Recent Decisions On the $19b Ecuador Judgment Do Little to Decrease Chevron’s Enormous Risk

For indigenous and farmer communities, the fight continues

Supporters of the heroic two-decade effort to hold Chevron accountable for its indisputable toxic dumping and destruction of the Amazon rainforest in Ecuador should not despair over recent court rulings that have slowed the seizing of the oil giant’s assets in Argentina and Canada.

The fight is far from over and overall trend lines still favor the affected rainforest communities, who have suffered from Chevron’s toxic dumping for decades. (For a summary of the evidence, see here; for a video about the case see here or this 60 Minutes segment.)

In Toronto, in an unusual decision without any precedent in Canadian law, a court found that because Chevron operates only through subsidiaries then the case must be stayed.  That decision is now on appeal.  The court decision this week in Argentina to lift a freeze on Chevron’s assets will have little impact on a parallel judgment recognition action which is proceeding.  That action will allow the rainforest communities to seize up to $3.5 billion of assets if successful.

Chevron has roughly $15 billion in assets in Canada and another $4 billion in Brazil that are being targeted in court actions based on the valid Ecuador judgment.  That’s real risk no matter how Chevron’s management team – including its conflicted CEO, John Watson -- try to spin it.

Under oath in court, where company officials are obligated to tell the truth, a Chevron comptroller recently claimed such asset seizure actions will cause the oil giant “irreparable harm” and disrupt its global business operations.  Chevron also operates via its subsidiaries in dozens of countries around the world that could be targeted.

There is also a deeper reality to the reasoning behind the recent Canada and Argentina decisions that should disturb concerned citizens everywhere.  In effect, based on legal technicalities, these courts are flirting with a total grant of impunity to human rights violators like Chevron.

Let us explain.

In Canada, a trial judge ruled that Chevron is a separate company from its local subsidiary even though that subsidiary is 100% owned by Chevron.  Yet Chevron itself operates only through its many subsidiaries around the world.  The company does not even own its own building housing its headquarters near San Francisco.

It was also Chevron officials (operating under the Texaco brand) who made the decision to deliberately dump billions of gallons of toxic waste in Ecuador, decimating indigenous groups and farmer communities.  Chevron itself stripped almost all of its assets from Ecuador in recent years in anticipation of losing the case.  It then refused to pay the judgment.

The upshot is this:  when Chevron wants to increase its profits by dumping toxic waste, it can deliver a high level of fake value to its shareholders by externalizing the costs of pollution to impoverished local residents.  But when it comes time to pay the hefty tab for that dumping, it plays the corporate shell game and hides behind its subsidiaries.

That's Chevron's conception of impunity. The question is whether courts will let the oil giant get away with it.

The cultural mindset that it produces in a large oil company leads to excessive risk-taking and arrogance.  And that explains why Chevron always seems to be dealing with a massive number of environmental problems around the world, including in the U.S. where it is currently under criminal investigation for a recent refinery fire in Richmond, CA.

Courts in most countries would not allow Chevron to get away with this brazen mockery of the rule of the law.  Many of Chevron’s own shareholders are also disturbed enough to have sternly rebuked Watson for mishandling the fallout from the Ecuador judgment.

Knowing it cannot win the Ecuador battle on the merits, Chevron also cleverly tries to exercise improper political influence over governments and courts.  In Argentina, after the freeze order became a viable possibility, Chevron suddenly decided to “invest” $1.5 billion in a large gas field with the local state-owned oil company, YPF.

Chevron also took out full-page advertisements in Argentine newspapers claiming impending national doom if the Ecuador judgment were to be enforced.  Its local representative publicly announced Chevron would only follow through on its investment if the freeze order was lifted.  Suddenly, after some furious behind the scenes lobbying, Argentina’s Attorney General recommended the freeze order be lifted.  Voila!

We think Canada’s appellate court will see Chevron’s rope-a-dope for what it is: a sneaky attempt to play the corporate shell game to escape justice.  Ultimately, we feel Argentina’s courts will see it the same way.

Chevron should not take too much comfort from these latest rulings.

The evidence against Chevron for committing a horrific level of environmental contamination in Ecuador is strong.  It has been documented not only by the company’s internal files and a 220,000-page trial record, but by independent journalists the world over who have visited the disaster zone.

Only in an unjust world can a corporation get away with murder by hiding behind legal fictions created by bean counters.  As this battle rages on, everybody concerned about accountability for corporate human rights abusers should take note and demand that judges stand up for the fundamental principle that polluter pays.

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Statement by Steven R. Donziger Regarding Withdrawal of Counsel from Ecuador Case

Want to understand how Judge Lewis A. Kaplan is still trying to engineer a result in favor of Chevron in the Ecuador case from his New York courtroom? Read this press release here and read the statement from Steven R. Donziger below.

"The historic judgment won by Ecuadorian rainforest communities against Chevron is not about me -- nor is it about the United States.  As Chevron itself recognized two decades ago when it demanded that the trial be heard in Ecuador, the litigation is about contamination in Ecuador, the suffering of the indigenous and farmer communities in Ecuador, and it is now about a judgment rendered against Chevron in Ecuador that has been affirmed on appeal in Ecuador.

Chevron has now openly adopted a strategy of retaliation, suing me and the other lawyers for the Ecuadorians in the United States.  Chevron has harassed us, spied on us, and pressured us so that, in the words of Chevron CEO John Watson, the lawyers "give up."  This strategy has nothing to do with justice or merit.  It is the strategic, cynical use of overwhelming resources to try to crush the opposition.  With precious few exceptions, many in the United States have quietly nodded their heads at this approach, ignoring its moral bankruptcy and the fundamental threat it poses to the rights of all citizens in our democracy who try to hold powerful corporations accountable for their abuses.

The rest of the world, however, will see the moral bankruptcy and cynicism of Chevron’s approach for what it is. Lawsuits targeting billions of dollars in Chevron assets are proceeding around the world and will continue until the full amount of the Ecuador judgment is satisfied. Nothing that happens in Judge Lewis A. Kaplan’s New York court can stop this process. While litigating an eight-year trial in the face of Chevron’s constant efforts to sabotage the proceedings was not easy, the process in Ecuador was fundamentally fair and the Ecuadorian judgment is firmly grounded in multiple corroborating layers of scientific evidence pointing to Chevron's liability. These indisputable facts will drive the enforcement process to conclusion. Chevron's lawsuit against me in New York is a sideshow designed by the oil company to sap the limited resources of the rainforest communities and slow their march to justice.

It is in this context that I admit that Chevron's strategy of resource exhaustion has succeeded in the short-term to the point that I can no longer afford to pay my lawyers at Keker & Van Nest to represent me in the New York proceeding. I thank those at Keker & Van Nest who have fought valiantly to give me a voice in a courtroom run by a judge who regularly maligns me from the bench, has refused to recuse himself, and has not just encouraged but has co-engineered Chevron's strategy to exhaust our limited resources through pointless motion practice, one-sided decisions, and massive discovery obligations.

As my lawyer told the Court of Appeals for the Second Circuit, what Chevron has sought and received in the district court is a show trial, with my role that of a goat tethered to a stake. Although we had no trouble convincing the Second Circuit to vacate the portion of this farce that was then on review, I simply cannot afford the legal costs of doing the same with the remainder of the case. As such, I will now proceed pro se against Chevron with the option of trying to re-hire my lawyers should circumstances change.

In the interests of fundamental fairness, I reiterate my call for Judge Lewis A. Kaplan to step aside and allow this case to be re-assigned to a judge who takes seriously the obligation of courts to be fair and impartial.

I also want to thank the legal team at Smyser Kaplan & Veselka who have represented my Ecuadorian colleagues in this case with great commitment, honor, and tenacity."

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Stratus Settlement Results From Chevron's Corporate Thuggery

Below is a post written by Karen Hinton, former U.S. spokesperson for the Ecuadorians suing Chevron for payment of a $19 billion Ecuador judgment for the massive contamination of the Amazon rainforest.

On Oil Disasters: BP Took Responsibility; Chevron Hired Lawyers To Escape Justice 

There’s nothing like watching unadulterated corporate thuggery disguised as respectable lawyering.

Take the case of how Chevron is trying to block enforcement of its $19 billion liability in Ecuador.

When I read the affidavit of my friend Douglas Beltman -- who has been one of the scientists who spoke out against Chevron’s deliberate toxic dumping in Ecuador’s Amazon – I knew his testimony about the pollution and its impact had been coerced by Chevron.

For one, his denial of the contamination was so over the top that only people who stand to benefit from it could believe it, and even they know better.

After almost four years of fighting ruthless attacks, threats and duress at the hands of some of the corporate law firms that Chevron regularly employs, Doug threw in the towel. He also put his integrity on the line by stating, in effect, he had seen no evidence of contamination in Ecuador that could be attributed to Chevron – a statement completely contrary to everything he had said in the past.

By doing so, Doug saved himself and his small Boulder consulting firm, Stratus, from bankruptcy. He saved Stratus from the crushing weight of legal bills that included not only a defense against false fraud charges leveled by Chevron, but also a counterclaim filed by Stratus to try to stop repeated libelous attacks from Chevron lawyers who urged the firm’s clients to abandon it.

Chevron has filed Doug’s affidavit as “evidence” in a legal assault against the Ecuadorians and their lawyers in a U.S. court, where the oil giant is trying to block enforcement of the Ecuador judgment. Seeking almost $60 billion in damages, Chevron agreed to drop fraud charges against Doug and Stratus in exchange for his testimony as part of a settlement agreement.

Doug is a smart, articulate, warm and friendly man who once worked for the U.S. Environmental Protection Agency. Federal agencies such as the U.S. Department of Justice and the U.S. Fish and Wildlife Service have hired Doug for his expertise and his stellar reputation. As the former U.S. spokesperson for the Ecuadorians, I spent long days with Doug and reporters in the hot and sticky Ecuadorian jungle learning about the contamination.

I spent hours with Doug in meetings and on the phone, dissecting documents and reports that detailed how Texaco, later purchased by Chevron, deliberately dumped billions of gallons of pure crude and toxic chemicals into the waterways and soil of the rainforest for one reason only -- to reduce its costs and further inflate its profits. In 2009, during a 60 Minutes segment on the contamination, Doug told the world Chevron treated the rainforest like a “trash heap.”

Today Doug says he got it all wrong. Did he? The facts about the contamination (discussed later) say otherwise.

Simply put, Doug succumbed to Chevron’s pressure campaign:

• Chevron lobbied the U.S. government to disbar Stratus from obtaining federal contracts, alleging the environmental firm had committed fraud, along with the Ecuadorians and their lawyers. September 2009 emails obtained from court discovery revealed Chevron lawyer Tim Cullen of Jones Day asked for a meeting with Department of Justice lawyers Hank Walther, Mark Mendelsohn and Charles Durros to discuss the fraud. (See emails here- scroll down to second page.) It should come as no surprise to anyone knowledgeable about how business gets done inside the Beltway that Walther is now a lawyer for Jones Day.

• Chevron lawyer Andrea Neumann of Gibson Dunn lectured Doug during a deposition, reminding him that he and his firm could be disbarred from obtaining any federal contracts.

• Chevron spent enormous sums of money to produce a slick video and documents maligning Stratus and Doug personally. The video, posted on the internet, accused Stratus of being part of a “criminal conspiracy”. The story was circulated them to federal agencies and companies that had hired or might hire Stratus. Chevron also put the video and materials on its web site and urged reporters to write about Stratus’ “criminal” behavior. As part of the settlement agreement, Chevron removed the materials from its web site.

• Chevron also lobbied the Oregon Harbor Trustee Council to fire Stratus, preventing the firm from assisting in a cleanup of a toxic site created, in part, by Chevron. The Council members refused to do so because they argued Stratus had not been found guilty of any charges. As part of the settlement with Chevron, Stratus agreed not to work on the second phase of the project.

• The most recent blow was perhaps the most devastating. Chevron intervened in a litigation between Stratus and its insurance company over payment of legal fees so it could defend itself. Chevron filed an amicus brief, detailing its alleged criminal conspiracy. A Colorado court ruled in favor of the insurance company even though no trial has been conducted to determine the validity of Chevron’s charges. See page 15 of Stratus’ counterclaims.

Stratus described the pressure campaign in its December 2012 counterclaims, four months before the settlement:

“(Chevron has) embarked on an extrajudicial campaign of malicious defamation and deliberate interference with Stratus' business to tortuously destroy Stratus (and the livelihood of its employees) and to prevent Status from being able to successfully defend itself at trial. Chevron’s scheme … consists … of widely and publicly disseminating lurid allegations against Stratus concocted from lies and inappropriate manipulation … (of) evidence; publishing defamatory written statements directly to Stratus’ clients and others, falsely and maliciously telling clients that (courts) have entered conclusive findings confirming Chevron’s allegations …; in direct and indirect communications explicitly and repeatedly requesting that Stratus’ clients fire Stratus or not engage Stratus as a technical consultant….”

No wonder Doug caved.

But, the facts in the record and on the ground reveal the true story:

• Scarring Ecuador’s rainforest are about 900 Olympic-sized, unlined oil pits full of pure crude and toxic chemicals– all of them built by Texaco only in the 1970s and 1980s. Doug told me that each pit was the equivalent of one U.S. Superfund site (a major environmental disaster) that would cost at least $20 to $40 million each to remediate. In other words, billions of dollars of costs.
  Chevron now says that 900 is an exaggeration, but we know, for a fact, that Texaco drilled 343 well sites during its three decades of oil exploration in Ecuador. We know that Texaco built an average of two to five pits for each well site. Chevron has never produced a master list of its oil pits, but the number of pits comes from a combination of on-site inspections and aerial photographs.

• Texaco published an ad in an Ecuador newspaper admitting to dumping 16 billion gallons of untreated and scalding-hot production water directly into the streams and rivers that local people use for drinking water and to bathe and cook. Production water is composed of cancer-causing chemicals, such as benzene, toluene, xylene and Polynuclear Aromatic Hydrocarbons (PAHs). It also has a saline content ten times higher than ocean water.

• Texaco conducted two internal audits in the early 1990s (see here and here) – both part of the massive quantum of evidence against the company -- describing the contamination this way:
  
  
  • “No protection of water resources”
  • “Limited environmental protection measurements taken”
  • “Produced water disposed of into the jungle river”
  • “No treatment of wastewater conducted prior to discharge”
  • “Toxic wastes not treated”
  • “No recycling of wastes or waste reduction”

• The majority of Chevron’s chemical sampling results taken during the trial show high and illegal levels of toxins in the soil. See of soil contamination samples taken from a court document filed in Ecuador.

A careful reading of Doug’s affidavit also gives him away.

For example, he says he knows of no groundwater contamination resulting from Texaco’s operations. But Doug and I also discussed that a tight budget prevented the Ecuadorians from gathering many samples of groundwater contamination except under the company’s waste pits. And, as Doug told me on more than one occasion, if the soil is contaminated the groundwater is contaminated.

Most troubling, Doug testified in Chevron’s coerced affidavit that he had seen no evidence of harm to people.

I know that must have been very difficult for him to say. He and I spoke often of the need for a comprehensive plan to deal with the health problems created by Chevron’s contamination in the region – including high rates of cancer as confirmed by independent peer-reviewed health evaluations.

Doug would often counter that in the U.S. we don’t wait for a study to tell us that oil contamination is harmful to people and the environment. We clean it up immediately, as we required BP to do after the Gulf of Mexico spill that created an estimated $60 billion liability for the company.

One difference between the BP disaster and the Chevron disaster is that the British oil company accidentally took the lives of 11 people; the American oil company intentionally used substandard drilling and exploration practices that resulted in illnesses and deaths of untold numbers and the destruction of the environment and a whole way of life for many of the indigenous groups.

The other difference is that BP took responsibility. Chevron, on the other hand, hired lawyers to engage in a pressure campaign to extort testimony and attempt a desperate effort to avoid paying the $19 billion judgment.

With seizure actions filed by the rainforest communities against Chevron assets in three countries – Canada, Brazil, and Argentina – the risk the oil giant faces only continues to grow. In the meantime, a good man named Doug Beltman bites the dust when it comes to calling out environmental injustice.

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The Ugly Truth Behind the Burford-Chevron Settlement

It is becoming increasingly clear that Chevron’s so-called “settlement” with Burford Capital, a publicly-traded litigation hedge fund that had helped to finance the historic Ecuador environmental case, is beset by serious ethical problems. Just like the Stratus “settlement” that preceded it, this latest gambit by the oil giant will not diminish in the least its growing risk from the $19 billion adverse judgment.

We already explained the vicious pressure campaign waged by Chevron to extort a settlement from Stratus Consulting, a small Colorado-based technical firm. Stratus literally faced bankruptcy due to Chevron’s efforts to drive away its clients and impose enormous legal liability after it had the temerity to work on behalf of the Ecuador communities.

The good people at Stratus caved in the face of Chevron pressure, with two of its scientists agreeing to sign highly misleading affidavits contradicting earlier sworn testimony that the oil giant caused massive toxic contamination in Ecuador. Stratus essentially chose a near-death event (signing false affidavits) over a certain death event (continuing to fight Chevron).

Chevron’s settlement with Burford, announced with great fanfare on April 15, suffers from similar credibility problems and also appears to be the product of intimidation and threats.

Given that it is a public entity backed by prominent institutional investors, Burford could not afford to embroil itself in Chevron’s threatened litigation sideshow. Chevron’s approach threatened to dry up investment money for Burford. It also raised the prospect of forcing the fund to spend millions to defend itself -- something that would be very bad for business.

To avoid this Chevron-engineered unpleasantness, Burford CEO Christopher Bogart signed an affidavit that has the odor of being designed by Chevron’s own lawyers. Bogart claims in the affidavit that he had had been “misled” by lawyers for the rainforest communities about a wholly irrelevant technical report on damages (called the Cabrera Report). The Ecuador court did not even consider this report when finding Chevron liable.

(The Ecuador court did rely on evidence in more than 100 other technical reports that contained 64,000 chemical sampling results, most showing massive and life-threatening contamination due to Chevron’s deliberate toxic dumping in Ecuador. For a summary of the overwhelming evidence against Chevron, see here)

For the Ecuadorians, Burford’s settlement changes very little.

Burford already had refused to fund the case further in 2011 after Chevron filed a racketeering case against the communities that named the hedge fund as a “non-party co-conspirator” – a wholly invented designation used by Chevron to instill fear in the heart of any person or entity that wished to help the victims of the oil company’s toxic dumping.

But what does matter are the details behind Burford’s own descent into darkness. This is where it begins to get interesting.

What Bogart does not disclose is that when Burford ceased funding the case, it was hiding a flagrant conflict of interest from the Ecuadorians as well as its own investors. In late 2010, shortly after Burford had funded the claims of the Ecuadorians, the firm agreed to bring in as a principal partner former litigation lawyer Ernest J. Getto.

Getto had previously generated enormous fees at Latham & Watkins as one of Chevron’s lead outside lawyers. He worked for Chevron on a number of high-profile cases, including a toxic tort class action involving allegations of pollution and cancer deaths among students, faculty and alumni at Beverly Hills High School. (That case involved Chevron’s use of many of the same subterfuges it employed during the Ecuador trial to undermine the proceedings. You can read about it an excellent book by Joy Horowitz, Parts Per Million.)

In effect, a lawyer extremely close to Chevron had infiltrated the key funding entity of Chevron’s litigation adversary in a high-stakes case. Burford had a contractual right to access information from the rainforest communities, including information related to their strategy. There is no evidence – and Bogart has never asserted -- that Burford built a firewall between Getto and the case. Burford also never informed the Ecuadorians about the conflict.

Obviously aware of and embarrassed by this conflict of interest, Burford took the extraordinary step of censoring from its own website any reference to Chevron as one of Getto’s “major” clients during his tenure at Latham & Watkins. But one need only go to Latham’s directory of its retired partners – which we did just the other day -- to find this extraordinary claim:

“Mr. Getto, representing Chevron, also led a Latham team that won all 12 motions for summary judgment in the highly publicized Beverly Hills High School toxic tort litigation.”

That’s what you call a real whopper.

Bogart does Chevron’s bidding by claiming in his affidavit he was “misled” about the Cabrera report, but this has scant credibility. Bogart admits he had multiple discussions about this report with counsel for the Ecuadorians. He admits he was given a detailed memo on the case by the Patton Boggs law firm that included an analysis of the issue. He also had access to thousands of court documents filed by Chevron related to its concocted “fraud” narrative.

Again, trial and appellate courts in Ecuador rejected Chevron’s arguments about the Cabrera report. The court ruled against Chevron in the underlying case, finding it liable for causing massive toxic damage to the ecosystem. The side Burford funded won. You would think Bogart would be happy.

Which brings us to the next startling detail.

Bogart also does not fully explain in his affidavit the details around Burford's sale to a third party of its interest from its $4 million investment in the Ecuador case. Yet as part of its recent “settlement” with Chevron, Burford said it would give up on any monies it might still be owed from any recovery by the rainforest communities.

That’s at least mildly misleading, don’t you think?

If Bogart really believes what he says – that the Ecuador case is a “fraud” even though courts in Ecuador have ruled otherwise – then Burford surely must disgorge the monies it made when it sold its interest to a third party. That Burford refuses to do so is all you need to know about how the company really views the Ecuador case.

Curiously, nowhere in the “settlement” does Burford say it has freely entered into its terms with no monetary compensation, which is typical language in civil litigation.

Bogart’s affidavit is designed to get rid of a major litigation and business risk for Burford. For Chevron, the affidavit provides a fleeting public relations score that it will use to try to beat back the company’s angry shareholders in the lead up to the annual meeting in late May.

In last year’s annual meeting, Chevron CEO John Watson was pummeled openly for his mishandling of the Ecuador case. This year, he faces votes on two resolutions related to Ecuador that likely will lead to further embarrassment.

But the “settlement” also creates a nagging headache for Burford which will not easily go away. As Burford aspires to be an industry leader in the nascent field of litigation finance, it will always be known as the firm that caved to pressure from an aggressive oil company hell bent on destroying the legal claims of vulnerable indigenous communities.

In his declaration, Bogart presents his motives as high-minded. He said in settling with Chevron he is trying to maintain Burford’s “highly ethical approach to its business”. In light of the undisclosed facts and conflicts of interest that Bogart omitted from his affidavit, one can reasonably question what ethical compass is guiding this man.

In the meantime, while Chevron tries to focus attention on dubious and irrelevant affidavits, an Argentine court has embargoed $2 billion in company assets that could be used to satisfy the Ecuador judgment. Similar seizure actions are proceeding against Chevron assets in Canada and Brazil.

Yet Burford's new dance partners at Chevron headquarters refuse to disclose these real and enormous risks to shareholders, prompting multiple complaints to the Securities and Exchange Commission.


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Chevron Turns To “Obscure,” “Kangaroo” Court To Save It From $19 Billion Judgment

With hundreds of millions of dollars frozen in Argentina and legal losses in both U.S. and Ecuador courts piling up, Chevron is turning to an “obscure,” “kangaroo” court renting office space in the bowels of The Hague to try and escape the $19 billion judgment, writes Amazon Watch’s Paul Paz y Mino in his latest blog:

“So what do you do if you're a massive corporate criminal that has lost in local and national courts and the court of public opinion, been rejected by the U.S. Supreme court, had your assets seized and frozen abroad, and stand teetering on the brink of losing several other suits costing you billions of dollars in assets after decades of telling your shareholders you have ZERO risk in the matter?

“Well, if you're Chevron you try to weasel your way out any way you can and look to anyone – no matter how removed from the matter – to declare you're the victim rather than the perpetrator. In this particular case, as we wrote about last year, Chevron has found an obscure private arbitration panel, acting under the mantle of the U.S.-Ecuador Bilateral Investment Treaty, in an attempt to circumvent justice in Ecuador and threaten that country into interfering in the Lago Agrio case.”

The private arbitration panel that Paul writes about recently demanded that the Government of Ecuador stop the Ecuadorians from enforcing their $19 billion judgment against Chevron. Ecuador has rightly argued that it cannot interfere in its judiciary; that it would be a violation of the Constitution. Meanwhile, the Ecuadorians have filed lawsuits in Argentina, Canada and Brazil to try and seize Chevron’s assets in those countries. Courts in Argentina have frozen Chevron’s assets there, believed to be worth about $2 billion. Chevron has few assets in Ecuador.

The panel is composed of corporate lawyers, who have close ties to Chevron’s law firm, King & Spalding and is highly conflicted in that its members are allowed to serve on the panel, even though they are representing other corporations before another panel at the same time. See this blog here for more details.

Read Paul’s entire blog here and watch this video, made by Friends of the Earth.

The Ecuadorians have ignored this panel and will continue to do so, given that it has no jurisdiction in the enforcement of the $19 billion judgment that they received from a legitimate court in Ecuador for the environmental crimes of Chevron.


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Chevron Ignores Safety Standards At California Refinery Where 19 Fires, Spills & Explosions Have Occurred Since 1989

About 4,800 Richmond, California residents have sued Chevron for negligence at an oil refinery and putting them at risk by not issuing public health warnings immediately after a recent explosion, the 19th disaster to have occurred at the refinery since 1989. The explosion, resulting from a corroded pipe, exposed them to toxic fumes that brought on respiratory, gastrointestinal and other serious health problems.

Chevron's refusal to adhere to state and federal safety regulations is another example of the oil giant's disrespect for environmental laws both in the United States and abroad.

See this Huffington Post blog and this recent story about the refinery.

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Gibson Dunn, Chevron Suffer Another Devastating Setback In $19 Billion Ecuador Case

The U.S. law firm Gibson Dunn & Crutcher is getting hit with a new round of hurt because of its bungling of Chevron’s Ecuador environmental case.

The recent order in Argentine to freeze roughly $2 billion in Chevron assets to help pay for the $19 billion Ecuador judgment is a monumental failure for Gibson Dunn’s defense strategy and a personal setback for its self-described “dream team” of litigators.   These lawyers -- Randy Mastro, Ted Boutrous, Scott Edelman, and Andrea Neuman – prematurely tried (in a stunning display of arrogance) to create an entire practice group off the Ecuador case.

The freeze order in Argentina is a potent setback, not just in one country but throughout Latin America and maybe beyond.  Company officials are ever closer to having to write checks to the very indigenous groups they decimated with their reckless, criminal, and even racist operational practices in the rainforest.

Gibson Dunn probably did not know that International treaties in the region allow for the reciprocal enforcement of foreign judgments.  The Ecuadorians already have seizure actions pending against Chevron in Brazil and are planning to file one soon in Colombia, said Pablo Fajardo, their lead counsel.  Venezuela and Panama are also potential targets.  In Ecuador, Fajardo’s team is in the process of seizing an estimated $200 million in Chevron assets. 

The recovered Ecuador assets can be used to fund even more seizure actions against Chevron around the world, including in Asia, Africa, and Europe.   Chevron thus faces the prospect of a far more constricted reality where its global investment opportunities begin to choke off, little by little.  Countries where Chevron should be considering investments on equal footing with its peers are falling off the map because of the added risk created by Gibson Dunn’s utter failure to contain the Ecuador liability.

In Canada, a key strategic country in the oil industry where the Ecuadorians have an enforcement action pending, Chevron may have as much as $12 billion in assets.  The same goes for Argentina.  In that country, Chevron produces roughly 30,000 barrels of crude daily but has plans to invest another $1.8 billion to drill 120 new wells over the next three years, according to Platt’s Oilgram News.

Ecuador is clearly off the map to Chevron while other international companies vie to buy the drilling rights to numerous oil fields in the Amazon.

This downward Chevron trend line could be a case study in how a top U.S. law firm can lose sight of the big picture while it obsesses over minute details of a satellite (and baseless) “fraud” case in New York. Gibson Dunn keeps billing huge fees to landscape Chevron’s front yard without realizing the house is on fire.

Gibson Dunn has now lost at least 10 major legal actions since entering the case in 2009, including before the U.S. Supreme Court in an appeal headed by none other than Ted Olson, the former Solicitor General of the United States. Olson has probably won more U.S. Supreme Court arguments than any person alive.  But not even he could figure out a way to put lipstick on Chevron’s pig. 

Chevron hired Mastro and the GDC dream team in 2009 to “rescue” it from the impending liability in Ecuador.  Two years later, the Ecuador court – despite eleventh-hour efforts by Chevron to bribe and threaten judges – found the oil giant liable and imposed a $19 billion damages award.  It was based on overwhelming evidence that Chevron deliberately dumped billions of gallons of toxic waste into the environment, poisoning the water supply of indigenous groups and causing an outbreak of cancer and other oil-related health problems.

Courts also found Mastro and his colleagues committed ethical violations on behalf of Chevron, including using lawsuits as weapons of intimidation designed to suppress the First Amendment rights of the company’s critics.

Evidence also emerged that Chevron might be deceiving shareholders about the degree of risk it faces over the Ecuador liability, as documented in great detail in a report by Canadian securities lawyer Graham Erion.  A U.S. Congresswoman and a group of institutional investors have called on the SEC to investigate the company.

This blog by Kevin Koenig of Amazon Watch clearly explains the misrepresentations and hypocrisy radiating out of Chevron’s corporate headquarters in San Ramon.  Even some analysts, most of whom are still in the thrall of the industry, are catching on to the extent of Chevron’s problems in the Ecuador case.  

Gibson Dunn is of course reaping a financial windfall to help Chevron evade responsibility for the destruction it has caused.  Mastro recently trooped into U.S. federal court in New York with 11 lawyers in tow for a minor hearing at which one person spoke.  He has admitted to using more than 60 lawyers from his firm on the Chevron case.   The firm’s profits rose by 20% the year after Chevron hired it.

The Gibson Dunn/Chevron losing streak in Ecuador highlights Chevron’s utter lack of corporate governance. Chevron General Counsel R. Hewitt Pate, for example, was given an obscene 75% raise last year (to $7.8 million) after he lost the Ecuador case. In granting the raise, Chevron’s Board actually praised his handling of the matter.  Taking care of insiders -- that’s how aging dictators act as the winds of change start to sweep over the palace.

Pate and notoriously short-fused Chevron CEO John Watson need independent oversight, but none exists.  The conflicted Watson is both Chairman of the Board and CEO, making him his own boss.  He was also the main Chevron executive who vetted the purchase of Texaco in 2001 and at the time failed to account for the massive Ecuador liability.  By all accounts, he is emotional and unrepentant when talking about the Ecuador case – telltale signs of a man who suffers from an acute conflict of interest.

There will be more international enforcement actions filed against Chevron soon.  The company’s investment map will get smaller.  In the meantime, expect more delusion, denial, and deceit as long as Watson and Pate are leading the company.

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