Wednesday, August 10, 2016

Power Protecting Power (the Chevron Rulings)

Reposted from Medium.

Power protects power.

This is a lesson to learn early in life when it comes to matters of the haves and have-nots of the world.

Such is the case of the Second Circuit Court of Appeals decision this week in the 23-year-old lawsuit, brought by a group of Ecuadorian indigenous peoples against Chevron for one of the largest oil contamination disasters in history.

The U.S. appellate court sided with Chevron, letting the company off the hook for pollution damage that even the oil giant does not deny.

By 2013, three levels of Ecuador's courts had ruled Chevron should pay $8.6 billion in damages, but the 2nd Circuit judges blocked enforcement of the judgment in the United States, in defiance of another country's court system.

In a lengthy ruling, the judges cited over a hundred cases to justify their decision, but they barely mentioned the deaths, the diseases and the destruction experienced by the Ecuadorian plaintiffs – the indigenous tribal people and villagers who live on land Chevron's adopted company, Texaco, left contaminated and dangerous almost three decades ago.

They live off this land, or try to.

One could say they have been forgotten, but they would have had to be remembered in the first place. They never were, here in the land of the free and the brave.

They have been literally lost and invisible in the U.S. court system.

On numerous occasions, one of their U.S. attorneys questioned the integrity of U.S. courts, in particular, the lower court judge who ruled the attorneys committed fraud. In turn, the judge had few kind words for the people suffering in Ecuador and focused his attention on the attorney.

Clearly, the appellate court could not abide such heresy, either, especially by a U.S. attorney.

So, it adopted hook, line and sinker the lower court judge's reasoning and essentially wrote a legal template to protect U.S.-based, multi-national corporations that are exploiting, have exploited or will exploit the people and resources of struggling, third world countries.

The Second Circuit judges should have saved a tree and been much more succinct in its argument:

We are protecting our own: our court system, our judge, our corporations.

We are going to make it harder for hard-hitting human rights and environmental lawyers to come after American corporations when they take advantage of other countries' resources and workforces they need for profit.

We are going to make sure the Ecuadorian plaintiffs (many of whom are indigent, are sick or have family members who are sick) do not benefit, even though the alleged fraud does not change the fact Texaco dumped 18 billion gallons of oil and toxic water into the rainforest from the early 1970s to 1990 and then faked a cleanup.

We are ruling against the Ecuadorians because their attorneys did not dispute the fraud findings (even though they did in numerous court filings, including evidence showing Chevron's main witness lied.)

We are ruling on both the law and Chevron's facts, even though we – appellate courts – generally do not rule on the facts and, in the process, we are going to ignore the Ecuadorians' facts.

This decision is unprecedented in American law for many reasons but, most urgently, because it empowers corporations to criminalize efforts to hold them accountable for the messes they make, whether here or elsewhere.

The Ecuadorians do have options, thankfully. They are seeking to enforce their judgment in Canada, where Chevron has enough assets to pay the damage award. A trial begins in September.

Meanwhile, here in the U.S., the emperor wears no clothes but multi-national corporations are busy today, applauding anyway.

Tuesday, July 12, 2016

Chevron's Ted Boutrous Thoroughly Embarrassed Himself Last Week

Reposted from Huffington Post.

Ted Boutrous embarrassed himself in Huffington Post this week in an apparent attempt to "up the crazy" as the trial to seize Chevron's assets in Canada looms. It appears the "Big Lie" sickness of Donald Trump-ism continues to grow in America. The lawyer for Gibson Dunn, a firm known for its corporate attack dog efforts, has taken lying and slander to a new level. To Boutrous, giant fossil fuel corporations are the victims of legal attacks by environmental and human rights groups and the actual human rights violations or environmental destruction is either insignificant, or nonexistent in Ted's view. To top it off, Boutrous – defender of Chevron – worst global polluter ever – is lecturing that "the ends don't justify the means." It's not a coincidence that Chevron will find itself in court once again in a matter of weeks trying to justify the unjustifiable.

Boutrous has now tagged himself as the kind of lawyer who blames the rape victim for dressing the "wrong way". Or the kind of lawyer who blames the black man shot by police for being where he shouldn't have been and "looking like a threat." He has the audacity to blame the people Chevron deliberately poisoned by intentionally dumping billions of gallons of toxic waste in the Ecuadorian Amazon. Despite the fact that it is the largest oil-related disaster in history, which remains yet today in the form of almost 1,000 toxic waste pits, Boutrous claims there's "a lack of evidence."

To the families of the over 1,400 people who have already died of cancer in the Amazon – Boutrous denies your suffering. To the indigenous communities wiped out by Chevron's operations (and Texaco) over decades, Boutrous never believed in you in the first place. To any environmental or human rights advocates who denounced the environmental "crime of the century" Boutrous says you are criminals.

For the record, here are but a few of the incontrovertible facts to which Texaco has already confessed and to which any non-corrupted lawyer would concede:

In fact, Chevron videos taken in 2005 and leaked by a whistleblower prove even the few pits Texaco claimed to have cleaned were still toxic years after the alleged "remediation".

Texaco argued for a decade in US Federal Court in New York that Ecuador was the proper venue for the case and agreed that it would honor the decisions of the Ecuadorian court system. However, on the first day of the new trial in Ecuador, Texaco insisted that the case should not be heard in Ecuador either.

Chevron's RICO trial specifically excluded any evidence of the contamination in Ecuador and in no way exonerated nor even suggested that Chevron/Texaco was not responsible for the contamination in Ecuador.

Chevron's key witness in its RICO case, disgraced ex-judge Alberto Guerra, received over $2 million from Chevron for his testimony, admitted to lying about alleged bribes from lawyers for the Ecuadorians, and admitted that he embellished his story to get Chevron to pay him more.

Forensic evidence obtained by analysts of the presiding judge's computer disprove any allegation of "ghost-writing" as the verdict was a document saved hundreds of times over a four month period and no external devices were attached (as Guerra claimed at one point).

In 2013, a US District Court found that Chevron had not shown that Amazon Watch had done anything wrong in relation to the Chevron litigation or that Amazon Watch had engaged in fraudulent conduct or furthered a conspiracy against Chevron. In an 11-page order, Judge Cousins quashed Chevron's attempts to open up Amazon Watch's files, and threatened sanctions against Gibson Dunn and Chevron if they reissued subpoenas unless they were "significantly narrower in scope to seek only highly relevant information and more carefully tailored to avoid infringing upon the organization's First Amendment rights."

None of this can be contested by Boutrous, no matter how much he may wish he could. And every single one of these facts are ones Chevron and Gibson Dunn hopes desperately that the public (and justices in Canada) will ignore or forget. Yet despite knowing them, and all those ethical guidelines Ted theoretically understands, he is willing to write that there's a "lack of evidence" against his client Chevron and the environmental NGOs asserting otherwise are criminals for doing so.

Like Chevron executives, who have spent billions to try to escape justice in Ecuador, Boutrous is impervious to shame. His firm has harassed people, threatened judges, bribed witnesses, falsified evidence (not the first, or second time), hidden information from the Ecuadorian court, and even admitted to opposing counsel in the U.S. that their motions were improper, yet filed them anyway. And it's within this context that Boutrous writes: "the ends don't justify the means."?!?

It's unclear which is a greater danger to our society, the ability for oil companies to intentionally and catastrophically pollute, or the willingness of large law firms like Gibson Dunn to cheat, lie and generally abuse the legal system in order to deny the existence of the continuing suffering of tens of thousands of people. Add to that the vilification and intimidation of anyone who dares to speak against them. Sounds like Donald Trump's ideal America to me.

Ted Boutrous is not an idiot, but he has demonstrated absolutely no moral compass whatsoever. In the fever to defend his client – a company that admitted to the deliberate pollution in the first place – he has gone completely off the deep end. And he has embarrassed himself in the process. That's probably why he (or his staff) have obsessively deleted every comment to his post on Huffington – a delicious irony from a "First Amendment lawyer."

The notion that anyone would accept his premise when Chevron has lost every legal contest apart from Kaplan's (which is still under appeal, and was just handed another major blow by a recent SCOTUS decision about the use of RICO in such circumstances) is frankly preposterous.

No, we can't afford to sue Ted and Gibson Dunn for their acts of libel and intimidation, and they know it. The system of justice here completely favors the Chevrons of our society. That's why they are infuriated that the people of Ecuador actually persevered. Despite all Chevron and Gibson Dunn did to prevent it, they couldn't stop the $9.5 billion judgement against them. They won't be able to stop the action to enforce that verdict in Canada to seize Chevron's assets there, but Ted Boutrous and his buddies intend to get much richer trying.

Ted's post is a sign that the Chevron attack dogs are foaming at the mouth the closer we get to a trial in Canada (it begins in September). Last year, when the Supreme Court of Canada sided unanimously with the Ecuadorians to allow them to sue to enforce their verdict, it sent shock waves through Chevron's board room. The phone calls to Gibson Dunn have probably been non-stop ever since.

Ted Boutrous is using Huffington Post to spread more lies that Chevron hopes will sow more doubt about this case. "Perhaps there is no evidence in Ecuador after all." That's what they hope journalists or justices in Canada will think. Perhaps global warming is a hoax, too. "I read on the internet," says Donald Trump. That is the era we live in.

Anyone can appreciate the irony when Ted Boutrous calls Trump out for his racist comments about a judge while he dismisses Ecuador's entire judicial system, local communities and indigenous peoples as either too corrupt or too "unsophisticated" to make a just ruling based on the overwhelming evidence in the Amazon. Trump doesn't appear embarrassed, but Ted certainly has been.

Wednesday, July 6, 2016

In Chevron's Ecuador Case, Justice Delayed Is Justice Denied But, Hey, Football Season's About to Begin

Reposted from Huffington Post.

What does superstar quarterback Tom Brady and a group of Ecuadorian indigenous tribes suing Chevron for massive oil contamination have in common?

They both had lawsuits heard in U.S. federal trial court and appealed to the Second Circuit Court of Appeals in Manhattan. That, however, is where any similarity ends.

Brady – who only wants to play football – got his decision from the appellate court only 4 weeks after oral argument.

The Ecuadorians, who only want to survive on their ancestral lands without being poisoned by oil waste?

They are still waiting, 64 weeks after their oral argument.

A ruling on whether a superstar football player, married to a superstar model, gets to play football appears to be more important than cleaning up toxic waste in the Ecuador rainforest.

The Ecuadorians' quest for justice began over 23 years ago when they sued Chevron for intentionally contaminating the Amazon rainforest where they literally live off the land.

Chevron and its legions of law firms have done everything in their power to smother the lawsuit in legal delays to block a $9.5 billion Ecuador judgment against the oil giant. The country's highest court upheld the judgment in a unanimous decision, in the forum where Chevron insisted the trial be held – in Ecuador. In all, 18 consecutive appellate judges in Ecuador and Canada have ruled in favor of the villagers and against Chevron.

With the writing on the wall, Chevron still refuses to pay the judgment, which serves to further delay the case and force the Ecuadorians to try to seize the company's assets in other countries.

Justice delayed is justice denied but, hey, football season is about to begin.

I'm not so presumptuous to think this blog will have any impact on the timing of the 2nd Circuit ruling in the Ecuadorians' case. I also recognize legal arguments vary in complexity, but it's important for environmental advocates to take note of the difference in treatment. A valid argument can be made that a U.S. courtroom is the last place to look for justice when trying to hold a U.S. corporation accountable for environmental misdeeds in other countries.

For example, the Southern District Court of New York (the federal trial court in Manhattan) is largely responsible for making a legal mess of the original lawsuit against Chevron filed before U.S. Judge Jed Rakoff in 1993. In 2001, he ordered the case returned to Ecuador, over the objections of the indigenous groups. (Yes, it took eight years just to dismiss and move it to Ecuador.) The Ecuadorians argued their country's courtroom could not handle a mass tort case this complicated.

Since then six top-shelf corporate law firms, at the direction of Chevron, have used every legal trick in the book to slow down the case in Ecuador and grind it into quicksand.

This includes drowning the country's under-funded court system with motions, some of which were duplicates of earlier motions already ruled on, and bankrupting the Ecuadorians by filing related lawsuits against them in over two dozen jurisdictions across the U.S. See here and here. Finally in 2011 – eight years later – an Ecuador court ruled against Chevron.

Enter Gibson Dunn's Randy Mastro.

Leading the legal hordes is Mastro, now infamous for having been paid $8 million of taxpayer money to do a bogus "study" supposedly "exonerating" Governor Chris Christie in the Bridgegate scandal. Mastro and his team destroyed notes from his own investigation that produced no negative findings against Christie. Watchdog groups and some New Jersey electeds have questioned whether the cover-up of Bridgegate should be treated as a criminal conspiracy, involving the Governor, his staff, Gibson Dunn and specifically Mastro. (Gibson Dunn is earning quite a reputation; the High Court of England last year ruled the corporate law firm falsified evidence in another case.)

Mastro - who with great rhetorical flair accused poor Ecuadorian villagers and indigenous peoples living in the rainforest of a "criminal conspiracy" to shake down Chevron – also was the man responsible for prepping the main witness in the U.S. "fraud" lawsuit against the Ecuadorians and their attorneys.

That witness, Alberto Guerra, spent a whopping 53 days being coached by Mastro and Gibson Dunn lawyer Avi Weitzman to get his story straight in federal court.

We know this because Guerra recently admitted under oath in a separate but related case that he lied about major portions of his testimony during the lower court trial in the Southern District, heard by U.S. Judge Lewis Kaplan.

In April 2015, Guerra admitted before an international arbitration panel he changed his story not once, but three times. These are Guerra's three stories:

Story No. 1: Guerra alleged the Ecuadorians' attorneys "ghostwrote" the Ecuador judgment and hired Guerra to edit it, which he said he did on his home computer. But when Chevron couldn't find the judgment on his computer, Guerra recanted.

Story No. 2: Actually, Guerra said, the verdict was on a flash drive that the Ecuador judge hearing the case gave him at the Quito airport. But when Chevron couldn't find the judgment on any flash drives, Guerra changed his story yet again.

Story No. 3: Actually, Guerra said, he traveled to the jungle on a bus and edited the judgment there on a laptop owned by one of the Ecuadorian attorneys.

As each story unraveled and evolved, Chevron agreed to pay Guerra more money for testimony the company desperately needed to hold up its "fraud" allegations. To date, Chevron has paid him at least $2 million in cash and benefits and moved him and his family to the U.S., in exchange for his testimony. He also is an admitted criminal, testifying under oath to taking numerous bribes in other cases before he was removed from the bench. Read this Courthouse News article for more background.

This information is in front of the 2nd Circuit, including an argument that a recent Supreme Court decision essentially nullifies Chevron's entire case.

Chevron and Mastro put many, if not all of their eggs, in the Guerra basket that now has large holes in it, threatening to sink Chevron's entire retaliation strategy.

Perhaps like Brady's football, Mastro's argument has been deflated. The Second Circuit should take note. Hopefully, soon.

Chevron Shareholders Still Wary of Risks from $11 Billion Ecuador Judgment

Reposted from CSR Strategy Group.

Chevron shareholders remain wary of the risks from an $11 billion judgment against the company in Ecuador. They also continue to be critical of Chevron management's mishandling of the case.

At Chevron's annual shareholder meeting in May, a significant number of Chevron shareholders expressed criticism of management. Shareholders voted 378,540,311 shares in support of a resolution that cited management's mishandling of the case in Ecuador and called for tighter shareholder oversight.

Put simply, Chevron management lost the confidence of shareholders holding nearly one third of shares and valued at almost $38 billion.

In a solicitation to shareholders filed at the U.S. Securities and Exchange Commission, the resolution proponent, Newground Social Investment was severely critical of Chevron management.

Proponents believe that Chevron’s management has materially mishandled legal matters brought against the company by communities in Ecuador – in ways that increased liabilities for the matter, currently amounting to $9.5 billion. Moreover, proponents are concerned about the adequacy of the company’s disclosure of those risks to shareholders. Finally, proponents are deeply troubled that the company has harassed longstanding shareholders who questioned the company’s approach to these issues….

…It is our belief that instead of negotiating an expedient, fair, and comprehensive settlement with the affected communities in Ecuador, Chevron management pursued a costly, risky, and ultimately unsuccessful legal strategy that involved material missteps. Although the Company has engaged in various legal efforts to try to negate the Ecuador judgment, the proliferation of circumstances and locations where the Ecuador judgment may be enforced increases the likelihood of a large eventual loss as a result of the case.

In the past year, Chevron's management has suffered additional court setbacks and made strategic blunders in the case that heighten the risks to shareholders.

Chevron continues to lose legal ground to the Ecuadoran villagers as they seek to collect on their $11 judgement against the company. To collect the $11 billion judgment, the Ecuadorian villagers have filed judgment enforcement actions targeting Chevron assets in Canada, Brazil, and Argentina. In September 2015, the Supreme Court of Canada unanimously ruled that the Ecuadorian plaintiffs may proceed to enforce the $11 billion judgment against Chevron’s Canadian assets. This figure represents more than 73% of the value of Chevron’s total assets in Canada. In addition, time is not on Chevron's side. Interest on the underlying judgment is increasing Chevron’s liability by an estimated $275 million per year.

Meanwhile Chevron's efforts to put pressure on the Ecuadoran government may spectacularly backfire. Chevron has been awarded $96 million plus compound interest by the Permanent Court of Arbitration in the Hague due to Ecuador’s breach of its contractual obligations to Texaco. On June 6, 2016, the United States Supreme Court refused to hear Ecuador’s appeal of that ruling. What turns this good news into bad for the company is that the $96 million judgment against Ecuador is now an asset of Chevron's in Ecuador.

The Ecuadoran courts have already awarded what remained of Chevron's assets in the country to the plaintiffs as part of their collection on their $11 billion judgment. If the plaintiffs were to collect even a few million dollars of the $96 million judgment, they would have the money necessary to launch further collections against Chevron's assets around the world. As Marco Simons, Legal Director of EarthRights International, noted in a prescient blog five years ago:

[T]he plaintiffs only need to win once or a few times, while Chevron needs to win everywhere. Even if Chevron wins twenty cases, just one loss could cost the company hundreds of millions or billions of dollars.

Chevron also faces a possible overturning or rollback of its judgment against the plaintiffs and their lawyers in its RICO suit. A recent U.S. Supreme Court decision sharply curtailed the use of the RICO statute in a case against RJR Nabisco over cigarette smuggling in Europe, according to a new legal filing by Gupta/Wessler.

Deepak Gupta, who represents U.S. attorney Steven Donziger, made the submission to the United States Court of Appeals for the Second Circuit asserting that the RJR decision “further limits private RICO actions by requiring proof of a quantifiable, redressable and domestic injury – something Chevron has steadfastly refused to identify," Gupta said. The RJR decision also made clear that the RICO statute could not be used to attack a final judgment from a foreign court, as Chevron has tried to do in the Ecuador case, Gupta added in the letter.

Chevron's playbook in the Ecuador case of downplaying the risks to shareholders and savagely attacking its critics may well be unravelling. As Katie Redford, Director of EarthRights International, noted in her recent blog “The New Corporate Playbook, Or What To Do When Environmentalists Stand In Your Way:"

Companies are no longer satisfied with evading their liability for human and environmental harms. Of course, they continue their tried and true tactics of denial, cover ups and fraud, but with the additional goal of silencing their critics, they are counter-attacking, mounting a sophisticated and well-funded campaign to target, sue, surveil, and harass the activists, lawyers, and NGOs that expose their harms. They have powerful allies in Congress and in the media that aid them in their efforts to intimidate, distract and sap the resources of organizations that are already out-resourced in what can only be described as David and Goliath struggles.

There is probably no other case where a company has pursued this playbook so vigorously as Chevron has done in the Ecuador oil pollution case. Chevron even subpoenaed its own shareholders who voiced their concerns.

However, shareholders have continued to voice their concerns over Chevron management's mishandling of the Ecuador case. The continued high vote for resolutions critical of management demonstrate that a large number of Chevron's own shareholders lack confidence in the company's ability to withstand the fall-out from losing the Ecuador lawsuit without significant damage to shareholder value.

Tuesday, June 28, 2016

U.S. Supreme Court Decision Undermines Chevron's Defense in Ecuador Pollution Case

Chevron's faltering "racketeering" (or RICO) case against the Ecuadorian villagers the company poisoned with its toxic dumping was just rendered a nullity by the U.S. Supreme Court, dealing another major blow to the oil giant as it attempts to evade paying the $11 billion pollution judgment.

(For full background on last week's U.S. Supreme Court decision in the RJR Nabisco case and how it hurts Chevron in the Ecuador case, see here.)

Chevron in 2010 deployed hundreds of lawyers to attack and try to demonize indigenous villagers who has just won a multi-billion dollar judgment in Ecuador against the company. Three layers of courts in Ecuador had found Chevron guilty of dumping billions of gallons of toxic waste. Chevron was also reeling after having been embarrassed by brutal exposes of its jungle misconduct in prominent media outlets, including 60 Minutes, Vanity Fair, and The New York Times.

Chevron of course believes the rule of law should apply only when it wins in court, not when it loses.

Angry and desperate, Chevron went on the counterattack. It sold its assets in Ecuador and then filed a retaliatory RICO action in the United States against the villagers and their lawyers claiming the entire judgment was a product of "sham" litigation despite overwhelming evidence against the company. (See here for photos and testimonies of some of Chevron's victims in Ecuador.)

Rather than being assigned randomly, Chevron's RICO case was grabbed by a headline-hungry U.S. judge who never disclosed he had personal investments in Chevron when he presided over the case, despite clear signs he was motivated by bias.

The judge, Lewis A. Kaplan, constantly disparaged the villagers and their country from the bench. A prominent law scholar, New York University Professor Burt Neuborne, blasted Kaplan for engaging in "judicial slander" to undermine Chevron's victims. Other international legal scholars and U.S. civil society groups such as Amnesty International and Earth Rights criticized the judge for his intellectual dishonesty and animus toward the indigenous groups.

A subsequent bench proceeding (Kaplan refused to seat a jury of impartial fact finders) looked more like a Soviet-era show trial. Chevron corporate executives cheered from the gallery and virtually every ruling went in favor of the company. Meticulously choreographed, the Chevron-Kaplan show trial was a mockery of justice from the start, and the case should have been thrown out immediately, as underscored by the U.S. Supreme Court decision.

Aaron Page, a U.S. lawyer who represents the Ecuadorians, put it perfectly:
Chevron's RICO case in Ecuador already was doomed because of its countless legal excesses and absurd factual findings. Now, the Supreme Court has ruled you can't bring a RICO case, even a legitimate one, based on harm that took place abroad. This is another example of why Chevron's RICO case should have been thrown out on day one.
It is worth reviewing a few of the lowlights of what can only be described as a hostile takeover of our taxpayer-funded federal court system by a wealthy private corporation:
  • Chevron and its investigators (Yohi Ackerman and Andres Rivero) paid $38,000 in cash out of suitcase and more than $2 million overall to an admittedly corrupt former judge in Ecuador, Alberto Guerra. In exchange, Guerra became Chevron's star witness and lied on the stand by claiming he had been in a meeting where a "bribe" was discussed.

  • Subsequent to the RICO trial, Guerra admitted admitted under oath that he made up key parts of his testimony. He also confessed to accepting bribes when he was a judge, and paying bribes to judges when he was practicing law. It also emerged that Guerra admitted lying to Chevron to induce the company to pay him more money for his testimony. "Money talks, but gold screams," Guerra told Chevron in a taped conversation.

  • Chevron put Guerra on the stand in the RICO case after the company's lawyers at the U.S. firm of Gibson Dunn coached him for 53 consecutive days. After the coaching, Guerra began to claim he had information the plaintiffs wrote the trial court judgment. The claim was a lie, as an independent forensic analysis later proved. Neither Chevron nor its outside lawyers have been held accountable for coaching a witness to lie in a federal court.

  • The judge also let Chevron pay more than $15 million to Kroll, a private investigations service populated by former FBI and CIA agents, to spy on lawyers for the villagers -- a clear violation of the law and professional ethics. U.S. attorney Steven Donziger was followed and harassed by six separate Kroll agents in Manhattan. Kroll also admitted it prepared 20 to 30 reports on Donziger in an attempt to dig up dirt and discredit him.

  • Chevron also convinced Kaplan – who has a long history of hostility toward plaintiff's lawyers – to actively promote its scheme. Kaplan denied the Ecuadorians a jury so he could write the decision himself, which was largely cribbed from Chevron's briefs. Kaplan also allowed secret witnesses and refused to consider any of the environmental evidence (such as soil and water samples) that clearly proved the oil company was guilty. For a deep dive into Kaplan's miscarriage of justice, read the 65-page factual summary in this appellate brief.
In short, from his Manhattan trial court, Judge Kaplan tried to rule that Ecuador's entire judiciary was illegal. Worse, he tried to singlehandedly overturn a critical ruling from another country's Supreme Court. And he allowed Chevron's made-up facts into his courtroom to justify a defective ruling that has embarrassed the federal judiciary and been lambasted by legal scholars from nine countries around the world.

 Although Guerra was busted for perjury, Chevron has kept him on its payroll to this day. The $2 million in payments is only what Chevron disclosed it had paid Guerra as of 2013. Today, that number is surely an order of magnitude greater, but Chevron refuses to disclose the real value of the slew of benefits it has bestowed on this tawdry criminal.

 When the dust clears and the villagers collect on their judgment – most likely in Canada, where they are advancing toward a seizure of company assets after winning a unanimous decision before the country's Supreme Court – that will not be the end of the story. The people in and out of Chevron responsible for this abuse of power need to be held accountable. They include, most notably, Chevron CEO John Watson, Chevron General Counsel R. Hewitt Pate and Randy Mastro, Andrea Newman, and Avi Weitzman from the outside firm of Gibson Dunn.

Chevron's RICO case and the bombastic, inaccurate, and pre-ordained factual conclusions of Judge Kaplan's show trial are currently being reviewed by a New York federal appellate court. That court had a relatively easy job to begin with, given the many fatal flaws in Chevron's case. The U.S. Supreme Court's latest decision on the RICO law just made that job even easier.

Monday, June 27, 2016

Chevron’s Garbage Fire Sale

Chevron's Richmond refinery flare at 9:30 pm. Photo credit: Jeremy Miller

Reposted from Eye on the Amazon.

Chevron sending up massive flares in Richmond is not the only sign things are getting hot for the oil giant on the run from a $11 billion verdict.

On June 19th, Chevron's Richmond refinery erupted a torrent of flames and black smoke into the air and terrified local residents. The community remembers all too well when 15,000 people were sent to the hospital when that same refinery exploded in 2012. Unfortunately, since then the public hospital in Richmond has closed. They can't afford another explosion as the closest public emergency room services are now thirty to forty minutes away in Oakland.

But that's not the only thing "on fire" at Chevron lately. Similar to the company's claims that it needs massive flares to burn off excess gas, Chevron claims there's "nothing to see here" as it tries to sell off US $5 billion in assets in its Burnaby oil refinery in British Columbia. But the company's actions and track record tell a different story. Realizing it was going to lose in its legal battle and be forced to accept responsibility for deliberately dumping 18 billion gallons of toxic waste into the Ecuadorian Amazon, Chevron instead sold off all its assets and fled that country. It's been a corporate criminal on the run ever since, but the law is finally catching up with Chevron – in Canada.

In September, the Ecuadorian plaintiffs – bolstered by a unanimous decision in their favor by Canada's Supreme Court – will begin their trial to seize Chevron's Canadian assets to cover its US $11 billion debt to the affected communities in Ecuador.

Chevron currently holds approximately US $15 billion of assets in Canada, almost all of which is at risk due to this enforcement action. Chevron refuses to acknowledge its full liability to the SEC and to its shareholders, and this latest move may give a clue as to why. Unable to replicate its customary racist attacks against Ecuador's judiciary and legal system, Chevron has to dream up new methods in Canada.

The Ecuadorians have defeated Chevron in every single legal contest which has considered the evidence of their crimes in Ecuador (Chevron's singular victory – a retaliatory RICO SLAPP suit in the US – notoriously forbade any evidence of contamination in its proceedings and is still under appeal). The writing is on the wall in Canada, and Chevron is trying to slip out quietly and escape justice once again.

To make matters worse for the oil giant, a recent U.S. Supreme Court decision on the use of RICO may preemptively doom its defense before the Second Circuit Court of Appeals in New York. As respected appellate attorney Deepak Gupta wrote, the Supreme Court decision "further limits private RICO actions by requiring proof of a quantifiable, redressable and domestic injury – something Chevron has steadfastly refuse to identify." The decision also made clear that the RICO statute could not be used to attack a final judgment from a foreign court, as Chevron has tried to do in the Ecuador case. Aaron Page, a U.S. lawyer for the Ecuadorians called it a "nail in the coffin" of Chevron's RICO case. He added, "Now, the Supreme Court has ruled you can't bring a RICO case, even a legitimate one, based on harm that took place abroad. This is another example of why Chevron's RICO case should have been thrown out on day one."

Bottom line on these developments: no matter how desperate it gets, Chevron can't hide its actions in Canada or its pollution in Ecuador or Richmond.

Thursday, May 26, 2016

Chevron CEO Watson Shows He Is Out of Touch On Ecuador Litigation, Fossil Fuels

Chevron CEO John Watson and his Board of Directors seemed terribly out of touch at the company's annual meeting this week where they were once again pounded by the environmental group Amazon Watch and its allies. Watson simply refused to deal with his two key challenges: the $11 billion Ecuador pollution judgment, and climate change.

For shareholders, it was hardly a performance that inspires confidence in the future. Chevron's revenues are down 75% compared to last year and its stock price continues to lag behind its peers. Nobody wants a Luddite running an oil company, but that is what Watson is in danger of becoming.

On Ecuador, Watson arrogantly dismissed the comments of renowned indigenous leader Humberto Piaguaje. A Secoya elder who has seen his village devastated by Chevron's pollution, Piaguaje had traveled from his jungle home to confront Watson directly about the enormous court judgment won by thousands of villagers in 2013. The decision against Chevron has been confirmed by no fewer than 18 appellate judges in Ecuador and Canada.

Yet Watson refuses to pay up, prompting the villagers to try to seize Chevron assets in Canada. Given that Chevron has extremely valuable oil fields and other properties in Canada, it is likely the villagers will collect the entirety of their judgment in that country.

Watson had the gall to suggest to Piaguaje that his thoughts about how Chevron's pollution destroyed the ancestral lands of indigenous groups were not really his own. Surely, Watson said, these thoughts were planted in his head by lawyers. After Piaguaje asserted that Chevron's "blame the victim" strategy in Ecuador is racist, Watson became visibly flustered and turned off the microphone after saying, "I've been trying to answer questions on Ecuador for seven years. I am not going to take any more questions." (For more details, see this account from Amazon Watch and this article by Courthouse News.)

Watson -- who received $22 million in compensation last year -- was even more arrogant on the climate change issue. In contrast to several European-based oil majors, Chevron under Watson's leadership opposed all six resolutions designed to drag the company into the modern world on this most critical of challenges. Watson obviously has no plan to deal with Chevron's stranded asset problem as the world transitions to a clean energy economy. This is a great example of how poor citizenship and flawed decision making combust into a perfect storm of corporate stupidity.

Here are some more signs from the annual meeting that Watson has his head in the sand:

*Watson did not even acknowledge that because of the Ecuador judgment Chevron faces the seizure of billions of dollars of company assets in Canada, where the country's Supreme Court recently ruled for the villagers. Chevron is on the firing line of one of the most important environmental cases in history, yet Watson was mum about what appears to be a threat to the company's business model.

**Also on the Ecuador litigation, Watson was silent on how Chevron's key witness from Ecuador has repudiated his own testimony and admitted lying to get more money from the company. Chevron has paid the witness at least $2 million and moved his entire family to the U.S.; the company's entire defense hinges largely on the testimony of this one witness.

**Watson also completely ignored a whistleblower video that shows Chevron scientists trying to defraud Ecuador's courts by hiding evidence of the company's pollution. The video was given to Amazon Watch by a company insider.

**During the meeting, Watson failed to beat back a shareholder resolution from Newground Social Investment critical of Chevron's mishandling of the Ecuador litigation. The resolution received support from 30% of all shareholders, or a majority of all shares not controlled by the company. This was a stinging rebuke to company management, which has used 60 different law firms to fight the villagers.

**Watson also refused to discuss how Chevron recently dropped a key legal claim against the villagers because the company concluded that its arguments were certain to be rejected by courts.

**Finally, Watson again failed to acknowledge the humanitarian catastrophe in the area of Ecuador where the company operated from 1964 to 1992. Cancer rates have skyrocketed and hundreds if not thousand of people have died from oil-related diseases since Texaco (bought by Chevron in 2002) started to systematically dump toxic waste into the Amazon in the 1960s.

Watson was the Chevron executive who in 2001 fought hard for the merger with Texaco knowing that it had left billions of gallons of toxic waste in its wake. Watson didn't respect the sophistication and determination of indigenous groups at the time; he obviously still doesn't.

Chevron Board members, who are paid around $400,000 per year, remain silent in the face of this fiasco. Most would rather collect their fee by getting along with management when they should focus on exercising their fiduciary duties on behalf of shareholders.

What a sorry commentary on the company and its leaders.

Tuesday, May 24, 2016

With Assets Under Threat, Chevron CEO Faces Judgment Day Over Ecuador At Annual Meeting

Chevron CEO John Watson is getting roughed up in the days leading up to the company's annual shareholder meeting this week as risk related to his historic $11 billion environmental liability in Ecuador continues to increase. The judgment has now been confirmed unanimously by Ecuador's Supreme Court while Canada's Supreme Court has ruled the affected communities can try to seize some of the company's $15 billion worth of assets to pay for a clean-up.

(For background, see this press release.)

In all, 18 consecutive appellate judges in Ecuador and Canada have rejected Chevron's arguments and ruled in favor of indigenous and farmer villagers from the Amazon who first brought suit in 1993. Chevron's global game of forum shopping is running out of steam -- the company is facing a true litigation catastrophe in Canada -- and Watson no doubt will be called out by shareholders at the meeting for his abhorrent and irresponsible mistreatment of indigenous groups in the Amazon.

The annual meeting, at company headquarters in San Ramon, will be highlighted by a face-to-face showdown between Watson and renowned Ecuadorian indigenous leader Humberto Piaguaje. Piaguaje, a Secoya elder, has traveled from his jungle home to attend the meeting. He is being hosted by Amazon Watch, a U.S.-based environmental group that is organizing a major protest outside during the meeting.

Watson and Chevron's Board will be on the hot seat over a number of issues:

**The company's Ecuador liability -- originally $9.5 billion -- is getting worse by the day as statutory interest in Canada (where the villagers are trying to enforce their judgment against Chevron's assets) has pushed up the amount to roughly $11 billion. Just last week, two top Chevron executives were forced to answer questions under oath in a deposition in Canada; a critical court hearing is scheduled for September that has the chance of knocking out all of the oil giant's defenses.

**Under Watson's leadership, Chevron is flailing not only over the Ecuador issue but over its core business. The company recently reported its first quarterly loss in 13 years; revenue is down 75%; and climate change threatens to leave shareholders with billions of dollars of "stranded assets" as the world moves away from fossil fuels.

**A major Chevron shareholder, Newground Social Investment, has filed a resolution that asserts that Watson's management team "has mishandled a number of issues in ways that significantly increase both risks and costs to shareholders. The most pressing of these issues is the ongoing legal effort by communities in Ecuador to enforce a $9.5 billion Ecuadorian judgment for oil pollution." The resolution follows a complaint to the SEC by a U.S. Congresswoman that suggests the company is trying to downplay its Ecuador liability. Newground also published a letter on the SEC website calling for shareholders to vote for the resolution.

**It is increasingly clear that Chevron is responsible for one of the world's most dire humanitarian catastrophes in Ecuador. Numerous independent studies confirm that cancer rates in the region where Chevron operated have skyrocketed; thousands of indigenous peoples and farmers have died of cancer and other oil-related diseases. Yet at great cost, Watson continues to pay 2,000 lawyers from 60 law firms to fight some of the most vulnerable people on the planet.

In the press release put out by Amazon Watch, Piaguaje said
Our leaders plan to confront Mr. Watson with judgments from multiple courts mandating that the company pay its pollution bill to the people of Ecuador.  Mr. Watson needs to accept responsibility for Chevron's environmental crimes in Ecuador, apologize to the company's victims, and abide by court orders that compensation be paid. Until he abides by the rule of law, Mr. Watson and Chevron's Board members will be considered by us to fugitives from justice subject to arrest for crimes against humanity under principles of universal jurisdiction.
Well said, Humberto. Perhaps you should consider making a citizen's arrest of Watson at the meeting.

In previous shareholder meetings, Watson has suffered a series of biting rebukes over the Ecuador liability. One resolution critical of Watson's mishandling of the case received a whopping 38% support from shareholders.

In addition, in 2011 several of Chevron's institutional shareholders with more than $580 billion in assets under management sent Watson a letter urging settlement of the Ecuador case. Amazon Watch also sent a letter to Chevron signed by 43 corporate accountability and human rights groups blasting the company for trying to silence its critics.

Chevron's shareholders should use the annual meeting to re-assess whether the conflicted Watson -- who made $22 million in compensation last year from a Board that he controls -- has the vision to fully grasp what it means to serve shareholder interests.

Tuesday, April 5, 2016

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, March 24, 2016

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

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

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

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

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

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

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

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

Tuesday, February 2, 2016

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

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

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

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

Here is our first installment of The Chevron Chronicles:

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

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

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

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

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

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

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

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

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

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

Tuesday, January 5, 2016

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

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

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

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

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

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

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

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

  • A stunning new independent evidentiary report by a team of prominent American scientists yet again validates the overwhelming scientific proof that Chevron dumped billions of gallons of toxic waste into the rainforest, decimating indigenous groups and farmer communities.
Paul Paz y Miño, a director with the environmental group Amazon Watch, had this to say about Chevron's prospects:
All told, 2015 was a disastrous year for Chevron in the Ecuador pollution case and 2016 might be even more challenging for the company as it tries to dig out of its ever-deeper hole. Make no mistake about it, Chevron is now moving backwards in its abusive campaign to evade the Ecuador judgment despite spending massive sums of shareholder money on an unethical, illegal, devious, and ultimately futile jurisdictional shell game.
Steven Donziger, the longtime U.S. legal advisor to the affected communities and a target of a desperate company espionage campaign, criticized CEO Watson for "marching the company so far out onto a limb it appears there is no longer a viable path to turn back without Watson himself losing face and possibly his job." Donziger said it was clear the company has no coherent exit strategy with Watson at the helm.

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

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

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

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

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

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

Monday, December 21, 2015

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

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

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

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

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

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

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

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

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

Second, Gibraltar is not a real country. It is a tiny British protectorate of only 30,000 citizens that occupies 2.6 square miles of territory connected to Spain on the southern side of the Iberian Peninsula. A relic of the British Empire, Gibraltar is so small the country's main road doubles as an airport landing strip.

Nevertheless, the elected leader of Gibraltar refers to himself as "Prime Minister" while the local trial court is called a "Supreme Court". Pate thought he would pull a fast one and make it seem like the ruling was a considered decision by several top-ranking appellate justices from a real country; it was decidedly not.

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

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

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

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

Good for you, Mr. Yanza.

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

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

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

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

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

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

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

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

Wednesday, December 16, 2015

The Real Facts About Gibraltar: Chevron's Lies Boosted by Paul Barrett of Businessweek

Chevron's illusory $28 million judgment for legal fees against an empty shell investment vehicle owned by Ecuadorian villagers in the tiny protectorate of Gibraltar is worthless -- despite the attempt by Bloomberg's Paul Barrett to build it up with his incomplete and dishonest reporting.

After largely ignoring the stunning legal setbacks to Chevron in recent months in Canada and elsewhere regarding the $9.5 billion Ecuador pollution judgment against the company, Barrett this week posted a story about how Chevron won a default judgment in Gibraltar.  Gibraltar has only 30,000 people and four trial judges.

Nobody defended the company because the entire litigation is part of Chevron's nefarious effort to entrap the villagers in meaningless cases in irrelevant jurisdictions. Chevron wants to suck the villagers into doing anything except what really matters -- which is seizing company assets to pay for a long-awaited clean-up of lands where the oil major dumped billions of gallons of toxic waste.

In a misleading press release parroted by Barrett on the Businessweek website, Chevron General Counsel R. Hewitt Pate claimed the "Supreme Court" in Gibraltar ruled in favor of the company. What Pate didn't tell Chevron shareholders is that the Supreme Court of Gibraltar is actually a trial court with fewer judges than most small towns in America.

Pate tried to suggest in his press release that it was the highest appeals court in the country, which it decidedly is not. Pate of course never wants to talk about how Chevron polluted the crap of Ecuador and then tried to corrupt and sabotage the trial where it was held accountable.

The dormant investment vehicle targeted by Chevron was used years ago by the company's victims in Ecuador to fund the prosecution of their environmental claims against the oil giant. The villagers also planned to use it to aggregate proceeds of the judgment that would come with selling off Chevron's seized assets. The idea was to distribute the proceeds for an environmental clean-up in Ecuador without the Ecuadorian government interfering with the process.

The villagers chose not to divert their limited resources from Canada, where they have a real chance of collecting the entirety of their historic judgment. Chevron has $15 billion worth of assets in the country and the Supreme Court recently gave the green light for the villagers to go after them, dealing a devastating blow to Pate's blocking strategy.

"We must be disciplined and focus on seizing Chevron assets to force the company to comply with orders from the courts in Ecuador where the company insisted the trial be held," said Luis Yanza, an Ecuadorian community leader. "We will not fall into the trap of defending against frivolous cases that Chevron chooses to initiate in irrelevant jurisdictions."

With the help of corporate sympathizers in the journalism world like Barrett, Chevron's beleaguered management team is using the Gibraltar ruling to try to present a false picture of "progress" in the litigation. That is all part of an attempt by Pate and Chevron CEO John Watson to keep company shareholders and the financial markets from belching too loudly about the company's growing risk in Ecuador.

Chevron is on its heels in Canada and in the United States. Chevron's star witness in its retaliatory "racketeering" case in the U.S., Alberto Guerra, recently admitted lying on the stand to try to frame New York lawyer Steven Donziger in a bribery scheme in Ecuador. In apparent violation of federal law, Chevron had paid the witness $2 million for his testimony. Chevron lawyers coached Guerra for 53 consecutive days before allowing him to present his false testimony.

A concrete example of Barrett's dishonesty is how he used only a small portion of a written statement given him by Yanza, the internationally renowned Goldman Prize winner. The statement explained why the Gibraltar judgment has no impact on the case.

Here is Yanza's full statement as sent to Barrett:
Chevron's default judgment is against a dormant investment vehicle. We believe this judgment has zero value other than as a public relations stunt designed by Chevron to project the false appearance of 'progress' in a litigation where the company recently suffered multiple setbacks, including an admission by its star witness that he testified untruthfully in the RICO case and a decision by Canada's Supreme Court allowing our communities to try to seize company assets
While after two decades of litigation Chevron has yet to pay even one dollar to the thousands of people in our country that it harmed, it is no small irony that Chevron rushed to a courthouse in a far-flung jurisdiction to try to collect millions of dollars in fees that it has paid to its army of lawyers. Rather than engage in a multi-jurisdictional campaign of evasion, Chevron's management team would better serve company shareholders by complying with the Ecuador judgment so that the humanitarian crisis afflicting our communities can be addressed immediately.
This is the only part of Yanza's statement that Barrett quotes in his story:
While after two decades of litigation Chevron has yet to pay even one dollar to the thousands of people in our country that it harmed, it is not small irony that Chevron rushed to a courthouse in a far-flung jurisdiction to try to collect millions of dollars in fees that it has paid to its army of lawyers. 
Journalists of course have a right to use only parts of statements in their stories. But Barrett's long history of uncritical service to Chevron's narrative understandably makes us skeptical of his motives. In an obvious conflict of interest, Barrett last year testified in favor of Chevron before the U.S. Congress while reporting on the case.

Barrett's latest article repeats yet again a false thematic narrative almost always found embedded in his reporting. Barrett suggests that Chevron's retaliatory racketeering case against Donziger and his clients in the U.S. somehow amounts to an "exoneration" of the company's environmental crimes and fraud. Nothing could be further from the truth.

The reality is that Chevron made a mockery of justice in the RICO proceeding. The trial judge, Lewis A. Kaplan, arrogantly disparaged the affected communities and excluded any evidence of Chevron's toxic dumping in Ecuador. He also refused to seat a jury and then accepted the paid-for testimony of Guerra, Chevron's discredited witness. The judge knew nothing of Ecuadorian law or procedure and let Chevron abuse the process throughout.

Kaplan also failed to disclose his own investments in Chevron when he presided over the case. The entire proceeding reeked of racism and was reverse-engineered to favor the oil company.

Ultimately, the RICO judgment -- like the default judgment is Gibraltar -- does nothing to mitigate Chevron's risk from it pollution in Ecuador. But with Barrett promoting these judgments with a fundamentally false narrative, they do allow Chevron yet another bite at the apple on the public relations front.

That false hope is a major factor that allows Chevron's management team to spend millions on its army of lawyers to keep the litigation going even after it lost the case in its preferred forum.

Good work, Paul. As we have said before, you could make a lot more money by joining Chevron's public relations department.

(For more background on Barrett's distortions of fact and made-up scenes in his book about the Ecuador case, see this "notice of defamation" letter sent to him and his publisher.  For a summary of the overwhelming evidence against Chevron in Ecuador, see here.)