Monday, November 16, 2015

Chevron Paying Income Taxes and Salary of Corrupt Witness Who Committed Perjury in Ecuador Case

Reposted from The Chevron Pit

Without public disclosure, Chevron has re-upped its contract to pay $144,000 annually to former Ecuadorian judge Alberto Guerra after he admitted perjuring himself in a federal court during the company's RICO trial. The perjury happened after Chevron lawyers at the outside law firm Gibson Dunn coached Guerra on his false testimony for 53 consecutive days.

We have no choice but to call this what it is: a witness bribery scheme orchestrated by a major American oil company. Chevron's aim is to evade paying for the clean-up of what could be the world's worst oil disaster, caused deliberately on its watch when it operated in Ecuador (under the Texaco brand) from 1964 to 1992.

The discredited Guerra – who has admitted that he accepted bribes when he was a judge in Ecuador – has become a central figure in Chevron's campaign to evade paying the $9.5 billion environmental judgment in the South American nation. Chevron was found to have deliberately dumped billions of gallons of toxic waste into the streams and rivers of the rainforest. The dumping continues to decimate indigenous groups and has caused an outbreak of cancer, according to the findings of three layers of courts in Chevron's preferred forum of Ecuador.

The Chevron payments to Guerra seem to have earned the company and its ethically-challenged lawyers at Gibson Dunn a fraud and bribery complaint to the U.S. Department of Justice. Amazon Watch, an environmental group that has been fighting to hold Chevron accountable, said it will lodge a formal complaint over the witness payments and falsification of evidence.

Paul Paz y MiƱo, a director at Amazon Watch, said:
It is unethical, illegal, and utterly shocking that Chevron continues to pay huge sums to a completely discredited witness who has admitted to repeatedly lying and accepting bribes to testify falsely in court. This arrangement is worth of a criminal investigation and we are asking the Department of Justice to look into it. We consider Chevron to have engaged in witness bribery.
Luis Yanza, a winner of the Goldman Environmental Prize and the longtime leader of the rainforest communities affected by Chevron's pollution, said in reference to Guerra:
Chevron and its lawyers gave a key witness cash out of a suitcase to falsify evidence to taint the Ecuador judgment so the company does not have to pay for the clean-up of oil pollution that is causing grave harm to thousands of people. This is just one example of the company's plan to threaten judges and sabotage the proceedings in Ecuador.
Guerra stunned the legal community after he admitted during a recent international arbitration proceeding that he lied on the stand during the company's retaliatory civil "racketeering" (or RICO) case targeting the lawyers for the villagers who won the historic judgment. Chevron made a mockery of justice in that case after the judge (Lewis A. Kaplan) displayed intense personal animus toward the villagers while hiding his investments in Chevron despite calls for his recusal over bias.

(As background, a federal appellate court in New York unanimously reversed Kaplan in 2011 when he earned the scorn of the international legal community by trying to block enforcement of the Ecuador judgment anywhere in the world. Without a jury or a fair trial, Kaplan then tried to overrule the final decision of Ecuador's Supreme Court by refusing to consider any evidence of Chevron's contamination and claiming the Ecuador decision was the product of racketeering. In the meantime, the villagers recently won a unanimous decision from Canada's Supreme Court authorizing them to seize Chevron assets to enforce their judgment. Here is a summary of the overwhelming evidence against Chevron.)

Guerra also recanted key portions of his testimony in the RICO case claiming that the Ecuadorian trial judgment was ghostwritten by the plaintiffs, according to reports from Courthouse News and Vice. These developments emerged recently when transcripts from the arbitration finally were released after Chevron, in yet another violation of the ethical rules, tried to keep them under wraps for months.

The transcripts show Guerra admitting that Chevron extended his contract for another year. Guerra does no work for Chevron other than make himself available to testify on the Ecuador case – a fact that many observers believe violates federal law and the ethical rules, as this legal brief and this opinion from a prominent ethics expert explain.

Yet Chevron continues to make up its own rules. In 2012, company operatives Andres Rivero and Yohi Ackerman traveled to Ecuador and paid Guerra $38,000 in cash out of a suitcase for his "cooperation" with the company. That included a promise by Guerra to try to bribe the trial judge with a down payment of $1 million with the goal of getting him to recant his decision. "Money talks but gold screams," Guerra said to the Chevron operatives at the time.

Chevron then inked a two-year deal providing Guerra a $144,000 annual salary, full payment of all income taxes, payment for the fees of three personal lawyers, health care, a car, and immigration services. The immigration services have allowed several family members to become residents of the United States after some had been living here illegally for years.

We also believe that Guerra and his team lied to the Department of Homeland Security to legalize the status of himself and his family members. By not disclosing to the U.S. government the many crimes Guerra had committed in Ecuador and later in the United States, Guerra (and Chevron) arguably violated U.S. law and committed a felony. Our investigation of this aspect of the Chevron-Guerra subterfuge continues.

All told, we conservatively estimate Chevron's paid benefits to Guerra amount to at least $250,000 annually. The amount rises considerably when one takes into account benefits paid to Guerra's three adult children and their families. Not bad for a man who testified he had $146 in his bank account when he struck the deal with Chevron.

Even with these extraordinary payments, Guerra seems to have very little skill as a Chevron stooge. Like most liars, he gets twisted into knots during cross-examination. Eric Bloom, a lawyer for Ecuador's government, shredded Guerra on the witness stand during the arbitration proceeding. (See these transcripts for the evidence. For more background on Guerra's admissions as well as the larger implosion of Chevron's RICO case, see this press release.)

As said, Chevron lawyers Randy Mastro and Avi Weitzman (both at Gibson Dunn) coached Guerra for an interminable period of time before letting him testify. Guerra had been removed from the bench in Ecuador for misconduct and was facing criminal prosecution until Chevron spirited him out of the country. Mastro also personally negotiated Chevron's payments to Guerra as the same time he was preparing a sworn affidavit for Guerra that by Guerra's own admission contained multiple lies.

Guerra admitted in the arbitration that he lied when he told Judge Kaplan he had been offered a "bribe" from the plaintiffs to write the trial court judgment against Chevron. He also confessed that critically important shipping records had nothing to do with the Chevron case, contradicting his prior testimony. He confessed that there were no emails or documentary evidence that the trial court judgment had been drafted by the plaintiffs and then given to the judge on a flash drive, as he had told Judge Kaplan.

The entire saga might expose Mastro and Weitzman to criminal prosecution, according to respected environmental lawyer Marco Simons.

One of the main targets of Chevron's retaliation campaign, U.S. attorney Steven Donziger, has filed the latest evidence of Guerra's collapse before the federal appellate panel reviewing Judge Kaplan's flawed decision. Donziger also turned the tables on Chevron by demanding the company cease the destruction of all documents related to the dispute in anticipation of further litigation by the villagers over the company's worsening misconduct.

The more Chevron fights, the more the company and General Counsel Pate seem to lose ground. Chevron's jurisdictional shell game is getting more exposed. The larger question is when Chevron's top leaders will be held accountable for the destruction of the Amazon and their own gross misconduct in evading court orders to clean up the damage.

Wednesday, November 4, 2015

Businessweek's Paul Barrett Ignores Spectacular Implosion of Chevron's RICO Case

Reposted from The Chevron Pit

Businessweek reporter Paul Barrett is again taking Chevron's side in the Ecuador pollution litigation by failing to report on the spectacular implosion of the company's RICO case. Readers of Businessweek interested in the latest news on the litigation are getting shortchanged.

We previously reported how Barrett generally frames his stories about the Ecuador litigation in a way that apologizes for Chevron's corruption and betrays a deep animus toward U.S. attorney Steven Donziger, the advisor to the affected rainforest communities that obtained a $9.5 billion judgment against the oil giant. Barrett adopted his flawed narrative in his thinly-sourced book on the case (called Law of the Jungle), which is largely an ad hominem attack against Donziger and is replete with factual errors and made-up scenes.

This "notice of defamation" letter written by Donziger explains some of the details of Barrett's sloppy and unethical journalistic practices. Usually missing from Barrett's stories is that Ecuador's Supreme Court (in the country where Chevron insisted the trial be held) unanimously affirmed the liability against Chevron in a 222-page decision meticulously documenting extensive contamination at hundreds of former company well sites. (See this summary of the overwhelming evidence against Chevron and this affidavit documenting some of the company's corruption.)

Barrett is now refusing to report on explosive new evidence from a related arbitration proceeding that strongly suggests Chevron's retaliatory RICO case has imploded in spectacular fashion. Others are reporting this news fully, but not Barrett. (See this powerful analysis from Amazon Watch, this article from Vice, and this article from Courthouse News.)

Here are some recent developments that severely damage Chevron's litigation prospects but are ignored by Barrett:

  • Chevron's main claim that the trial court judgment in Ecuador was "ghostwritten" by lawyers for the villagers has fallen apart. There was scant evidence of this other than the testimony from a corrupt and impoverished Ecuadorian witness (Alberto Guerra) paid $2 million by the oil company after having only $146 in his bank account; now Guerra admits under oath he lied on the stand during Chevron's RICO case about critical elements of his story.
  • Barrett has completely underplayed evidence from a computer forensic examination requested by Chevron in the arbitration proceeding that found the Ecuador trial judge saved the Word file that became the judgment on his own computer more than 400 times. Guerra had claimed the judgment was given to the judge by the plaintiffs on a flash drive just before it was issued. This evidence has been presented to the appellate court that oversees Kaplan.
  • Barrett also ignored that Guerra testified in Kaplan's RICO proceeding that the Ecuador trial judge promised him 20 percent of an alleged $500,000 bribe. In his arbitral testimony, Guerra confessed it was a total lie.
  • Guerra claimed he played a key role in the so-called ghostwriting. But he admitted he lied before Kaplan by claiming he made two trips to Lago Agrio to work on the judgment; in fact, those trips had nothing to do with the Chevron case. Again, silence from Barrett.
  • Guerra also conceded in his arbitral testimony that there is no evidence corroborating his allegations that the lawyers for the affected communities bribed the trial judge and wrote the judgment, which is Chevron's defense to actions to seize company assets to satisfy the Ecuador judgment. Guerra admitted he lied to Chevron to obtain more money from Chevron. "I lied there," he said. "I recognize it. I wasn't truthful." Again, nothing from Barrett.
In Canada, a trial to seize Chevron assets is proceeding. The villagers have filed a motion for summary judgment to knock out all of Chevron's defenses on the grounds they already were litigated and resolved by the court in Chevron's preferred forum of Ecuador. Barrett has yet to report on this development.

We suspect Barrett's recent retreat into silence has much to do with the fact developments are turning against Chevron. The company's trumped-up "fraud" narrative is the central thrust of Barrett's book and his prior reporting. To report that his main narrative is unraveling would further damage Barrett's credibility and would not be in his commercial interest.

Want to get a sense of what Businessweek's readers who rely on Barrett are missing? Read Eva Hershaw's account in Vice News in an article titled "Chevron's Star Witness Admits to Lying in the Amazon Pollution Case":
In testimony given before the international tribunal... Guerra has now admitted there is no evidence to corroborate allegations of a bribe or a ghostwritten judgment, and that large parts of his sworn testimony, used by Kaplan in the RICO case, were exaggerated and, in other cases, simply not true.
Adam Klasfeld of Courthouse News reported that Guerra "repudiated much of his explosive testimony" and admitted to lying about a number of key facts. Marco Simons, an attorney with Earth Rights International, suggested that two Chevron lawyers, Randy Mastro and Avi Weitzman, might face criminal exposure for coaching Guerra for 53 days to present false testimony. (For more on how Chevron law firm Gibson Dunn has falsified evidence, see here.)

Chevron had no real answer for several days to these devastating setbacks. That's where Barrett stepped in to post a short story on the company's website that is nothing more than a tortured attempt to rehabilite the lying Guerra.

Barrett might be technically correct to point out that Guerra has not recanted his testimony that a bribe occurred, but Guerra has admitted to being such a serial liar about everything else that nothing he claims can be taken seriously. That's especially true when there is no corroborating evidence left to back up the central feature of his story.

Predictably, Chevron spokesperson Morgan Crinklaw has been pushing Barrett's latest defense of Guerra into social media as a surrogate statement for the company. Barrett's colleague Roger Parloff of Fortune -- himself silent about the unraveling of Chevron's "racketeering" case -- tweeted it. (For more on Parloff's own bias in favor of Chevron, see this blog and this analysis.) And Barrett took the extraordinary step of contacting another reporter via Twitter to challenge her reporting contesting Chevron's narrative.

Businessweek needs to assign a truly independent journalist to report this story. In the meantime, Barrett should consider joining Crinklaw in Chevron's public relations department. He could make a lot more money doing the same thing.

Monday, October 26, 2015

Game Over: Chevron's RICO Case Spectacularly Implodes as Corrupt Ex-Judge Admits to Making It Up in Exchange for Chevron Payoff

Reposted from Eye on the Amazon

Chevron's ongoing contamination in Ecuador

Faced with a likely multi-billion dollar verdict against it for deliberate pollution of the Ecuadorian Amazon, in 2010 Chevron began fabricating an elaborate story of bribery, corruption and ghostwriting to strike back. It claimed everyone and everything against it was part of a scheme – the evidence, the contamination, the Ecuadorian villagers, all the environmental and human rights organizations – everyone. The company spent millions to concoct its cover story. There was only one big problem: it all hinges upon the testimony of a completely non-credible witness who has now admitted on the stand that he lied about it in exchange for payments from Chevron.

Back in 2009, someone at Chevron was probably jumping up and down exclaiming "slam dunk". The company had found a key witness they could buy who was willing to say what they needed to pull together their fabricated fraud story in Ecuador. How did they "find" him? Easy, he came to Chevron asking for a bribe to help Chevron get out of its massive legal problems in Ecuador. That should have been a red flag, but fueled by their own arrogance and legal hubris Chevron moved forward with Guerra as their star witness. It turns out that rather than a Bond-esque spy thriller with intrigue and a sophisticated plot, the story for Chevron is more like "Harold and Kumar go to White Castle".

Alberto Guerra, who we explained before is a corrupt ex-judge, claimed that the legal team for the Ecuadorians offered him a bribe to ghostwrite the judgment against Chevron. Guerra said he asked Chevron for a bribe first, and they turned him down, so then he went to the Ecuadorians. Despite the fact that Guerra was acknowledged by judge Kaplan himself to be less than credible, his testimony was allowed to stand (this is the same court that forbade evidence of actual contamination). The argument was that Guerra's testimony fit the "circumstantial evidence" against the Ecuadorian legal team. Except that evidence has also evaporated.

The sweetest irony is how this has all come about. Chevron brought a separate case to the Hague under a bilateral trade agreement between the US and Ecuador. In obvious forum shopping (which has been called out by the Second Circuit Court of Appeals) they were hoping to pin their financial liability on the Ecuadorian tax payer. Only their entire effort is backfiring – like when that body recently denied Chevron's claim that an agreement with the government of Ecuador released them from civil liability. Much like the actual evidence it presented in Ecuador, Chevron is hanging itself with the very action it hoped to use to escape justice.

Guerra claimed that the bribe of $300,000 he was offered (at one point he also said it was $500,000) was to work with the presiding judge Zambrano to ghostwrite the judgment. When asked about it before the Hague Tribunal he said: "Yes sir, I lied there...I wasn't being truthful." Zambrano has denied this from the beginning and ALL the forensic evidence backs it up. You see, also as part of Chevron's Hague action, the government of Ecuador hired the world's top computer forensic analyst to review the document. As Courthouse News reported today:

"...forensic expert Christopher Racich testified that he found a running draft of the judgment against Chevron on Zambrano's hard drives. Ecuador now argues that this forensic evidence – which Courthouse News reported exclusively early this year – proves Zambrano painstakingly wrote the ruling and saved it hundreds of times throughout the case. Chevron has not been able to produce emails between Guerra, Zambrano and the purported ghostwriters, Donziger and Fajardo, Ecuador's forensic expert says."

The seemingly never ending stream of Guerra lies doesn't stop there. At first Guerra said that he had thumb drives with the judgment on it to prove his claim. Then later he admitted that he didn't. Then he said he has calendar entries of his meetings with the Ecuadorian legal team. Then he admitted that he didn't. Guerra also claimed he had agreed with Zambrano to cut him in for 20%. Now he admits that too was a lie. Chevron claims evidence of meetings with Guerra and Zambrano backs up their claims, but no, Guerra now says no meetings he ever had with Zambrano had anything to do with Chevron. Oops.

Indeed there IS evidence of a bribe – Chevron bribed Guerra to make up this story. And unlike the lie about ghostwriting, there's actual evidence to back this bribe up. Guerra, a man with less than $200 in his bank account at the time, admits that he said all these things to get more money out of Chevron. He and his entire family now live in a house Chevron bought for him, drives a car they gave him and live on $12,000 per month from the oil giant. How's that for evidence?

At this point, I'm sure you are asking yourself: How on Earth did Chevron get this witness on the stand in a NY Federal Court in the first place, and what did they think would happen once his true story came out? (The Ecuadorians tried to save Judge Kaplan from the embarrassment.) Well, they were certainly worried about how Guerra would do – which is why they coached him for 53 straight days before his testimony. It clearly wasn't enough.

Chevron's polluted house of cards has come crashing down around them. Guerra is a liar – and he freely admits it. Chevron can either double down and insist Guerra was "before it before he was against it" or denounce him now – in which case they can never argue he's credible by any stretch.

There's a LOT of provably unethical and illegal behavior here – all of it from Chevron's camp.

What should happen now:

The Federal Appeals Court should completely throw out Kaplan's verdict. It depends entirely on Guerra's false testimony and the judgement against Chevron has been conclusively proven to be legitimately written by Zambrano (as the Ecuadorian appeals court had already determined).

Chevron and their lawyers should be investigated and brought up on charges. They have intimidated judges in Ecuador, bribed others, falsified evidence, and coached Guerra to submit false testimony in US Federal Court and made a complete mockery of the our judicial system (not to mention the mis-use of a trade agreement to go after the government of Ecuador).

Amazon Watch will be calling for such an investigation. We know Chevron is never likely to admit they lied and schemed to create this false RICO attack. Nor will they stop trying to attack us and our funders. They need to be held to account.

We look forward to the day they try to peddle this preposterous RICO verdict in Canada. Perhaps we will all get a chance to see Guerra take the stand once again. If so, it can only get worse for Chevron.

Tuesday, October 20, 2015

Chevron's Academic Corruption Over Ecuador Pollution Spreads to NYU School of Law

Reposted from The Chevron Pit

Chevron's recruitment of academics to promote the oil giant's increasingly hapless attempts to defend its Ecuador pollution disaster appears to have compromised the ethics of two more professors at a prominent institution of higher learning. This time, the credibility blow handed out by Chevron is being suffered by New York University.

We recently exposed how a Notre Dame human rights law professor, Douglas Cassel, was shilling on behalf of Chevron and compromising the academic integrity of his university without disclosing the extent of his relationship with the oil giant or the amount of money he was receiving. Since our expose appeared, Cassel has not written further about the Ecuador matter.

What we know on the NYU front is that Professor Linda J. Silberman, an expert in transnational litigation who has been teaching at NYU School of Law since the 1980s, is using her post to quietly shadow block on behalf of Chevron to prevent long-suffering Ecuadorian rainforest villagers from recovering their $9.5 billion environmental judgment. Silberman's role in the litigation -- managed by the outside Chevron law firm Jones Day -- is part of a larger campaign by the company to evade accountability for the deliberate dumping of billions of gallons of toxic oil waste into the rainforest when it operated in Ecuador (under the Texaco brand) from 1964 to 1992.

The facts of Chevron's reckless misconduct have been confirmed by three layers of courts in Ecuador, including by the country's Supreme Court in a unanimous 222-page decision issued in 2013. That decision meticulously documented extensive pollution that continues to contaminate groundwater and surface water at hundreds of former Chevron production sites covering a huge swath of rainforest that is home to five indigenous groups. A sixth group, the Tetete, disappeared shortly after Texaco arrived on the scene in the early 1960s. Chevron insisted the trial be held in Ecuador and repeatedly praised the country's court system to get the venue shifted out of the U.S.

Almost five decades after the oil production started, Chevron's horrendous operational practices in Ecuador have resulted in skyrocketing cancer rates that have decimated local communities and killed or harmed thousands of people. Chevron executive Rodrigo Perez Pallares flat-out admitted during the Ecuador trial that the company discharged more than 15 billion gallons of toxic waste into streams and rivers that local inhabitants rely on for their drinking water. More than 100 technical evidentiary reports -- most provided by Chevron technicians -- backed up the claims of the villagers. (A summary of the extensive evidence against Chevron relied on by Ecuador's courts is here.)

Silberman's cameo role in this fiasco came to our attention recently when an unpublished essay she authored with an NYU colleague, Aaron Simowitz, arrived in our inbox. Available here, the essay was distributed to an internet community focused on "dispute management" in the energy sector.

We were stunned to notice the complete absence of a proper conflict of interest disclosure in the essay by Silberman and her co-author explaining their ties to Chevron and its law firms in the Ecuador litigation. Both are clearing violating NYU's Code of Ethical Conduct, as we explain below.

At the end of the essay, Silberman meekly notes she is a consultant to the Chevron law firm Jones Day. Really now. Jones Day has played a critical and highly controversial role fighting the indigenous groups with corrupt tactics -- including the use of bribes and the secret videotaping of a trial judge. Jones Day and its lead partner Tim Cullen have reaped millions of dollars in fees for so-called "services" that include paying the rent and laundry bills of a corrupt Chevron operative (Diego Borja) after he was spirited out of Ecuador to live under Chevron's protection in the United States.

Clearly, the exact nature of the Jones Day relationship to Silberman might be something NYU's students and faculty need to know to be able to assess the credibility of her "scholarship" and teaching about the litigation. She might also mention how much Jones Day is paying her to lend her academic credibility as an NYU professor to Chevron's strategy to block the Ecuadorians from entering the courthouse in Canada, where they are trying to seize company assets to pay for their environmental remediation.

Junior writing partner Simowitz has the same problem. He "discloses" at the end of the essay that he used to work for the law firm Gibson Dunn. What he fails to mention is that Gibson Dunn is Chevron's lead outside counsel in the case and was hired to deploy at least 114 lawyers to viciously attack the main U.S. legal advisor to the Ecuadorians, Steven Donziger. Chevron's goal was to kill the case by using false and distorted evidence, a paid fact witness who lied about a supposed bribe, and outright intimidation. (For more on Chevron's unprecedented retaliation campaign, see this article in Rolling Stone, this analysis of how Chevron made a mockery of justice in a U.S. court, and this legal brief by Donziger's counsel Deepak Gupta that summarizes how Chevron abused the civil justice system.)

The lack of disclosure in the Silberman/Simowitz essay is one problem. The intellectual dishonesty by these so-called scholars is another.

In the article, Silberman and Simowitz claim that Canada's Supreme Court got it "wrong" when it ruled unanimously in September that the villagers have the right to try to seize Chevron's assets in that country to satisfy their judgment. The only reason the villagers are trying to seize those assets in Canada is because Chevron (after 11 years of litigation in its preferred forum of Ecuador) refuses to pay the judgment despite accepting jurisdiction there as a condition of moving the case out of New York in 2001. Chevron also sold off its assets in Ecuador during the trial as the evidence mounted against it, leaving those affected with almost no options to collect.

Silberman and Simowitz fail to mention that Chevron announced years ago that it would fight the villagers "until hell freezes over" and then "skate it out on the ice." Once it became clear Ecuador's courts might actually hold the company accountable, Chevron's lawyers tried desperately to sabotage Ecuador's court process as we mentioned. The company played an abusive game of forum shopping and sued Ecuador's government in a secret arbitration proceeding that excluded the villagers to try to obtain a taxpayer-funded bailout of its pollution liability.

Instead of explaining this critical context to their readers, the authors attack the Canada Supreme Court's decision on conclusory technical grounds by promoting a legal fiction created by Chevron. The authors repeat Chevron's losing argument before the Canada Court that it would impose a "substantial burden" to force an oil company with $250 billion in annual revenue to defend the Ecuador judgment in Canada because all of its assets there -- estimated to be worth $15 billion -- are held by a wholly-owned subsidiary whose dividends flow entirely to Chevron shareholders. The Canada Supreme Court rejected this argument in very plain language by explaining Chevron does have assets in Canada via its subsidiary.

While we believe the Chevron defense promoted by Silberman is preposterous on its face -- any Chevron-owned subsidiary logically is a Chevron asset that can be used to pay off a Chevron debt  -- at a minimum the oil giant's claim will be litigated in Canada at the trial level now that the Court has ruled the case can proceed. Yet according to Silberman and Simowitz, this technical defense should block the enforcement action from even commencing. Given that Chevron operates around the world only through its subsidiaries, their argument is a stab at obtaining complete impunity for a corporate human rights abuser.

While Silberman and Simowitz have a right to make an intellectually dishonest argument in support of Chevron's abusive litigation strategy, they don't have a right to make it without disclosing their conflicts of interest or otherwise ignoring their ethical obligations in violation of NYU's written Code of Ethical Conduct.

NYU's ethics policy prevents conflicts of interest and requires all faculty to uphold the "highest professional and community ethical standards." This means Silberman should disclose how much she is making for promoting Chevron's arguments, how long she has been on the Chevron dole, whether Jones Day passes on the costs of Silberman's work to Chevron, and if so at what rates. She might also mention whether lawyers at Chevron or Jones Day have approval rights or review her supposedly "independent" analyses before they are published or otherwise distributed. Her contract with Jones Day and communications with the law firm pertinent to the Chevron matter should be fully disclosed. The same goes for Simowitz and his relationships with Gibson Dunn or any other Chevron law firm.

The writers notably fail to mention that Gibson Dunn lawyers from Simowitz's former firm have committed all manner of ethical violations on behalf of Chevron. This includes the illegal payment of more $2 million to a fact witness for his false testimony, an attempted bribe of the trial judge, using the discovery process to harass the oil company's adversaries, and threatening judges in Ecuador with jail time if they did not grant Chevron motions to nullify the proceeding. Was Simowitz directly involved in these activities when he worked at Gibson Dunn? Certainly his readers and students have a right to know the answer. (For more on Chevron's attempts to corrupt the judicial process in Ecuador, see this affidavit and these whistleblower videos.)

Again, we question whether these otherwise reputable professors would engage this issue in the way that they have had they not been paid by Chevron or its surrogates.

The issue of corporate corruption of academia has been a hot topic in recent weeks. The New York Times recently exposed how Monsanto pays academics to launder company agitprop to block the labeling of genetically modified foods. A major academic at the Brookings Institute recently lost his job after Sen. Elizabeth Warren nailed him for failing to disclose to Congress that his flawed research was funded by a pro-business lobbying group.

Chevron has a long history in the Ecuador matter of trying to secretly pay academics in service of its litigation positions. The company has hired a global warming skeptic named Douglas Southgate, a former lobbyist for the chemical industry named Ralph Marquez, and a technical consultant named John Conner who wrote a field manual ordering company scientists to lift only "clean" soil samples during the Ecuador trial to hide contamination from the court.

NYU's faculty needs to ensure that Silberman and Simowitz comply with the university's Code of Ethical Conduct. They should be prohibited from trying to hide partisan advocacy in the clothing of independent scholarship. Most of all, they should be barred from letting Chevron secretly capitalize on NYU's good name to evade accountability for its abuses in the rainforest.

We look forward to see whether NYU as an institution has the backbone to address the very obvious ethical lapses of two of its leading professors.

(We might add that another prominent faculty member at NYU School of Law, Burt Neuborne, has been a stalwart defender of the rights of the Ecuadorian villagers and has represented them pro bono.  Two of Neuborne's legal briefs for the villagers can be found here and here.)

Friday, October 9, 2015

Ricardo Reis Veiga: Architect of Chevron's Fraud In Ecuador

Reposted from The Chevron Pit

Chevron CEO John Watson is the one person ultimately responsible for his company's refusal to abide by the rule of law and pay a $9.5 billion judgment for toxic dumping on in Ecuador's rainforest.

But we cannot forget that another high-level Chevron executive currently in Watson's employ --Ricardo Reis Veiga -- did much of Chevron's corrupt "dirty work" in the South American nation and deserves to be held accountable for his leading role in the misconduct. The fact Watson continues to try to protect Reis Veiga reflects poorly not only on Watson's own lax ethical standards, but it also creates significant risk to company shareholders as we will see below.

First day of Ecuador trial -- October 21, 2003: Chevron's Reis Veiga tries to explain the impossible while his Israeli bodyguard casts a wary eye from behind. Photo by Lou Dematteis.

For years in the 1990s, Reis Veiga was known in Ecuador as the "architect" of the Chevron-Texaco fraud. As Texaco's main lawyer on the case, he even was indicted after the villagers presented information about how he had "certified" a fake clean-up to to Ecuador's government in a desperate effort to help the company evade liability. Under pressure from Chevron, prosecutors dropped the criminal charges but the cold hard facts about Reis Veiga's corruption cannot so easily be erased.

(See here for more background on Reis Veiga's checkered past in Ecuador and here for Chevron's attempt to corrupt Ecuador's courts using American drug trafficking felon Wayne Hanson.)

Watson and Chevron's public relations flaks try mightily to keep Reis Veiga out of the public eye. But Watson is more than happy to keep him on the Chevron payroll, no doubt so he won't blow the whistle on the company. (A Chevron whistleblower earlier this year disclosed internal videos showing company scientists trying to hide evidence of oil contamination from the court.)

A lawyer and Brazilian national, Reis Veiga set in motion Chevron's disastrous Ecuador policy when in 1995 he negotiated a "remediation" agreement on behalf of Texaco with certain corrupt officials in the government. (Chevron bought Texaco in 2001 and assumed its liability in Ecuador.) The agreement allowed Texaco to go through the cosmetic motions of a clean-up while spending virtually no money to address the underlying environmental impacts. Those impacts include the abandonment of roughly 1,000 toxic waste pits filled with oil sludge and the dumping of billions of gallons of toxic "water of production" into streams and rivers relied on by local inhabitants for their drinking water.

In exchange for a promise to do a cosmetic clean-up, Texaco received a "release" from Ecuador's government for any claims the government might assert against the company for the environmental damage. The release was given before the first shovel was even put in the ground to do the work. (As a critical aside, the release did not bar -- nor could it under Ecuadorian law -- the claims of the private citizens who had brought the historic lawsuit that 16 years later resulted in the judgment.)

The more salient point is that Reis Veiga's "remediation" was shot through with fraud. Texaco spent only $40 million to address the massive contamination which included hundreds of equivalent U.S. Superfund sites. This is far less than a penny on the dollar of what a real clean-up would cost, according to the later court judgment and various independent analyses. Texaco also spent about one-tenth of one percent of the roughly $50 billion BP has allocated to its much smaller 2010 spill in the Gulf of Mexico.

While Chevron now spends millions of dollars on ads claiming it supports the communities where it operates, Reis Veiga negotiated a deal to screw the affected communities of Ecuador.

What had to surprise Chevron and Reis Veiga is that the trial in Ecuador over the company's dumping -- a trial that the company fought desperately to block -- actually happened. The indigenous communities had the wherewithal to hire lawyers and the funds to hire technical experts. Evidence against Chevron quickly started to mount. And as a result, a Chevron lie that already was visible to the naked eye in the oil fields was verified in laboratories as well.

Scientific sampling data from field inspections during the trial in Ecuador showed exorbitant rates of cancer-causing petroleum hydrocarbons at sites Reis Veiga had claimed were cleaned. As an example, at Sacha 65 -- a former Chevron well site that Reis Veiga had certified as remediated to Ecuador's government back in 1998 -- a soil sample lifted during the trial had 35,380 ppm of petroleum hydrocarbons. That's more than 350 times higher than the maximum amount allowed in most U.S. states. It also exceeded Ecuador's regulatory norms by an order of magnitude.

In fact, there were 54 separate sites supposed "remediated" under the Reis Veiga plan that were inspected during the later trial. All demonstrated the presence of harmful toxins and all but two were above Ecuadorian regulatory norms. Some exceeded the norms by dozens and even hundreds of multiples.

By its own admission, Chevron applied its wholly inadequate clean-up methods to only a small portion of the waste pits it abandoned in Ecuador. Chevron simply excluded 85% of the pits from its flawed action plan altogether. Those pits were left to continue contaminating soils and drinking water for centuries absent compliance with the Ecuador court judgment.

Even if one focuses only on the small fraction of waste pits Chevron took responsibility for under Reis Veiga's plan, many of those were left untouched on the theory they were being used by villagers for fishing. Others were left untouched based on a simple drive-by inspection that involved no actual soil testing. In actuality, all were filled with oil sludge.

For the pits it did address, Chevron used heavy earth-moving equipment to cover up the sludge with dirt without cleaning out the toxins. Reis Veiga's plan was to bury evidence of the crime for the lowest possible cost. He never imagined these hidden pits would be unearthed by scientists working for the villagers during the later trial.

Reis Veiga also duped Ecuador's government. During the negotiation over the clean-up plan, he conspired with certain officials to adopt a clean-up standard for petroleum hydrocarbons 50 times more lax than the typical U.S. regulatory norm. He then used a bogus soil sampling test to measure contamination that captured only a tiny fraction -- often less than one percent -- of the hydrocarbons present. His goal was to "certify" the pits as safe using the fraudulent sampling results. (For more on Chevron's use of the bogus test and its other scientific fraud in Ecuador, see here.)

For the communities in the affected region, Chevron's Potemkin clean-up actually made the matter worse. Many villagers moved next to the newly covered waste pits thinking Texaco must have been acting in good faith when it told locals it was remediating. That's just a sickening level of cruelty even for a company recently named the worst global corporation at a ceremony in Davos.

Aside from the outright fraud in the design and execution of the Reis Veiga plan, the Chevron executive did nothing to address the separate impacts of the billions of gallons of benzene-laden water of production that were discharged into streams and rivers. Reis Veiga also ignored the need for medical care and monitoring to deal with skyrocketing rates of cancer and other oil-related diseases.

The longterm environmental and human toll of this failure to remediate has been staggering. The affected area, home to dozens of impoverished indigenous and farmer communities, has extremely high rates of childhood leukemia and other cancers. There is also virtually no medical care. To be treated for cancer, once has to jump on a bus and travel several hours over tortuous mountain roads to Quito. (Numerous independent studies documenting the cancer can be accessed here. For photos and stories of some of the victims, see this gripping report in The Huffington Post by photojournalist Lou Dematteis.)

The economic impacts also have gutted the communities. While Watson makes approximately $30 million per year in compensation, the average indigenous person in the Amazon is lucky to pull in $1,000. That's after Chevron robbed the communities of access to clean water and most of the other non-monetary riches found on rainforest ancestral lands.

Reis Veiga's misconduct was not limited to the bogus remediation. During the trial, he was heavily involved in the halting of a critical judicial inspection (see paragraphs 18 to 27 of the referenced document) by fabricating a security threat against Chevron lawyers. His fingerprints were all over the work of Chevron consultant John Connor when he wrote a field manual directing company scientists to lift soil samples only from "clean" spots far away from sources of pollution in an attempt to deceive the court.

Given this outrageous and patently criminal conduct, why is Reis Veiga still employed at Chevron?

The reality is that an oil company management team acting Mafi-style in Ecuador cannot afford to let its skeletons migrate out of the closet. This is the same company that recently employed the author of a legal memo (William J. Haynes) justifying the torture of detainees when he was an official at the Pentagon. Other egregious Chevron wrongdoers in the Ecuador matter, such as discredited witnesses Diego Borja and Alberto Guerra, are kept close with fat salaries, homes in gated communities on golf courses, stipends for spouses and family members, and all sorts of luxury perks such as first class air travel that are hidden from shareholders and the public.

Then there are the academics who have humiliated themselves and compromised the integrity of their institutions by trying to defend Chevron's atrocities in Ecuador in exchange for money -- people such as Notre Dame Law Professor Douglas Cassel, Dr. Douglas Southgate of the climate change-denying Heartland Institute, and Dr. Pedro J. Alvarez of Rice University. Their involvement comes from the same dark place in Chevron's legal department where ethical rot has taken hold under the leadership of General Counsel R. Hewitt Pate, and where Reis Veiga hangs out.

Chevron's Board of Directors -- notorious for its lack of independence given that Watson himself is Chairperson -- is letting an environmental liability turn into a major business problem. Company operations in Canada and elsewhere are under seige as the villagers try to collect on their judgment by targeting Chevron's assets. In Canada, the company has an estimated $15 billion worth of refineries, oil fields, office buildings, and intellectual property rights.

Not to be glib, but we suspect the indigenous people of Ecuador are going to own a good chunk of that portfolio if the company does not abide by its legal obligations.

We are still waiting for any sign that the Chevron Board will take the necessary steps to fulfill its fiduciary obligations. It might start much as BP did in the Gulf -- by immediately paying compensation to those affected. It might follow up by ordering an independent review of the legal violations involved -- including the possible bribery of foreign officials -- in the desperate attempts by high-level company officers and employees to extricate themselves from this problem.

On behalf of Texaco and now Chevron, Reis Veiga executed a strategy in Ecuador of cover-up rather than clean-up. The disturbing facts are part of the plain history of Chevron's billion-dollar campaign to obtain impunity.

(For the evidence of Chevron's environmental catastrophe and fraudulent clean-up, see this power point presentation by the former scientist for the affected communities. For a summary of Chevron's forum shopping and jurisdictional shell game, see here. For more on Chevron's efforts to corrupt the Ecuador trial process, see this sworn affidavit and these counterclaims.)