In reaching the $18 billion judgment -- the largest ever in an environmental case (see here and here) -- the Ecuador trial court used Chevron's own admission that it deliberately dumped billions of gallons of toxic oil waste into Amazon waterways from 1964 to 1992, when the company operated in Ecuador under the Texaco brand. The dumping decimated indigenous groups and caused an outbreak of cancer and numerous deaths, according to several peer-reviewed studies.
“Only in America could a major oil company give a 75% raise to a lawyer who lost an $18 billion case to a legal team with a fraction of the resources,” said Karen Hinton, the U.S. spokesperson for the dozens of rainforest communities who sued the oil giant.
Chevron’s 2012 proxy statement reported that Pate’s salary jumped “in part because of his 'outstanding management of Ecuador (lawsuit).'" See pages 28 and 43.
Pate's 75% salary increase also is out of line with the 16.6% increase in Chevron's 2011 year-end stock valuation - a key metric for investors in deciding to support annual 'say-on-pay' votes. Chevron CEO John Watson received an even more ludicrous 65% raise to $24.7 million in 2011 compensation.
"Chevron's enormous executive pay raises are way out of step with shareholder returns and the company's dismal handling of its liability in Ecuador," said Graham Erion, a securities lawyer advising the rainforest communities.
In the latest of a series of legal setbacks on the Ecuador matter, a panel of appellate judges in affirmed the $18 billion judgment in January. The same month, a U.S. federal appeals court sharply rebuked Chevron for trying to use an illegal injunction to block the Ecuadorians from enforcing their judgment.
A new report published last week also found that under Pate's leadership Chevron has continually misled its own shareholders about the Ecuador liability. Some shareholders have criticized company management for mishandling the Ecuador litigation while others have asked for an investigation by the Securities and Exchange Commission.
Pate recently reported that Chevron has used 483 lawyers and legal assistants on the Ecuador case from at least 39 different law firms. The rainforest communities are led by Pablo Fajardo, a 40-year-old Ecuadorian man who grew up in poverty and recently was award a CNN "Hero" prize. See this CNN piece and Vanity Fair article.
A former Bush Administration antitrust lawyer with little experience in the oil industry, Pate took over Chevron's legal department in 2009. Since that time, the oil giant has suffered multiple legal setbacks in Ecuador and elsewhere:
- Part of the $18 billion judgment in Ecuador is to compensate the rainforest communities for harm caused by Pate’s hyper-aggressive and unethical litigation tactics, including the repeated filing of frivolous motions and the threatening of the presiding judge with jail time if he didn't rule in favor of the company.
- Last September, jurists from across the world blasted Pate's strategy for trying to illegally use a U.S. trial court to block the international enforcement of the Ecuador judgment. Chevron's lead attorney on that case, Randy Mastro of Gibson Dunn & Crutcher, was harshly criticized by the appellate panel. See page 19 of this transcript.
- Chevron in 2009 orchestrated a video entrapment scheme against a sitting judge in Ecuador which backfired against the company and prompted an investigation of the company's attempts to corrupt the country's justice system. The incident has created potential exposure for Chevron under the Foreign Corrupt Practices Act.
- U.S. courts have repeatedly sanctioned Pate's lawyers for engaging in unethical behavior. Recently a U.S. federal judge fined Chevron after finding that Gibson Dunn lawyer Kristin Hendricks (an associate working under Mastro) abused the discovery process to harass a respected environmental organization. A Colorado judge in 2010 rebuked Gibson Dunn lawyer Andrea Neumann for trying to intimidate a witness.
- Under Pate’s leadership, reports recently surfaced that Chevron floated a $1 billion bribe offer to Ecuador's government to kill the legal case, made via an official in charge of an environmental project; that Chevron lied to its own expert witnesses so they would defend the use of deceptive sampling practices during the trial; and that the company used a secret lab to hide evidence of contamination from the court.
During Pate's tenure, Chevron faces a $22 billion lawsuit in Brazil after it appeared to mislead investigators about the impacts of an offshore spill; paid a $600,000 penalty for environmental violations at approximately 100 storage tanks in Puerto Rico; paid $24.5 million to California for violations of laws governing the disposal of hazardous materials; and suffered a horrific pipeline spill in Utah which resulted in a $4.5 million fine and ongoing lawsuits. The company, as part of an oil consortium, also faces a $64 million fine in Kazakhstan for releasing airborne toxins.
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