Chevron’s Fugitives from Justice and the Bogus TCLP Test

Not only has Chevron readily admitted in trial that it deliberately discharged billions of gallons of toxic "water of formation" into Ecuador's Amazon rainforest, but it also has figured out a clever way for its employees to evade justice. What began as a corporate strategy of cover-up has trickled down to Chevron's lawyers who do the company's dirty work in Ecuador.

Rodrigo Perez Pallares is a perfect illustration of the extent of Chevron's corruption in Ecuador. This disgraced Ecuadorian lawyer had worked as Chevron's official corporate agent in Ecuador for more than three decades while it mercilessly dumped toxins into the Amazon. Pallares was paid handsomely for defending a system of oil production that imposed horrific costs on the local indigenous population. After Chevron was sued in U.S. federal court by those groups for clean-up in 1993, Pallares helped to mastermind Chevron's sham "remediation" in the mid-1990s that the company has continually (and unsuccessfully) used to try to escape liability in various courts.

Pallares now appears to be a fugitive from justice, having fled to Miami after being indicted on fraud charges in Ecuador related to a cover-up of the contamination. Chevron should fess up as to whether it is paying for his relocation costs and living expenses. The U.S. government also might note that Chevron might be harboring a fugitive from what could be the world's worst environmental crime.

Chevron used the Pallares "clean-up" to argue that the then-pending environmental against (Aguinda v. ChevronTexaco) should be dismissed from U.S. federal court. The argument didn't work, but Pallares and his sidekick Ricardo Reis Veiga built a career out of it anyway. The pair orchestrated the use of an improper laboratory test, called the TCLP test, which made it impossible to measure anything more than trace amounts of toxins at the highly contaminated "cleaned" sites. The TCLP test runs water over contaminated soil, and then measures the toxins in the water instead of the soil. Only problem? Oil and water don't mix – so it's physically impossible for anything more than trace contaminants to show up in the TCLP test results, even if the soil sample tested was full of pure crude oil. Pallares and Reis Veiga used these test results to "prove" that the sites were remediated to they could procure a "release" under false pretenses.

Pallares and Reis Veiga probably never expected that their fraudulent handiwork would come under independent scrutiny during the Aguinda trial in Ecuador. But hundreds of scientific sampling results from the trial definitively prove that Chevron's representations to Ecuador's government about the "remediation" – used to induce the release -- were lies. Chevron's "remediation" amounted to bulldozing dirt over the waste pits without cleaning them out. Other waste pits the company had agreed to clean were never touched; Chevron's engineers claimed they were being used for "fishing" by the locals.

Chevron's fraud is as plain as day. Compare what Chevron reported to Ecuador's government in 1998 (at the end of its "remediation") to the actual trial results from the same sites:

Chevron's Fraud During The Ecuador Remediation

(Measured in TPHs)

Site of Judicial Inspection: Lago Agrio Trial	Chevron's Reported Result to Obtain Release From Ecuador (1998)	Actual Result At Same Site During Trial (2006)
Sacha 18	No Detect	35,380 ppm
Sacha 65	No Detect	32,444 ppm
SSF 27	No Detect	26,413 ppm
Atacapi 5	No Detect	21,976 ppm
Sacha 21	No Detect	17,000 ppm
SSF 21	No Detect	16,033 ppm

This chart is telling. The maximum tolerance for TPH (which measures hydrocarbon contamination) in many U.S. states is 100 parts per million (ppm). In Ecuador, the maximum tolerance for "sensitive ecosystems" like the Amazon is 1,000 ppm. In Ecuador, pits Chevron claimed it cleaned (such as pits at Well Sites Sacha 18 and Sacha 65) are obviously more than three hundred times higher than what would be a maximum tolerance in many U.S. states and dozens of times higher than the more lax Ecuadorian norm. And these are the cleaned sites.

Note in the second column of the chart that Chevron reports its results as "no detect" rather than giving the actual result. First, the clean-up standard of 5,000 ppm that Chevron maliciously negotiated with Ecuador's government is more than 50 times more lax than a typical U.S. norm. Sort of shows you how much Chevron values an Ecuadorian life. Given that the company knew it couldn't meet even this ridiculously lax standard with its clean-up, it used the bogus TCLP test which made it physically impossible to violate the 5,000 ppm standard. All this so the company could induce a release under false pretenses.

Even if the cleanup Chevron conducted hadn't been fraudulent, the cleanup would not absolve Chevron of responsibility. The release expressly excludes the private claims that are being pressed in the Aguinda lawsuit. Chevron only touched 16% of the 916 toxic waste pits the court-appointed Special Master found in his review of the evidence at trial; only a fraction of those were actually covered with the dirt. Instead of preparing some sort of estimate of how much the company should pay to clean up the mess it made, Chevron claims that the court-appointed Special Master's damages assessment to properly remediate the remaining pits is too high. Chevron prefers the Special Master lower the number to comport with the cost of running dirt over the oil sludge in the pits consistent with Chevron's shoddy method of clean-up in Ecuador.

This scam is why Pallares has been living in Miami for more than a year and might end up never returning to his country. Reis Veiga, who works in Miami as one of Chevron's top executives for Latin America, refuses to return to Ecuador to confront the charges against him.
Chevron is still using both men to play instrumental roles in advising the company in the Aguinda trial where their previous fraudulent conduct is at issue.

If this sounds familiar, that's because it is. Last year, Chevron paid to move one of its Ecuadorian contractors, Diego Borja, out of Ecuador after he was implicated in a sting operation against the judge overseeing the trial. Our sources in Chevron indicate that Borja now lives in a luxury mansion in a gated community near Chevron's headquarters. Borja now has an American lawyer paid for by Chevron to ensure he can never be questioned by investigators. There is some question as to whether Chevron implicated itself in obstruction of justice by moving Borja out of a country where he is now the subject of an official investigation.

Chevron has shown it will do anything to evade accountability for the humanitarian crisis it created in Ecuador. Now its employees seem to be rewarded for ducking out of countries where they face investigations or indictments. Just like the toxic dumping, Chevron operates on the principle that violating the law can pay handsome dividends.

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Chevron General Counsel Hewitt Pate Stumbles as Ecuador Problem Balloons Out of Control

Hewitt Pate

As we blogged earlier, Chevron's continuing desperation to do anything it can to derail the potential $27.3 billion liability it faces for destroying part of Ecuador's rainforest has backfired yet again –this week the company again was caught misrepresenting key facts about the court-appointed expert who conducted a damages assessment not to the company's liking. On Tuesday, Chevron announced it had "newly discovered" evidence that the expert who conducted the damages assessment, Dr. Richard Cabrera, owns a remediation company in Ecuador that stands to benefit from a clean-up should the plaintiffs win the case.

Like so many other breathless announcements by Chevron, the company's newest "discovery" ("new" despite the fact that Chevron has filed 28 prior motions to attack Cabrera, none of which has been successful) has turned out to be worth less than the paper that its press releases were printed on.

It turns out that far from a conflict of interest, Dr. Cabrera explicitly disclosed to the court that he was involved in remediation in Ecuador – a qualification that was properly cited by the court as one of the reasons why he was accepted as the independent expert in the first place. Obviously, Dr. Cabrera would never be able to benefit from a clean-up related to a case he worked on given basic conflict of interest rules in Ecuador. But since Chevron cannot attack the technically sound evidence in the Cabrera report, which calls the company out for creating pollution that led to more than 1,400 excess cancer deaths, it tried to fabricate a distracting sideshow. For more details about Chevron's misrepresentations regarding Cabrera, see this response: http://chevrontoxico.com/assets/docs/2010-02-09-cabrera-response.pdf

The factual deficiencies of Chevron's allegations didn't stop the company from its ill-advised decision to "man up" and deploy Chevron Vice-President and General Counsel Hewitt Pate as its lead spokesman on the issue. Pate was featured prominently in Chevron's press materials and was put squarely in the middle of what should have been a low-level food fight between the long-warring parties. The fact that Pate, who is the general counsel of America's third largest company, is expending his political capital to bolster unsubstantiated allegations demonstrates how frantic the company has become about Ecuador. It also raises serious questions about the judgment of Chevron's legal department, where it seems to be a job requirement to prove your "machismo" through frontline interviews. Any other company would use a consultant or public relations firm to execute this type of messy media hit job.

So what's behind this? The answer is politics. Making up a press "event" out of facts that you misrepresent is a classic maneuver popularized by the Karl Rove School of politics. It turns out that Pate and his colleagues running the Chevron legal department all played central roles in the last Bush Administration. This is not a coincidence, as all of these individuals looked like they picked up a trick or two from Rove during their years of government service.

Chevron has a major distinction among the world's super-major oil companies: while most hire their general counsels from within their own legal department after years of service, or from prestigious outside law firms populated by lawyers experienced in the ways of the energy industry, Chevron stands alone in hiring political lawyers out of Republican Administrations. The last two general counsels for the company (Charles James and Pate) have been hand-plucked from the Bush administration's Justice Department, where they worked closely with former Attorney General John Ashcroft. James, who worked closely with Pate in Washington and hired him for Chevron, has a reputation from Washington to San Francisco as being a hard-right political ideologue.

James made the decision to hire as Chevron's deputy general counsel Jim Haynes, one of the Bush Administration "torture lawyers" under potential indictment in Spain and now unable to travel abroad for fear of arrest. While Chevron keeps Haynes swept under the rug for public image purposes, speculation on the street is that he is running the day to day in Chevron's in-house legal department. He clearly learned a lot about Chevron's conception of human rights by providing the legal justification for torture to a Rumsfeld-led Pentagon, where he served as General Counsel before being blocked by the Senate for a federal judgeship because of his infamous memo justifying waterboarding.

With these personnel moves, Chevron has elected to build a general counsel's office that is filled with right-wing lawyers who have relatively little experience in complex litigation matters. It turns out that since Chevron's legal team is led by political ideologues, the company is trying to find a political solution to a legal problem. It hires outside law firms who, to obtain Chevron's lucrative business, fall all over themselves to enable this distorted and ineffective conception of politics-as-litigation. That's why Chevron keeps stubbing its toes over Ecuador. That's why it has lost five straight times before U.S. federal courts, including before the U.S. Supreme Court, in its increasingly futile effort to get any judge anywhere to grant the company some sort of relief. That's also why Chevron's latest gambit to take the entire Ecuador matter to an international arbitration panel, without the presence of the Amazon communities, now risks getting torpedoed in U.S. federal court. The ham-fisted approach championed by James and now Pate is one reason why the Ecuador liability has ballooned out of control for Chevron and threatens about 20% of the company's market value.

Chevron must realize that the old days of using political influence to quash legal cases in far-flung countries is winding down. In Ecuador, those days are clearly over. In the United States, the method doesn't work. The fact Chevron uses its new general counsel's limited credibility to distort basic facts shows how "quaint" Chevron is compared to its industry peers, most of whom (perhaps not coincidentally) reported far better financial results last quarter. "Quaint" is how former Bush Administration lawyers such as Chevron's Haynes and Alberto Gonzales – folks who never served in the armed forces themselves -- used to describe the Geneva Conventions when justifying those "harsh interrogation tactics" that the world considered torture. Most Americans would consider such talk profoundly unpatriotic, but in Chevron's legal department that's probably what passes for typical chatter around the water cooler. That, and the excitement generated by the Sarah Palin sighting at the latest Tea Party convention.

Since lost lives don't seem to have much impact on the thinking at Chevron, how many billions of dollars will have to be garnished before Chevron's Board wakes up to this internal hazard?

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