Evidence that Chevron defrauded Ecuador's government and its 14 million citizens is adding to the growing business risks facing CEO John Watson from the $9.5 billion Ecuador judgment, as this excellent summary in Inside Counsel magazine explains. A successful suit by Ecuador's government against Chevron could add billions more to the company's tab and further complicate its business prospects in South America and perhaps elsewhere.
Just days ago, the Huffington Post published a story by our colleague Karen Hinton showing that during its "clean up" in Ecuador Chevron used norms that were at least 100 times more lax than those in effect in the U.S. at the time. (They were also at least ten times more lax than norms used under Ecuador's laws.) It then used these fake "norms" to try claim it had "remediated" hundreds of toxic waste pits when in reality it simply covered them up with dirt without actually cleaning them out. It then presented fake evidence to induce Ecuador's government to approve the remediation.
With regard to Chevron's purported remediation in Ecuador, Hinton writes:
Six different sets of tests have shown that Texaco only dumped dirt on top of the pits to hide the contamination, not clean it. And, eight Ecuador judges and two U.S. judges who've heard evidence related to the 22-year-old lawsuit have either ignored the remediation agreement, thrown it out or stated it had no merit in Chevron's defense. All of this evidence adds up to one thing: Texaco committed fraud against the Ecuador government. And Chevron has done the same by lying about the remediation to Ecuador and U.S. courts.Although the "release" Chevron received for its fake clean-up expressly excludes the legal claims of the private citizens who later obtained the judgment, in an act of pure chutzpah Chevron still asserts the release as a defense. Even though no court has accepted this argument, just by litigating it Chevron can buy time before it has to pay up. Hinton calls the fraudulent release Chevron's hoped-for "get out of jail free" card.
It won't work over the long haul. Chevron's main problem is that the scientific evidence during the eight-year trial in Ecuador produced 105 technical reports that are full of chemical sampling results that prove the so-called "remediated" pits are highly contaminated with life-threatening toxins such as cadmium, zinc, and polycyclic aromatic hydrocarbons.
The human toll from Chevron's toxic dumping can be measured in the form of increased cancers, nervous system damage, and spontaneous miscarriages. Read this summary of the cancer studies and see this photo essay by award-winning journalist Lou Dematteis for background on the thousands of people who have died or who face life-threatening diseases because of the pollution.
Instead of going after Chevron for fraud, Ecuador's government has fallen into Chevron's trap. It is spending millions of dollars on an American law firm to defend its interests against an illegitimate and secret arbitration action brought by Chevron that attempts to shift the entirety of the clean-up liability to Ecuador's government.
In other words, Chevron is seeking a taxpayer-funded bailout from Ecuadorian citizens of its clean-up obligations. It wants Ecuadorians to pay for the bullet Chevron used to shoot them. To do this, Chevron is using a private star chamber "investment" court that bars the communities from appearing. Again, it won't work. But it does put Ecuador's government needlessly on the defensive. What the government should do is man up and sue Chevron for fraud in its own courts.
Can you imagine the uproar if BP tried to pull Chevron's Ecuador stunt in the U.S. after its Gulf Spill and sued the U.S. government in a secret investment court for a bailout? The racism that permeates Chevron's strategy in Ecuador is palpable.
The scientific evidence against Chevron in Ecuador is overwhelming. According to Hinton, Chevron expert Marcelo Munoz found evidence of the company's illegal contamination. Chevron then refused to pay Munoz because the company did not like the results he produced.
In 2003, Ecuador's auditors discovered pits oozing with oil that Chevron had certified as clean. In 2013, a U.S. engineering firm (the Louis Berger Group) also found high levels of contamination at the so-called "remediated" pits. LBG reviewed the work of Chevron's experts and found numerous flaws. See pages 35 to 42 of this document to better understand Chevron's remediation fraud.
What is getting more clear is that Chevron is suffering from a pronounced moral rot under Watson's leadership. The high-level executive who organized the fake remediation still has a thriving career with the company. Ricardo Reis Veiga is pulling down a huge salary as the director of special litigation projects for Chevron even though he was criminally indicted in Ecuador for lying to the government.
Reis Veiga's sidekick and co-conspirator in Chevron's cover-up, Sarah McMillan (who sports the title of Chevron's "lead scientist" despite having limited academic credentials), also continues to pull down a fat salary from the company. For more on how McMillan and her Chevron colleague John Conner tried to cheat the court during the Ecuador trial, see here.
Chevron's fake remediation was just the tip of the iceberg in terms of the company's corruption in Ecuador. Chevron's lawyers threatened judges with jail time, inundated the court with frivolous motions, tried to bribe Ecuador's government, set up dummy front companies, and hid dirty soil samples from the court to minimize evidence of the company's homicidal conduct in a mad pursuit of ever greater profits. Company operatives also spied on lawyers for the communities and tried to harass them.
For those who want to call attention to Chevron's outrageous behavior, vote for the company to win a lifetime achievement award for corporate abuse. The online voting for the recipient of The Public Eye Award can be found here.
For more details on Chevron's misconduct, see this affidavit by Ecuadorian lawyer Juan Pablo Saenz; this video documenting the company's pump and dump operation and human rights violations; and this recent article in Rolling Stone that explains the company's unethical and illegal litigation tactics.