Tuesday, April 5, 2016

Chevron Reeling? Oil Giant Abandons Key Claim In Ecuador Pollution Case

Reposted from The Chevron Pit

Chevron is reeling again in the Ecuador pollution case. The company's plan to evade paying for a court-ordered clean-up of the billions of gallons of toxic waste it dumped in the Amazon rainforest -- decimating indigenous groups -- seems to be faltering like never before.

After suffering defeats before 18 separate appellate judges, Chevron quietly abandoned its last major claim in Ecuador to challenge the $10 billion environmental liability imposed on the company by Ecuador's Supreme Court in 2013.

Chevron's decision to sit on its hands at such a critical juncture severely damages its prospects in Canada, where the affected communities are targeting company assets to pay for a clean up of their ancestral lands. (Here is background on Chevron's increasing legal difficulties in Canada; here is an explanation of the company's jurisdictional shell game.)

Chevron abandoned its "fraud" allegations in Ecuador by letting the statute of limitation lapse on a key claim under the country's Collusion Prosecution Act (CPA). The move is a flagrant illustration of how the company's evidence has collapsed in recent months. Ignoring the CPA claim all but nullifies Chevron's international arbitration action against Ecuador's government, where the company cynically has been trying to stick taxpayers in Ecuador with its enormous clean-up tab.

Chevron's decision follows a series of devastating courtroom setbacks.

The company's star witness, Alberto Guerra, recently admitted to accepting bribes and then lying under oath after being paid $2 million (see here and here) by the company. Some of the Chevron funds were handed over to Guerra as cash out of suitcase by company lawyers Andres Rivero and Yohi Ackerman.

The company's forensic evidence regarding the supposed "ghostwriting" of the trial court decision also has fallen apart; a new report proved the judge wrote the judgment by saving it 484 times on his office computer. Chevron is also facing negative fallout from a whistleblower video showing its scientists plotting to hide pollution evidence from the Ecuador court.

Caught committing fraud, Chevron paid an estimated $2 billion to dozens of law firms to try to turn the tables on the very people it poisoned by manufacturing false evidence using paid stooges like Guerra. Chevron's strategy is designed to shroud the company's crimes and wrongdoing in a fog so thick that the financial risk can be hidden from shareholders, artificially propping up the company's stock price. In the meantime, Chevron's notoriously passive Board of Directors (with CEO John Watson as Chairman) sits on its hands while villagers suffer and die.

This disastrous corporate strategy, designed and funded by Watson and Chevron General Counsel R. Hewitt Pate, is now in full backfire mode.

The mind-blowing story behind Chevron's latest retreat is in this press release issued by the Amazon Defense Coalition. The ADC represents the 80 impoverished indigenous and farmer communities in Ecuador who obtained the court judgment. Another press release explains how Chevron is facing a potential "litigation catastrophe" in the Ecuador case.

Three layers of courts in Chevron's preferred forum of Ecuador found that the oil giant deliberately dumped billions of gallons of toxic waste into the rainforest, causing an outbreak of cancer that has killed or threatens to kill thousands. (For a summary of the overwhelming evidence against Chevron, see here.)

In another sign of its bad faith, Chevron stripped its assets from Ecuador in 2007 after insisting that the trial take place in the South American nation. Once Ecuador's Supreme Court in 2013 affirmed the final judgment, there was no way to force Chevron to pay up without targeting company assets in other countries, which the villagers are doing in Canada and Brazil.

Chevron's latest decision to give up the CPA claim "is an example of the company bailing out of any court where it knows its incredibly weak evidence will not carry the day," said Luis Yanza, a leader of the affected communities and a Goldman Prize winner.

Thursday, March 24, 2016

Alec Baldwin Helps Expose Chevron's $10 Billion Ecuador Pollution Disaster

Reposted from The Chevron Pit

Actor and journalist Alec Baldwin has used his popular podcast "Here's The Thing" to interview human rights attorney Steven Donziger about Chevron's pollution disaster in Ecuador's rainforest.

The interview, broadcast on National Public Radio's outlet in New York, is here.

Donziger, who for two decades has helped Ecuador indigenous and farmer communities win a historic $10 billion environmental judgment against Chevron, used the interview to explain the ongoing environmental devastation, high cancer rates, and public health crisis caused by the oil major's decision to discharge billions of gallons of toxic waste into the Amazon rainforest. Chevron operated in Ecuador under the Texaco brand from 1964 to 1992.

Three layers of courts in Ecuador -- the country where Chevron insisted the trial be held -- have found the company guilty. Chevron admitted that it abandoned an estimated 1,000 unlined toxic waste pits in the Amazon that continue to contaminate soils, groundwater, and rivers. Ecuador's Supreme Court unanimously confirmed the judgment against Chevron in 2013.

The affected communities are trying seize Chevron assets in Canada and other countries to force the company to comply with the judgment. Chevron stripped its assets from Ecuador in 2007 in anticipation of losing the case. The Canadian Supreme Court last year unanimously denied Chevron's attempt to block the asset collection action, leading to major new difficulties for the company.

Just recently, Amazon Watch exposed a devastating whistleblower video showing Chevron technicians trying to hide the company's pollution from Ecuador's court. Here is a summary of the overwhelming evidence against Chevron; a summary of the independent media coverage documenting Chevron's wrongdoing; and a 60 Minutes segment on the case.

Baldwin's podcast is enormously popular and often reaches millions of listeners. In recent months, he has interviewed people as diverse as actors Sarah Jessica Parker and Dustin Hoffman, Comedian Amy Schumer, Doctors Without Borders President Joanne Lui, and environmental activist Antonia Juhasz.


Tuesday, February 2, 2016

Chevron At War With Canada Supreme Court; Company Also Faces Accusations of Terrorism and Tax Evasion

Reposted from The Chevron Pit

As Chevron faces a potential litigation catastrophe over its $10 billion pollution liability in Ecuador, we have decided to publish a news summary from the front lines of the historic battle by indigenous communities to hold the company accountable for its "Amazon Chernobyl" disaster.

The summary will chronicle examples of Chevron's illicit behavior and sub-standard business practices in Ecuador and elsewhere -- including, most recently, the shocking news that the company is being sued for making payments to Saddam Hussein's private slush fund.

We understand that we might have a space problem given the ample material related to Chevron's unethical litigation practices, payments to witnesses, and other fraudulent shenanigans taking place under the regime of current CEO John Watson (annual compensation: $25 million) and his sidekick, Chevron General Counsel R. Hewitt Pate. But we will try.

Here is our first installment of The Chevron Chronicles:

Chevron violating Canada Supreme Court decision: Chevron's arrogance and the moral bankruptcy of its "perpetual litigation" strategy under Watson's leadership is now on full display in Canada. The villagers last week demonstrated in a new legal filing that Chevron yet again is defying a Canada Supreme Court order granting them jurisdiction to try to seize company assets to pay for their $10 billion judgment. Despite the Supreme Court order, Chevron for the fourth time has filed legal papers to nullify jurisdiction.  The company now faces the nullification of its defenses given that it already litigated them (and lost) in Ecuador, where it insisted the trial be held. For background, see here; for the Canada Supreme Court decision against Chevron, see here.

Chevron is now 0-18 among appellate judges in Canada and Ecuador: As further proof that Chevron views courts as little more than pawns in a larger strategy to win by might what it can't win by merit, the company has now lost before all 18 appellate judges in Canada and Ecuador who have heard the case. Using some of the 60 law firms and 2,000 lawyers Chevron has retained to fight the villagers, the company is still trying to re-litigate many of the same issues (including jurisdiction) already decided by the 18 appellate judges. As Alan Lenczner, the Canadian lawyer for the villagers, said in his latest filing: "Deep pockets against the resources of indigenous people in the Ecuadorian Amazon and repeated, interminable delay until 'hell freezes over' are Chevron's weapons." Chevron's desperation in Canada is so palpable that the company enlisted the notorious convicted felon Conrad Black to serve as a spokesman for its cause.

Chevron charged with providing material support to terrorists: Chevron's propensity to put profits in front of people in Ecuador -- which ended up causing numerous deaths from cancer -- are just the tip of the iceberg. Several victims of terrorism sued Chevron in California last October for financing a Saddam Hussein slush fund that was used by the Iraqi government to reward the families of suicide bombers targeting Israeli civilians. Chevron already paid a $30 million fine to the U.S. government for violating the Foreign Corrupt Practices Act in Iraq. The latest civil lawsuit alleges: "Due, in part, to Chevron's substantial assistance, Saddam Hussein had the means to finance and direct over twenty separate acts of violent terrorist attacks inflicting death, disfigurement, and lasting psychological trauma and pain upon plaintiffs, eighteen U.S. nationals and over 300 foreign nationals then living in Israel."

Chevron's fraud in Ecuador proven by whistleblower video: The explosive Chevron whistleblower video that shows company scientists trying to defraud Ecuador's courts continues to gain traction.  The video has now been viewed more than 2 million times on the Internet and does more than anything to illustrate how the devious company uses obfuscation to hide the truth about its toxic legacy.  Combined with the stunning admission by the company's star witness that he lied in open court, Chevron now faces a major uphill battle in Canada even under the best of circumstances.

Chevron faces allegations of tax evasion in Australia and fraud in Tennessee: In Australia-- where Chevron is the largest foreign investor -- a stunning new report details how how the company has become a tax cheat extraordinaire.  Chevron has been ripping off the Australian government by stashing its earnings in a subsidiary in Delaware and using other paper financial transactions to drain profits out of the country to reduce its tax payments. As business columnist Michael West wrote, "Secretive oil major Chevron Corp has taken the art of tax avoidance to its ultimate form thanks to a scheme so aggressive that it goes beyond merely reducing exposure to income tax, but rather, has been designed to make a profit from the Australian Tax Office."

Separately, the Attorney General of Tennessee sued Chevron for fraudulently siphoning $250 million from a state environmental clean-up fund. A 2009 report from award-winning journalist Antonia Juhasz documented Chevron's environmental problems in dozens of countries around the world

Of course, an oil company like Chevron does not run into trouble with the law so frequently unless it is management's policy to see what it can get away with. As it is doing in Canada to evade paying the Ecuador pollution judgment, Chevron is playing a cynical game with courts and regulators. If this was a fair world, Chevron's executives would face prison for their horrific acts.

Instead, for being the Dick Cheney-esque mastermind behind this subterfuge, Chevron's General Counsel Pate reaps millions of dollars per year in compensation while the company's victims around the world suffer illness and death. Most of Chevron's Board puts up with Watson and Pate by turning a blind eye to these repeated acts of wrongdoing.

Judges and regulators need to connect the dots and take notice of the full range of Chevron's wrongdoing around the world. Only then will they not fall prey to the company's cynical and manipulative jurisdictional shell game.

Courts also must reprimand Chevron like any other abusive litigant trying to use its superior resources to evade its moral and legal responsibilities to those it has harmed.



Tuesday, January 5, 2016

Here Are Five Reasons Why 2016 Could Spell Disaster for Chevron's Ecuador Strategy

The year 2016 is shaping up to be particularly dreadful for Chevron in the Ecuador pollution case despite massive expenditures by the company -- estimated to be $2 billion and rising -- to pay dozens of law firms to try to derail the litigation.

Chevron and its CEO John Watson now face potentially catastrophic difficulties given critical setbacks in 2015 suffered by the oil giant both in and out of the courtroom. That's the word from a devastating new press release about Chevron's declining prospects put out by the villagers.

Here are the five main reasons (although there are many others) that explain why Chevron and Watson are moving closer to being forced to pay the full amount of the $10 billion environmental judgment in Ecuador:

  • The oil giant faces a "litigation catastrophe" in Canada due to a blockbuster 7-0 decision by the country's Supreme Court that issued in 2015. The decision rejected all of Chevron's jurisdictional arguments and gives the green light to the villagers to seize company assets to pay for their clean-up. Chevron has $15 billion of assets in Canada.

  • A unanimous 5-0 decision in favor of the villagers by Ecuador's Supreme Court also makes the Ecuador judgment enforceable against Chevron assets in dozens of countries around the world, posing huge risk to company shareholders.

  • Chevron must deal with the negative fallout from the complete collapse of its star "racketeering" witness, Alberto Guerra. Guerra admitted to lying on the stand after being paid $2 million by Chevron and coached for 53 consecutive days by company lawyers; he is also the company's most important witness in the Canada enforcement action.

  • Chevron also must overcome highly embarrassing and rock solid video proof that company scientists tried to defraud Ecuador's courts by hiding massive oil pollution during judicially-supervised field inspections. The videos were disclosed by a company whistleblower.

  • A stunning new independent evidentiary report by a team of prominent American scientists yet again validates the overwhelming scientific proof that Chevron dumped billions of gallons of toxic waste into the rainforest, decimating indigenous groups and farmer communities.

Paul Paz y MiƱo, a director with the environmental group Amazon Watch, had this to say about Chevron's prospects:
All told, 2015 was a disastrous year for Chevron in the Ecuador pollution case and 2016 might be even more challenging for the company as it tries to dig out of its ever-deeper hole. Make no mistake about it, Chevron is now moving backwards in its abusive campaign to evade the Ecuador judgment despite spending massive sums of shareholder money on an unethical, illegal, devious, and ultimately futile jurisdictional shell game.
Steven Donziger, the longtime U.S. legal advisor to the affected communities and a target of a desperate company espionage campaign, criticized CEO Watson for "marching the company so far out onto a limb it appears there is no longer a viable path to turn back without Watson himself losing face and possibly his job." Donziger said it was clear the company has no coherent exit strategy with Watson at the helm.

That might explain why Chevron under Watson's misguided leadership refuses to cut bait and deal with the obvious risk its reckless scorched-earth strategy has created. The company's Ecuador liability grows larger by the day due to statutory interest while Watson seems to have little clue on how to reverse course. As usual, Chevron's notoriously callow Board of Directors with Watson as "Chairman" does nothing.

Aside from the problems mentioned above, Chevron also faces a shareholder revolt over the pollution liability; new computer forensic evidence from noted authority J. Christopher Racich that puts the lie to the company's claim the Ecuador judgment was "ghostwritten"; increasing protests by environmental groups over the company's human rights abuses in Ecuador and elsewhere; and evidence that Chevron lawyer Andres Rivero tried to bribe the Ecuador trial judge.

In addition, Chevron General Counsel R. Hewitt Pate has been hit with accusations of market manipulation over the Ecuador judgment. That was after a private panel of three arbitrators rejected Chevron's primary defense to the environmental claims. Also in 2015, Chevron's main outside law firm (Gibson Dunn) on the Ecuador case again was blasted by a federal judge for its ethical lapses.

To put it mildly, 2015 was a very bad year for Chevron on the Ecuador pollution case despite the use of 60 law firms and 2,000 lawyers to try to shake the rainforest villagers. Making a bad situation even worse: cratering oil prices have shaved billions of dollars off of Chevron's book value.

Again, all of the juicy details of Chevron's Ecuador setbacks are in the latest press release.

Note to Chevron's Board: figure out a way to get Watson and his team under control or Chevron shareholders will face even greater wrath from the Ecuador judgment in 2016.

Monday, December 21, 2015

Market Manipulation? Chevron General Counsel Pate Has Some Explaining to Do to the SEC

Reposted from The Chevron Pit

The forum shopping by Chevron's General Counsel R. Hewitt Pate in Gibraltar to evade the company's $10 billion Ecuador liability seems to have backfired. We understand the desperation: largely under Pate's watch Chevron has spent an estimated $2 billion on 2,000 lawyers and 60 law firms in a futile attempt to fend off impoverished villagers who in 2013 won a historic environmental judgment against the company.

Now, Chevron might have to explain Pate's apparent market manipulation to the Securities and Exchange Commission.

Unable to shake the villagers, Pate resorted again to publishing a misleading press release to try to cover up his recent courtroom setbacks that now threaten company assets. These setbacks include the recent meltdown of the company's star witness -- he admitted lying on the stand -- and a unanimous decision against Chevron by Canada's Supreme Court allowing the villagers to try to seize the oil giant's assets to force compliance with their judgment.

The question arises: is Pate putting out misleading press releases to try to save his own skin in the face of increasing angst over the Ecuador liability from Chevron's Board? Or does Chevron's Board actually sanction what appears to be market manipulation from its General Counsel?

The latest misleading Chevron press release -- issued last week with a juicy quote from Pate himself -- had the following headline: Supreme Court of Gibraltar Rules Against Donziger Offshore Company; Awards Chevron $28 Million.

According to thestreet.com, Chevron's stock price bumped up with the publication of the Chevron release. Chevron's misleading interpretation of the default judgment was largely parroted by Paul Barrett of Businessweek and other pro-business journalists.

Let's break it down and assess whether the latest Chevron press release violates the holy grail of securities law which requires a company to be completely honest about any material issue in all of its public statements.

First, we note that the "Supreme Court" of Gibraltar as described by Pate is not really a Supreme Court. The Gibraltar court for purposes of this case consisted of one solitary trial judge. This judge was required by law to rule in favor of Chevron because the case was not defended.

Second, Gibraltar is not a real country. It is a tiny British protectorate of only 30,000 citizens that occupies 2.6 square miles of territory connected to Spain on the southern side of the Iberian Peninsula. A relic of the British Empire, Gibraltar is so small the country's main road doubles as an airport landing strip. Nevertheless, the elected leader of Gibraltar refers to himself as "Prime Minister" while the local trial court is called a "Supreme Court". Pate thought he would pull a fast one and make it seem like the ruling was a considered decision by several top-ranking appellate justices from a real country; it was not.

As the villagers pointed out in a devastatingly funny press release, the entire territory of Gibraltar is less than half the size the rural town of Ocala in North Florida. We suspect justice is probably more fair in Ocala than in Gibraltar, but that's a story for another day.

Third, the so-called default "award" is utterly worthless to Chevron. It came against an entity called Amazon Recovery Limited, or ARL. ARL has no money and will never have money. The villagers set up ARL in 2012 to collect the proceeds of their historic judgment that Chevron refuses to pay, despite orders that it do so from the Supreme Court in Ecuador. Given Chevron's targeting of ARL, the villagers long ago said they would no longer use it for its intended purpose nor waste their limited resources defending it.

The purpose of creating ARL in Gibraltar was to ensure that no official in Ecuador's government or in Chevron could interfere with the proceeds before a clean-up could take place. This is understandable given Chevron's history of trying to sabotage and corrupt the proceedings in Ecuador. That plan as envisioned by the villagers obviously did not work because of Chevron's latest subterfuge.

Luis Yanza, an Ecuadorian community leader and a director of ARL, explained it does not matter. "We are too smart to get sucked in by Chevron's abusive attempts to tie up our lawyers in irrelevant proceedings which the company uses to distract attention from its legal obligations to those it harmed," Yanza said.

Good for you, Mr. Yanza.

Fourth, Pate predictably used the latest press release to try to link the default judgment to U.S. human rights lawyer Steven Donziger. Unable to explain away the billions of gallons it dumped into Ecuador's Amazon -- oil waste confirmed by dozens of independent journalists -- Chevron years ago launched a demonization campaign against Donziger and his clients to distract attention from its own crimes and fraud. Donziger, called a "warhorse lawyer" by Rolling Stone, has advised the villagers for two decades and has admirably stood tall in the face of Chevron's attacks.

(For more on Donziger's point of view, see these counterclaims he filed against Chevron outlining the company's long history of illegal behavior in Ecuador.)

Again, we understand Pate's frustration. Donziger works alone out of his apartment in Manhattan while Pate pays dozens of law firms to try to destroy the Ecuador case by targeting him. Everything Pate has done to try to try to bring down Donziger, including an open-ended espionage campaign and launching what is probably the most expensive retaliation campaign in U.S. history, has come up short. Pate initially had Chevron sue Donziger personally for $60 billion dropping all damages claims out of fear a jury would rule against the company.

As the villagers point out, Donziger was not a director of the company against which Chevron has its illusory default judgment in Gibraltar. Nor did he participate in a single meeting. The directors were Yanza, two other villagers, a representative from the internationally respected accounting firm Grant Thornton, and a British barrister. So why other than market manipulation would Pate call it a "Donziger offshore company" in the headline?

In the latest press release from the villagers, Donziger described Pate's strategy better than we ever could:
Pate forum shopped the world to extract a judgment from an irrelevant jurisdiction that commands no respect on the global stage in a case that was understandably and quite properly never defended on the merits because it does not matter. The Gibraltar judgment has zero value to Chevron other than as a public relations stunt to distract attention from its growing financial risk due to advances in enforcement actions targeting company assets in Canada and elsewhere.
Donziger added there was element of racism to Chevron's attempts to discount the ability of the villagers to govern their own affairs:
Pate and his colleagues in Chevron act as if no indigenous person from Ecuador's rainforest has either volition or intelligence. They seem to believe the villagers are simply dumb people manipulated by outsiders. I understand this mentality because that's how Texaco viewed the Ecuadorian people when it deliberately destroyed their lands and waterways. Today, that approach reeks of racism. It is also based on patently false assumptions as anybody can see by simply talking to the internationally recognized community leaders who have battled Chevron so successfully for years.
Chevron shareholders whose dividends are under threat might note that the $28 million default judgment was to obtain partial reimbursement for the exorbitant fees Pate paid to the law firms the company has used to attack the villagers and Donziger. Bills submitted in Gibraltar showed some of these lawyers were charging more than $1,200 per hour to carry out the campaign.

Pate, who earned almost $8 million from Chevron the year he lost the Ecuador case, has gotten in trouble before by trying to make Chevron's litigation position appear stronger than it is. In 2013, Pate put out another press release falsely trumpeting a decision from a private international arbitration as a "victory" in the Ecuador litigation when in fact it was nothing of the sort.

In 2012 and 2013, Pate also had no answer for detailed reports submitted to the SEC showing Chevron was deliberately misleading shareholders about its growing  risk in Ecuador. Those rather harrowing reports of company malfeasance, which prompted a shareholder revolt against CEO John Watson at the 2013 Chevron annual meeting, can be read here and here.

The SEC failed to catch the rather obvious market manipulation before the 2008 financial meltdown. Maybe the agency will do something this time to protect Chevron's shareholders and the financial markets from the obvious misconduct of Pate and other top-level managers.