Tuesday, August 11, 2015
If you want a vivid example of how Chevron CEO John Watson and General Counsel R. Hewitt Pate continue to step on themselves in Ecuador, look no further than the company's recent arbitration "victory" against the government of Ecuador in a case involving a dispute over oil royalties.
This supposed Chevron "victory" – in the amount of a $106 million award – is likely to help Ecuadorian indigenous villagers collect their separate $9.5 billion environmental judgment against the oil giant. It could also disrupt Chevron's operations in other countries where the villagers are trying to seize company assets to force compliance with the environmental judgment.
The villagers won the larger judgment in 2011 in a civil case in Ecuador after Chevron insisted the trial be held in the South American nation. Chevron's attempts to sabotage and corrupt Ecuador's court system throughout that trial have been well-documented; ultimately, Ecuador's Supreme Court affirmed the judgment in 2013 in a unanimous 222-page opinion that meticulously documented the company's wrongdoing at hundreds of different well sites throughout the Amazon.
(For examples of Chevron's attempts to corrupt the Ecuador proceedings, see this affidavit and how the company falsified evidence by paying a corrupt witness.)
Chevron launched the arbitration case against Ecuador's government in the middle of the environmental trial to gain leverage. It tried to claim its "damages" over the distribution of oil royalties dating from the 1980s were a preposterous $700 million.
The company's goal was to use the risk of a large judgment over the royalties to pressure Ecuador's government to "disappear" the historic environmental case, where the company faced an enormous multi-billion dollar liability. Chevron's plan was an illegal attack on the rule of law and a blatant attempt at extortion. Ecuador's government did not buckle, further infuriating the company.
In the meantime, because Chevron refused to abide by the environmental judgment, the villagers in 2012 quietly secured a court order in Ecuador entitling them to seize company assets to help pay for the remediation of their ancestral lands. Chevron had no real assets in Ecuador at the time, having sold off its Texaco gas stations in 2007 in anticipation of losing the case.
Here's where the law of unintended consequences kicks in. Watson and Pate's "victory" over the issue of royalties has now created Chevron's only real asset in Ecuador. The asset is a debt owed Chevron by Ecuador. And make no mistake about it, that asset is now subject to the jurisdiction of the courts in the very country where Chevron insisted the dispute be heard and resolved.
We believe that by Ecuadorian court order, the full amount of the $106 million arbitral award must be diverted to the villagers. They no doubt plan to use some of the funds to help seize Chevron assets in other jurisdictions such as Canada and Brazil, where collection actions are pending.
The clean-up in Ecuador clearly will require far more resources than the amount of the arbitral award. Chevron abandoned roughly 1,000 toxic waste pits that continue to contaminate soils, streams and groundwater. Each of those sites is akin to a Superfund site in the United States. And by way of comparison, BP has already paid out $54 billion to repair damage and to compensate victims after the much smaller Gulf of Mexico spill in 2010.
The 1,000 or so waste pits are not the only problem. Chevron also discharged billions of gallons of benzene-laden formation waters into streams and rivers relied on by locals for their drinking water. Cancer rates in the area have skyrocketed and untold numbers of people have perished, as this photo essay by journalist Lou Demettais documents.
(For a summary of the overwhelming evidence against Chevron in Ecuador, see here. For a 60 Minutes segment documenting the company's deliberate dumping of oil waste, see here.)
Pablo Fajardo, who represents the villagers, said that any funds collected from the arbitral award will be placed in a trust account set up to administer the clean-up. Under the law, he says the Ecuador government has no choice but to comply. (Actually getting the funds into the account will require a line item in Ecuador's budget. It is unclear how that might play out given Chevron's many prior attempts to disrupt the case in Ecuador, but we are hopeful.)
Fajardo was clear about his intentions, saying in a press release:
The Ecuadorian victims of Chevron's toxic dumping have a lawful right to obtain this arbitral award and other company assets until their judgment is fully satisfied. Our people are suffering from a humanitarian crisis and many lives are at sake because Chevron – unlike BP in the United States – refused to pay for a clean up of its pollution.
We might add that the Ecuador court order is not the only bad news lately for Chevron.
Chevron's central defense in the Ecuador matter – that the trial court judgment was "ghostwritten" – has been unraveling for several months, as this article in The Huffington Post explains. And Chevron's retaliatory "racketeering" case also faces a major risk of reversal, as this brief and this article by American lawyer Steven Donziger and his representatives explain.
Also hurting Watson is the stunning disclosure of internal Chevron whistleblower videos that show company field technicians trying to hide evidence of contamination from Ecuador's courts. These videos were published by VICE News and Amazon Watch and can be seen here and here.
The bottom line is that Chevron is suddenly at risk of becoming the leading financier for its adversaries in Ecuador. Some might call that the very definition of poetic justice.
Friday, July 17, 2015
Reposted from EarthRights International
Yesterday, Kellan Howell at The Washington Times published what can only be described as a hit piece against Amazon Watch, our longtime advocacy partner and sometimes client, for AW's continued support for a cleanup of Chevron's legacy of contamination in the Ecuadorian Amazon. Apparently, because a federal judge found that one attorney (Steven Donziger) committed fraud in the Ecuadorian pollution trial – a decision which is currently being challenged on appeal – that means that AW should stop advocating for a cleanup.
(I won't link to the article, but AW's response is here.)
If I were a snarky blogger, I might respond by saying something like, "Nice to see Kellan Howell take a break from cheerleading Donald Trump's immigrant-bashing to focus on a genuine issue of corporate accountability!" Or maybe: "Of course The Washington Times is my favorite local newspaper; what other totally respectable news organization would run "photo essays" on the best handguns under $500, and on the disputed title of the "sexiest woman alive," and then – in a truly masterful stroke – combine these two interests with Hollywood's hottest gunslingers? If that's not Pulitzer-bait, I don't know what is."
But of course, I'm a sober-minded lawyer, not a snarky blogger, so I'm really more interested in some boring legal issues raised by Ms. Howell's article.
Is this journalism – or a tort?
Ms. Howell started her investigation (I'm using the term generously) a couple months ago, by emailing a series of Chevron talking points to several AW funders. The emails read, in part:
Amazon Watch has worked closely with lawyer Steven Donziger in the case against Chevron, even letting Mr. Donziger write press releases that contained inaccurate and misleading information about Chevron to be distributed by Amazon Watch.
Last year a US District Court found that Mr. Donziger had fabricated evidence, ghostwritten studies and bribed judges to win the initial case against Chevron. The fraud charges prompted many of the investors in the case to back out. In his 500-page opinion, Judge Kaplan wrote that Amazon Watch worked directly with Mr. Donziger to distribute the false material, lobbied the media and the SEC to investigate Chevron and pressured shareholders and state comptrollers to sponsor shareholder resolutions to pressure Chevron to pay billions of dollars to settle the case.
Given this information, what I am interested in learning from the foundation is
1. does the foundation still give money to Amazon Watch?
2. Is the foundation aware of Amazon Watch's involvement in the Chevron case and its close connection with Mr. Donziger?
3. Did the foundation know that its contributions to Amazon watch was being used to perpetuate false evidence in this case?
4. If so, what is their reaction? Does that bother them and why keep funding the organization?
As I pointed out to Ms. Howell in an email at the time, this is not what I think of as journalism – it's trying to generate a reaction, rather than reporting on facts in the world. But that's not the biggest problem with it – the biggest problem is that it's demonstrably false. The centerpiece of Ms. Howell's email is: "Did the foundation know that its contributions to Amazon Watch were being used to perpetuate false evidence in this case?" (Full disclosure: I altered that quote to correct the capitalization and grammar.) As I wrote to Howell, this is not true:
First, Judge Kaplan did not actually find that Amazon Watch had said anything that was false. He faulted Amazon Watch for repeating an estimate that the Ecuador cleanup would cost $6 billion after the author of that estimate disavowed it, but Judge Kaplan did not make a factual finding that the cleanup would in fact cost less than $6 billion – in fact, the Ecuadorian court found that it would be more expensive than this. He also faulted Amazon Watch for repeating Donziger's estimate that the oil spilled in Ecuador was 30 times the size of the Exxon Valdez spill, but Judge Kaplan made no factual findings as to how large the amount of oil spilled actually was. In fact, Judge Kaplan could not have made any factual findings about the extent of contamination in Ecuador or the cost of a cleanup, because those issues were excluded from the Chevron v. Donziger trial. If he had addressed the issue, he would have considered the deposition testimony of Bill Powers – the same expert that Kaplan relied on to suggest that the 30 times estimate was misleading – who said that "the amount of toxic liquids that should not have been in the environment in Ecuador was at least 30 times the quantity or the volume of crude that was spilled in the Exxon-Valdez disaster."
Second, neither of these statements – the $6 billion estimate or the Exxon Valdez comparison – was submitted by Amazon Watch in court, and therefore neither constitutes "evidence." While AW has engaged in extensive public advocacy in favor of a cleanup of Chevron's documented environmental catastrophe in Ecuador, AW has not been directly involved in submitting any evidence, let alone "false evidence," in either the Lago Agrio litigation or the Chevron v. Donziger case. Your email suggests that AW was a participant in one or both of these cases, which is false. AW did not participate in the Chevron v. Donziger litigation, and Judge Kaplan's findings, which are currently being reviewed on appeal, would not be legally binding on Amazon Watch because it was not a party to that litigation.
Third, you sent your emails apparently without regard to what projects had been funded. You have no basis on which to assert that any particular funder's contributions were used by Amazon Watch for its Clean Up Ecuador campaign, which is only one of many Amazon Watch activities.
Ms. Howell's statement might be considered libel, but there's another more specific tort for this context – it's called "interference with business relations." If someone lies to a company that you're doing business with, and the company stops doing business with you as a result, you can be held liable.
Of course, virtually all of AW's funders either ignored Ms. Howell's misinformation entirely or indicated their ongoing support for AW. But Ms. Howell reports that at least one partner – Pura Vida – was taken in by her lies. So both Ms. Howell and The Washington Times might be held responsible for any losses to AW from the loss of their relationship with Pura Vida.
What about libel?
What about libel, indeed? While the initial emails included false information – and therefore might be libelous – most of what's in the final article is simply misleading rather than flat-out lies. For example, Ms. Howell focuses extensively on the fact that AW kept repeating an estimate made by environmental engineer David Russell that the Ecuador cleanup might cost $6 billion, after Russell disavowed the estimate:
In his opinion [Judge] Kaplan faulted Amazon Watch for continuing to use a “flawed” $6 billion estimate to “attempt to convince Chevron that it was facing multibillion-dollar exposure in Ecuador and that the time had come to settle.”
Ms. Howell included part of the response to this (my statement that "Judge Kaplan did not make a factual finding that the cleanup would in fact cost less than $6 billion. In fact, the Ecuadorean court found that it would be more expensive than this"), but still left out some key facts that I had emailed her:
Kaplan's opinion indicates that – a year before he told AW to stop using his damages estimate – Russell "left the LAP team . . . because, among other reasons, the LAP team owed him money and refused to pay it." If you had investigated this, you would also learn that, in his trial testimony, Russell admitted "that after the consultant underwent a falling out with Donziger, Russell turned around and offered his services to Chevron." (www.bloomberg.com/bw/articles/2013-10-18/a-swag-surprise-in-the-19-billion-chevron-case). So, you have a consultant who, while he was working for Donziger, did in fact prepare a $6 billion cleanup cost estimate. Then he has a dispute with Donziger over money, he quits, offers his services to Chevron, and disavows his earlier estimate. And you're suggesting that AW's funders are supposed to think they did something wrong by ignoring Russell's about-face and continuing to use the estimate he had prepared? To be clear, Kaplan made no findings about whether Amazon Watch knew or believed Russell's estimate to be false; Amazon Watch was not a party to the Chevron v. Donziger trial.
Even though she did not report the full story, which had been pointed out to her in advance, Ms. Howell's writing here is probably not libelous; it's just biased reporting.
But other statements are more problematic. Ms. Howell writes that "an analysis produced by the accounting firm KPMG concluded that Mr. Donziger’s team and his funders donated over $500,000 to Amazon Watch." As far as I can tell, that's pretty clearly wrong. The KPMG accountant, Troy Dahlberg, submitted testimony that he had "confirmed" payments of $11,181 to AW from the attorneys, and had found some "evidence" of additional payments of $243,173 for which there was no hard evidence. I don't know what the real figure is, but I have no idea where Ms. Howell got her numbers. As far as I can tell, that's false.
Is it libelous? The law breaks libel down into falsehoods that actually harm someone's reputation, and "libel per se" – false statements that are so bad they are presumed to cause harm. This might not be libel per se, because – even though Ms. Howell clearly intended to imply that this is scandalous – there's actually nothing wrong with AW accepting any amount of funds from the Donziger and other lawyers. If, however, it causes some harm to AW (such as if a funder withdraws its support), then Ms. Howell might be liable.
There's another statement, though, that's far worse:
“Amazon Watch is a key player in a fraudulent scheme concocted by a group of lawyers in an attempt to extort billions of dollars from Chevron. They have been paid to promote knowingly false and misleading information about the company to the media, the U.S. Securities and Exchange Commission and government officials in an effort to pressure Chevron into a settlement,” said Morgan Crinklaw, a spokesman for the oil giant.
Now, if that's false (and everything that I know leads me to believe it is), it's libel per se. It doesn't actually matter that Ms. Howell is quoting a Chevron spokesperson. As one newspaper handbook explains, "The fact that a person is quoted accurately is not in itself a defense to a subsequent libel action, if the quoted statement contains false information about someone." The reporter and newspaper are liable for repeating the false statement. That's especially true here, because the falsity of the statement was pointed out to Ms. Howell before she published, so it was deliberate.
To be clear, there's absolutely nothing wrong with "an effort to pressure Chevron into a settlement." And in the only legal proceedings that Amazon Watch actually participated in, a federal court found that " Even if this Court assumes that Amazon Watch was the mouthpiece for [Steven Donziger], there is nothing to suggest that Amazon Watch’s campaigns and speech were more than mere advocacy and were likely to incite or produce imminent lawless action. . . . All that Chevron has shown this Court is that Amazon Watch has been very critical of Chevron’s operations in Ecuador." Ms. Howell knew this, because I told her.
From the beginning of Chevron's campaign against the Ecuador case, they have argued that the entire case is a "fraudulent scheme," as Crinklaw states. They weren't willing to try to prove it at trial, though. While they did try to prove that Steven Donziger had committed misconduct, they made no attempt to show that Chevron was not responsible for massive contamination in Ecuador.
Amazon Watch's campaign against Chevron would only be illegitimate if they knowingly said false things, or if they knew that the whole campaign was an effort to pressure into settling pollution claims that were false. As noted above, the best that AW's critics can do is point to the continued use of a cleanup estimate that 1) was actually issued by the scientist that they attributed it to; 2) was asked to be withdrawn after a dispute over payment of the scientist's bill, after which he switched sides; and 3) was ultimately less than found by the Ecuadorean courts. And the pollution claims aren't false; no court has even suggested that they are.
So, shocking as it may be, we'll continue to stand by Amazon Watch – along with pretty much everyone else.
Thursday, July 16, 2015
Amazon Watch and our supporters will not be bullied!
Reposted from Eye on the Amazon
As part of an ongoing effort to blur the truth, The Washington Times just published a "hit piece" against Amazon Watch, which has long supported the Ecuadorian communities that were devastated by decades of Chevron's reckless actions for which it has been found guilty in a landmark environmental lawsuit. Biased and misleading, the article is nothing more than another piece of Chevron's ongoing strategy to do anything other than deal with the consequences of its actions in Ecuador and the subsequent toll on the Amazon rainforest and its inhabitants.
When it's impossible to hide a crime, as with Chevron's environmental devastation in Ecuador, corporate criminals have a history of changing the story to vilify the victims and their allies instead of facing the consequences. For Chevron's army of lawyers and multiple PR teams – and more money than some nations – there's no lie too big and no scheme too outlandish.
We first learned of this latest attack a couple months ago when a major contributing foundation received a voicemail from a Washington Times "reporter" asking false and misleading questions. Shortly thereafter, we heard that additional foundations also received biased, pro-Chevron emails from the same "reporter." In her correspondence, Kellan Howell repeatedly omitted the fact that Amazon Watch had successfully defeated all of Chevron's allegations of wrongdoing in federal court. And that's the difference between an investigation and a smear campaign: journalists investigate truth, smear artists propagate lies. Yet, much to Chevron's chagrin, our donors' steadfast support and refusal to be intimidated comes across clearly in the article despite the author's attempts to cast us in a negative light.
Even after it was brought to her attention multiple times, including by our lawyer, Ms. Howell's article completely omits the fact that a US District Court found – rejecting Chevron's argument that Amazon Watch had done anything wrong – that "there is nothing to suggest that Amazon Watch's campaigns and speech were more than mere advocacy and were likely to incite or produce imminent lawless action," and that "[a]ll that Chevron has shown this Court is that Amazon Watch has been very critical of Chevron's operations in Ecuador."
Of course The Washington Times failed to include that vital information because it directly refutes Chevron spokesman Morgan Crinklaw's slanderous statement that Amazon Watch was "paid to promote knowingly false and misleading information about the company to the media, the U.S. Securities and Exchange Commission and government officials…"
In another glaring example of biased reporting The Washington Times deliberately omits the fact that Russell – who issued the $6 billion damage estimate – "left the LAP [plaintiffs'] team . . . because, among other reasons, the LAP team owed him money and refused to pay it." Additionally, Russell admitted that after the consultant underwent a falling out with Donziger, he turned around and offered his services to Chevron. Of course, after Russell left the team the final damage estimates were much higher than $6 billion.
Below is the response Amazon Watch sent to The Washington Times when they reached out to us for comment several weeks after first contacting our donors.
Monday, July 6, 2015
BP's latest settlement for its Gulf of Mexico spill, for the amount of $18.7 billion, further highlights the greed and racism of Chevron for refusing to settle claims over the far worse ecological damage caused by the company to the people of Ecuador's Amazon region.
With the latest settlement, BP estimates its total liability for the 2010 spill to be $54 billion. That's more than five times higher than Chevron's liability for systematically discharging billions of gallons of benzene-lade oil waste into the waterways of Ecuador's Amazon. The dumping happened from 1964 to 1992, when Chevron (operating as Texaco) abruptly pulled out of the country.
Could there be a more brazen illustration of racism and greed than Chevron's despicable refusal to accept responsibility for what it did in Ecuador?
Chevron CEO John Watson has claimed Ecuador's courts gouged the company when they delivered the verdict against the oil giant in 2011. The damages later were upheld in 2013 in a unanimous decision by Ecuador's Supreme Court. To avoid a U.S. jury, Chevron had insisted the trial be held in Ecuador and had accepted jurisdiction there.
While BP compensates its victims in the U.S., Chevron thus far has been able to obtain effective impunity for its crimes against the people of Ecuador. Cancer rates in the affected area have skyrocketed, costing numerous lives. Instead of cleaning up, the company attacks the very villagers it poisoned and sues the lawyers who have led the legal charge demanding adequate compensation.
Chevron's contamination in Ecuador is far more widespread than BP's in the Gulf. It has lasted longer, was planned deliberately, and has decimated indigenous groups. The hard truth is that environmental racism is alive and well in Chevron today and Ecuador is not the only example.
Another is how the company treats the Bay Area community of Richmond. That's where Chevron owns a polluting refinery where a fire recently forced thousands to seek medical attention. When the community stood up to Chevron and demanded changes, the company had the temerity to spend $3 million to fund its own candidates for the town council.
There was a tragic loss of life and a major environmental impact from the Gulf spill. But at least 1,400 people in Ecuador are estimated to have died from cancer and other oil-related diseases. The death toll will rise if there is no clean-up.
Chevron's racism toward the people of Ecuador was on clear display during the trial. Company lawyers proposed that Ecuador's courts adopt a clean-up standard 100 times more lax than that used in its home state of California. For more on how Chevron tried to corrupt the court process in Ecuador, see this sworn affidavit from lawyer Juan Pablo Saenz.
Of course, many of Chevron's victims in Ecuador are indigenous and live in an isolated part of a Third World country. Unlike BP's victims in the U.S., they do not have environmental laws like the Clean Water Act to protect them.
Let's review the facts.
In Ecuador, a major U.S. oil company has refused for almost 50 years to clean up an environmental catastrophe caused by intentional dumping over a period of decades. In the U.S., a British company that had a terrible accident put up $20 billion without as much as a trial and ultimately settled the entire matter for more than $50 billion.
When Chevron CEO Watson claims the Ecuador judgment is too high, what he is really saying is it is unfathomable to him that people in the forest could actually hold his company accountable.
Watson and Donald Trump might have more in common than they realize.
Wednesday, June 17, 2015
A five-judge panel from a respected New York appeals court has dealt a blow to Chevron in a dispute between two groups of villagers related to the company's $9.5 billion pollution liability in Ecuador.
In a decision issued this week, the court unanimously ruled that any dispute among Ecuadorian villagers over the distribution of proceeds from the historic judgement should be heard in the same courts that issued it. American law professor Judith Kimerling, who claims to represent a handful of indigenous families out of an estimated 30,000 affected Ecuadorian villagers, had asked the New York trial court to issue an order that her clients were entitled to a proportional share of the proceeds.
Kimerling's theory was sound but her choice of forum was nuts from the get go. Although she purports to be a human rights lawyer, in reality she was doing the bidding of Chevron by attacking Ecuador's courts as incapable of dealing with the dispute. She could not point to a single instance in the history of American jurisprudence where a U.S. court tried to resolve competing claims among foreign citizens over the proceeds of a foreign judgment issued in the courts of their own country.
The latest appellate court decision, issued unanimously, is a direct rebuke to Chevron and raises yet more questions about the wrongheaded approach of U.S. trial judge Lewis A. Kaplan in a similar case brought by the oil giant.
At Chevron's request, Kaplan in 2014 refused to seat a jury and then entered a bizarre and unprecedented order that tries to block the Ecuadorians from collecting the proceeds of their judgment anywhere in the world. Kaplan refused to even review the 105 technical evidentiary reports that demonstrated Chevron had deliberately disposed of its toxic waste in the rainforest, decimating indigenous groups and causing an outbreak of cancer that has cost the lives of numerous local residents.
Dozens of international law scholars filed a "friend of the court" brief blasting Kaplan's decision as a violation of international law. The Kaplan ruling is under appeal before a separate federal panel.
In the meantime, just a few blocks away, five judges from a New York state appeals court used logic and common sense sorely lacking in Kaplan's courtroom. The court agreed with Steven R. Donziger, a New York attorney who has represented the affected communities in Ecuador for two decades. Donziger had argued that any dispute over the judgment obviously should be resolved in the nation that conducted the trial.
According to the state appellate court,
"Ecuador is the forum more convenient to the parties and witnesses in New York; there is no unfairness in requiring plaintiffs to prosecute their claims in Ecuador where they reside; the underlying litigation took place there; the underlying judgment to which plaintiffs claim a proportional share, was issued there; and defendant Amazon Defense Coalition, which was directed to distribute the proceeds of the judgment, is domiciled there."
Donziger, in his own statement, praised the court's logic and implicitly criticized Kaplan:
"The New York state appellate court properly recognized that issues related to an Ecuadorian judgment against Chevron should be resolved by the courts of Ecuador, not by U.S. trial judges who not only lack jurisdiction but have no expertise regarding Ecuadorian law or procedure."
One must remember that Ecuador's courts spent 11 years in trial and appellate proceedings only because Chevron insisted the trial be held there after the original action was filed in New York in 1993. Once damning evidence of extensive contamination was presented in Chevron's preferred courts of Ecuador, the oil company shifted gears and began to attack the very judicial system it had previously praised.
In the meantime, Chevron came back to the same U.S. court where it had blocked the original case to beg Judge Kaplan to try to rescue it from the Ecuadorian judgment. Kaplan – who has undisclosed investments in Chevron – was more than happy to oblige. He allowed the oil giant to present fabricated witness testimony and otherwise make a mockery of justice in his courtroom, as this document explains. (For Donziger's explanation of the case, see this article from The Huffington Post and this legal brief appealing Judge Kaplan's decision.)
In the meantime, the affected villagers are not waiting around to hear from U.S. courts. They have hired counsel in Canada and Brazil where they are pursuing Chevron's assets to force the company to comply with the rule of law. Chevron has responded in its usual fashion to its latest spate of bad news – by trying to cyberbully a respected journalist who exposed that its entire defense to the judgment is falling apart.
For Donziger's full statement on the recent court decision, see this press release. For the court's full decision, see here.