Texaco Broke It; Chevron Bought It; Now Chevron Has To Fix It

Chevron executives continue to argue before anyone who will listen (and that’s mostly people who have been paid by Chevron to listen) that just because the company bought Texaco doesn’t mean Chevron is responsible for Texaco’s massive contamination of the Ecuador rainforest.

What Chevron neglects to mention is that not only have the Ecuadorian courts refuted that nonsensical argument, but the U.S. 2nd Circuit Court of Appeals has as well.

Here is what the U.S. appellate court judges wrote in a related ruling in footnotes 3, 4 and 5:

“Chevron Corporation claims, without citation to relevant case law, that it is not bound by the promises made by its predecessors in interest Texaco and ChevronTexaco, Inc. However, in seeking affirmance of the district court’s forum non conveniens dismissal, lawyers from ChevronTexaco appeared in this Court and reaffirmed the concessions that Texaco had made in order to secure dismissal of Plaintiffs’ complaint. In so doing, ChevronTexaco bound itself to those concessions.

“In 2005, ChevronTexaco dropped the name “Texaco” and reverted to its original name, Chevron Corporation. There is no indication in the record before us that shortening its name had any effect on ChevronTexaco’s legal obligations.

“Chevron Corporation therefore remains accountable for the promises upon which we and the district court relied in dismissing Plaintiffs’ action.

“Texaco had been trying to convince the district court that Ecuador would serve as an adequate alternative forum for resolution of its dispute with Plaintiffs. As part of those efforts, Texaco assured the district court that it would recognize the binding nature of any judgment issued in Ecuador. Doing so displayed Texaco’s well-founded belief that such a promise would make the district court more likely to grant its motion to dismiss. Had Texaco taken a different approach and agreed to participate in the Ecuadorian litigation, but announced an intention to disregard any judgment the Ecuadorian courts might issue, dismissal would have been (to say the least) less likely.

“We therefore conclude that the district court adopted Texaco’s promise to satisfy any judgment issued by the Ecuadorian courts, subject to its rights under New York’s Recognition of Foreign Country Money Judgments Act, in awarding Texaco the relief it sought in its motion to dismiss.

“As a result, that promise, along with Texaco’s more general promises to submit to Ecuadorian jurisdiction, is enforceable against Chevron in this action and any future proceedings between the parties, including enforcement actions, contempt proceedings,
and attempts to confirm arbitral awards.”

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Chevron's Tinker, Tailor, Soldier, Spy Thriller -- Even Better Than The Movie

Chevron is spying on the two lead attorneys for the Ecuadorians to intimidate and harass them,reports the Amazon Defense Coalition. The lawyers, Pablo Fajardo and Steven Donziger, helped the Ecuadorians win an $18 billion judgment against the company for massive oil contamination. See press release here.

During an eight-year trial in Ecuador, Chevron has operated a corporate espionage campaign out of its San Ramon, California and Quito offices, hiring no less than four private investigative firms to carry out various plots in an effort to derail the lawsuit, but with no success.

In January, an Ecuador appellate court upheld the lower court's $18 billion judgment for what is considered to be the world's largest oil-related environmental disaster. Under Ecuador law, the Ecuadorians may enforce the judgment now, but they will have to do so in other countries' court systems because Chevron has refused to pay and has sold its major assets in Ecuador.

A private investigator hired by the Ecuadorians told the two lawyers he has seen tapes of Donziger under surveillance, and another said he watched individuals in cars follow Donziger and his family in New York City, where they live. The license plates indicated the cars had been rented.

In Ecuador, Fajardo was physically assaulted by two individuals who said they were serving legal papers on him on Chevron's behalf, even though Ecuador does not "serve" papers, as in the United States. Other Ecuadorian lawyers and staff have reported that they are being followed and have had backpacks and other items stolen.

This is not the first time this has happened. The United Nations directed Ecuador to provide security for the Ecuadorians and their lawyers in 2005, when similar incidents took place. See here.

Chevron has long relied on corporate spies to try and undermine the Ecuadorians' lawsuit.

Remember Diego Borja and Wayne Hansen?

A Chevron contractor, Diego Borja, admitted to a childhood friend he was Chevron's "dirty tricks" operative in Ecuador. The company said it paid him to lift soil and water samples from oil sites during the trial. In a recorded conversation, though, Borja said, his real job was to undermine the trial, something he said Chevron's lawyers had never been able to do in court.

On audio tapes, Borja said that he tried to spy on the Ecuadorians' testing lab by pretending to be someone else; that he switched dirty samples for clean samples; and that could prove Chevron had "cooked" evidence in the case. See here.

Borja partnered with an American named Wayne Hansen, to secretly videotape one of the judges who heard the case. Hansen and Borja used a spy pen and spy watch to tape the judge. They tried to offer him a bribe on camera. When the judge prepared to leave the room, Hansen badgered him to admit Chevron was guilty. The judge never discussed much less accepted a bribe and repeatedly told the two that he could not comment on Chevron's guilt. See here and here.

Nonetheless, Chevron has paraded the tapes in front of the news media and U.S. courts to argue fraud.

The online legal publication, Courthouse News, obtained emails written by Hansen to two of Chevron's private investigative firms hired to "handle" the California man after the Ecuadorians revealed Hansen was a convicted drug felon, not a legitimate businessman looking for contracts in Ecuador, as Chevron claimed.

Hansen wrote to Chevron's private investigator Oliver Beard of Investigative Research Services, Inc., that he wanted a "deal" similar to what Borja had received for the secret videotapes of the judge. Hansen wrote: "I need to hear from a real player with a plan for Wayne Hansen."

Not long after, Chevron hired another private investigative firm, The Mason Investigative Group, to deal with Hansen who vanished from the U.S. after being subpoenaed in 2011 under federal court order. According to the Courthouse News emails, Hansen thanked Eric Mason, the firm's president, for helping him move to Peru where he was "living like a king."

Eric Mason, Chevron's Spy

Currently Chevron, Borja and The Mason Group are fighting the release of discovery documents to the Ecuadorians and the Government of Ecuador in a California federal court. Out of 700 documents, only 13 largely irrelevant documents have been turned over by Chevron, Borja and The Mason Group. The Ecuadorians and the Government of Ecuador have been trying for over a year to obtain the documents in the face of repeated obstruction by Chevron and lawyers for The Mason Group and Borja, all of whom are paid by Chevron.

Legal papers filed in the discovery action accuse all three of trying to hide Chevron's "involvement in concocting and executing a plan to undermine the environmental litigation in Ecuador by tainting the presiding judge with a manufactured scandal."

Remember Mary Cuddehe and Sam Anson?

Sam Anson, Chevron's Spy

In 2010, the Atlantic Monthly exposed yet another clandestine effort by Chevron to throw the case.

Mary Cuddehe, an Iowa-born graduate of Columbia University with a Masters degree in Journalism, published an article documenting that the investigative firm Kroll has been running an espionage operation in Ecuador on behalf of Chevron.

Sam Anson, an investigator for Kroll, offered Cuddehe $20,000 for six weeks of work to appear as an independent journalist while working as an undercover spy in Ecuador. Her job was to spy on sick Ecuadorians to determine if they really had an illness. Anson paid for Cuddehe to travel to Bogota where the case was explained and she was offered the money in the suite of a luxury hotel. She later declined the job and instead wrote an article for the Atlantic Monthly.

Chevron refused to comment on Cuddehe, but the company remains associated with Anson who spies for the oil giant full time.

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Chevron: A Fugitive From Justice In Latin America

Legal Battles & Threats Question Leadership of CEO Watson & General Counsel Pate

Chevron’s troubles in Latin America are escalating and calling into question the ability of its Chairman and CEO John Watson and General Counsel Hewe Pate to manage the oil giant in crisis.

Chevron CEO John Watson

General Counsel Hewe Pate

In Brazil, federal prosecutors filed criminal charges today against 17 Chevron executives for deploying substandard drilling practices and lying about the cause, safety plans and the cleanup of a November oil spill off its coast. An $11.2 billion civil lawsuit had been filed already.

In Ecuador, an appellate court upheld a lower court $18 billion judgment that found Chevron in violation of essentially the same charges -- dumping billions of gallons of toxic water of formation and pure crude throughout an area the size of Rhode Island, then lying about it and covering up a shoddy cleanup.

See here and here.

Surely Brazilian authorities had Ecuador in mind when they barred the Chevron executives from leaving the country earlier this week for fear the oil giant’s bigwigs would become fugitives from justice.

An “overreaction” is the way several U.S. analysts, covering the oil industry, have described Brazil’s reactions, but that’s only because they are weighing the relatively small size of the spill, not Chevron’s enormous disrespect for the rule of law in Brazil and in other Latin American countries.

Brazil is smart to recognize that Chevron is capable of doing anything to avoid being held accountable. It only has to look at Ecuador’s experience for evidence.

Chevron basically became a fugitive from justice when Watson, Pate and other high-level officials said that, regardless of the law and court decisions, it would never pay the Ecuador judgment.

Chevron’s refusal to post a bond while it appeals the judgment to Ecuador’s National Court allows the Ecuadorians to begin enforcement proceedings against the company, but they must do so outside the country because Chevron has sold most of its assets in Ecuador.

Confiscating the Chevron executives’ visas is wise, too.

In 2009, Chevron paid for the relocation of one of its Ecuador operatives and his family so he would not have to face a possible criminal investigation in Ecuador for secretly videotaping a judge and offering him a bribe.

Prior to Chevron’s public release of the videos, the company obtained visas for Diego Borja, a self-described “dirty tricks” operative, and his family and relocated them to San Ramon, California, its headquarters, and later to Houston, Texas.

Upon closer review of the tapes, the news media disputed the bribery charge. Later private investigations revealed that Chevron promised Borja and an accomplice payment for orchestrating the sting operation against the judge. Legal documents show that Borja has been paid $2.2 million since he left Ecuador in June 2009. Borja's partner, Wayne Hansen, is now out of reach of both Ecuador and U.S. authorities. With Chevron's assistance, Hansen now lives in Peru in an undisclosed location with no visible means of support, other than what Chevron is likely providing him.

Ecuadorian prosecutors would like nothing better than to question Borja and Hansen but, alas, they are not within their reach, thanks to Chevron.

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Chevron's Troubles

Chevron is facing troubles in a number of oil-rich countries, including Nigeria, Brazil, and, of course, Ecuador.

Here are three articles worth reading that appeared this weekend:

Chevron's Amazon-sized gamble on Latin America

The Chevron spill off the coast of Brazil is not so much about the amount of oil spilled but about Chevron's reckless behavior that results from the company's arrogance -- similar to its misconduct in Ecuador.

Excerpts: "The prosecutor told Reuters the more than $11 billion civil award sought against Chevron is not based on a clear assessment of damages from the spill. The figure is meant to send a message.

"'Energy companies operating here need to know that reckless behavior will cost them,' (the prosecutor) said.

"Chevron's worst-case scenario damages from Brazil and Ecuador could top the company's $26.9 billion in 2011 profits....

"Chevron's deputy comptroller, Rex Mitchell, warned in U.S. District Court last year that the Ecuadorians' collection effort could 'cause irreparable injury to Chevron's business reputation and business relationships.'

"Chevron may be spending $200 million per year in legal fees related to Ecuador alone, the plaintiff lawyers estimated. Chevron declined to comment on legal fees."

Chevron: Fire On Gas Rig Extinguished

Nigerians have been pleading with Chevron to help them following a fire on a gas rig that took over a month to put out, but Chevron has done very little.

Excerpts: "Residents here complained of air, water, and fish that taste of kerosene as the plume of smoke hovered within sight offshore.

"They're asking Chevron to relocate the approximately 10,000 people in the surrounding community--a request that cuts against long-standing religious ties to land in Nigeria's oil-rich marshland.

"Mostly, residents say their livelihood--fishing--has been spoiled by the gas fire.

"'The gas is inside the fish,' the youth chairman for the village, Bravely Salvage said. 'After eating the fish you feel like somebody who drunk diesel, you feel dizzy...some of us collapse.'"

Hits, and Misses, in a War on Bribery

The Ecuadorians believe Chevron is in violation of the Foreign Corrupt Practices Act by offering what is essentially a $1 billion bribe to the Government of Ecuador for the Yasuni project and a small cleanup effort -- but only if the Government steps in and blocks the enforcement of the $18 billion judgment against Chevron.

Excerpts: "Enacted in 1977, the Foreign Corrupt Practices Act prohibits American companies and foreign companies whose securities are traded on exchanges here from bribing foreign officials to attract or keep business. For many years, there were few prosecutions under the act. In 2003, for instance, not a single person was charged.

"But in the last four years, a total of 58 companies have paid a combined $3.74 billion to settle such corruption charges. Since 2009, some 67 people have been charged, 20 are still awaiting trial or are at large, and 42 have been convicted, some from charges prior to 2009. A total of 22 have been acquitted or had charges dismissed.

"Lanny A. Breuer, the assistant United States attorney general who has stepped up enforcement actions under the act, said he saw no reason to change course. In fact, he is expanding his staff — and his range of potential targets.

“'We have to be willing to take cases that we would be willing to lose,' Mr. Breuer said in an interview. 'We can’t just pick the easy cases.'

"Even more, he sees himself on the right side of history, especially given the outcry against government corruption in the Arab world and elsewhere.

“'This is not the time for the United States to be condoning corruption,' Mr. Breuer said. 'We are a world leader and we want to do everything to make sure that business is less corrupt, not more.'”



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The Facts Are The Facts

As hard as Chevron tries, it can’t escape the undisputed facts that clearly show the company guilty of environmental crimes that resulted in the destruction of once pristine land and water in the Ecuador rainforest and direct harm to the health of the area’s 30,000 residents.

Chevron wants to make the Ecuador contamination lawsuit about anything other than these pesty facts:

-- Chevron intentionally dumped 18 billion gallons of hazardous water into the rainforest.

-- Chevron built over 900 unlined pits to permanently store pure crude and production water -- a toxic brew that continues to leech into the soil and water today.

-- Chevron oversaw a fraudulent remediation in 1995 that encouraged residents to build homes on top of and near oil pits they thought had been cleaned by the company.

-- Chevron’s own tests taken during the trial found that soil and water samples from the so-called “remediated” pits were just as toxic as samples from pits that had not been cleaned.

-- Chevron knowingly put these people in greater danger to their health and lives by not confessing the company had simply thrown dirt over the pits instead of cleaning them properly, as required by the agreement.

-- Chevron has lost the case.

-- The Ecuadorians have won and have a legitimate judgment they are preparing to enforce.

And those are the facts.



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BP Talks Settlement In Gulf, While Chevron Pouts

Former BP CEO Tony Hayward shocked the world with his remark about wanting "his life back" only days after 11 people lost theirs in the Gulf Coast oil disaster. But the company had the good sense to dump him, make peace with President Obama by ponying up $20 billion for a relief fund and start owning its mistakes -- mistakes that could cost BP up to $60 billion when all is said and done.

Contrast that with the way Chevron has handled the Ecuador disaster -- a disaster that wasn't an accident; that hasn't been cleaned; that started five decades ago, and the cost is only a fourth ($18 billion) of what BP will likely pay.

The Amazon Defense Coalition's recent press release compares the two disasters. See here

Says an Ecuadorian representative:

Once Chevron was found guilty and said it would never pay, Chevron became a fugitive from justice. Chevron CEO John Watson is creating a big problem for his company's shareholders because of his utter arrogance when it comes to Ecuador -- which is precisely the opposite reaction BP had with the Gulf disaster, where it is trying to deal with its obligations.

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