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.

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