Thursday, November 9, 2017

21-0: Ecuadorian Communities Are Dominating Chevron In Canada's Appellate Courts

Chevron's strategy to block enforcement of its $9.5 billion environmental liability in Canada is on the rocks. The company now has lost three straight decisions (see here, here, and here) in Canada's appellate courts to Ecuadorian indigenous peoples and farmer communities. To cover up this debacle, Chevron General Counsel R. Hewitt Pate continues to bullsh*t -- sorry, mislead  -- company shareholders about the growing risk faced by his company.

Chevron's string of losses in Canada comes after Mr. Pate hired several large Canadian law firms -- who send mostly older white men in suits to court -- to try to block indigenous peoples from collecting a judgment the oil giant was ordered to pay to remediate the extensive damage to the rainforest caused by its systematic dumping of oil waste from 1964 to 1992. As journalist Alexander Zaitchik wrote in his latest article on the case: "Ecuadorian Villagers Are Fighting Chevron In Canada -- And Winning."

The affected communities in Ecuador are not just winning, but dominating.

Thirteen appellate judges in Canada have ruled in their favor since the enforcement action was filed. In Ecuador, eight appellate judges have ruled in favor of the villagers. None have ruled for Chevron in either country. For those keeping score, that's 21-0 in favor of the villagers in appellate courts in Ecuador and Canada. (Here is a summary of the overwhelming evidence against Chevron.)

Chevron's latest reversal in Canada came last week when a three-judge panel on the Ontario Court of Appeal strongly criticized the company for trying to end the Ecuador litigation by imposing a $1 million costs order on the indigenous groups. The decision was a stunning setback for Chevron.

Chevron's courtroom carnage in Canada dates to 2013 when Ecuador's Supreme Court ruled unanimously in favor of the indigenous groups after an eight-year trial in the forum where the company insisted the trial be held. Chevron refused to pay the judgment and sold its assets in Ecuador, threatening the indigenous groups with a "lifetime of litigation" if they persisted.

To force compliance with the law, the affected communities then filed suit in Canada to seize some of Chevron's extensive holdings in the country. Chevron predictably tried to block that action on jurisdictional grounds as part of its campaign to obtain impunity.

Chevron lost the jurisdictional issue in spectacular fashion not only at the Ontario Court of Appeal but also in a stunning 92-page decision issued by all seven justices on the country's Supreme Court. Both decisions were unanimous.

Stuck with an impending trial where it would have to put on the same fabricated evidence of "fraud" that it concocted in the United States to try to evade the Ecuador judgment, Chevron launched a new strategy to try to kill off the case by imposing the costs order.

It would be hard to imagine a greater travesty of justice than a costs order given that Chevron owes its victims $12 billion and refuses to pay. Further, the company surely spent more on legal fees to get the costs order than any amount it would have received from the costs order had it been allowed to stand. Again, that subterfuge was blocked in a third unanimous appellate opinion issued last week.

A score of 21-0 in favor of the communities among appellate judges sounds more like a lopsided football score. In the annals of courtroom battles, it's virtually unprecedented -- not too far from Georgia Tech's infamous 222-0 thrashing of Cumberland College in 1916. That was the most lopsided score in college football history.

The only decision that Chevron has won in the long-running case is one based on clearly fraudulent evidence issued by a compromised U.S. judge Lewis A. Kaplan. (See this report for full documentation of Chevron's fraud in Kaplan's courtroom.) Chevron tries to cite the Kaplan findings in its favor but that decision is now clearly backfiring against the company.

In Canada, the Ontario Court of Appeal made it clear that it would have nothing to do with Kaplan's ruling despite tenacious efforts by Chevron lawyer Larry Lowenstein to act as if trumps the extensive findings of Ecuador's courts -- the only courts to actually hear the voluminous evidence of Chevron's toxic dumping and wrongdoing in the Amazon.

Chevron's next manuever in Canada is to try to eliminate its wholly-owned Canadian subsidiary (Chevron Canada) as a defendant in the enforcement action. The Ontario Court of Appeals will hear argument on that issue soon. If the past is prologue, the appellate tally will look even worse for Chevron after that matter gets resolved.

If all of this appears to have produced a little too much stress for Pate, that certainly would be understandable. Chevron's top lawyer has spent an estimated $2 billion of shareholder funds on the company's defense. Just days ago, he hastily issued a misleading press release claiming the Ecuador judgment was obtained "fraudulently". Chevron then backpedaled and re-issued the same release later in the day with softer (but still misleading) language.

Pate's idea is to try to leave the impression that Chevron is "winning" the case around the world. But an 0-21 record in appellate courts in the two most important jurisdictions is sort of hard to wash away no matter how aromatic the Chevron propaganda. Most companies would have fired their General Counsel long ago for such an atrocious track record when the stakes are so high.

Worse for Pate is that major Canadian citizens, such as national indigenous leaders Phil Fontaine and Ed John along with Greenpeace co-founder Rex Weyler, recently have lined up behind the Ecuadorian indigenous groups. British rock musician Roger Waters of Pink Floyd is also speaking out publicly against Chevron for its refusal to remediate its toxic pollution in Ecuador.

In his article about the string of victories by the Ecuadorians in Canada, Zaitchik quoted the lead Ecuadorian lawyer for the indigenous groups, Patricio Salazar:
"Chevron's entire strategy is based on obstruction and delay. Canadian courts need to put an end to this abuse of the civil justice system. It is unfortunate that this Chevron maneuver to impose a court tax on the people it poisoned got as far as it did."
Steven Donziger, Chevron's main U.S. critic who is being personally targeted before Kaplan with a preposterous $33 million costs order, had this to say to Zaitchik:
"We are confident Chevron's scorched-earth strategy of obstruction and delay will soon run its course, and the company will pay the full amount necessary to clean up its awful pollution in Ecuador which continues to decimate indigenous peoples. Chevron has thrown at least $2 billion and 2,000 lawyers at us to try to obstruct court proceedings. That strategy has failed."  
Well said by both lawyers.

Chevron's Board of Directors needs to think about getting rid of Pate so it can address its Ecuador problem before the repercussions start to negatively affect company operations around the globe. Absent action by the Chevron Board, it might be time for Chevron shareholders to take control of this rapidly deteriorating situation.

What is definitely clear is that Chevron's current management team seems utterly clueless when it comes to Ecuador.

Wednesday, November 1, 2017

The Takeaway: Chevron CEO Big Loser in Latest Canada Court Decision Over Ecuador Pollution Judgment

The latest attempt by Chevron CEO John Watson to foist his company's RICO fraud from the United States onto Canadian courts just got slapped down by a three-judge panel from the Ontario Court of Appeal. This suggests the oil giant faces major hurdles in Canada in its campaign to evade enforcement of a $12 billion liability owed to Ecuadorian indigenous peoples and farmer communities.

The latest Canada decision, which can be read in full here, can only be described as a powerful rebuke to Watson, Chevron General Counsel R. Hewitt Pate, and the company's army of Canadian lawyers who are being paid big bucks to obstruct and delay the case. Consider these key takeaways from the decision:

  • Chevron's SLAPP-style harassment attempt to impose a $1 million costs order on the impoverished indigenous groups always was a classic corporate maneuver to evade liability by trying to end the litigation without a resolution on the merits. The Appeals Court vacated the order in its entirety. Chevron General Counsel Pate sent at least 20 high-billing lawyers to court, implicitly disclosing that the company was spending more in legal fees to obtain the costs order than it would have received had it been granted. Worse, almost all of the Chevron lawyers were bland white men in suits whose job apparently is to block aboriginal peoples from collecting money they need to clean up an environmental disaster caused by Chevron. The fundamental disparity in resources – Chevron makes $225 billion annually while the indigenous groups live in poverty due largely to Chevron's pollution – could not have been more stark.
  • Chevron's attempt to leverage U.S. Judge Kaplan's completely flawed civil RICO (or "racketeering") decision against the indigenous groups appears to have backfired yet again. It is becoming more apparent in Canada that the Kaplan decision is a debacle for Chevron and actually favors the aboriginal groups on a variety of levels. It is now seen as a product of Chevron's fraud in presenting false testimony from a disgraced witness paid $2 million who later admitted lying in court. No Canadian court wants to be told by a U.S. oil company that it must defer to a U.S. judge – especially one who conducted a hocus-pocus proceeding in favor of Chevron. Violating his duty of neutrality, Kaplan obviously bent over backwards to help the oil major. He also failed to disclose his own ethically dubious investments in the company when presiding over the RICO trial.
  • The three Canadian judges implicitly rebuked both Judge Kaplan and the Canadian motions judge who relied heavily on Kaplan's erroneous decision to impose the costs order, while ignoring the Ecuadorian trial court decision at the heart of the case. The Ecuador decision, we might add, was issued by the very court where Chevron for years insisted the trial be held. The panel wrote: "There can be no doubt that the environmental devastation to the appellants' lands has severely hampered their ability to earn a livelihood. If we accept the findings that underlie the Ecuadorian judgment – findings that have not yet been undermined in our courts – Texaco Inc. contributed to the appellants' misfortune." You can say that again – cancer rates in the area are skyrocketing, and untold numbers of people already have perished due to Chevron's refusal to abide by the Ecuadorian court order.
  • The Canadian court also found that Chevron obviously doesn't need its costs paid. How obvious is this? The company already has used at least 60 law firms and 2,000 lawyers since the inception of the case. It grosses $225 billion per year. And yet, nary a word was written in all prior decisions on the issue. The Canadian panel confronted it directly: "Chevron Corp. and Chevron Canada have annual gross revenues in the billions of dollars. It is difficult to believe that either of these two corporations... require protection for cost awards that amount or could amount to a miniscule fraction of their annual revenues."
  • The decision was also an implicit rebuke to the duplicitous Larry Lowenstein, Chevron's lead lawyer in Canada and a partner in the prestigious Osler law firm. Lowenstein made a cameo before the appeals panel and tried to peddle the Kaplan decision as being the final word on the case. As said, that decision is a product of Chevron's fraud. Lowenstein used Kaplan to try to dupe Canada's judges, but they would have none of it. Osler cannot be so desperate for business that it would stoop to this level of "service" for a company known in environmental circles as a major polluter.
While the latest decision removes a major roadblock for the Ecuadorian indigenous groups, there is still substantial work to be done even after five years of litigation in Canada's enforcement courts. Chevron no doubt has many tricks up its sleeve, including trying to hide its Canadian assets in wholly-owned subsidiaries. Courts in Canada need keep their door open to human rights victims and resolve the claims in this matter without further indulging the company's dirty tricks campaign.

Five years already is way too long for any enforcement action, much less one where thousands of indigenous lives hang in the balance and where a final judgment has been rendered in the preferred jurisdiction of the debtor.

Monday, October 16, 2017

Chevron Lawyer Larry Lowenstein Continues to Mislead Canadian Courts About Company's Fraud in Ecuador

To help Chevron block enforcement of the Ecuador environment judgment in Canada, company lawyer and Osler partner Larry Lowenstein flat-out lied last week to a panel of three judges on the Ontario Court of Appeal in Toronto. It is the vulnerable indigenous communities in Ecuador who pay the price for Lowenstein's bad form in service of one of the world's worst corporate polluters.

Lowenstein made an interesting cameo for Chevron last Wednesday before the appeals panel in Toronto that heard argument over a $1 million costs order the oil major is trying to impose on the impoverished indigenous groups. Those indigenous groups in 2013 won a $9.5 billion environmental judgment against Chevron, as determined by three layers of courts in Ecuador in the venue where the company insisted the trial be held and where it had accepted jurisdiction.

Since then, Chevron has hired 60 law firms and used roughly 2,000 lawyers to evade paying the judgment. It also sued an American human rights lawyer for the Ecuadorians for $60 billion before dropping all money damages claims to avoid a jury. It is now suing the same lawyer (Steven Donziger) for $33 million in fees, trying to bankrupt him. (For background, see here.)

This is how Chevron rolls. Without lawyers willing to do its bidding, Chevron could never get away with such blatant misconduct.

It is preposterous to think a large oil company that generates $225 billion in annual revenue needs the "protection" of a $1 million costs order against impoverished indigenous groups. Chevron no doubt is spending more money on legal work to get the costs order than the amount sought in the order. This is clearly another Chevron tactic to deny its adversaries access to the justice system.

Chevron's use of the costs order against indigenous groups is a vital part of the company's global intimidation model. It is a brazen attempt to close the courthouse doors to communities trying to force Chevron to clean up the mess the company left on their ancestral lands. This is consistent with a threat the company made in 2009 promising the indigenous groups "a lifetime of litigation" if they continued to pursue their claims.

"We will fight this case until hell freezes over, and then we will fight it out on the ice," said Charles James, Chevron's former General Counsel.

As the latest front man for Chevron's impunity campaign, Lowenstein claimed to the appeals panel that the Ecuador judgment was based on an "egregious fraud" because that's what a pro-business U.S. judge, Lewis A. Kaplan, determined after a lopsided "racketeering" trial held in 2013. During that trial, the court refused to consider any evidence of Chevron's environmental contamination. And Kaplan held undisclosed investments in Chevron during the proceeding, called a "Dickensian farce" by noted U.S. trial lawyer John Keker.

(Here is a press release and a detailed 33-page report documenting Kaplan's blatant bias against the Ecuadorian villagers and his erroneous findings.)

In speaking before the appellate panel, Lowenstein ignored the overwhelming evidence against Chevron in the Ecuador proceeding. He ignored the false testimony used by his client in the RICO matter and obfuscated evidence of the company's fraud in Ecuador and the United States. His courtroom act was designed to dupe the Canadian judges into thinking Chevron was the victim of the people it poisoned, rather than the other way around.

Lowenstein also tried to leave the impression that the decision against Chevron in Ecuador can never be enforced because of the one batshit crazy ruling by Kaplan, the compromised U.S. trial judge who seemed to think he had the authority to overturn Ecuador's entire Supreme Court.

Consider what Lowenstein failed to disclose to the appellate panel about Chevron's role in creating a catastrophe in the rainforest so massive it is called the "Amazon Chernobyl" by locals:

**Chevron was found by three layers of courts in Ecuador to have dumped billions of gallons of oil waste into the rainforest over a two-decade period, decimating indigenous groups and causing numerous cancer deaths. The court decisions were based on 105 technical evidentiary reports. Here is a summary of the overwhelming evidence; a legal brief that explains the history of the company's dumping and cover-up; and a summary of the high cancer rates.

**Initially sued by indigenous villagers in New York in 1993, Chevron praised Ecuador's justice system thinking it could engineer a political dismissal of the case by shifting it to the South American nation. With the scientific evidence mounting in its preferred forum of Ecuador, Chevron sold its assets to evade paying the judgment. 

**Ultimately, Chevron was ordered to pay $9.5 billion in damages and costs. This amount is a pittance compared to the roughly $50 billion BP has paid for its much smaller Gulf of Mexico spill in 2010. 

**Chevron retaliated by suing the indigenous groups and their lawyers before Kaplan, who invited the company to file the action. Chevron then made a mockery of justice by dropping all damages claims on the eve of trial to avoid a jury. Chevron also bribed a witness with $2 million to claim that the judgment in Ecuador was "ghostwritten"  -- testimony that since has been proven false but was nonetheless adopted by Kaplan.

**The bribed Chevron witness, Alberto Guerra, later admitted under oath that he repeatedly lied before Kaplan. Separately, a forensic examination by the American expert J. Christopher Racich demonstrated that the Ecuador trial judge wrote the decision on his office computer, contradicting Guerra's false claim that it had been given to the trial judge on a flash drive.

**In total, 18 judges appellate judges in Ecuador and Canada have ruled in favor of the villagers and rejected Chevron's "fraud" claims. (The Second Circuit Court of Appeals refused to review Kaplan's erroneous findings, as did the U.S. Supreme Court.) Lowenstein also ignores that 17 prominent human rights groups and 19 international law scholars have sided with the indigenous groups against Chevron.

Because of its corrupt acts and disdain for the rule of law, Chevron now finds itself in serious trouble. It faces possible criminal and civil jeopardy for its cover-up in addition to its $12 billion environmental liability (rising $300 million per year because of interest) to the people of Ecuador. Company management also faces a shareholder revolt over its unethical behavior.

Another big Lowenstein whopper before the Toronto court came when he claimed that Donziger, one of the American lawyers for the villagers, "controls" monies that will be deposited in trust for a clean-up.The trust is actually controlled by the affected communities, not their lawyers. 

Lowenstein's little speech reminded us of the bit part played years ago by a professor from Notre Dame who also allowed himself to be used by Chevron for money. That professor, Douglas Cassell, was slapped down by Notre Dame's administration for hiding the fact he was shilling for the oil giant while trying to act like a disinterested scholar. For background, see here.

The personal reputation of Lowenstein, and by extension that of the Osler partnership, is in play. The American law firm Gibson Dunn suffered a huge setback recently after its own unethical work of behalf of Chevron in the United States was exposed. Osler obviously is Chevron's answer to Gibson Dunn in Canada -- a law firm with a willingness to cross the ethical line to "rescue" a client from a scandal of its own making. 

Lowenstein's partners at Osler naturally claim they run one of the leading business law firms in Canada. If misleading courts and shareholders is how Osler deploys its legal skill, then those partners might need to rethink their business model. They also might disclose how much the firm charges Chevron for this tawdry service. 

Thursday, October 12, 2017

Us and Them: Affected Peoples vs. Chevron in Canada

Reposted from Eye on the Amazon


The latest chapter in the decades-long struggle seeking justice for Chevron's crimes in Ecuador is taking place in Canada right now. Unfortunately, as the years grind by the issues being debated get further and further away from the substantive problems of environmental contamination and human suffering, and the process becomes stuck in a legal quicksand of Chevron's design. The hearings before the Ontario Court of Appeals this week were a perfect example of that.

Amazon Watch continues to bear witness to this ongoing perversion of justice, both because we ourselves are a target of Chevron's attacks, and also because the cynical strategy the oil giant employs is a real and present danger to corporate accountability work everywhere. For that reason we attended the hearings in Toronto this week along with artist and activist Roger Waters, founding member of Pink Floyd. Waters spoke to the media to express his outrage at Chevron's endless legal maneuvers to escape justice for its crimes.

"It's a fundamental question of whether corporations like Chevron ... should be allowed to use their financial muscle to destroy people with an absolutely vital claim to reparations for damages that were caused to them over many years," Waters said before the hearing. "The way Chevron has behaved here is against everything that any of us might believe society ought to be like."

This week was supposed to see the beginning of the appeal of the previous decision in this case - which was mixed (upholding corporate separateness but granting the Ecuadorians the right to a trial to challenge Chevron's completely unfounded allegations of fraud). Instead the Ecuadorians were forced to confront Chevron's demand that the communities come up with almost $1 million as a security fee for the appeal to proceed. This is yet another legal delay tactic from Chevron in their never ending hope that the people they harmed will either give up, run out of funds, or simply die off before they can force Chevron to pay up.

In 2014, the Supreme Court of Canada ruled unanimously that the Ecuadorians could seek enforcement of the $9.5 billion verdict in Canada. Chevron's Canadian subsidiary, Chevron-Canada, holds approximately $15 billion in assets and since Chevron famously fled Ecuador with its assets to avoid paying (and invented an elaborate lie about fraud and bribery so they could countersue in the U.S. to make enforcement there very difficult), the Ecuadorians have been forced to pursue Chevron to Canada like a fugitive deadbeat.

Try to wrap your mind around this: the third largest corporation in the U.S., after spending billions to drag out a cut-and-dry case of deliberate environmental contamination for decades, is now demanding the the Ecuadorian communities pay $1 million for the right to an appeal which could finally permit seizure of their assets to pay for a clean-up.

To quote The Dark Side of the Moon: "And if your head explodes with dark forebodings, too..." yeah, that's an appropriate reaction at this point.

The lead lawyer for the Ecuadorians, Alan Lenczner, pointed out quite clearly that this was nothing more than a stunt by Chevron, stating that, "Chevron is one of largest companies in the world with over 1,500 subsidiaries, $225 billion in annual revenue, which is $1 billion a day for each working day, with a profit of $25 billion annually, working out to $1 million per DAY is hardly in need of protection!" In fact, just counting Chevron and Chevron-Canada's legal team in the room this week, there were at least twenty lawyers and their staff. The cost for their travel and billing right there is more than the security fund itself! That alone proves this is nothing but a punitive legal subterfuge, to our eyes.

But the hearing this week also had a new element which has previously played only a minor role in the several years this case has dragged on in Canada. The introduction of Peter Grant, a renowned Canadian aboriginal rights lawyer who recently helped to win a major case before the country's Supreme Court, had a profound impact on the proceedings. Peter made it clear to the appellate panel of Justices Hoy, Cronk, and Hourigan that this entire exercise was fundamentally an issue of access to justice for indigenous peoples. Grant, who had recently visited the Ecuadorian Amazon to witness the contamination along with Canadian indigenous leaders Phil Fontaine and Ed John and Greenpeace co-founder Rex Weyler, spoke with firsthand experience of what effect this order would have on the people still suffering today. This has even more resonance considering that Canada recently signed the UN Declaration on the Rights of Indigenous Peoples and there is much more respect in Canadian political discourse for indigenous peoples.

And that's the genuine issue that not only the Canadian appeals court but Chevron and its lawyers should be made to face every single day. People are still dying from the deliberate contamination caused by Chevron in the Amazon. This is not an historic case about reparation for past harms, but a very real and urgent need for clean-up today. Every day Chevron evades paying for that clean-up, more people in the region risk sickness and death. It must end here. As Roger Waters said, "if Chevron can go on fighting this for another twenty years, and they will if they can, what does that say about us as a human race, that we would allow such a thing? It says that we've lost our grip on the reins of civilization."

Tuesday, August 29, 2017

Chevron CEO Watson Leaves a Legacy of Toxic Waste

Reposted from Eye on the Amazon

Wanted: Chevron CEO John Watson

After seven dreadful years, Chevron CEO John Watson recently made a surprise announcement that he is finally slinking off with his tail between his legs. Yet the world will continue to suffer from the disastrous effects of his terrible decisions for many years to come. Amazon Watch's history with Watson dates back to Chevron's merger with Texaco. John Watson was a principal architect of that merger, and at a Chevron shareholder meeting we presented him with a great deal of information about Texaco's environmental disaster in Ecuador and warned that if the merger went through then Chevron would necessarily assume all liability to clean up the worst oil-related disaster in history. Watson ignored us.

In 2010, Watson became CEO on the eve of the largest environmental judgment ever won against an oil company, in which Chevron was ordered to pay $9.5 billion to clean up Texaco's toxic mess. Chevron lost that trial after years of efforts to delay and derail it, and after thousands of pages of scientific evidence – much of which provided by Chevron's own experts – demonstrated the damage caused by Texaco's deliberate dumping and shoddy operations. At the time of that judgement, Watson had another chance to listen to the appeals of the people of Ecuador and finally do the right thing.

Not only did Watson refuse to take responsibility and clean up the toxic waste still poisoning these communities, but he focused the full weight of Chevron's legal and public relations might on demonizing the Ecuadorians and their lawyers, and he even countersued them, alleging extortion. The company is even seeking $32 million in legal fees in an attempt to personally bankrupt Steven Donziger, a key member of the legal team that achieved the historic judgment in Ecuador. We at Amazon Watch were pulled into Chevron's sham suit as an alleged "co-conspirator" for standing with the communities who sued to clean up their homes. It's estimated that, to date, Chevron has spent as much as $2 billion just to avoid cleaning up the toxic waste that Texaco admitted dumping in Ecuador.

In what some see as an existential threat to corporate accountability work in the U.S., Watson and his team also sought to trample the First Amendment rights of anyone who had ever dared to speak out about the company: journalists, bloggers, lawyers, advocacy organizations, activists, and even its own shareholders. Chevron's legal and public relations teams built a practice on intimidating its critics.

During his time as CEO, Chevron even approved payments to company witnesses and bribed them to falsify evidence and testimony in U.S. federal court. With these tactics, CEO Watson helped pave the way for a new wave of "racketeering" lawsuits that have since been filed by other corporations against a variety of environmental and human rights organizations, such as our friends at Greenpeace and the Sierra Club.

Under Watson's misleadership, Chevron has distinguished itself as the worst U.S. oil company by eliminating its renewable energy program, closing its corporate social responsibility department, and attempting to influence politics by spending more on super-PACs than any other corporation immediately after the Citizens United decision.

In short, it would be hard for Chevron to do worse than Watson and we are thrilled to see him go. The company is still facing a collection action in Canada for its $9.5 billion debt to the people of Ecuador. A new CEO will have an opportunity to finally break with Chevron's abusive past and respect the rule of law and the environment.

Watson spent his time as CEO trying to make it harder for the environmental and human rights community to challenge corporate power, but we stand united and will continue to hold Chevron to account, no matter who is at the helm.

Wednesday, August 23, 2017

Chevron CEO Watson Tarred His Own Legacy by Fumbling Environmental Issues

Burdened with a series of intractable problems, Chevron CEO John Watson announced this week that he is stepping down after seven years at the helm of America's second-largest energy company. He will be remembered far more for saddling Chevron with huge environmental liabilities than for delivering value to shareholders.

Watson's legacy is to leave Chevron with a bleak long-term prognosis. While the fossil fuel industry faces unprecedented structural pressures, Chevron is arguably in a worse position than its peers. Watson made a disastrous bet in Australia on the Gorgon natural gas project, a move that landed him in major trouble with tax authorities and saddled Chevron with at least $20 billion in cost overruns.

But let's focus on Watson's most obvious mistake, Ecuador.

Ecuador is the place where Watson literally has blood on his hands for failing to address the fallout from Texaco's deliberate dumping of billions of gallons of toxic waste into the rainforest when it operated six huge oil fields from 1964 to 1992. The dumping -- called the Amazon Chernobyl by locals -- decimated indigenous nationalities and continues to kill scores of innocent people as confirmed by multiple academic studies and various court rulings.

While Chevron left Ecuador in 1992, the company's toxic legacy -- including roughly 1,000 open-air toxic waste pits -- continues to cause grievous harm to the local population. Under Watson's recommendation, Chevron bought Texaco in 2001 and now owns the Ecuador problem.

A successful litigation brought by local communities to repair the damage has captured the imagination of the world. The legal battle led to a $9.5 billion judgment in Ecuador in the venue where Chevron accepted jurisdiction and where it had insisted the trial be held. Chevron could have settled the claims for a relative pittance years ago. But under Watson, the Ecuador liability has now ballooned to $12 billion (with interest) in Canada, where the villagers are enforcing their judgment.

In Canada, the country's Supreme Court in 2015 unanimously backed an effort to try to seize Chevron assets to pay for the clean-up. Major international law scholars and civil society organizations, including Amazon Watch, also have backed the villagers.

Watson was the Chevron executive in charge of merging with Texaco back in 2001. At the time, environmental groups such as Amazon Watch warned him about the massive pending liability in Ecuador; he ignored the warnings, which perhaps explains why he doubled down and started attacking his victims and their lawyers. He also ordered a $2 million payment be made to a witness to lie in order to help the company cover-up its disastrous policy.

At the time Watson was director of Chevron's acquisitions, Chevron grossly overpaid for Texaco's assets given that there was no accounting for the Ecuador clean-up costs. But arrogance is Watson's hallmark personality trait.

Angry at being challenged by shareholders and activists, Watson and his General Counsel R. Hewitt Pate launched the most expensive corporate "defense" in history. They threatened the Ecuadorian villagers with a "lifetime of litigation" if they persisted. They had five shareholders arrested at an annual meeting after they challenged the company's Ecuador policy. Chevron's lawyers even fabricated evidence to secure a favorable "judgment" in a farcical non-jury trial in U.S. federal court, making a mockery of justice in the process.

A Chevron official wrote an email saying Watson's main litigation strategy was to "demonize" Steven Donziger, the tenacious Harvard-educated human rights lawyer who has led the fight against Chevron for years. Donziger personally deposed Watson in 2013 in New York. Although the pro-Chevron judge sealed the deposition -- a ridiculous and unnecessary move -- we can assert with certainty that Watson came across as an angry and petty man.

Watson even told Forbes he would stop the Ecuador litigation only when Donziger and the lawyers "give up" and quit the case. That's an intimidation strategy, not a litigation strategy worthy of a major public company that purports to behave ethically.

Watson tapped into shareholder resources to hire at least 2,000 lawyers and 60 law firms to try to beat back the courageous indigenous villagers -- another massive cost suck that suggests Gorgon was not Watson's only spending problem. In his latest maneuver, Watson has ordered his lawyers to illegally try to collect $32 million in legal fees from longtime nemesis Donziger.

Chevron's refinery in the California town of Richmond is another example of Watson's short-sightedness. Major fires at the refinery have spewed so much toxic waste that 15,000 local residents have been forced to receive medical attention. Rather than shut down or at least update the refinery, Watson tried to take over the town by financing a slate of candidates for city council while secretly funding an on-line newspaper to spew pro-Chevron propaganda.

Under Watson's leadership, Chevron has tried to buy its way out of its litigation problems by spending heavily in the political world rather than compensate the company's victims. Watson ordered Chevron to be a major donor to the Trump inauguration and other Koch-funded initiatives designed to increase corporate power. Watson also donated millions of Chevron dollars to the Clinton Foundation and the U.S. State Department during the Obama Administration at the same time his team was inappropriately lobbying to try to kill off the Ecuador liability.

Watson was willing to take extraordinary risks for the leader of a public company. His corrupt witness payments to Guerra and another Chevron employee, the infamous Diego Borja, continue to this day. With Watson's blessing, Chevron also spent at least $15 million on the corporate espionage firm Kroll to spy on Donziger and his colleagues and to try to enlist independent journalists to go undercover in Ecuador on the company's behalf.

Chevron's next CEO will need to clean up Watson's dastardly mess in Ecuador. Indigenous people are still dying in the Amazon because of the company's failure to address its toxic legacy. It's long past time for Chevron's Board to admit that Watson only has made matters worse both for the people of Ecuador and the company's own shareholders.

Monday, August 14, 2017

Haunted by Ecuador Judgment, Chevron Now Trying to Impose $32 Million "Fine" On Lawyer Who Beat It In Court

While fossil fuel giant Chevron still refuses to pay its $12 billion environmental judgment to the indigenous groups it poisoned in Ecuador, company CEO John Watson apparently has found the time to try to impose a massive $32 million liability on the solo human rights lawyer who beat his company in court.

As background, it is undeniable that Harvard Law grad and American human rights advocate Steven Donziger did something so extraordinary to hold Chevron accountable for its environmental crimes that Watson decided to launch a crusade against him. Working against huge odds with a team of Ecuadorian rainforest leaders and local lawyers, Donziger spent eight years (2003 to 2011) coordinating the litigation in Ecuador against Chevron over the deliberate dumping of billions of gallons of chemical-laced oil waste into the rainforest. The case took place in Ecuador at Chevron's insistence and the company accepted jurisdiction there.

After overcoming Chevron's repeated attempts to sabotage the proceeding, a court in 2011 found the company guilty and imposed a $19 billion judgment that was halved when a punitive damages penalty was struck. (The amount is now $12 billion because of interest.) It is without doubt the largest environmental judgment in history from a single court case. Chevron's toxic dumping in Ecuador decimated indigenous groups and caused an outbreak of cancer that has killed or threatens to kill thousands of innocent people. Locals call the catastrophe the "Amazon Chernobyl; this photo essay by acclaimed journalist Lou Demettais captures the brutal human cost of what can only be described as a deliberate act of industrial homicide.

The Ecuador trial-level decision against Chevron  -- based on voluminous evidence including 105 technical evidentiary reports -- was affirmed unanimously by two separate appellate courts in Ecuador, including by the country's Supreme Court. Not even Chevron disputes that it dumped the toxic waste or that it was the exclusive operator of the oil fields. But to evade paying the judgment from its preferred forum, Chevron tried to cover up its criminal misconduct.

Chevron hired 60 law firms and roughly 2,000 lawyers and investigators in part to cook up fake evidence to file a "racketeering" (or RICO) case against Donziger, Ecuadorian lawyer Pablo Fajardo, community leader Luis Yanza, and all 47 of the courageous villagers from the affected area who stepped forward as class representatives. As part of its intimidation model, Chevron General Counsel R. Hewitt Pate promised the indigenous groups and their lawyers a "lifetime of litigation" if they persisted.

Part of that model was to retaliate against Donziger personally back in New York federal court in an unprecedented collateral attack on a foreign judgment. Another Chevron goal was to use the retaliation case to try to intimidate lawyers and supporters of the villagers with the threat of harassing lawsuits. Chevron also peddled its false narrative from the case to the financial markets to distract from the Ecuador liability and to prop up the company's stock price.

A distinguished member of two bar associations, Donziger is a solo practitioner who along with environmental groups such as Amazon Watch and shareholder activist Simon Billenness has driven the accountability campaign against Chevron for over two decades.

Described as a man of "Herculean tenacity" by Bloomberg, Donziger is also known for creating a new human rights funding paradigm that has allowed the impoverished indigenous groups of Ecuador to sustain their case for years against one of the world's richest companies. The private financing model alone surely terrifies Chevron. Fossil fuel companies are not used to their victims being represented by top-flight litigators like Canada's Alan Lenczner or Brazil's Sergio Bermudes, who are trying to seize Chevron assets to force it to comply with the rule of law and pay the judgment.

If Chevron's so-called "retaliation" case against Donziger and the Ecuadorians was designed to silence their campaign, it obviously failed. Left with little to show for its massive expenditures on RICO given that the villagers are successfully enforcing their judgment in Canada -- with the Canada Supreme Court already ruling in their favor -- Chevron is now trying to "punish" Donziger back home. (For more on Chevron's difficulties in Canada from the Ecuador liability, see here.)

Chevron's attacks only serve to underscore the extent of the bullying approach being used. In fact, it is no less than staggering to see the extent of Chevron's cowardice in the context of its attacks against Donziger and the Ecuadorian indigenous groups. These attacks happened after Chevron sold off all of its assets in Ecuador as the evidence against it mounted.

Chevron generates revenue at roughly $200 billion per annum and pays its top lawyers at the firm Gibson Dunn $1,500 per hour; Donziger lives and works out of a small apartment in Manhattan while most of his clients are lucky to make $200 monthly. When Donziger and the villagers challenged Chevron's claim that the entire Ecuador lawsuit was "sham" litigation, the company dropped part of its claim to avoid producing internal documents related to its toxic dumping. (See here and here for articles Donziger has written about the case of the indigenous groups against Chevron.)

After having sued Donziger for roughly $60 billion, Chevron dropped all damages claims on the eve of trial in what can only be described as a bombshell retreat to avoid a jury of impartial fact finders. While that move took away any remaining legitimacy from Chevron's bogus case, it did allow the proceeding to be tried alone by a pro-corporate judge (Lewis A. Kaplan) who repeatedly made comments from the bench that the villagers interpreted as racist. Chevron also hired the corporate espionage firm Kroll to spy on Donziger while deploying at least 114 lawyers to fight him in court.

Under the U.S. Constitution, anybody sued for money damages has the right to a trial by jury. By dropping its damages claims out of fear Donziger would defeat its lawyers before a jury, Chevron bailed on the main part of its case to leave the dirty work to Judge Kaplan. One of Kaplan's first moves was to exclude the scientific evidence of pollution used to convict Chevron in Ecuador.

Judge Kaplan also prevented Donziger from telling his side of the story in open court as part of a series of rulings that seemed more in sync with a judicial apparatchik in Putin's Russia than a neutral federal judge. For a comprehensive summary of how Chevron made a mockery of justice in Kaplan's court, see here and read Donziger's appellate brief. Prominent attorney John Keker also accused Kaplan of showing "implacable hostility" toward Donziger and allowing the matter to "degenerate into a Dickensian farce" unworthy of any civilized country.

Chevron also used the Kaplan proceeding to unveil a new corporate playbook: invest massive sums to try to weaponize the American civil justice system to flog those holding it accountable. Chevron issued subpoenas to more than 100 environmental activists, bloggers, and academics who had some connection to the Ecuadorian communities. Yet at bottom Chevron had nothing other than a series of procedural complaints about the conduct of the Ecuador trial that already had been either corrected or rejected by Ecuador's courts.

With virtually nothing to work with, Chevron's lawyers became so desperate that they paid an admittedly corrupt Ecuadorian witness at least $2 million in cash and benefits to lie in Kaplan's court. That witness, Alberto Guerra, claimed Chevron lost the case because Donziger had arranged for a bribe to be paid to the trial judge so that his Ecuadorian legal team could "ghostwrite" the judgment. Guerra's claims have been thoroughly debunked by scientific evidence and rejected by three layers of courts in Ecuador, and by two appellate courts in Canada. Guerra later admitted under oath that he had lied repeatedly on the stand before Kaplan.

Kangaroo proceedings clearly produce kangaroo results that continue to haunt Chevron.

Chevron CEO Watson and his besieged General Counsel R. Hewitt Pate still stand by the fake "bribe" story. They pump millions of dollars of company funds into the Gibson Dunn law firm to propagate the core falsehood. Kaplan also refuses to set aside his ludicrous decision that the Ecuador judgment was obtained by fraud even though Chevron's case has fallen apart, potentially exposing the company and its lawyers to criminal liability.

The campaign against Donziger has become such an obsession to Watson and his management team that it threatens a serious blowback. Watson and Pate essentially have bet their jobs on the RICO case given the massive investment of resources in fabricating false evidence and attacking the human rights community. Major Chevron investors are furious and shareholder resolutions connected to the Ecuador liability have received widespread support in recent years.

Given that Chevron caved when it came time to test its evidence before a jury, the company is now trying to paralyze Donziger on the back end by insisting he pay the company $32 million to cover a small part of its legal fees in creating the sham allegations. The effort  is a clear violation of the RICO law and the Constitution, as this court submission by Donziger points out. Simply put, there is no legal authority for Chevron to collect legal fees after it fabricated evidence and denied its adversary a jury.

In what can only be described as a situation that evokes shades of modern-day Russia, the same pro-Chevron judge in the U.S. (Kaplan) who already refused to hear evidence that Chevron defrauded the court to frame Donziger now gets to hear the motion to force Donziger to pay Chevron's fees for the work of its lawyers in framing him. That's not how the rule of law is supposed to be administered in a society with an independent judiciary.

(If you think the Russia comparison is inapt, read about a Russian lawyer named Magnitsky who was framed by multiple judges with fake evidence when he uncovered a massive tax fraud a few years ago. The book Red Notice by the American Bill Browder is the best account.)

Chevron's plan to try to use the case to isolate Donziger and his allies in the environmental community also has backfired. The villagers and their lawyers continue to garner deep support around the world. Among those in their camp are a brave U.S. Congressmaninternational law experts from nine countries, 17 environmental and human rights groupsmembers of the European Parliament, and artists such as actor and producer Trudie Styler and Sting.

A retaliatory legal action so petty and desperate from one of the world's largest corporations against a brave lawyer who stood up to Chevron's 2,000-person team would be hard to find in the history of America. The attacks against Donziger decidedly will not help Chevron diminish its growing risk from the Ecuador judgment. And we will see if the beleaguered Chevron legal team at Chevron's outside law firm of Gibson Dunn -- which had marketed itself as a "rescue squad" to save Chevron from the Ecuador liability -- will be able to survive its growing reputation as a serial ethical violator and fake fraud-producer for clients guilty of scandalous behavior.

Besides confronting a fading a business model in a world transitioning to clean energy, there is little doubt Chevron and other oil companies collectively face more than one trillion dollars of unbooked liability for causing environmental damage over many decades. The Ecuador judgment could be the first of many to come. Hence, the massive expenditures to try to kill off the Ecuador case continue.

Donziger and the Ecuadorian villagers have a $12 billion judgment against Chevron. If Chevron succeeds in obtaining a $32 million judgment against one lawyer who has little chance of paying even a small fraction of it, so be it. Anyone keeping score realizes that Chevron is getting devastated.

Chevron's latest attack on Donziger also underscores that bullying often trumps serious merits-based litigation at the highest levels of the fossil fuel industry. Chevron's attempts to defame its victims will not play well in Canada in the upcoming trial to enforce the Ecuador judgment. Chevron has an estimated $25 billion of assets in Canada or more than enough to pay the entirety of the amount it owes to the people it harmed in Ecuador.

The Canada trial likely will result in a remediation paid by Chevron of a humanitarian disaster that never had to happen. Now that it has, Chevron needs to stop presenting fake evidence to courts and cheating the people it poisoned in Ecuador.



Tuesday, August 1, 2017

Bloomberg Should Fire Legal Reporter Paul Barrett For His Blatant Bias

When is Bloomberg going to finally wake up and fire reporter Paul Barrett for his overall crappy reporting and his repeated bias in favor of Chevron in its scorched-earth campaign to evade paying the $12 billion Ecuador environmental judgment?

The latest example of Barrett's pro-business "reporting" comes from a Bloomberg article last week about the latest attempt by a major corporation with environmental problems to use the RICO (or "racketeering") statute to try to intimidate and silence its activist adversaries. The article details how Resolute, a Canadian timber company, has accused Greenpeace of being a "global fraud" after the organization claimed the company was trying to destroy the Boreal forests in Canada.

Let's get this straight: Greenpeace appears to be in the right (see this great video for its version) to take on Resolute over poor environmental practices. But even it was wrong, does that give a corporation like Resolute the right to use RICO and the civil justice system to try to bankrupt Greenpeace and undermine its First Amendment right to engage in legitimate advocacy?

Barrett seems to think so.

What Barrett should be writing about is how an increasing number of corporate counter-attacks against activists and human rights lawyers are becoming a threat to our democracy. For background on this dangerous trend, see this compelling blog by Otto Saki of the Ford Foundation and this analysis by Katie Redford of Earth Rights International. These important perspectives are absent from Barrett's reporting.

Now, to Barrett's bias in favor of Chevron in its battle to evade paying the Ecuador pollution judgment. In the latest article, Barrett tries to impart credibility to the shaky Resolute lawsuit by comparing it to the RICO judgment Chevron obtained against American lawyer Steven Donziger and his Ecuadorian clients who won a historic $12 billion judgment against the company. But Chevron's RICO case was a fraud in and of itself -- engineered by a pro-business judge and hundreds of company lawyers. Since the judgment came out in 2014, that case has completely fallen apart.

(If you want to understand the utter depravity of Chevron's RICO case and why it has completely collapsed since trial, see this press release and this 33-page response to the erroneous findings of the trial judge. See here for a summary of the overwhelming evidence against Chevron in the Ecuador case and here for the peer-reviewed studies showing high cancer rates in the affected area.)

In the RICO case, Chevron fabricated evidence of a judicial bribe by illegally paying its star witness, Alberto Guerra, a $2 million bribe in exchange for his false testimony. The case collapsed after trial after Guerra admitted he lied repeatedly on the stand and a forensic analysis of the Ecuador trial judge's computers proved he wrote the judgment, contrary to Guerra's testimony that it had been ghostwritten by lawyers for the plaintiffs.

Chevron used hundreds of lawyers to target Donziger, a solo practitioner and human rights attorney. The company admitted its long-term strategy was to "demonize" him. But Chevron's lawyers, in an act of utter cowardice, dropped all damages claims against Donziger on the eve of the RICO trial to avoid a jury of impartial fact finders. Yet none of this an be found in Barrett's reporting on the Chevron RICO case. That's just deceptive.

In his article on the Resolute lawsuit, Barret writes about the Chevron case as follows:
Chevron proved that its activist foes had transformed their suit against the company into an extortion plot featuring bribery, fabrication of evidence, and the ghostwriting of judicial opinions.
As the above reports prove, this type of analysis is just flat-out wrong and deceptive. The totality of the evidence proves there was no bribe or ghostwriting and the only party to fabricate evidence in the RICO case was Chevron. Yet Barrett has completely ignored these critical developments. He does not even give a nod to the idea of a competing narrative.

While Barrett used his Bloomberg platform to repeatedly shill for Chevron during the RICO trial in 2013, he has never reported on the collapse of Chevron's RICO evidence and still acts as if the flawed judgment in that case is End of Story. Yet that RICO judgment is now virtually worthless to Chevron in courts around the world that are threatening to seize company assets. Chevron's RICO strategy has failed; the campaign of the villagers has been successful. Barrett has it backwards.

Chevron now faces a veritable mountain of liability ($12 billion) in Canada in a judgment enforcement action that already won the unanimous backing of the country's Supreme Court.

Barrett's flawed reporting comes on top of the dozens of factual errors, use of outright plagiarism, and the fictionalized scenes in his supposedly non-fiction book on the Ecuador case that was rushed out in 2014 to celebrate Chevron's supposed "victory" over Donziger that never was. The credibility of that book -- most of which could have been written by Chevron's public relations team -- was utterly destroyed in a point-by-point takedown by Donziger himself.

Barrett's errors in his Ecuador reporting curiously always point in one direction -- Chevron's. He has denied the truth about what really happened to the indigenous people of Ecuador, whitewashed the company's environmental crimes, and tried to celebrate the "genius" of corporations that use the profits they suck out of the earth to violate the constitutional rights of their adversaries.

The fact Barrett is part of a troika of business reporters who for years have shamelessly carried Chevron's water for its disastrous behavior in Ecuador is a real stain on Bloomberg's reputation.

To maintain her own credibility, Bloomberg editor Megan Murphy should show Barrett the door. Bloomberg needs to assign a reporter to the Chevron legal beat who can write about these critically important matters with a more balanced perspective.

Thursday, June 22, 2017

George Mason Professor Krauss Is Chevron's New Stooge in Ecuador Pollution Case

Note to George Mason University law students: exercise extreme caution when dealing with Professor Michael I. Krauss, a self-proclaimed "expert" in ethics who in his spare time shills for Chevron's criminal cover-up of its toxic dumping in Ecuador's Amazon rainforest. You might want to ask Krauss in his next ethics class if his obvious ties to Chevron and his obfuscation of the truth compromise the academic standards of George Mason.

As background, Krauss teaches at a university that has received major funding from the Koch Brothers and their largely anonymous network of right-wing donors exposed brilliantly in Jane Mayer's book Dark Money. The Kochs have donated tens of millions of dollars to turn George Mason into a "libertarian mecca" that serves as a beachhead near the nation's capital for political and academic attacks on almost any form of government regulation. (See pages 149-151 of Mayer's book for background.)

We have no problem if Krauss is an avowed libertarian, even if his university has sold its soul to right-wing donors. We do have a problem with his estranged relationship with the truth.

In fact, in his many blog posts on Forbes on the Chevron case, Krauss repeatedly ignores, obfuscates, and distorts the most basic facts to apologize for the company's atrocious behavior in Ecuador as found by multiple courts around the world. Unlike the propagandistic blog posts of Krauss, these court findings are based on voluminous scientific evidence and peer-reviewed and scholarly research.

Consider what Krauss ignores in his posts about Chevron's role in creating a catastrophe so massive it is called the "Amazon Chernobyl" by locals:

**Chevron was found by three layers of courts in Ecuador -- the country where company lawyers had insisted the trial be held -- to have deliberately and systematically dumped billions of gallons of toxic oil waste into the waterways of the Amazon rainforest over a two-decade period, decimating indigenous groups and causing an untold number of cancer deaths. The court decisions were based on more than 105 technical evidentiary reports and Chevron's own admissions. Ecuador's highest court unanimously affirmed Chevron's liability.

Here is what Krauss ignores and doesn't want you to see: a summary of the overwhelming evidence against Chevron; a legal brief that explains the horrific history of the company's toxic dumping, subterfuge, fraud, and criminal cover-up in Ecuador and the United States; and a summary of the peer-reviewed health studies that show high cancer rates and other impacts.

**Initially sued by indigenous villagers in New York federal court in 1993, Chevron praised Ecuador's justice system and accepted jurisdiction in the country thinking it could engineer a political dismissal of the case. After that failed, and with the scientific evidence against it mounting, Chevron sold its assets in Ecuador to evade paying any eventual judgment. Making a total mockery of the rule of law, Chevron then went into lockdown mode and tried to sabotage and paralyze the very trial it insisted on having. It once filed 39 repetitive motions in less than one hour just to tie up the court.

**Ultimately, Chevron was found liable in its preferred forum of Ecuador and ordered to pay $9.5 billion in damages and costs -- a pittance compared to the roughly $50 billion BP has paid out for the much smaller Gulf of Mexico spill in 2010. Yet rather than pay the judgment and clean up the toxic disaster it caused, Chevron threatened the indigenous groups who brought the claims with a "lifetime of litigation" if they persisted.

**Making good on its threat, Chevron retaliated by suing the plaintiffs and their lawyers under the civil RICO law back in the same U.S. court where it refused to defend the underlying claims. The company again made an utter mockery of justice, dropping all damages claims on the eve of trial to avoid a jury of impartial fact finders. Chevron then bribed a witness with a $2 million payment to claim that the judgment in Ecuador was "ghostwritten" by the plaintiffs -- an absolute lie that has since been proven wrong by a forensic examination.

For background on Chevron's criminal legal violations and witness bribery, see this brief filed before the U.S. Supreme Court, this legal submission, and this press release. Krauss also ignores the fact that 17 prominent human rights groups and 19 international law scholars have sided with the villagers in their campaign against Chevron.

**The bribed Chevron witness, Alberto Guerra, later admitted that he repeatedly lied under oath on behalf of the company in the U.S. federal court proceeding. Separately, a forensic examination by the American expert J. Christopher Racich demonstrated that the Ecuador trial judge wrote the decision against Chevron on his office computer, contradicting Guerra's false claim that it had been given to the trial judge on a flash drive just before it was issued.

**In the meantime, the Supreme Courts of two countries -- Ecuador and Canada -- have unanimously rejected Chevron's fabricated "fraud" claims and ruled in favor of the villagers. The affected communities and their legal team are currently trying to seize company assets in Canada and Brazil to force compliance with the Ecuador judgment. The next hearing in Canada is this October in Toronto.

**In total, 18 judges appellate judges in Ecuador and Canada have ruled in favor of the villagers. Yet Krauss writes only about a rogue decision from one U.S. federal judge who relied on false evidence fabricated from Chevron for his findings. The Second Circuit Court of Appeals refused to review those false findings, as did the U.S. Supreme Court.

Because of its corrupt acts in Ecuador and the United States and its utter disdain for the rule of law, Chevron now finds itself in serious trouble. It faces possible criminal and civil jeopardy for its cover-up in addition to its $12 billion environmental liability (rising $300 million per year because of interest) to the people of Ecuador. Company management, led by CEO John Watson, also faces a shareholder revolt over its unethical behavior in trying to evade paying the Ecuador judgment.

In his latest blog, Krauss tried to claim that a recent decision by the U.S. Supreme Court to deny review of the deeply flawed RICO decision somehow vindicates the rule of law. Not true. The Supreme Court actually is turning a blind eye to the rule of law. Consider this shameful fact: no U.S. appellate court ever considered evidence of Chevron's contamination, the company's bribes of its star witness, the admissions by the Chevron witness that he lied under oath, or the results of a forensic examination that completely exposes the RICO decision for the fraud that it is.

Krauss also suggests that Steven Donziger, one of the American lawyers for the villagers who has courageously led the fight against Chevron, should be disbarred based on the company's fabricated evidence. Chevron has admitted its strategy in the case is "to demonize" Donziger rather than defend on the merits. Playing Chevron's game on this point is not only unethical, but could lead to serious problems for Krauss. Calling publicly for a fellow lawyer to be disbarred based on false evidence is itself a major violation of the rules of ethics.

This sad episode with Krauss reminds us of another law professor from Notre Dame who also allowed himself to be used as a Chevron stooge in the Ecuador matter, with disastrous results. That professor, Douglas Cassell, was slapped down by Notre Dame's administration for hiding the fact he was receiving payments from Chevron while shilling publicly for the oil giant. He was also forced to remove all of his Chevron materials from his page on the school's website. For background, see here.

Krauss should be forced to disclose to his students, the George Mason administration, and Forbes why he he has posted so many misleading blogs that try to apologize for Chevron's environmental crimes and fraudulent cover up. Is is possible that he too is being paid by Chevron or any of the many groups funded by the oil company? Has Chevron donated money to George Mason? If so, why has Krauss not disclosed these obvious conflicts of interest?

We might add that Krauss brags on his resume for having arranged the largest ever "anonymous" donation to George Mason. He might start the process of complying with his ethical obligations by disclosing whether Mr. Anonymous made his money in the fossil fuel industry, whether he is Charles or David Koch, or whether he might have something to do with Chevron. And Krauss might be forced by the George Mason law faculty to cease teaching "ethics" until he comes clean on his own ethical issues.

The personal reputation of Krauss, and by extension that of the entire law faculty at George Mason, is in play. The university has a robust ethics policy. It should be enforced. In the meantime, it is pretty safe to conclude that the blog posts of Krauss on the Chevron case are that of a political hack, not that of a law scholar.



Friday, June 2, 2017

Chevron's Payments To RICO Witness Are Not Just Ugly - They're Criminal

Reposted from The Huffington Post.

Fellow HuffPost contributor Paul Paz y Miño has a great post up on Chevron's payments to the "fact" witness at the heart of its insane civil "racketeering" (RICO) lawsuit against its own Ecuadorian contamination victims, focusing on the fact that the payments are not just unseemly and illustrative of the cynicism of the entire gambit, but also -- oh yeah -- illegal under federal law. This has not gone unmentioned, including most recently in an important amicus brief as described by Michelle Harrison of Earthrights International, but Paul's reminder about the legal framework is helpful.

Perhaps wisely, the Ecuadorian contamination victims have not thus far piled litigation upon litigation by pressing for yet another legal case out of these illegal payments, especially given that a federal law claim would be heard by a U.S. federal court system that has thus far utterly rolled over to Chevron—memorably described by the judge in the RICO case as "a company of considerable importance to our economy." (He went on to opine from the bench that "I don't think there is anybody in this courtroom who wants to pull his car into a gas station to fill up and finds that there isn't any gas there because these folks," i.e. the Chevron's Ecuadorian victims.)

But that doesn't mean the Ecuadorians (or federal prosecutors) wouldn't have a case if they saw fit to bring one before the statute of limitations expires sometime in the next year. Paul set out the relevant statute, 18 U.S.C. § 201 et seq., in his blog. It sets out the crime and associated fines and imprisonment (up to two years) for anyone who "directly or indirectly, gives, offers, or promises anything of value to any person, for or because of the testimony under oath or affirmation given or to be given by such person as a witness upon a trial." § 201(c)(2).

Critically, the only criminal intent required here is the intent to make the payment. If there provable "intent to influence the testimony," the penalty goes up to a maximum of 15 years imprisonment.

Did Chevron and its legal team at Gibson Dunn give "anything of value" to Alberto Guerra "for or because of [his] testimony" in Chevron's RICO case? Did they do so "to influence [Guerra's] testimony"?

Oh yeah. Oh $$$ Yeah.

The point of this blog is not to review all the ugly Guerra details. You've got Paul's blog, the Earthrights blog, and the recent amicus brief. You've got this analysis from when the payments were first uncovered, and this trial motion (to the biased judge above) to strike Guerra's testimony. You've got these reports and blogs about later Guerra recanting his obviously false testimony, and about that testimony later being proven false through a forensic analysis of the hard drive of an Ecuadorian judge. (This analysis showed that Guerra's elaborate story of helping to "ghostwrite" the environmental judgment against Chevron on one of the plaintiffs' laptops was flat-out false. The judgment was properly written by the Ecuadorian judge on his computer in chambers.)

Though we'll get to Chevron's "defense" in a second, this really isn't a subtle or nuanced case. As the snippet in Paul's blog sets out, this is Chevron handing Guerra a suitcase full of $18,000 in cash at their first meeting, and Guerra responding with "Couldn't you add a few zeroes?"

Many zeroes are indeed later added, in the form of more hundreds of thousands of dollars in additional cash payments and a regular "salary," a housing stipend, a car, health insurance, and permanent immigration to the United States—a benefit of priceless value to Guerra because it allowed him to reunite with several of his adult children living illegally in the United States who he hadn't seen in years.

In return, Guerra put himself and his testimony at Chevron's disposal. He was prepped for over 50 days by Chevron lawyers in advance of his RICO testimony, and has been trotted out to testify (falsely) in other subsequent proceedings. His "fact" testimony changed constantly (and dramatically) to fit shifting factual developments in the case and Chevron's needs at any given point. The whole thing was truly a disgrace.

Chevron's defense (and the company has spent well over $1 billion on legal fees in the case, so yes, it purports to have a defense) is that Guerra was paid not for his testimony, but rather for the underlying information he gave Chevron—and subsequently testified about.

You might be thinking: Say what? How is this not paying for testimony? You wouldn't be alone. When famed legal ethics and constitutional law scholar Dean Erwin Chemerinsky heard that Chevron and Gibson Dunn were making this claim, he was so outraged he offered the Ecuadorian a free legal opinion to try to convince the court not to accept the testimony:

[I]f a party or its counsel were permitted to pay a testifying witness for physical evidence, beyond the reasonable value of that evidence, and to pay the witness a salary in exchange for an agreement to testify, there would be little left to the rule against compensating fact witnesses. Lawyers could always circumvent the prohibition of paying non-expert witnesses for their testimony by saying it was to pay for documents or other physical evidence.

Specifically on the evidence versus information question, Chemerinsky did not entirely reject the notion that a party might be able to pay for "information," but emphasized the key restraint on any such practice—that the payments not enrich the witness.

If a lawyer pays a testifying witness for physical evidence, such payments must be based on the reasonable value of the evidence, and a reasonable fee for the witness's time spent gathering the evidence. For example, if a lawyer were to pay to obtain a computer from a witness, the lawyer should not pay the witness more than the replacement cost of the computer, and any costs incidental to copying the necessary data. In my opinion, the reasonable value of the physical evidence should not be based on its value to the lawyer or the party obtaining the evidence. If that were the rule, there would be virtually no limitation on payments that lawyers could make to fact witnesses under the guise of obtaining evidence.

Now, Chevron got an ethics opinion, too. It got it from Professor George M. Cohen at the University of Virginia Law School, and while it most certainly was not provided pro bono, Chevron apparently did the right thing by consulting with Cohen and explaining the situation before they made any payments to Guerra. The distinguished professor signed-off on some payments to Guerra in some circumstances, setting out clear ethical lines to be followed as Chevron entered such ethically tricky waters. So far, so good. (I have a dim view of the substance of the opinion, which I may explain in a later blog, but at least the approach thus far was minimally adequate.)

But then, Chevron and Gibson Dunn decided they didn't like all those ethical lines after all. For example, throughout his 20-page, gold-plated opinion, Professor Cohen repeatedly emphasized the importance of the fact that the substantial payments for information were okay because it was just a cash-for-information deal, unconnected from the focus of § 201, namely testimony . He wrote:

On its face, §201(c)(2) does not seem to apply to payments purely for information or documents, as opposed to testimony. Because Chevron intends to pay for pre-existing information, and currently has no intention to call the witness to provide testimony in the pending federal proceeding in New York, or any other federal proceeding, the payment does not seem to violate the statute.

But Chevron and Gibson Dunn decide they do want Guerra to testify after all. (Or maybe that was the plan from the beginning.) In any event, that's a problem given the do-not-cross lines set out in the opinion, right?

No sir, no problem at all! They go back to the good professor, who provides a revised version of the same opinion, neatly excising out the inconvenient (italicized above) parts:

On its face, § 201(c)(2) does not seem to apply to payments purely for information or documents, as opposed to testimony. Because Chevron intends to pay for pre-existing information, the payment does not seem to violate the statute.

Gee thanks Professor! What a pro. No wonder these guys are paid the big bucks.

With the "information versus testimony" distinction in mind, Chevron and Gibson Dunn and their agents met with Guerra. Their attempt to "stay within the ethical lines" is, frankly, comical. The meeting was recorded:

CHEVRON: The money we're talking about is for, the money has to be for information—

GUERRA: Yes, yes, yes.

CHEVRON: It cannot be for testimony. It has to be for, it has to be for—

GUERRA: Yes, yes, yes, but not for only—

CHEVRON: —or for creating any of that [VOICES OVERLAP]—

GUERRA: For example, for example, right now, of all that—right? I don't earn anything and neither do you.

CHEVRON: Uh-huh.

GUERRA: We can talk about gold, old man.

CHEVRON: Of course.

GUERRA: But, damn, in practice, nothing.

CHEVRON: Of course, but I mean, it has to be information, not— [OVERLAP]

GUERRA: Sure, this is a matter of "here you are, these are my documents ...

CHEVRON: There, that's it.

GUERRA: —and that has value. It's worth one, or worth a million. But that does have value.

CHEVRON: Exactly.

GUERRA: That's the whole issue. Sure, it's clear to me.

It's clear to us too, Alberto. All too clear.

You can almost see the grins on their faces as they go through this charade, knowing the recorder is running. At the end of this conversation, they "purchase" from Guerra the "information and evidence" listed on this Appendix: a used hard drive and a handful of flash drives, a few old calendars ("day planners"), and "permission to access, inspect, copy, and preserve" two email accounts. The reasonable value of all this, to Guerra? What do you think? Fifty bucks? One hundred?

Guerra gets a suitcase with $18,000.

Of course, that's not the "million" Guerra wanted. As was made "clear" to him, he would get it—he would have to wait a little bit.

At this point (or after another "purchase" of old technology and records for an additional $20,000), Chevron and Gibson Dunn start shifting the payments into a new "ethical" theory: witness expenses. For this theory, Guerra will indeed be a witness, utterly reversing the central fact that justified the first two Cohen opinions.

They need another ethics opinion. How to get it? Perhaps they approached a second ethics professor without telling him or her about Cohen? No, don't be silly. Remember, Cohen is a pro. He can handle anything.

So back to Cohen they go, now with the fact that they want Guerra to sign a contract sign a contract obliging himself to testify at Chevron's direction. Witness expenses are typically understood to include travel, accommodation, copying costs, and at most an hourly fee for discrete work. Here, among many other perks as noted above, Chevron put Guerra on an indefinite "salary" of $10,000 per month—20 times what he was earning before he started negotiating with Chevron. Nonetheless, Professor Cohen opines, this is a reasonable understanding of "expenses." (Professor Chemerinsky, meanwhile, makes clear that any payment of a "salary" to a fact witness is "a clear violation" of the rules.)

The problems with the Cohen opinions go on and on. I won't (continue to) digress. Sadly, for Chevron and Gibson Dunn, the opinions have basically the same value as they did on their sell-by date—not based on their ridiculous arguments and client-serving logic, but based their cover-your-ass (CYA) value. No matter how bad they are, Chevron and Gibson Dunn get to say, gee, he's the expert, how could we have known better?

Personally, I don't think it's enough in these circumstances. The fact that Cohen was so acrobatic in adjusting his opinions to suit Chevron's needs as they emerged I think lessens their CYA value considerably. Depending on the context in which a § 201 claim or criminal prosecution might arise, the central issue would still go to a jury: were Chevron's cash payments, $120,000/year "salary," immigration, and other perks, made to Alberto Guerra "for or because of [his] testimony" in the RICO case? (For the more severe sanction in § 201(b)(3), were the payments "corrupt," i.e. to "influence [that] testimony"?)

Not a toughie.

Not surprisingly, Chevron seems more than a bit nervous about l'Affaire Guerra. At Chevron's recent annual shareholders summit, Chevron played a video it had commissioned crafting itself as the hero of the whole Ecuador situation, an unfairly targeted corporation that had the guts to stand up to a criminal band of deceitful Ecuadorians and conniving U.S. lawyers. It then took questions. But when a question was asked about Guerra, Chevron CEO John Watson brusquely turned the entire meeting to another topic and the questioner's microphone was shut off.

But there are a lot of microphones that Chevron can't shut off. Shareholders ended up voting at historic levels to rebuke CEO Watson for his "mishandling" of the Ecuador case; a full 39% (a huge percentage for a shareholder resolution) voted to install an independent chair that analysts claimed would bring more perspective to the company's Ecuador strategy. (The company's self-stated strategy at present is "fight until hell freezes over, and then fight it out on the ice.")

In a year, Chevron and Gibson Dunn might breathe easier, as they will be able to try to fight off any criminal prosecution on the Guerra payments by pointing to the federal five-year the statute of limitations. Until then, Chevron's fight on the ice is more like a cold sweat. We'll see what happens next.