Sunday, January 29, 2012

Why Did Chevron Pay Its "Dirty Tricks Guy" $2.2 Million?

Reposted from The Understory

Expose Diego Borja, Chevron Human Rights HitmanDiego Borja is Chevron’s “dirty tricks guy” — that’s not an allegation, that’s how he once described himself.

Recent court documents reveal that Chevron has paid Borja $2.2 million for his work. You have to wonder: What exactly is Chevron paying Borja to do?

Ostensibly, that $2.2 million is for retainer fees, living expenses, income taxes and legal fees. But given that those same court documents also reveal that Borja was one of several Chevron workers employed to help hide contaminated soil samples taken from the company’s well sites in the Ecuadorean Amazon, there’s plenty of room to suspect the official explanation Chevron has offered for the large sums of cash it’s paying Borja does not tell the whole story.

After all, Borja was once caught on tape saying that he had threatened to testify against Chevron if the company didn’t compensate him for his botched attempt to bribe an Ecuadorean judge. That particular dirty trick earned Borja a spot on our list of Chevron’s Human Rights Hitmen — and an all-expenses-paid trip out of Ecuador, once the Ecuadorean government started looking into Borja-the-Chevron-contractor’s attempts to corrupt the Ecuadorean judiciary.

The Chevron Pit has the scoop on the hush money Chevron is paying Borja, plus this background for those who are new to the strange and sordid saga of Chevron’s dirty tricks guy:

In 2009 Borja, along with his mysterious partner Wayne Hansen, secretly videotaped a judge in a failed effort to derail the trial that charged Chevron with deliberately contaminating the rainforest and resulted in an $18 billion judgment against the company.

Chevron whisked Borja and his family out of Ecuador and into the U.S. after Borja turned over the tapes to Chevron. Later, though, Borja threatened to turn evidence against Chevron if he was not paid handsomely for them.

Since that revelation, the Borjas have been practically under house arrest in Houston, but the money ain't shabby so maybe they don't mind. See court documents here.

Chevron has picked up their rent, the car payments and the costs for a washer, dryer, and all their furniture. Both Borjas get retainer checks every month. The wife has a job with Chevron but nobody seems to know what she does exactly. Borja is unemployed.

Why is this a problem? Borja is likely to be a witness in pending litigation and hearings about the $18 billion judgment. Will Borja bite the hand that feeds him? We doubt it, and that's exactly the Chevron plan.

We hope the news media won't let Chevron get away with it. Hats are off to the reporters who have taken the time to peruse these documents.

See articles by Kate Sheppard of Mother Jones, Adam Klasfeld of Courthouse News, Rebecca Beyer of the Daily Journal and Braden Reddall and Dan Levine of Reuters.

– Mike G.

Thursday, January 26, 2012

US Court Delivers Serious Rebuke to Chevron's Abusive Legal Tactics

Victory for Ecuadorians Seeking Justice in the Amazon

Today, a three-judge panel of the 2nd U.S. Circuit Court of Appeals delivered a major blow to Chevron's efforts to evade responsibility for the devastation it caused in the Amazon rainforest of Northeastern Ecuador.

The appeals court reversed an order by District Court Judge Lewis Kaplan that purported to block enforcement of an $18 billion judgment delivered by an Ecuadorian court in February 2011, and upheld in full on appeal just weeks ago.

As the Associated Press reports:

"The Ecuadorean plaintiffs appealed Kaplan's ruling to the 2nd Circuit. The appeals court heard oral arguments and then issued an order in September lifting Kaplan's block on collection efforts. On Thursday, it went a step further, tossing out the portion of Chevron's challenge to the judgment that sought to block its enforcement anywhere in the world."

U.S. spokesperson for the Ecuadorians, Karen Hinton, said that the ruling sets right a "grave injustice against the Ecuadorians," and "rebukes Chevron's abusive legal tactics of the past two years designed solely to malign the very people who suffer as a result of the company's deliberate poisoning of their homeland."

Craig Smyser, a lawyer working with the plaintiffs' legal team, also made a statement in response to the appeals court ruling:

"Instead of confronting its environmental despoliation, Chevron has engaged in an international smear campaign of lawyer- and court-bashing. As a result of the 2nd Circuit's opinion today and the confirmation of the Ecuadorian trial court's judgment by the Ecuadorian appellate court, the wheels of the law are bringing Chevron to justice."

Also today, U.S. Magistrate Judge Gary Austin delivered more bad news for Chevron. He allowed the Republic of Ecuador to move forward with discovery proceedings that will allow lawyers for the Republic of Ecuador to subpoenas documents and depose an expert witness for Chevron, Dr. Douglas Mackay.

As Ms. Hinton said in her statement regarding the appeals court ruling:

"Chevron's fraud includes the deliberate use of substandard operational practices all designed to further inflate company profits at the expense of human life, the manipulation of scientific evidence during the trial and the launching of a smear campaign to distract attention from its own misconduct."

The plaintiffs believe there's that discovery proceedings against Dr. Mackay by the government of Ecuador – related to Chevron's last-ditch effort to pursue arbitration against Ecuador at the Hague – will likely bring some of the company's widespread fraud to light. Dr. Mackay was paid by Chevron to review the company's sampling of polluted sites during the trial in Ecuador. The oil giant created a "Judicial Inspection Playbook" to help Chevron's technical team take samples that would minimize detection of toxins, and then doctored this internal document before delivering it to Dr. Mackay, who reviewed an altered version for a report to the court. It appears that Dr. Mackay, a University of California professor, may be just one more victim of Chevron's fraud and deceit.

At least they didn't ravage his community, poison his water, and then smear him for telling the truth. At least not yet.

– Han Shan

Friday, January 20, 2012

Chevron's 500 Lawyers At 39 Law Firms Defeated For Third Time

Five Impoverished Indigenous Groups One Step Closer To Justice

Reposted from The Chevron Pit

How many lawyers does it take to lose three court decisions in a row?

According to a Chevron declaration: Almost 500 lawyers and paralegals at 39 firms.

Chevron's public face for its unprecedented legal attack against the impoverished Ecuadorians has been Gibson Dunn's Randy Mastro, a former political hack to tough guy Rudy Guiliani, a former NYC Mayor and one-time presidential candidate.

See here and here for more information.

Early on in the fight, Mastro got lucky when another fellow New Yorker, federal judge Lewis Kaplan ruled in Chevron's favor in its effort to block the $18 billion judgment out of Ecuador.

(The $18 billion is to cleanup the company's massive contamination of the rainforest, provide health care and deliver clean drinking water to the area.)

Kaplan and Mastro competed in court to see who could out-disparage and out-ridicule the indigenous groups, and Judge Kaplan made disturbing comments from the bench about the Ecuadorians.

Mastro's luck ran out, though, when he appeared before the 2nd Circuit Court of Appeals in September. The judges literally laughed at Mastro's argument that a U.S. court could sit in judgment of Ecuador's court system. One business day later, the court threw out Chevron's case.

In January, after Ecuador's appellate court upheld the $18 billion judgment, Chevron went back to its favorite judge, but even Kaplan wouldn't touch the oil giant's desperate plea to stop the Ecuadorians from enforcing the judgment.

Seeking relief from what Chevron described as "imminent harm," Mastro tried again with the 2nd Circuit but yesterday's ruling – denying the company's motion to block the judgment – ended Chevron's 18-month odyssey in U.S. courts to derail the Ecuadorian trial – a trial it asked for and fought for ten years ago.

For more insights into Mastro's "legal thuggery," see this Huffington Post blog.

Wednesday, January 4, 2012

Ecuador Appeals Court Affirms $18 Billion Pollution Judgment Against Chevron: Time to Pay Up!

Secoya elders march in Lago Agrio at the start of the trial against Chevron Texaco. © 2004 Lou Dematteis

An appeals court ruling on Tuesday brings justice one significant step closer for the communities of the Ecuadorean Amazon who have suffered for decades from Chevron's callousness. A three-judge panel in the Provincial Court of Justice of Sucumbios upheld the historic $18 billion judgment against the oil giant issued in February.

The verdict from the appeals panel cites Chevron's own scientific evidence and blasts the company's conduct during the trial, calling it "abusive" and "clearly designed to obstruct the administration of justice."
"Chevron was condemned to pay trial costs for manifest bad faith... so much so that now suffice it to say that the procedural conduct of the defendant, few times seen in the annals of the administration of justice in Ecuador, were abusive to the point that... the Court will not even dedicate any more writings to this portion of the decision."
In the seething 16-page verdict, the judges conclude that Chevron "staged incidents that encumbered the process of the trial." They also scold the company for burying the appellate court with 20,000 pages of redundant evidence, and note that during the trial, "hundreds of thousands of documents submitted by Chevron bloated the trial record with everything it considered relevant."

Predictably, Chevron condemned the ruling as illegitimate and painted the courts as corrupt.

...which the appeals panel addressed in its verdict: "From the [initial hearing] up to the present appeal, it can be said that ... Chevron has failed to recognize the authority, jurisdiction, and competence of Ecuadorian courts."

As The Miami Herald reports, attorney for the Ecuadorian plaintiffs Pablo Fajardo says "the company has been resorting to the same tactics in Ecuador"
"Chevron doesn't want to acknowledge that indigenous communities and poor people have a right to access justice," Fajardo said. "Chevron wants to avoid a precedent that could serve for other communities around the world."
Indeed, some analysts have argued that Chevron has fought this case so aggressively – and earned the support of "greed is good" allies like the Chamber of Commerce for doing so – exactly because they fear a precedent that would embolden communities to fight to hold more companies accountable for their environmental and human rights abuse.

But others, including my friend Paul Paz y MiƱo, writing in the Huffington Post yesterday, point to the fact that Chevron's legal strategy in this case is being driven – faster and nearer to the cliff-edge each day – by corporate behemoth law firm Gibson, Dunn & Crutcher which likes to brag about its "innovative rescues" of "clients in deep trouble." Gibson Dunn has turned this case, and the oil giant, into a major money machine, with its lawyers billing perhpas hundreds of millions a year.

And one can't count out the utter imperialistic audacity of entitled greed summed up beautifully by the Chevron lobbyist who told a reporter, "We can't let little countries screw around with big companies like this." For CEO John Watson and the one-percenters who are also the one-percenters at Chevron, it must gall them to think that they could be brought to justice by a bunch of indigenous people and campesinos, their grassroots supporters around the world, and the tenacious human rights lawyers they've brought on to fight their case.

But whatever the thinking behind Chevron's dead-end strategy, their options are quickly running out.

As Patrick Radden Keefe writes in The New Yorker:
In theory, Chevron has one final appeal in Ecuador, to the country's Supreme Court. But to proceed with that appeal and stop the plaintiffs from trying to collect on the judgment in the meantime, Chevron would have to post a multi-billion-dollar bond, which, given its jaundiced view of the rule of law in Ecuador, it seems unlikely to do. So for all intents and purposes, yesterday's decision amounts to a green light for the plaintiffs to start collecting.
And by "collecting," he means that with the $18 billion judgment now affirmed on appeal, the plaintiffs can take that judgment to dozens of countries around the world where Chevron operates – Ecuador no longer being among them – and take legal action to force Chevron to pay up, or seize their assets.

As Quito-based Amazon Watch activist Kevin Koenig told The Financial Times:
"Chevron has to win every one of those cases. The plaintiffs will only need to win one."
Chevron has significant assets convenient to the plaintiffs' base in Latin America, including Argentina, Venezuela and Brazil, where prosecutors are suing the oil giant and oil rig multinational Transocean for $10.85 billion in damages for a large oil spill off the coast of Rio.

Many news reports will note that Chevron continues to pursue international arbitration against the government of Ecuador under the provisions of the Bilateral Investment Treaty (BIT) between the U.S. and Ecuador. Corporate manipulation of and collusion with unaccountable tribunals against the interests of sovereign nations and their citizens outraged people who took the streets around the world, grabbing the world's attention during massive protetsts that shut down the World Trade Organization in Seattle in 1999. The 9-11 terror attacks unraveled that nascent movement but with a resurgent Occupy Wall Street movement today, use of the international arbitration system by deep-pocketed multinationals to defend against liability in countries where they do business will be getting more and more scrutiny. In the Ecuador case, a closed-door tribunal with a panel of international jurists accountable to no one, could conceivably order the Ecuadorian government to mandate that its independent courts release Chevron of liability. But even there, a decision from the tribunal is likely years away, and the plaintiffs have an enforceable multi-billion dollar judgment today.

Returning to The New Yorker's News Desk article by Patrick Keefe, he mentions early settlement talks between Chevron and the plaintiffs, writing that the parties first discussed as little as $140 million. Of course, the plaintiffs walked away from that. He continues:
Since then, each settlement conversation has entertained higher numbers than the last. Chevron once promised the plaintiffs "a lifetime of litigation,” and the sheer acrimony that has marked the case might yet goad both sides to continue the fight. But at some point, they will be forced to bargain, and yesterday's decision in Ecuador could help bring that about.
And a respected oil sector financial analyst seems to think that's exactly what Chevron should do. As The Guardian (UK) reported:
"The wise thing to do is to settle. But they should make sure the money goes to the people who suffered, not the lawyers," said Fadel Gheit, an oil analyst at Oppenheimer. Gheit expects Chevron will try to settle for $2bn-$3bn.
Whether the plaintiffs would ever consider settling for two or three billion dollars is anyone's guess. We're talking about poor farmers whose children have died of cancer and indigenous people who have faced genocide at the hands of oil companies, with ChevronTexaco carving into their rainforest lands, introducing the abuses that still haunt the communities.

As The Miami Herald's Jim Wyss reports, he spoke to my friend Humberto Piaguaje yesterday, who had been trying to reach people in his remote village all day to share the news of the appeals court verdict:
"We've lost so many people in the community," he said, "and it's a shame they couldn't be with us to hear the good news."

– Han Shan

Tuesday, January 3, 2012

Randy Mastro and Gibson Dunn: How Lawyer Arrogance Imperils Chevron Shareholders In Ecuador

One of the more interesting aspects of the $18 billion Chevron-Ecuador environmental case is not only that the oil giant recently offered a $1 billion bribe to Ecuador's government to quash the case, but how a series of monumental mistakes by the American law firm Gibson Dunn Crutcher ("GDC") and its lead partner, Randy Mastro, have increasingly imperiled the interests of a major client like Chevron and its institutional shareholders.

The latest of several recent Gibson Dunn setbacks occurred Tuesday, when an Ecuador appellate court affirmed the $18 billion judgment against Chevron. Chevron is Gibson Dunn's lead client for the last two years as the law firm has seen its profits soar off of the oil giant's Ecuador debacle, which is largely a function of Mastro's own flawed advice and unethical litigation practices as outlined below.

Gibson Dunn partners might want to wake up to Mastro's shenanigans, which have largely remained hidden from public view but threaten to stain the reputation of a prominent law firm that has always been pretty good at hiding its dark side. The same might go for Chevron's management, which continues to foot the bill for a legal strategy that creates major operational risks for the company in countries around the world.

Gibson Dunn has long advertised itself as the "dream team" for clients in serious trouble. It boasts that lawyers like Mastro, Andrea Neumann, Scott Edelman, and William Thomson are capable of mounting "rescue" operations for corporations facing major liability for environmental and other abuses committed against vulnerable peoples like the indigenous and farmer communities of Ecuador's Amazon. If the law is in the way of a client's interests, GDC claims it will work to either change the law or maneuver around it. The firm is notorious forthrowing a client's lawyers under the bus for not being "aggressive" enough so GDC can replace them.

Hyped-out aggression is an approach that can resonate powerfully to a desperate and confused management team like the one at Chevron. CEO John Watson already has egg on his face for bungling what could be the largest environmental litigation in history. For years Chevron praised Ecuador's courts to move the venue of the case out of the U.S. Its attacks on those courts today after it lost the case seem opportunistic to say the least, particularly after Chevron submitted scientific evidence and internal audits that prove the claims of the plaintiffs. While with Mastro's encouragement Watson tries to kick the Ecuador can down the road, the risk to Chevron's shareholders continues to increase while Watson's personal conflicts of interest become ever more manifest. See here, here, and here.

(Note: Watson in 2001 helped engineer the Chevron purchase of Texaco after failing to properly vet the company for the Ecuador liability. Chevron at the time ignored repeated warnings about the case from environmentalists and others. [After ignoring these warnings, Chevron vastly overpaid for Texaco by not accounting for the Ecuador liability in the purchase price. The problem for shareholders is exacerbated by the company's notoriously passive Board of Directors, whose members allow Watson to police himself by holding the dual titles of Board Chairman and CEO.)

Back to Gibson Dunn. The combination of Chevron's deep pockets and its desperate situation in Ecuador – the country where it wanted the trial held thinking it could use political influence to engineer the "proper" result – has created the perfect storm of opportunity for GDC's marketing and billing machine. In fact, Gibson Dunn has billed Chevron so much for its Ecuador work – at least hundreds of millions of dollars over the past two years, according to those who know the legal profession – that one has to wonder whether Chevron General Counsel Hewitt Pate works for his outside law firm or whether the outside law firm works for Pate. Gibson Dunn alone has at least 60 lawyers working on the Ecuador case, according to its own admission before a U.S. federal court.

Chevron also uses three other major U.S. law firms on the case (Jones Day, King & Spalding, and Boies Schiller) and at least six public relations firms to spread company propaganda that the matter is a "fraud" orchestrated by greedy American lawyers. It also uses the same political consulting firm that launched the Swift Boat campaign against John Kerry in the 2004 presidential election.What few know is that Gibson Dunn basically uses carbon copy lawsuits alleging "fraud" against almost any entity that has the temerity to challenge its powerful clients.

To get Chevron out of its mess, Gibson has targeted Ecuadorian lawyer, Pablo Fajardo, who was profiled with great sensitivity in Vanity Fair. Fajardo brilliantly has outmaneuvered Chevron's high-priced lawyersat almost every turn. The fact GDC with its hundreds of millions of dollars has been unable to shake Fajardo and his team of twenty-somethings has to be the litigation story of the year, but you won't read about it American Lawyer, which recently named Gibson Dunn its litigation firm of the year even after it suffered multiple setbacks in the Ecuadorcase.

More incredible is that since Gibson Dunn entered the Ecuador case on behalf of Chevron in 2009, the interests of the oil company's shareholders have endured a series of blows almost unprecedented in the annals of litigation. Consider the sad results of Mastro's latest "rescue" operation for Chevron:

  • Chevron in February of 2011 lost the underlying Ecuador litigation in one of the largest civil judgments in history – roughly $18 billion. In a 188-page decision, the court found the company poisoned an area the size of Rhode Island, decimated indigenous groups and caused an outbreak of cancer affecting thousands of people. See here and here.
  • Just this week, Gibson Dunn suffered another blow when an Ecuadorian appellate court affirmed the trial court decision.
  • Roughly half of the total judgment in Ecuador is to compensate the rainforest communities for the harm caused by Chevron's and Gibson Dunn's hyper-aggressive litigation tactics, including the repeated filing of frivolous motions and the threatening of the presiding judge with jail time if he didn't rule in favor of the company.
  • Last September, a federal appellate court panel in New York rebuked Mastro for attempting (without any legal precedent) to use the U.S. court system to block the Ecuadorian rainforest communities from enforcing a judgment from their courts in any country in the world. Mastro's position was blasted by jurists around the world for turning U.S. trial courts into appellate courts for all of the world's judicial systems. Mastro was so hysterical and rude to the appellate panel that one of its members asked him to sit down. See page 19 of this transcript. Chevron General Counsel Pate, who was attending, looked ashen-faced after the argument.
  • Chevron orchestrated a video entrapment scheme against a sitting judge in Ecuador, which backfired against the company and prompted an ongoing criminal investigation in Ecuador of Chevron's attempts to corrupt the country's justice system. Mastro and his team have played a leading role in trying to block the release of documents in the United States related to this outrageous scandal, which also has created potential exposure for Chevron under the Foreign Corrupt Practices Act.
  • Gibson Dunn lawyers have been sanctioned repeatedly by U.S. courts for engaging in unethical behavior on behalf of Chevron. Just weeks ago a federal judge in Oregon sanctioned and fined Chevron after finding that Gibson lawyer Kristin Hendricks (an associate working under Mastro) abused the discovery process to harass a respected environmental organization that had filed a brief in the Ecuador case.
  • A Colorado federal court in 2010 rebuked Gibson Dunn lawyer Andrea Neumann for trying to intimidate and harass a witness she was deposing who had worked for the Ecuadorian plaintiffs.
  • Gibson Dunn partner Scott Edelman, a key member of Mastro's team, has been sanctioned twice under California's anti-SLAPP statute for filing frivolous litigation to intimidate lawyers and filmmakers who are trying to hold Gibson Dunn clients accountable for human rights violations. In one of those cases, a judge ordered Chevron to pay the legal fees for a lawyer who had represented the Ecuadorian plaintiffs against Chevron.
  • Gibson Dunn partner William Thomson, also a key member of Mastro's team, wrote a report for the U.S. Chamber of Commerce criticizing "abusive foreign litigations" without disclosing that he represents Chevron in the Ecuador case, which the Chamber uses as Exhibit A in its campaign to prevent the enforcement of foreign judgments against U.S. corporations. Thomson allowed his report to be used to mislead the U.S. Congress at a recent hearing that dealt with the Ecuador case.
  • Under Mastro's leadership, the Ecuador case recently has taken a profound turn for the worse with the attempted bribe of Ecuador's government by long-time ally Ivonne Baki, the discovery that Chevron lied to its own expert witnesses to get them to defend the use of deceptive sampling practices during the trial, and the shocking revelation that Chevron used a secret lab to hide from the Ecuador court its dirty soil samples taken from its former well sites. In fact, Chevron's entire defense in Ecuador is falling apart given the mounting evidence that it is based on fraudulent science designed to hide evidence of life-threatening amounts of contamination.
  • Mastro recently tried to convince a federal court judge that Ecuador's entire judicial system is as bad as that of Iran's, which has about as much credibility as saying North Korea will hold free and fair elections to replace Kim Il Jong. In fact, Ecuador has one of the top judicial systems in Latin America and Chevron and other foreign investors have won multiple cases in Ecuador's courts in recent years.

Mastro also appears to use his own low-paid associates to take outrageous personal risks that he would never take himself. The official court sanctioning of Hendricks, a young graduate of Georgetown law school, is a classic example. What is distressing is that Hendricks did not bungle the Oregon case; harassment is what Mastro teaches his associates if they want to get ahead in his practice group.

The real question is whether Chevron's shareholders wake up to the fact that a) their company faces unprecedented legal risk for the obvious mishandling of the Ecuador case; b) that their own management team is in bed with a law firm that has a huge stake in convincing the company to continue the litigation even at great risk, so it can keep lubricating its billing machine; and c) that an American law firm is creating open conflict between Chevron and a foreign government, disrespecting local laws and the communities in which the company operates, all the while casting outrageous aspersions on the court system of a nation that is a U.S. ally.

Given that Chevron might face enforcement actions in countries around the world over the Ecuador liability, shareholders might want to question whether Gibson Dunn's "rescue" strategy is as good for Chevron as it for Gibson Dunn.