's bad acts, and even ]Chevron's own shareholders who have questioned company management over its strategy.

In a further sign of Watson's eroding credibility, Chevron's management team doesn't seem to have gotten much in return for spending large wads of shareholder cash to go after its perceived enemies.

Nine separate judges in Chevron's chosen forum of Ecuador reviewed the evidence and affirmed the company's liability. That was after top Chevron executive Rodrigo Perez Pallares admitted during trial that the company dumped billions of gallons of benzene-laden toxic waste into streams and rivers.

There's also the little problem for Chevron of the 105 technical expert reports submitted to the court that demonstrate extensive toxic contamination at 100% of the company's former well sites. Not to mention the additional problem of the videotapes of Chevron's technical workers secretly pre-inspecting waste sites to try to figure out ways to hide the contamination from the court.

As Amazon Watch underscored, Chevron fought for years to move the lawsuit from U.S. federal court to Ecuador where it though it could engineer a quick dismissal. The company even worked with U.S. embassy officials in Quito to craft a package of "debt relief" for Ecuador's President with the hope that he would quash the legal claims of the country's citizens.

When that plot failed, the company simply stripped its assets from the country and high-tailed it back to the United States.

Again, from Amazon Watch:

When the evidence against it mounted in the ensuing trial in Ecuador, Chevron stripped its assets from Ecuador and then went back on its word and began to attack the very courts it had previously praised. Chevron also returned to the same U.S. court where it blocked the original lawsuit and filed a civil racketeering case against indigenous leaders and their lawyers.

Chevron's sale of its assets in Ecuador forced the communities to try to seize company assets in jurisdictions such as Canada to force it to comply with the Ecuador court order. But Chevron is now arguing its assets in Canada should be immunized from judgment because they are held in wholly-owned subsidiaries, even though 100% of the profits from those subsidiaries flow to Chevron shareholders.

By engaging in a jurisdictional shell game with courts around the world, Chevron is accelerating the death and suffering of untold numbers of people in Ecuador due its shoddy operational practices and refusal to abide by court orders. Judges must ensure that these Chevron games stop once and for all.

Congratulations to the Swiss environmental organizations for their decision. We cannot think of a more deserving recipient than Chevron for Public Eye's award.

(For more background on Chevron's human rights violations in Ecuador, see this summary of the evidence, this article in Rolling Stone magazine, and this video.)

Wednesday, January 21, 2015

Courts Deep-Six Details of Chevron's Relationship to Shady Characters in Cover-Up of Ecuador Environmental Disaster

Reposted from The Huffington Post

After more than two decades of litigation, Chevron continues to protect a series of shady characters who have been instrumental in trying to sabotage a legal case brought by indigenous groups over environmental damage in Ecuador's rainforest.

No wonder. In the case, Chevron admitted that its predecessor Texaco dumped billions of gallons of toxic oil waste into rivers and streams relied on by local indigenous groups for their drinking water, bathing, and fishing. Several peer-reviewed studies have documented dramatically higher rates of cancer in the region ravaged by the oil company.

Chevron wants the case to disappear and has paid big bucks to those willing to try to make it happen.

For example:

Pressing questions about these individuals and the issues associated with them remain unanswered largely because U.S. courts and a corporate arbitration panel haven't pushed Chevron to address them. That's too bad given that the answers obviously could be critical to the various ongoing legal proceedings that are part of Chevron's avowed "lifetime of litigation" strategy.

Among those proceedings:

Enforcement actions where the villagers are trying to collect Chevron assets in Canada and Brazil to force compliance with their winning a $9.5 billion judgment that the oil company - in an illustration of its arrogance - now simply refuses to pay, even though it insisted the trial take place in Ecuador.

An extraordinarily important appeal by the villagers and their counsel before a New York federal appellate court. The villagers are seeking to reverse a non-jury decision by a controversial U.S. trial judge that condemned Ecuador's entire judicial system as unworthy of respect based largely on Chevron's corrupt evidence.

Here are just a few of the questions that, if answered, would tell us a great deal more about the lengths to which Chevron has gone to evade accountability for its toxic dumping in Ecuador:

  • Is Chevron renegotiating its two-year, $2 million contract with the self-admitted corrupt Ecuador judge (Alberto Guerra) whose testimony that a "bribe" occurred has unraveled completely?
  • What is in a 2014 expert forensic report that appears to prove that Guerra lied and that Ecuador Judge Nicholas Zambrano testified truthfully when he said he and he alone wrote the judgment? Why are Chevron and a group of corporate arbitration lawyers so scared to release the report?
  • Is Chevron still paying Diego Borja, an Ecuadorian, who worked for the company during the trial and admitted on tape that he had evidence that would prove Chevron's guilt?
  • Is Chevron still employing or paying Borja's wife, Sara Portilla? At one point, Chevron paid her 5,000 per month even though Borja admitted in a deposition he didn't know what his own wife did for the oil giant. (See pages 119-121.)
  • Where is Wayne Hansen, the American drug felon caught lying to and secretly videotaping an Ecuador judge for Chevron? Hansen fled the country with Chevron's apparent assistance to avoid a subpoena. He was last seen living in a beach town in Peru. See this Courthouse News article.

Let's take a closer look at each of these individuals for an explanation of why they are important to the company's campaign to sabotage the legal claims of the indigenous communities that held it accountable.


Alberto Guerra

Guerra is Chevron's star witness. He is also undeniably corrupt. Even Guerra admits it, as this legal brief explains.

Chevron needs to disclose all the details of the package of cash and benefits it has paid to Guerra and his family in exchange for the corrupt testimony. Chevron moved his family and his son's family to the U.S., paying for all of their daily expenses. Chevron should disclose whether it's renegotiating the two-year, $2 million contract (signed in 2013) with Guerra. Company executives may be forced eventually to reveal how much they have paid Guerra in any asset seizure trial, but that is not likely to occur until late 2015 or 2016.

Before testifying for Chevron in U.S. court in October 2014, Guerra admitted to having taken bribes in 14 unrelated court cases in Ecuador. He also changed his "bribery" story about the Ecuador judgment at least three times during monetary negotiations with Chevron as new forensic evidence emerged to disprove his prior claims. Each time Guerra changed his story, he negotiated more money from Chevron. His personal diary and emails - which he said corroborated his testimony - mysteriously went missing.

U.S. Judge Lewis Kaplan allowed Guerra's testimony to blight New York's federal courthouse. But Judge Kaplan did not require Chevron to answer any questions about the tainted relationship, including details of a recording between Guerra and a Chevron attorney who paid him $20,000 out of a suitcase to begin the negotiations for his testimony. It is a violation of the ethical rules to allow a fact witness to be paid in this manner.

Corporate Arbitration Lawyers

J. Christopher Racich is a forensic expert hired by the Government of Ecuador to review the evidence regarding the oil giant's erroneous allegation that someone other than the Ecuador judge wrote the judgment. It appears from legal filings in a related international arbitration claim that this expert's findings disprove Chevron's allegations. See pages 1 & 32-40.

However, Chevron and the corporate arbitration lawyers hearing the case have blocked the release of the actual report.

In 2009, Chevron filed an arbitration claim against the Government of Ecuador to try to shift its clean-up liability to Ecuadorian taxpayers. The arbitration panel's proceedings are completely private, a fact that is most disturbing to the Ecuadorians, as well as to Public Citizen in the U.S., a good government advocacy group that has been urging for reform of corporate arbitration because arbitration generally favors corporations versus the governments sued.

The villagers whose claims are supposedly being "re-litigated" by the panel (which consists of three private lawyers who have been paid millions in fees by the parties) have no ability to pry information or legal documents from the panel. However, Chevron and/or the corporate arbitration lawyers could easily agree to the report's release. But both have a hard time exhibiting such candor.

The attorneys for Ecuador's government have claimed publicly that Chevron's charge "has now been shown to be false" by the contents of this critical expert report that is still being hidden from the public and from other courts.


Diego Borja

Chevron also should address questions about its exorbitant payments to Diego Borja and his wife Sara Portilla. Both worked for Chevron in Ecuador in various capacities during the eight-year trial there.

A 2010 discovery motion submitted by the villagers seeking the sordid details about Chevron's relationship with Borja and Portilla is pending before a California federal court. Curiously, more than three years after oral argument on the motion,the court has yet to rule. There is no conceivable explanation for such a long delay.

Borja has admitted on tape to having evidence of Chevron's corruption, its creation of dummy laboratories in Ecuador to dupe the court, and other malfeasance that he said would result in Chevron losing the case if released publicly. To deceive the court, he also admitted that on behalf of Chevron he switched out toxic soil samples from the company's former well sites and exchanged them for clean ones during the trial.

Portilla submitted the fake samples to the Ecuador court as an "employee" of what should have been an independent lab but was in fact an entity created and controlled by Chevron.

In mid-2009, Chevron negotiated with Borja a similar payout as the one it later negotiated with the crooked judge Guerra. Earlier that year, Chevron met with Borja and Hansen (the American drug dealer who was working with Borja in Ecuador) about secretly filming the presiding Ecuador judge. The two surreptitiously taped the trial judge with a spy watch and pen during a meeting arranged under false pretenses. Chevron later released the videos to the news media, claiming they showed the judge agreeing to take bribes.

In return for the videotapes, Chevron paid to relocate the Borja family to Houston. The company paid their income taxes, fees for the lawyer who obtained them political asylum under false pretenses, and covering their housing and living costs. By September 2010, Borja and his wife had been paid $2 million. Chevron should disclose how much more they have been paid as it absolutely bears on their credibility and that of the company.

Sara Portilla

Part of the $2 million income to the Borja family was a $5,000 monthly "retainer" for Portilla. In a deposition, Borja could not describe what his wife Portilla was doing for Chevron to justify her $5,000 retainer. See here and here.

What we do know is that Portilla, along with her husband Borja, were key to Chevron's efforts to falsify evidence. This press release reveals more about how Chevron manipulated evidence.

This "chain of custody" record submitted to the Ecuador court dated March 15, 2006, clearly shows that Borja turned over contamination samples to Portilla, a representative of Severn Trent Labs, the U.S. laboratory Chevron used to test contamination samples. Portilla's title is listed as Project Manager and her contact information is listed as a Severn Trent Labs company email address.

This handoff to Portilla, who also worked for Chevron in Ecuador at the same time, compromises the "chain of custody" of the soil and water samples, providing one piece of evidence that Chevron's labs were not independent.

Other evidence also points to the lack of independence of Chevron's labs. See here.


Wayne Hansen

No one knows the whereabouts of the mysterious Wayne Hansen, the convicted American felon and drug dealer who pretended to be a "businessman" interested in cleaning up the contamination. He partnered with Borja to secretly videotape the Ecuador judge under false pretenses.

Last we heard he had fled to Peru months after the New York Times blew up the scheme by reporting that Hansen was a convicted felon and con artist. Also, after closer examination of the videotapes, several news outlets wrote that the videos did not show any bribe, despite Chevron's incendiary charges to the contrary. See here.

The little we do know is from a few emails obtained during court discovery. Chevron's investigators tracked down Hansen in a Los Angeles hospital after he had sent them an email complaining that Borja, his partner, had been paid handsomely for his espionage efforts but he, Hansen, had not. See this Courthouse News story.

The emails link Hansen to a private investigative firm hired by Chevron. Hansen sent the first message, bearing the subject line "dooped ?????", weeks before Chevron released the videos in late August 2009.

"I have been waiting for your call, you said you would call me .... It seems that the oil co has cut a deal with Diego [Borja] and I have not heard a word from anyone but Diego. What am I to think? ...

"As I can see the window of life coming to a close I will not hold back. I need to hear from a real player with a plan for Wayne [Hansen]. If I do not hear from the oil co. by July 17, 09 I must think I have been left out and I am to do what and think what ... I have been duped."

In late 2010, about two months after the Government of Ecuador obtained a subpoena for Hansen, he sent a similarly enigmatic email to the Mason Group, a private investigative firm based in the San Francisco area.

"I am in a nice place where you guys from SF might like to visit or just hang it up and live like a king for 1,200 a month. ... The little beach town is Moncora in northern Peru and the waves are the best I have ever seen. ... come on down. [L]ots of fish to cook up. ... Best Regards and GOD Bless you Wayne Hansen." [Ellipses and brackets in original.]

None of the questions about Borja, Portilla and Hansen's relationship to Chevron have been answered in part because California Federal Magistrate Judge Nathanial Cousins has yet to rule on a 2010 discovery motion. We are not sure what Judge Cousins is up to, but he did take the time to attend a party with Chevron's and Borja's attorneys the night before the motion hearing. We know this because he joked with them about the party as the hearing began.

From the court transcript:

Judge Cousins: "I regret to inform that there are no Mai Tais or ice cream left over from Judge Chen's party last night, but we'll do our best to accommodate you."

Chevron-paid attorney: "You made it here, your Honor."

Judge Cousins: "Yes. Yes, despite long odds. We've got two motions pending, as well as some follow-up on the protocol that we discussed last week, by telephone .... I suggest we start with that. So if we could, start there. And everyone speak slowly, because we are still recovering from yesterday."

Partying aside, all of our questions could be answered if U.S. courts and the corporate arbitration panel would force Chevron to turn over documents, as Judge Kaplan forced the Ecuadorians and their lawyers to do four years ago in the company's retaliatory racketeering case. Judge Kaplan even ordered an Ecuadorian to immediately turn over his laptop when he admitted to having one in his possession during the U.S. trial. The laptop produced no evidence, only photographs of the man's children.

It did, however, show the power of a single corporation to get what it wants from the federal judiciary.

Apparently, helping impoverished villagers who have been decimated by an American oil company in faraway lands is not a priority for the federal judiciary in the world's greatest democracy.

Monday, January 12, 2015

In Letter to Obama, Congressman Described Chevron's Degradation in Ecuador

Reposted from The Chevron Pit

In the extraordinary history of the campaign to hold Chevron accountable for despoiling Ecuador's rainforest, numerous outsiders have traveled to the affected area to bear witness. Few have been more eloquent upon return than Rep. James McGovern of Massachusetts.

That's a good thing given that Rep. McGovern remains the only elected member of Congress ever to visit an area that locals call the Amazon Chernobyl.

A longtime champion of human rights, Rep. McGovern traveled to Ecuador in 2008 at the invitation of the affected communities. That was just days after President Obama was elected to his first term. After years of stonewalling by Chevron, it is worth revisiting how the Congressman described what he saw at the time.

Here is an excerpt from a letter from Rep. McGovern to President-elect Obama sent two weeks after the presidential election. It describes the impacts of Chevron's contamination and seeks White House help in providing technical assistance to those affected:

I just returned from a trip to Ecuador.  I witnessed firsthand the terrible humanitarian and environmental crisis that has resulted from the decades-long failure to properly clean the contamination left by oil drilling and production. Specifically, the sites I visited were those that were under the control of Texaco, now Chevron. As an American citizen, the degradation and contamination left behind by this U.S. company in a poor part of the world made me angry and ashamed.

I visited "oil pits" that were poorly constructed; poorly remediated; or remediated not at all. This has left a toxic legacy for poor campesinos and indigenous peoples. I also saw the infrastructure Texaco/Chevron created that allowed for the wholesale dumping of formation water and other highly toxic materials directly into the Amazon and its waters.

The drinking water for thousands of poor people is horribly unfit – even deadly. Children are drinking and bathing in water that reeks of oil. In one village, San Carlos, I couldn't come across a family that hadn't been touched by cancer. Mothers brought their children to show me the terrible rashes and sores that covered their bodies. At an oil well site known as Yuca-4, I talked with a farmer who lost many head of cattle because of the polluted water near the site and its pits – robbing his family of what little food and assets they had.

The full letter from Rep. McGovern can be read here.

As far as we know, President Obama did not respond to the request for assistance. As a newly-elected Senator in 2006, President Obama did intervene along with Sen. Patrick Leahy to protect the villagers when Chevron tried to lobby the Bush Administration to quash their legal claims.

Chevron executive Rodrigo Perez Pallares admitted during an eight-year trial in Ecuador that the company discharged billions of toxic waste water into rivers and streams relied on by local communities for drinking water, fishing, and bathing. When Chevron left Ecuador in 1992, it abandoned roughly 1,000 open-air toxic waste pits filled with oil sludge that continue to foul groundwater and soils.

What Chevron did in Ecuador was not an accidential disaster like BP's 2010 spill in the Gulf of Mexico. It was a premeditated act of dumping-for-profit that has posioned the ecosystem for decades. The aftershocks are still reverberating across the forest in devastating fashion.

Cancer rates in the local communities have skyrocketed. One scientist predicts at least 10,000 additional cases of cancer in the coming decades even with a comprehensive clean-up. For photos and the stories of some of the victims, see this essay in the Huffington Post.

In the years since Rep. McGovern's visit, Chevron CEO John Watson has tried to run and hide. He helped to strip company assets from Ecuador as the scientific evidence of Chevron's misconduct mounted. Watson also has spent an estimated $2 billion to pay at least 60 law firms and 2,000 lawyers to obstruct a $9.5 billion court judgment ordering a clean-up. Chevron lawyers have promised the villagers a "lifetime of litigation" if they persist.

Eight appellate judges in Ecuador – including all five justices of Ecuador's Supreme Court to hear the matter – have affirmed the finding of liability against Chevron. Watson ignores it all while Chevron uses its big bucks to play hokey pokey with courts around the world.

Unlike BP, Chevron has not paid even one dollar directly to the people it harmed. Nor will it talk to them about a resolution. For background on Chevron's jurisdictional shell game to evade the Ecuador judgment, see this recent blog.

Unlike the rest of us, Chevron apparently believes it is above the law and therefore can dump its trash for free.

As we enter yet another year of Chevron's stonewalling, we salute Rep. McGovern for reminding the world of the truth. We also again demand that judges stand up to Chevron's shell game and ensure a final resolution of the claims of the affected communities.

Thursday, December 18, 2014

Chevron's 12-Step Program to Obtain Impunity for Its Crimes and Abuses in Ecuador

Reposted from The Chevron Pit

Why has Chevron still not paid up for its destruction of Ecuador's ecosytem after 22 years of litigation?

And why has Chevron still not paid a dollar directly to those affected by its pollution in Ecuador when BP voluntarily put up $20 billion to compensate victims within weeks of its much less impactful Gulf oil spill in the United States?

It is undisputed that Chevron deliberately dumped billions of gallons of toxic waste into the Amazon rainforest when the company (under the Texaco brand) operated in Ecuador from 1964 to 1992. Three layers of courts in Ecuador have confirmed that the oil gaint used substandard practices that decimated indigenous groups and caused health problems that have killed, or threaten to kill, thousands.

(For a summary of the overwhelming evidence against Chevron, see here.)

After an arduous eight-year trial, in 2011 the villagers finally won a judgment in Ecuador ordering the company to pay $9.5 billion to restore the environment and to provide clean water and appropriate medical care. Ecuador is where Chevron insisted the trial held and where the company accepted jurisdiction. The amount of the final judgment is modest compared to BP's estimated liability in the U.S., which has now grown to an estimated $50 billion.

We have tried to understand how Chevron has been able to snub its nose at the court judgment with so few consequences.

It certainly has much to do with how Chevron uses its vast wealth to pay hordes of lawyers from 60 different firms to tie up the villagers in courts stretching across countries and continents. Chevron's annual revenues are four times greater than Ecuador's GDP. Chevron CEO John Watson obviously calculates that it is cheaper to use lawyers to delay justice than to remediate the disaster.

There is also the larger threat to Chevron's business model. Ecuador is hardly the only country where Chevron faces significant liability for causing environmental damage in the communities where it operates. The last thing Watson wants is for other indigenous and farmer communities to get the dangerous idea that they can pursue their own legal claims against the company.

More interesting is why judges around the world can't seem to put a stop to Chevron's abusive strategy. Maybe the world needs a new global court to resolve civil disputes so powerful companies can't play national court systems against each other, as Chevron has done so effectively.

Whatever the solution, the system obviously is not working when the claims of vulnerable human rights victims cannot be resolved after an eternity of effort and untold suffering.

Here's our description of Chevron's 12-step program for impunity stretching back to the launching of the case in 1993:

1) Ecuadorian villagers sue Texaco in New York federal court in 1993 seeking a clean-up of the remediation and compensation for personal injuries. Texaco claims it should not be held liable because it operated in Ecuador via a wholly-owned fourth-tier subsidiary called Texpet.

2) Texaco and then Chevron (which bought Texaco in 2001) plead with a U.S. judge for nine years to move the case to Ecuador. The company files 14 affidavits praising Ecuador's judicial system and expressly agrees to jurisdiction there. The case moves to Ecuador.

3) On the first day of trial in Ecuador in 2003, Chevron goes back on its promise and claims the Ecuador court has no jurisdiction. Again, the company argues that it cannot be held liable because it operated via a wholly-owned fourth-tier subsidiary. The court rejects Chevron's argument.

4) When the trial evidence against Chevron mounts, the company sells its service stations in Ecuador and strips its remaining assets from the country. It vows never to pay any judgment and begins to threaten judges with jail time if they do not rule in its favor.

5) Chevron openly mocks the rule of law in Ecuador. Company lawyer Sylvia Garrigo tells 60 Minutes: "We don't want to be in any court, period." A Chevron lobbyist tells Newsweek: "We can't let little countries screw around with big companies like this." The company promises the villagers "a lifetime of litigation" if they persist in pursuing their claims.

6) Faced with the prospect of being held accountable in Ecuador, Chevron retaliates by suing all of the villagers and their lawyers for "fraud" in the same New York court where the company had blocked the original lawsuit in 1993. Chevron convinces a controversial (and very biased) trial judge to block the villagers from enforcing their judgment in the U.S. That decision is under appeal.

7) Subsequent to the filing of the retaliatory New York lawsuit, two appellate courts in Ecuador (including the country's highest court) unanimously affirm the judgment against Chevron. No fewer than eight appellate judges in Ecuador reject Chevron's claims of fraud.

8) Left with few options in their own courts, the Ecuadorian villagers are forced to file new collection lawsuits to seize Chevron assets in Canada, Brazil and Argentina. Chevron tries to defend these actions by seeking to have them dismissed on various technical grounds.

9) To fight the Argentina collection action, Chevron resorts to blackmail. The company successfully conditions a multi-billion dollar investment on the dismissal of the lawsuit. Chevron CEO John Watson visits Argentina and meets with President Cristina Fernandez de Kirchner to finalize the deal.

10) In Canada, Chevron claims its assets should be off-limits to the villagers because they are held by a wholly-owned Canadian subsidiary, Chevron Canada. While that issue is being litigated, the villagers cannot access Chevron's funds. Almost three more years pass.

11) Separately, Chevron sues Ecuador's government before a private arbitration panel seeking a taxpayer-funded bailout (by Ecuadorian citizens) of its pollution liability. By rule, the villagers are not allowed to appear to defend themselves. That litigation has been ongoing for five years with no end in sight while the three private arbitrators are making millions of dollars each in fees.

12) Chevron tries to cut off funding for the litigation by suing two financial supporters of the villagers in Gibraltar. Chevron is asking the court to issue rulings on the very same factual issues that already have been litigated and resolved by three layers of courts in Ecuador. The company also sues five lawyers and dozens of supporters of the villagers in an attempt to try to drive them away from the case.

Let's summarize some of the results of Chevron's 12-step "lifetime of litigation" strategy.

In Ecuador, there's virtually no Chevron assets to collect because the company sold them off anticipating it would lose the lawsuit.

In Canada, where there are $15 billion in Chevron assets, the company claims it is immunized because those assets are held by a wholly-owned subsidiary that Chevron controls completely.

In the U.S., a trial judge who refused to even read the evidentiary record from the trial in Ecuador has ruled that Chevron's assets are completely off-limits to the villagers.

In Gibraltar, Chevron has effectively tied up the funders of the lawsuit in personal litigation to distract their attention from enforcing the judgment against Chevron's assets.

Despite these Chevron-made obstacles, the oil company still faces a substantial risk that it will be forced to pay the judgment in full. Chevron is feeling sufficient pressure such that its representatives recently floated the idea of a three-party settlement that would include the government. But is is unclear if at this late stage a settlement would even be desirable for the communities.

As we have explained, the U.S. judgment is likely to be reversed on appeal in the coming months. That would open up the U.S. to enforcement actions.

In Canada, justices on the country's high court seem ready to order Chevron to stand trial to determine the validity of the Ecuadorian judgment. If a Canadian court recognizes the judgment, the assets of Chevron's subsidiary in Canada and those in other countries will be in play for potential seizure.

Chevron also faces increased global business risk stemming from its failure to abide by the law in Ecuador. There is a huge political backlash developing against the company in Latin America. Some details are in this article by a U.S. legal advisor to the Ecuadorians, Steven Donziger.

Chevron's strategy is also enormously expensive and has provoked regular challenges of CEO Watson from influential company shareholders. To defend against the pollution claims, Chevron has used at least 60 law firms, 2,000 lawyers, six public relations firms, and ten private investigations firms.

We estimate Chevron has spent at least $2 billion to try to grind down the villagers and their supporters. The company has paid at least $15 million to Kroll, the world's largest private spook company. Kroll admitted to running an espionage and intimidation operation against the lawyers for the villagers. It also admitted that it prepared at least 20 reports on Donziger's private life for Chevron's consumption.

Bottom line: Chevron's litigation abuse needs to stop. Courts around the world need to stand up to Chevron's harassment model and prevent it from litigating the same issues again and again.

The stakes are far greater than the outcome of this particular case. Chevron's blocking plan has profoundly negative implications for human rights victims and rule of law advocates everywhere.

Tuesday, December 16, 2014

Canada's Supreme Court Poised to Force Chevron to Stand Trial Over $9.5 Billion Judgment

Chevron Lawyer Clark Hunter Poses Dare to Justices: "Fairness" Should Have Nothing to Do with It

Reposted from The Chevron Pit

Chevron's brazen plan to inflict a "lifetime of litigation" on the indigenous communities it poisoned in Ecuador's Amazon continues to grind its way through courts around the world. We are now in the third decade of litigation since the original lawsuit was filed in 1993 in New York against Chevron's predecessor company Texaco.

The latest stop in Chevron's global road show of evasion over the Amazon pollution in Ecuador occurred last week in Canada's Supreme Court. On a snowy day in Ottawa, Chevron's small army of Canadian lawyers put the dare to seven respected justices to stop the company's abusive "lifetime of litigation" strategy as it continues to block the villagers from having their claims resolved.

Chevron might have met its match in Canada. The country is known for having an outstanding judicial system that is more than capable of standing up to Chevron's game of musical courts that has spread across countries and continents.

The seven justices who heard almost three hours of argument seem ready to order Chevron into a trial that could determine whether it pays the entirety of the Ecuador judgment. Unlike in Ecuador – where Chevron stripped its assets in anticipation of losing the lawsuit – the company maintains substantial holdings in Canada via a wholly-owned subsidiary. These holdings could fully cover the company's obligations in Ecuador and result in a comprehensive clean-up of the ancestral lands of the indigenous groups.

The specific issue before the Supreme Court of Canada is whether the Ecuadorian villagers should be forced to overcome a new jurisdictional hurdle invented by Chevron that appears to have no precedent in the law. As far as we can tell, never have courts in either Canada or the U.S. (or in any other country) required the holder of a foreign judgment pursuing a scofflaw debtor like Chevron to prove jurisdiction for a second time after jurisdiction already was established where the underlying matter was heard. That's the new barrier Chevron is asking the justices to erect.

In fact, Chevron voluntarily accepted jurisdiction in Ecuador. It had eight years to defend itself in the country and it did so mightily. It often inundated the court with frivolous motions and threatened judges with jail if they failed to rule in the company's favor. It submitted dozens of evidentiary reports and hundreds of motions challenging court rulings. Chevron lost on the merits based on 105 expert evidentiary reports and 220,000 pages of trial evidence.

An intermediate Ecuadorian appellate court unanimously affirmed the judgment after a de novo review of the trial record. Ecuador's highest court, the National Court of Justice, unanimously affirmed the de novo decision. In all, eight different appellate judges in Ecuador rejected Chevron's complaints of an unfair trial and confirmed the validity of the overwhelming evidence against the oil company.

If Chevron's proposed jurisdictional rule is adopted, it could severely hamper if not quash the ability of the indigenous communities to enforce their judgment in Canada. As a general matter, Chevron appears to believe that judges should erect new barriers to justice whenever the existing ones don't seem to work well enough to immunize it from its rampant misconduct in Ecuador. (For detailed background on that misconduct, see this extraordinary affidavit by Ecuadorian lawyer Juan Pablo Saenz.)

(For more on Chevron's "lifetime of litigation" strategy as applied to Canada, see this press release and this background document.)

The Ecuador judgment was obtained only after Chevron tried to delay and sabotage the proceeding at almost every opportunity. The trial took place in Ecuador only because Chevron wanted it there. In fact, Chevron filed 14 affidavits before a U.S. judge in the 1990s praising the fairness of Ecuador's courts as part of its plan to block the case from being heard by a jury in New York.

When the trial started in Ecuador and the scientific evidence against Chevron began to mount, the company started to viciously attack Ecuador's courts and launched a lobbying campaign in the U.S. to eliminate bilateral trade preferences for the country. Chevron also issued a press release promising the villagers "a lifetime of collateral and appellate litigation" if they continued to pursue their claims.  "We don't want to be in any court, period," Chevron lawyer Sylvia Garrigo told the CBS news show 60 Minutes in 2009.

Chevron has roughly $15 billion of assets in Canada in a wholly-owned subsidiary, Chevron Canada. The assets include two offshore oil fields, a refinery in British Columbia, and a large tar sands project in Alberta. The parent company is said to collect between $2 billion and $4 billion annually in dividends from its Canadian operations.

So while Chevron and its shareholders benefit greatly from profits produced by the company's subsidiary Chevron Canada, in Chevron's view Chevron Canada should receive full immunity from any of Chevron's liabilities. That's Chevron's notion of corporate impunity in action.

There are also six wholly-owned Chevron subsidiaries between Chevron the parent and Chevron Canada. It is clear that none of these entities exist other than on paper. None of them have operations. Their sole useful function appears to be to shield Chevron from liability. Yet they are touted by Chevron as yet another reason the enforcement action of the villagers should be blocked.

We might add that the size of the Ecuador judgment is modest compared to the magnitude of the damage Chevron caused when operating in Ecuador under the Texaco brand from 1964 to 1992. Chevron abandoned roughly 1,000 toxic waste pits gouged out of the jungle floor. It also admitted to the systematic discharge of 15 billion gallons of oil-laced water into streams and rivers that indigenous groups relied on for their drinking water, bathing, and fishing. Cancer rates in the region predictably have skyrocketed.

BP's liability in the United States for the far smaller spill in the Gulf of Mexico now stands at $48 billion. That's about five times greater than Chevron's liability in Ecuador. Only four years after the Gulf spill, BP already has paid out an estimated $30 billion in damages. Almost five decades after Chevron began operating in Ecuador, the company has yet to pay even one dollar directly to the affected communities.

Chevron's theory that it owes no compensation to the villagers provides insight into how large multinational corporations try to evade accountability for human rights abuses. But judges are under no obligation to accept Chevron's theories of subsidiary immunity given the increasing evidence they run counter to international human rights law and evolving global standards of corporate accountability.

This was exactly the point made by several Canadian human rights groups – including the Human Rights Program at the University of Toronto Facuty of Law – that filed friend of the court briefs in Canada in support of the villagers. These insightful briefs explain how Chevron's approach will hurt the ability of human rights victims everywhere to receive legal redress. They can be read here and here.

It bears mention that roughly 80% of Chevron's revenues worldwide come from its wholly owned subsidiaries located outside the United States. Chevron makes almost no revenue except through the operations of its subsidiaries. Chevron does not even own its global headquarters building in California. Virtually the only way to recover Chevron's assets is to sue its subsidiaries.

Think for a moment about the degree of impunity to which Chevron feels it is entitled.

Under Chevron's scenario, the indigenous villagers cannot recover in Ecuador even though the company promised to accept jurisdiction there. That's because Chevron has no assets in the country.

The villagers also cannot recover in Chevron's home country of the U.S. That's where Chevron convinced a controversial trial judge from New York (after a farcical proceeding last year that is under appeal) to bar the villagers from seeking to collect their judgment in all 50 U.S. states. 

As for the rest of the world, that's off limits too under Chevron's absurd theory of subsidiary immunity. That's because the company claims that its assets in wholly-owned subsidiaries are not really owned by Chevron.

In other words, Chevron's promise of a "lifetime of litigation" is treading dangerously close to a new form of global immunity for a corporation that nobody disputes has caused massive environmental damage. That should be deeply disturbing to anybody who cares about corporate accountability and access to justice.

Chevron's able lawyers who appeared before the Supreme Court of Canada, Clark Hunter and Benjamin Zarnett, did what they are being paid to do. Their focus was on the technical. Neither spoke a word about the devastating life conditions caused by the company's dumping or referenced a single name of a Chevron victim. (Some of the personal stories of those affected have been captured vividly by photojournalist Lou Dematteis.)

Mr. Hunter went so far as to warn the justices of the "danger of paying too much attention to fairness" in their analysis. When asked if he was requesting that the court create a new jurisdictional barrier for the villagers that had never before existed in Canada, he evaded the question.

To Chevron, "fairness" never had any place in either its brutally messy operations in Ecuador or in its legal analyses in court. Hopefully, judges who hear these cases will reject Mr. Hunter's entreaties and use basic notions of fairness when interpreting the law. The affected villagers deserve to be able to seek to collect on what they have won after too many years of delay.

Absent some sort of extraordinary abuse not present here, enforcement actions against a company that refuses to pay a valid court judgment must be decided on the merits. To accept Chevron's theory and deny the villagers an enforcement trial would make little sense in our increasingly globalized world. It would also be a manifest injustice to those who have fought bravely for 22 years to obtain a resolution of their claims.