Thursday, September 27, 2012

Dishonest Reporting: Fortune's Roger Parloff Delivers A Hit Job for Chevron

Reposted from The Chevron Pit

Fortune writer Roger Parloff has used dishonest reporting to help Chevron cover its tracks in the wake of its horrific human rights disaster in Ecuador – a disaster where Chevron admitted that predecessor company Texaco deliberately dumped more than 16 billion gallons of toxic waste into the water supply of rainforest indigenous groups as a cost-saving measure, and then tried to cover up this crime with a sham remediation and attempted bribes to the Ecuadorian government to kill off the lawsuit seeking compensation.

If Chevron's executives had pulled this stunt in the U.S. and our citizens were the victims, they likely would have landed in jail. Certainly there would be a multi-billion fine – see BP, which faces a $40 billion liability for the far smaller Deepwater Horizon disaster in the Gulf of Mexico.

But in Ecuador, Chevron has gotten off relatively easy – a $19 billion judgment after an eight-year trial but no criminal charges for top executives related to their cover-up of the world's worst oil-related ecological problem. Evidence shows the dumping was part of a deliberate plan to enrich Chevron shareholders at the expense of the health of the local population, which has suffered an epidemic of cancers and other oil-related diseases. Chevron wanted the case tried in Ecuador and moved it there from U.S. federal court, claiming repeatedly that Ecuador has a fair judicial system – a fact confirmed by prominent experts.

Given that a prominent American oil company was found liable for this type of gross misconduct – no less a company under the cloud of another criminal investigation in the U.S. for illegal toxic gas flaring at its San Francisco-area refinery – one would think Parloff would treat Chevron's latest claims with at least the basic level of skepticism taught to college freshmen in Journalism 101.

Instead, Parloff's latest 5,000-word blog repeats almost word for word Chevron's fake narrative. He hides behind Chevron legal papers to claim the venerable U.S. law firm Patton Boggs tried to cover up a fraud in Ecuador. The blog is exhausting to read, but it is a fabulous case study in dishonest reporting that should leave Fortune editors and Time Warner executives shaking their heads.

Parloff fails to report – even as opinion – that Chevron's fundamental narrative is false: Patton Boggs never tried to "cover up" a fraud because there was no fraud by the plaintiffs in Ecuador. There is extensive evidence of a massive environmental crime and fraudulent cover-up by Chevron in Ecuador, but Parloff didn't touch that evidence even though it is readily available in thousands of pages of legal papers, is summarized in the 188-page Ecuador court judgment, and he has been told about it repeatedly by representatives of the plaintiffs.

The fact Parloff fell far short in his ethical duties as a journalist is undeniable.

First, Parloff never called Karen Hinton, the spokesperson for the plaintiffs, to get the other side of the story. He never mentioned (much less reported the details of) U.S. lawyer Steven Donziger's devastating counterclaim against Chevron recently filed in U.S. federal court, that in 214 meticulous paragraphs puts the lie to Chevron's fake narrative. He also never cited in any depth to any of the thousands of pages of legal briefs filed by the plaintiffs and Donziger in Ecuadorian and U.S. courts disputing ever aspect of Chevron's allegations.

Parloff never reported that the relatively inconsequential "hearing" on the Patton Boggs subpoena (which was the "news hook" for Parloff to repeat Chevron's fake narrative and go after Patton Boggs in his blog) – which is related to the equally far-fetched "RICO" case Chevron filed against Donziger and his colleagues – is being conducted by none other than federal judge Lewis A. Kaplan, whose earlier work on the Ecuador case was vacated by the Second Circuit Court of Appeals and who has been widely discredited for his blatant personal biases against the Ecuadorians, documented in this legal brief.

Parloff also stripped his story of vitally relevant context that demonstrates that Chevron is clearly on the ropes in the case.

  • Because it flouts the rule of law in Ecuador, Chevron now faces something much worse – seizure actions against billions of dollars of strategic company assets in Canada and Brazil. These actions, that in the words of Chevron Deputy Comptroller Rex Mitchell, will cause "irreparable harm" to company operations and disrupt Chevron's global supply chain. Chevron is fast approaching a point where it won't be able to invest in several countries because of the risk its investments could be seized to pay the Ecuador judgment. This is unprecedented in the annals of American business, yet neither Parloff nor Fortune has ever reported this aspect of the story.
  • Chevron shareholders are in open rebellion against company management for its mishandling of the Ecuador case, to the point where CEO John Watson's ability to continue as Chairman of the Chevron's Board is in jeopardy. Again, silence from Parloff.
  • Fair Pension, a London-based shareholder advocacy organization, just issued a blistering report documenting how Chevron is under increasing pressure from shareholders and the media because of the $19 billion judgment. Again, Parloff's fingers apparently seized up at the keyboard.
  • Chevron's lead outside law firm, Gibson Dunn & Crutcher, has been caught engaging in unethical behavior on behalf of Chevron in Ecuador and the U.S. and is engaged in a blatant intimidation campaign against any lawyer who wishes to help the Ecuadorians. Recently, several lawyers reportedly left the firm rather than continue to do Chevron's bidding on the case. Again, nothing from Roger.

The absurdity of trying to tar strong and experienced lawyers like Jim Tyrell of Patton Boggs with defamatory allegations is a joke. A law firm like Patton Boggs – with former Republican Senator Trent Lott as a partner and Douglas Ginsberg, the Republic Party's go-to election law guru as a leading light – would not work for three years on a case if it thought there was even a shred of possibility that it was doing anything improper.

How does Parloff explain all of the other prominent law firms who have rallied to the cause of the plaintiffs and their lawyers? Apart from Patton Boggs, you have Lenczner Slaght in Toronto, Sergio Bermudes in Brazil, Keker Van Nest in San Francisco, Smyser Kaplan & Veselka in Houston, and Miranda & Amado in Lima. All are firms with major corporate clients who enjoy the highest reputations for integrity, unlike the chaps Chevron has bedded over at Gibson Dunn.

Parloff let himself be used to advance Chevron's unsavory, unethical and un-American campaign to deny legal representation to vulnerable peoples because the company knows it cannot win the case on the merits.

Donziger's lawsuit documents in chilling detail how Chevron's own internal audits and expert analyses confirm the claims of the Ecuadorian indigenous communities – and that Chevron, faced with losing the Ecuador case, "decided to fraudulently vilify both the Ecuadorian judiciary and the lawyers" by fabricating evidence, lying about the scientific data, and "leveling false and misleading claims of fraud and other misconduct".

Parloff also ignores the fact that Chevron's own internal reports – by Fugro McClelland and HBT Agra – concluded there was massive toxic contamination at every one of the company's well sites when it left Ecuador in the early 1990s. (Chevron operated in Ecuador from 1964 to 1992.) There was also no mention that Chevron produced thousands of scientific sampling results in the Ecuador trial that found levels of contamination for 15 toxic chemicals well above legal limits at 97% of the 93 Chevron well sites inspected.

Also missing from Parloff's article is the extensive evidence of Chevron's attempts to illegally sabotage the judicial proceedings in Ecuador with pressure, bribes, threats against judges, cooked evidence, and the like. These acts are extensively documented in the sworn affidavit of Ecuadorian lawyer Juan Pablo Saenz. (Chevron has never responded to most of the allegations in the Saenz affidavit.)

Despite the overwhelming evidence against Chevron, Parloff has the temerity to claim that Donziger has never advanced a "benign" explanation to contradict Chevron's claims. Roger, first read Donziger's counterclaim. Second, understand that the "uncontradicted" findings (which were always disputed) of Judge Kaplan have been thrown out along with the rest of that earlier case where a formerly reputable judge engaged in the sad spectacle of trying to put the entire judiciary of U.S. ally Ecuador on trial in his Manhattan courtroom.

To Parloff, it is just inconceivable that indigenous groups in the Amazon have had the temerity to hook up with powerful U.S. law firms like Patton Boggs. To Parloff and the folks at Chevron, it is even more outrageous that Patton Boggs and other lawyers might actually get paid for their efforts. Wow, the idea of poor people from the Amazon and American professionals hooking up to fight for justice is frightening. I mean, nobody should ever get paid for fighting for justice, much less poor people.

We surmise that Chevron and the Koch brothers right now are designing a campaign to prohibit American lawyers from getting paid for holding American companies accountable for their outrageous conduct abroad. Watch for Mitt Romney, the oil industry's favorite son, to unveil the issue during the first presidential debate.

In Parloff's world, its OK for Chevron to have hired and paid hundreds of millions of dollars to its 41 law firms and roughly 500 lawyers being used to try to quash the claims of the Ecuadorian tribes. That's just normal corporate behavior.

Magazines like Fortune and "reporters" like Parloff love the free market as long as it benefits their big advertisers or the very large companies they fawn over. But when dying indigenous groups use the free market to sell part of their last assets to secure strong legal representation – giving them a fighting change to protect their fundamental right to life – suddenly the free market doesn't seem so attractive.

We note for the record that neither Fortune nor Parloff seem to give a damn about the free market in Venezuela and Argentina, where Chevron is in deep cahoots with two governments that have expropriated foreign oil properties of Chevron competitors.

Spare us the hypocrisy.

Tuesday, September 25, 2012

Law and Order: Chevron's Criminal Intent

Reposted from Eye on the Amazon

Oil Companies Should Stop Polluting Our Air: We Agree

For those of you who follow the landmark Aguinda v. Chevron lawsuit and the efforts of thousands of indigenous people and farmers to hold the San Ramon oil giant to account for one of the worst oil disasters on the planet, it would come as no surprise to read that Chevron:

...routed hydrocarbon gases around monitoring equipment and allowed them to be burned off without officials knowing about it.

But what's striking about that statement is that it's not in reference to the company's rainforest operations in Ecuador in the 1970s and 1980s. It's referring to Chevron's oil refinery in Richmond, CA. In 2012.

Turns out, Chevron is now under criminal investigation by the EPA for this intentional effort to deceive regulators. The Sunday edition of the San Francisco Chronicle reported:

Federal authorities have opened a criminal investigation of Chevron after discovering that the company detoured pollutants around monitoring equipment at its Richmond refinery for four years and burned them off into the atmosphere, in possible violation of a federal court order, The Chronicle has learned.

Air quality officials say Chevron fashioned a pipe inside its refinery that routed hydrocarbon gases around monitoring equipment and allowed them to be burned off without officials knowing about it.

Some of the gases escaped into the air, but because the company didn't record them, investigators have no way of being certain of the level of pollution exposure to thousands of people who live downwind from the plant.

...The federal investigation centers on Chevron's burning, or flaring, of gases created during the superheating needed to generate fuels from crude oil. Although flaring burns most gases, environmental groups have long maintained that residual gases blowing away from the refinery pose a risk of cancer and respiratory ailments

The federal probe began before the explosion and fire at Chevron's Richmond refinery on Aug. 6, and underscores the company's notoriously lax environmental standards and its callous disregard for environmental protection and responsibility.

As the Contra Costa Times reported, local government officials are outraged at the news:

"How do we ever trust them about anything now? That's where I am," said Richmond Councilman Jeff Ritterman. "Once you are lied to once by somebody, it's very hard for them to establish trust."

"That's a criminal act, intentionally bypassing the monitoring," said Contra Costa Supervisor John Gioia, who is also the chair of the air quality board. "The rule is designed to reduce flaring, and refineries are supposed have a responsibility to abide by it."

Sound familiar?

If Chevron is brazen and arrogant enough to hatch a plan to deceive regulators in 2012, in the state with arguably the toughest environmental standards in the United States, then imagine what it was doing in the remote Ecuadorian rainforest from 1964-1990.

Unfortunately, the disaster in Ecuador is not something of the imagination. It's all in the case file – some 200,000 pages and more than 64,000 water and soil samples in an 18-year litigation that found Chevron guilty and liable for $19 billion in damages.

In Ecuador, Chevron's operations were built to spill. The company designed, built, operated and maintained an oil extraction system intended to dump toxins and pollution into rainforest rivers and lands – the life source of the indigenous and campesino inhabitants – in violation of both Ecuadorian law and standard industry practice. Chevron's type of drill and dump practices had been outlawed in the U.S. for years, and it even had a patent for technology to better dispose of the toxic waste produced by its operations. But Chevron chose not to use that technology in Ecuador. Why?

It was a cold calculus based on one thing. Cash money. To save a couple bucks, Chevron designed an oil extraction on the cheap, using outdated technology that it knew would harm people and the planet. It wasn't a "mistake". It was premeditated, criminal intent. This was executives and engineers sitting around conferences tables, diagraming dangerous deeds on chalkboards, mapping out their crimes against humanity and ecosystems. [I can't confirm whether evil laughter took place, or whether these meetings were followed by long, extravagant Mad Men style lunches with stiff drinks, big steaks, and inappropriate flirting with secretaries. But it was the 1960s.]

These decisions went on for years, and were the subject of memos that show Chevron knew about the human and environmental costs of its operations, but chose profit over people:

Should oil waste or toxic formation waters be re-injected back into the ground? Instead, leave them in waste pits adjacent to streams and tributaries, and build an overflow pipe to carry the contaminants directly to the water source of thousands of people.

Should fences be put around the superfund-style toxic waste pits so animals or children don't fall in? No, too expensive.

Should the pits be lined to prevent leeching into groundwater or migration of contaminants to rivers or streams? No, too expensive.

Should records be kept of any spills? A 1972 memo orders all reports related to oil spills "are to be removed from the Field and Division offices and destroyed," that no reports are to be kept on a "routine basis," and only "major events" that "attract the attention of press and/or regulatory authorities," are to be reported.

And, don't forget about Brazil, where Chevron's recent spill from its Frade field off the coast of Rio de Janeiro has the company facing billions in criminal and civil liability. Like Richmond and Ecuador, Chevron intentionally misled investigators and disregarded regulations. Chevron underestimated the size of the spill, overstated the extent of the spill response, and tried to cover up the fact that it drilled deeper than the depth allowed by its contract – a potential reason for the blow out at the well site.

According to Fabio Scliar, the head of the environment unit of Brazil's federal police department that the deep water well "could not and should not have been drilled under the conditions presented in the area," adding that an "absurd" amount of pressure was used at the site situated off the coast of Rio de Janeiro state. "All indications are that a desire for profits led (Chevron) to take the prohibitive risk" of drilling at the site, Scliar concluded.

Environmental Minister Carlos Minc added, "There was an environmental crime. They hid information and their emergency team took almost 10 days to start acting."

Chevron's Richmond, Ecuador, and Brazil examples [and there are many more] illustrate a premeditated pattern to pollute, and a reckless flaunting of the law that has endangered human health and environment. These examples are also growing liabilities that highlight a pattern of egregious mismanagement by senior executives, which is increasingly apparent to Chevron's own shareholders. Although U.S.-based investor groups have long been pressing the company to clean up its act, global investors are now taking notice.

The highly-respected U.K. advisory Fair Pensions, which leading charities, trade unions, faith groups and individual investors in Great Britain, Europe and Australia, has released a new report calling on Chevron shareholders to demand the company to change course.

The report concludes:

Chevron's aggressive and much criticized management of the Ecuadorian case together with allegations of inadequate disclosure of the risks stemming from the case has highlighted a number of long-standing governance issues at the company which many believe are contributing to an unwise refusal to re-evaluate strategy. These include a lack of environmental expertise among independent directors, the combined role of CEO and Chairman, and restrictions on shareholders calling special meetings.

Chevron's repeated dismissal of valid shareholder concerns highlights the importance of international shareholders engaging with the company about these issues and supporting shareholder proposals to improve governance.

Read the full report here.

By all accounts, Chevron believes it is above the law. Help us bring this fugitive of justice to account!

– Kevin Koenig

Monday, September 24, 2012

Chevron Faces U.S. Criminal Investigation For Lying About Toxic Gas Flaring

Reposted from The Chevron Pit

More evidence of the cultural rot deep within Chevron's management structure has surfaced with a devastating new report in the San Francisco Chronicle that the company is now under a criminal investigation for lying to authorities over toxic gas flaring at its Bay Area refinery. For Chevron CEO John Watson and General Counsel R. Hewitt Pate the news could not have come at a worse time.

We already have reported that under Watson and Pate's leadership Chevron faces a hair-raising $19 billion liability in Ecuador for the dumping of billions of gallons of toxic waste into Amazon waterways, and then undertaking a fraudulent remediation to cover it up. Chevron also recently paid a huge fine to the Justice Department for violating the Foreign Corrupt Practices Act in Iraq and has been sanctioned by various courts in Ecuador and the U.S. for engaging in unethical litigation practices.

The Chronicle reported in Sunday's editions that the U.S. Environmental Protection Agency is conducting a criminal investigation of Chevron after learning the company has installed pipes to re-route toxic pollutants around monitoring equipment at its Richmond refinery before burning them off into the atmosphere, where they pose a risk of cancer and respiratory ailments.

According to the Chronicle: "Air quality officials say Chevron fashioned a pipe inside its refinery that routed hydrocarbon gases around monitoring equipment and allowed them to be burned off without officials knowing about it."

A local county supervisor, John Gioia, had the guts to be quoted on the record about what Chevron did: "That's a criminal act, intentionally bypassing the monitoring," Gioia said.

The criminal investigation started when two inspectors noticed that Chevron's pollution-monitoring equipment wasn't recording anything and became suspicious.

A fire at the Richmond refinery on Aug. 6, which forced thousands to area hospitals for treatment, is also under investigation and has led to a class action lawsuit against the company. See this Huffington Post piece for more details.

"Chevron's pattern of legal and environmental management failure reveals an executive team out of its depth and out of control. The board's lack of effective oversight of top management risks driving the company and its shareholders into the ground," said Simon Billenness, an independent analyst who has followed the company's growing environmental liabilities.

Billenness also said a new analysis by the London-based group Fair Pension has revealed how Chevron's approach to the Ecuador disaster threatens shareholder value.

Our advice to the investigators: look at Chevron's corporate suites for the source of the problem, not just the line workers at the refinery who creatively figured out a way to save the company money at the expense of the health of local residents.

Workers cheat because of the existence of a corporate culture that encourages cheating, the effects of which the world has seen in Ecuador time and again. If you want to see what kind of corporate citizen really Chevron is, look at this video about its gross human rights violations in Ecuador.