Wednesday, June 20, 2012

Chevron Can't Stop The Lies

In a recent letter to the Canadian newspaper, The National Post, Chevron repeats its lies to distract attention from its own misconduct in the world's largest oil-related environmental disaster in the Ecuadorian rainforest. 


For example, Chevron representatives are fond of claiming that a number of U.S. courts have “found” that there was “fraud” in the litigation in Ecuador. This is completely false. When Chevron made this assertion to one journalist who included it in his story, his publication, Courthouse News, was forced to run a retraction once it realized the reporter had been misled, stating that while “[a]n earlier version of this article quoted a Chevron spokesman as saying that eight federal courts had found the Ecuadorean plaintiffs had committed fraud. In fact, the courts issued crime-fraud exception findings during discovery. Chevron’s fraud allegations against the Ecuadorean plaintiffs remain unproven.” See here.
No U.S. court has made any final determination with respect to Chevron’s fraud allegations. In fact, 13 U.S. courts rejected or otherwise declined Chevron’s invitation to apply what is known as the crime/fraud exception. Such an exception requires a court to make only a prima facie showing that a fraud might have occurred if proven to be true. But no actual factual findings have been made. As one court succinctly put it: “The circumstances supporting [Chevron’s] claim of fraud largely are allegations and allegations are not factual findings."  Another wrote that Chevron was making a "mountain out of a molehill."  See here.

Chevron tries to distract attention from these facts with statements replete with falsehoods; meanwhile, independent journalists have long confirmed the company’s hand in creating this unprecedented catastrophe.  See these recent news reports from the Australia program Sunday Night; the American show 60 Minutes and this extraordinary video from the plaintiffs summarizing the evidence and Chevron’s corrupt attempts to derail the trial.   A story in Vanity Fair on the courageous Ecuadorian lawyer Pablo Fajardo, who was raised in abject poverty and who has been targeted with death threats, can be seen here.

Chevron takes emails and other correspondence out of context and cleverly edits video to make it appear that our own experts do not believe there is contamination. Yet one of the most respected experts in the world on how contaminants travel in groundwater – Dr. Ann Maest -- testified under oath recently that there is massive contamination of water in Chevron’s concession area. See here and here. In a blatant act of deceit, in a blog Chevron leaves the false impression that Dr. Maest agrees with the company that there is no water contamination.  See here.
Chevron’s assertion that the plaintiffs wrote the judgment is a both a fabrication and a final act of desperation. For this argument, Chevron relies on more paid experts who analyze what they call “word strings” from an internal memo from the plaintiffs that appeared in a handful of paragraphs in the 188-page judgment.  Yet arguments from the memo using the same language were submitted to court in numerous motions throughout the eight-year trial.  It is completely plausible for a court to adopt arguments and language from briefs or other materials submitted to the court.
The real and only fraud is Chevron's environmental crimes, its phony remediation, its manipulation of evidence during the Ecuador trial and its abuse of the rule of law by delaying and attempting to derail the trial during the eight-year-long proceeding. See here, here and  here.
These facts, as confirmed by Ecuador’s courts and independent journalists, are bad for Chevron.  More to the point, they explain why the company tried to sabotage the proceedings in Ecuador, and how it will now try to convince courts it Canada that somehow it was the victim of a shakedown by indigenous groups in Ecuador.
Don’t believe it.





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Thursday, June 14, 2012

Chevron Lies Through Teeth About Groundwater Contamination In Ecuador

The Ecuador indigenous and farmer communities who recently won an $18 billion judgment against Chevron have long maintained that the oil giant has been taking their comments out of context and is lying in its long-running effort to discredit the lawsuit.

Here’s a good example.

This week in a blog on its web site, Chevron claimed that Dr. Ann Maest, a prominent U.S. scientist who worked as an expert for the rainforest communities, testified under oath “that she was not aware of any scientific data indicating that drinking water wells have been impacted in any way by Texpet’s operations” in Ecuador.  (Texpet is a Chevron subsidiary.)  

What Maest said during three days of deposition testimony was that there was extensive groundwater contamination at Chevron’s production sites, but that there was no data from the plaintiffs about contamination in drinking water wells because no such wells were tested

In her deposition, Maest repeatedly cites multiple and widespread instances of groundwater pollution at every single waste pit in Ecuador where such testing took place. Yet Chevron claims in its blog that "even the plaintiffs own scientists" agree with Chevron's fabricated theory that there is no groundwater contamination in Ecuador.   

Here are some relevant excerpts from the Maest deposition that Chevron failed to mention in its blog:

“There has been some sampling of groundwater that's down gradient of pits, and they did find quite high concentrations of TPH [Total Petroleum Hydrocarbons] in groundwater.” (see 1/20/11 deposition, page 133)

The plaintiffs found "elevated concentrations of total petroleum hydrocarbons and polycyclic aromatic hydrocarbons...downstream of one of the separation stations in the concession." (see 12/8/10 deposition, page 161)

Samples tested from the plaintiff's and Chevron proved that "there are also PHs [a type of oil hydrocarbon] that are high in soil and groundwater immediately under the…pits that were allegedly remediated". (see 12/8/10 deposition, page 203)

Here is how Maest answered questions from a Chevron lawyer about groundwater contamination in Ecuador at a deposition that took place on December 8, 2010 (see page 212) -- an exchange Chevron ignored in its blog posting:

Q.  You had no worry about finding -- whether you were going to find it or not?

A. No. We knew at that time that they (the plaintiffs technical team) had found groundwater contamination.

Q. And where was that found?

A. Under pretty much every pit that they looked at.

Just in case you missed that last line: groundwater contamination was under pretty much every pit that they looked at.     

So much for Chevron’s claim that plaintiff's consultants agree with Chevron that there was no groundwater contamination in Ecuador.

For more on how Chevron lies to shareholders about the Ecuador litigation, see this report from securities lawyer Graham Erion and this letter from Congresswoman Jan Schakowsky (D-IL), asking the Securities and Exchange Commission to investigate the company.



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Wednesday, June 13, 2012

The Canadian face of the biggest lawsuit in the world

The Chevron Pit spoke with Jeff Gray of Toronto's Globe & Mail yesterday about the Ecuadorians' new lawyer, Alan Lenczner. Gray wanted to know why Lenczner decided to take our case.

We told him: "Because he knows he will win, and Chevron will lose."

After an indepth review of the Ecuador and U.S. court record on the case and a trip to Ecuador to view the contamination, Lenczner joined the legal team.

“It (seeing the contamination) influenced my decision a lot. I just saw the devastation … and I’ve seen the plight of these people,” he said. “… Forget the noise about lawsuits and distraction and internal memos and everything else, the fact remains that this is a mess.”

Read the story here: The Canadian face of the biggest lawsuit in the world



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Tuesday, June 12, 2012

Interesting Reads: BP Owes $192 Billion On Gulf Coast & Chevron's Secret Deal With Ivonne Baki

Interesting reading on The Huffington Post and The Business Insider. See below.

BP Owes $192 Billion for Gulf Oil Disaster, Not $15 Billion Settlement It's Seeking

On Friday, the Financial Times reported that BP is hoping to reach an agreement with U.S. authorities which would require it to pay under $15 billion to settle all criminal and civil penalties arising from the 2010 Gulf oil disaster. The Department of Justice is reportedly seeking $20 to $25 billion. Negotiations between the DOJ and BP are accelerating and "an agreement could be reached before the Democratic party's convention in September," the FT reported.

While $15 billion sounds like a lot of money -- and it is -- it is a far cry from what BP owes for the many costs associated with the largest offshore oil spill in history. To date, a full accounting of exactly what BP should owe for its crimes in the Gulf has not been made public. Such an accounting is vital if we are to ensure that justice and restoration are delivered to the Gulf Coast and that such a catastrophe never occurs again.

A straightforward application of just the most pertinent U.S. laws yields a fine of $192 billion. (For simplicity sake, I only address BP's fines.)

Sound high? Here's why it's not. (read more)

Why Chevron Fired Ogilvy


Chevron knew full well that an executive at its PR agency, Ogilvy PR, had ties to the Andean parliamentary president in Ecuador, Ivonne Baki, and fired the shop because the agency failed to bend the Ecuadoreans to its will, not because it was a conflict of interest: That, in a nutshell, is the conspiracy theory alleged by The Chevron Pit, a blog maintained by rain forest activists who successfully sued Chevron for its pollution of the Latin American jungle.

Chevron ostensibly fired Ogilvy after it discovered that one of its executives, Felipe Benitez, had given advice to both the Ecuadorean government and environmental groups hoping to preserve the Amazon. We pointed out that the move seemed weird because Benitez's LinkedIn profile listed the fact that he had those clients dating back to 2008, so this shouldn't have come as a surprise.

Chevron Pit now alleges that Chevron knew about Benitez all along and was hoping that he could sway the government to not enforce an $18 billion judgment environmental activists won against the company for polluting the forest:
There is simply no way Chevron could not have known that the firm of its lead lobbyist on the Ecuador matter was also representing Ecuador's government. In fact, we suspect that was all part of the "value" Ogilvy was offering Chevron for its fee of $600,000 per year.
(read more)


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Wednesday, June 6, 2012

Rattled Chevron Fires P.R Giant Ogilvy, But Questions Remain

The pressure on Chevron over its $18 billion Ecuador environmental judgment appears to be rattling company management. We already reported how 40 institutional investors hammered Chevron in recent days over its bungling of the litigation, asking that the long-running case be settled before the oil giant suffers further damage to its reputation.

Now we have the bizarre saga of Chevron firing its longtime lobbyist in Washington, the highly-respected and influential Wayne Berman, over something related to the Ecuador matter. The question is what is that something.

Last week it was reported Chevron fired Berman's firm Ogilvy because one of the agency's low-level employees offered advice on environmental public relations at an event organized by Amazon Watch. Amazon Watch is that pesky group of environmental activists who have driven Chevron crazy for years over its failure to clean up its mess in Ecuador. (Note that the young PR executive who spoke at the Amazon Watch event did not even mention Chevron and Ecuador.)

This week Advertising Age reported that Ecuador's celebrated Yasuni environmental project also  "halted its relationship with" Ogilvy. The Yasuni is an area of oil-rich rainforest inhabited by two non-contacted indigenous groups. Ecuador's government is trying to raise money from governments in exchange for a promise never to let oil companies exploit the territory.

We were surprised to learn that Ogilivy was representing Chevron -- a sworn enemy of Ecuador's government given their battles over who should clean up the oil pollution in the country -- and Ecuador's government at the same time.

Is there a connection between the two?

We think so. There is simply no way Chevron could not have known that the firm of its lead lobbyist on the Ecuador matter was also representing Ecuador's government. In fact, we suspect that was all part of the "value" Ogilvy was offering Chevron for its fee of $600,000 per year.

Chevron Pit readers may remember postings from several months ago (here and here) about Chevron offering a bribe to Ecuador's government in exchange for killing or stopping enforcement of the $18 billion judgment against it for massive oil contamination.

The bribe included a $500 million contribution to -- you guessed it -- the Yasuni project coupled with an effort to recruit corporations and governments around the world to raise more money.

But the plot thickens. The person heading up the fundraising effort for Ecuador is Ivonne Baki, who has close ties to Chevron and has tried to intercede on Chevron's behalf before to kill the lawsuit. See this press release and this Miami Herald story. Baki was also reported to be floating Chevron's bribe offer to kill the case from her perch inside Ecuador's government.

How is it that Oglivy and Berman, who have represented Chevron since 2004, acquired Yasuni as a client around the same time Chevron tried to bribe Ecuador through its Yasuni payment?

Was Chevron subsidizing the Yasuni PR effort through its own payments to Oglivy as a way to curry favor with Ecuador's government to kill the lawsuit?

Did Chevron use a young PR exec as a scapegoat to fire Oglivy because the Yasuni bribery plot turned south, possibly exposing company officials to liability under the Foreign Corrupt Practices Act?

Stay tuned.


Ivonne Baki -- Yasuni

Ogilvy- PR Firm 

John Watson -- Chevron

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Friday, June 1, 2012

Chevron Fires Big Shot Lobbyist Wayne Berman After He Hires Young PR Environmentalist

Chevron may be huge, but it's full of people with small minds.

The gigantic public relations firm, Ogilvy, hired a young man who has been involved in environmental causes, and Chevron went ballistic, firing the firm and along with it, Wayne Berman, a powerful and influential lobbyist in Washington, DC. Berman is an Ogilvy partner and has worked for Chevron since 2004.

We hear Berman is not happy. Maybe more to follow?

We know all about Chevron's revenge tactics. If you mess with them, you pay a price.

See Bloomberg story below.

Chevron Fires Ogilvy As Lobbyist Over Ecuadorean Dispute

By Jim Snyder - May 31, 2012 8:00 PM ET

Chevron Corp. (CVX) fired Ogilvy Government Relations as its U.S. lobbyist after a person affiliated with the firm spoke to a group advocating for residents of the Ecuadorean rainforest in a multibillion legal fight with the oil company, a person familiar with the matter said.

On May 9, Felipe Benitez of Ogilvy’s public relations branch gave a presentation to San Francisco-based Amazon Watch on “strategic communications for environmental defense and protection on human rights,” according to that group’s website. Lloyd Avram, a spokesman for Chevron, which was Ogilvy’s third-largest lobbying client last year, said the company discovered a serious conflict recently. He declined to comment about the nature of the issue or the date Chevron ended its relationship with Ogilvy.

Another person, speaking on the condition of anonymity due to the sensitivity of the matter, said the conflict concerned Benitez and his talk to Amazon Watch, which advocates on behalf of indigenous tribes in the Amazon basin and has called damage from oil drilling in Ecuador “Chevron’s Chernobyl.”

“Chevron discovered a material conflict of interest with Ogilvy,” Avram said in an e-mailed statement. “It could not be resolved and made our relationship with them untenable. Under the terms of our agreement, we terminated the relationship.”


Ogilvy Revenue

Ogilvy received $600,000 from Chevron in 2011 to lobby on energy, environmental, tax and financial policies in the U.S., according to federal lobbying records, making the oil company its third-biggest client by revenues, according to the Center for Responsive Politics, which tracks political and lobbying spending.

Ogilvy, the sixth-largest U.S. lobbying firm by revenue, according to the center, had represented Chevron since at least 2004, public records show. Ogilvy’s various units are owned by WPP Plc (WPP), a communications company based in Dublin. Avram declined to comment on Chevron’s plans to replace Ogilvy.

While Chevron, based in San Ramon, California, doesn’t operate in Ecuador, it has become embroiled in a lengthy legal fight over the alleged disposal of toxic wastewater from drilling operations by Texaco Inc., which used to operate in the country and was acquired by Chevron in 2001.

Previous Work

Previously, Benitez worked for Fenton Communications, and had helped Ecuador improve its global image, according to his page on Linked In, a social networking website.

“Chevron informed Ogilvy & Mather of its decision to end its relationship with Ogilvy Government Relations because of a perceived conflict with Ogilvy PR,” Rachel Ufer, a spokeswoman for Ogilvy public relations, said in an e-mailed statement, referring to the parent company. “As this is primarily a personnel matter, we are unable to provide further detail.” Amazon Watch didn’t return a phone call seeking comment.

Chevron is fighting an $18 billion judgment from an Ecuadorean court finding the company was responsible for damage. The company argues that Texaco performed all the environmental remediation under the terms of its contract with Ecuador. It has accused the plaintiffs’ lawyers and Ecuadorean officials of fraud and misconduct in the case.

Ecuadoreans filed a lawsuit yesterday in the Superior Court in Ontario targeting Chevron assets in Canada as a way to begin collecting on the judgment, because the oil company has few assets in Ecuador.

In Washington, Chevron spent more than $9.5 million on lobbying last year and keeps a team of outside firms to lobby on a variety of issues.

More than 70 companies and trade groups paid Ogilvy Government Relations more than $20 million to lobby on their behalf in 2011, according to the Center for Responsive Politics, which is based in Washington.

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Thursday, May 31, 2012

Ecuadorians File Suit In Canada Against Chevron To Collect Money Awarded By Court In Historic Lawsuit

Ecuadorian plaintiffs started the process of enforcing the $18 billion court judgement by filing a lawsuit in the Superior Court of Justice in Ontario to take over various assets that Chevron and its subsidiaries hold in Canada. Press release with more details below.

Ecuadorians Hit Chevron With $18 Billion Enforcement Action In Canada 

Toronto, Ontario – Villagers from Ecuador's rainforest today filed a lawsuit in Canada as the first step in forcing the company to comply with an $18 billion court judgment rendered in Ecuador and imposed to permit the clean-up of what experts believe is the largest oil disaster on the planet.

The lawsuit, filed in the Superior Court of Justice in Ontario, (see here) targets Chevron and various subsidiaries that together hold significant assets in the country – including Canada's largest offshore drilling project and new investments in oil sands in the province of Alberta, said Alan Lenczner, the noted Canadian litigator representing the Amazon communities. Canada also has a law that allows interest to run on a foreign judgment during the enforcement process, potentially adding a significant amount to the judgment against the oil giant.

The Ecuadorians, who consist of the inhabitants of five indigenous groups and approximately 70 farmer communities, are being forced to file enforcement actions because Chevron refuses to pay the judgment imposed by an Ecuador trial court in February 2011, which was later affirmed by Ecuador's court of appeals in January. The oil giant has virtually no assets in Ecuador.

Pablo Fajardo, the lead lawyer for the Ecuadorians and the recipient of the Goldman Environmental Prize and a CNN "Hero" Award, said his clients were intent on collecting the entire judgment.

"The time for delay is over," he said. "For decades Chevron refused to address the contamination that has devastated our ancestral lands. While Chevron might think it can ignore court orders in Ecuador, it will be impossible to ignore a court order in Canada where a court may seize the company's assets if necessary to secure payment.

"We plan to exercise our legal right to collect every penny of the legitimate judgment from Ecuador, even if we have to drag Chevron kicking and screaming into courts around the world," said Fajardo, who grew up in poverty working in Ecuador's oil fields and who put himself through law school specifically to hold Chevron accountable for the environmental disaster. See this article in Vanity Fair about Fajardo.

The judgment in Ecuador resulted from an eight-year trial that produced more than 64,000 soil and water samples that pointed to extensive contamination at more than 350 Chevron well sites and oil production stations in a large swath of Ecuador's northern Amazon region, known as the Oriente. This area was considered one of the most bio-diverse areas on earth before Chevron – to lower production costs – deliberately discharged billions of gallons of toxic waste into the environment, decimating local tribesmen and plummeting the region into a tailspin of despair from which it has yet to recover, according to evidence before the court.

(A video that explains Chevron's substandard operational practices in Ecuador and efforts to corrupt the trial process can be seen here.)

The result of the dumping, according to evidence presented at trial, is a public health crisis and the poisoning of a large swath of pristine rainforest that indigenous communities had relied on for millennia for their sustenance. Five indigenous groups – the Cofan, Secoya, Siona, Quichua, and Huaroni – are struggling to survive. Part of the judgment will be used to restore the forest so that the indigenous communities can return to their hunting and gathering traditions, said Fajardo.

Lenczner, the Canadian litigator who is representing the Ecuadorians, is considered by Chambers Global to be one of the top lawyers in Canada, having appeared in courts in all ten provinces and argued numerous cases before the country's Supreme Court. He is the founding partner of Lenczner & Slaght, a boutique litigation firm with approximately 50 lawyers that recently was named one of the top ten litigation firms in the country by Canadian Lawyer magazine.

"I am honored to have been asked by the indigenous people of Ecuador to correct a historic injustice visited upon them by Chevron," said Lenczner, who visited Ecuador and reviewed the extensive trial and appellate records of the case, which exceed 250,000 pages.

"Chevron fought for nine years to move the trial from the United States to Ecuador, and then had a full opportunity for eight years to defend itself in Ecuador," Lenczner added. “This is a legitimate judgment and I believe Canadian courts will recognize it and enforce it as such."

Fajardo said that the Ecuadorians have a list of countries that are possible targets for enforcement actions and that additional actions are likely to be filed to ensure the full amount of the judgment can be satisfied. A significant portion of Chevron's assets are located around the world in over 70 wholly-owned subsidiaries and 75% of the company's annual profits are derived outside of the U.S., according to an analysis by the plaintiffs.

Almost all countries have specific laws governing the recognition and enforcement of foreign judgments. Most of the laws favor enforcement, subject to specific exceptions such as lack of jurisdiction or fraud. Chevron has stated it will try to block enforcement by alleging fraud, but the Ecuadorian trial and appellate courts directly addressed the allegations and rejected them. See the lower court judgment and the appellate court judgment.

Representatives of the affected population, who meet every two months in the rainforest in a body called the Assembly of the Affected Ones (Asamblea de Afectados), were thrilled that the first enforcement action was filed. The local population has suffered from high rates of cancer, spontaneous miscarriages, and oil-related diseases. See here, here, and here.

"This is a historic day for us," said Luis Yanza, the coordinator of the Assembly. "We might be impoverished materially but we are rich in spirit. The time has now come to use the force of law to make Chevron clean up its pollution. No company, even one as rich and powerful as Chevron, is above the law."

In Canada, Chevron's biggest assets are a 20% interest in the Athabasca Oil Sands Project, which yields a capacity of 255,000 barrels per day and supplies 10% of Canada's oil needs; the Hibernia project, which is Canada's largest offshore drilling project; and the Ells River concession, which covers 75,000 acres and contains up to an estimated 7.5 billion barrels of oil.

Chevron also is the largest gasoline convenience store marketer in British Columbia through a network of 162 service stations, 134 Town Pantry convenience stores, and 21 White Spot Triple O quick-serve restaurants. Chevron also owns the Burnaby refinery, which processes over 50,000 barrels of oil per day.

Total daily production for Chevron in Canada in 2011 averaged 29,000 barrels of crude oil, 4 million cubic feet of natural gas, and 40,000 barrels of synthetic oil from oil sands, according to public disclosures of the company. Canada is one of the top ten markets in the world for Chevron's capital spending in 2012, according to the company's filings with the U.S. Securities and Exchange Commission.

The filing of the enforcement action comes on the heels of a major challenge by Chevron shareholders over the Ecuador matter.

Today Chevron CEO John Watson suffered a stunning reprimand during a tense annual meeting when investors holding over 38% of the company's shares (representing $73 billion worth of stock) voted for a resolution that directly challenged his authority because of the Ecuador case. Last week, 40 institutional shareholders representing $570 billion under management – including the New York state pension fund – urged the company to settle the Ecuador litigation.

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Friday, May 25, 2012

As Bad As Chevron Behaved Last Year, This Year It's Worse

Rebecca Tarbotton got it exactly right in her blog yesterday, titled Chevron's Worst Year Ever.

 As bad as oil companies behave -- both here at home and abroad -- Chevron takes the cake, especially this year. In a series of blogs, Tarbotton is posting about the oil giant's massive legal losses in Ecuador, its offshore disasters in Brazil and Nigeria, the indisputable contamination it is causing today in Kazakhstan, as well as the tragic deaths of the company's own employees in several locations, including in its home state of California.

Tarbotton is amplifying the voices of people who live in these countries and are fighting Chevron's efforts to hide behind its feel-good public face of expensive advertising designed to misled people, especially here in the United States.

She quotes from a letter to Chevron, written by Sergey Solyanik of Crude Accountability about the village of Berezovka in Kazakhstan:

"For nine years the residents of the village of Berezovka, which is located a mere five kilometers from the Karachaganak Oil and Gas Condensate Field, have been fighting for relocation to an environmentally clean and safe location. When exploitation of the field first began, the health of the 1300 residents of Berezovka radically worsened. The population is now suffering regularly from headaches and memory loss, muscular-skeletal problems, vision loss, cardio-vascular difficulties, serious gastroenterological problems, upper respiratory illness, and skin ailments. According to independent data, approximately half of the villagers suffer from chronic illness. The residents feel the impacts of hydrogen sulfide and other toxic chemicals that are connected with oil extraction and refining." 

Solyanik was one of about 30 people who Chevron threw out of a shareholder meeting two years ago, even though he had a legitimate proxie and had traveled all the way from Kazakhstan just to attend. While Solyanik will not be able to attend Chevron's shareholder meeting next week on May 30th, Luz Trinidad Andrea Cusangua of Ecuador will.

Here are the words of Cusangua, a farmer whose source of water has been contaminated by Chevron's oil.  She wrote to Chevron:

"We have won the lawsuit against Chevron, but still the company doesn’t want to accept responsibility for what they have done. They have no shame. They remain arrogant. They call us liars. But I have lived through the contamination that they left here. They can’t contradict me! The river close to my house was our source of life, and when Texaco drilled the wells Sacha 89, 90, 91 and even Sacha 5 and 13, the river became filled with oil. My children suffered because of the contamination. Their feet rotted, they had warts and rashes on their skin. And my mother got cancer on her nose. Do you think that there would be so much cancer in a virgin forest? I remember the nights when my feet would burn, and I would cry from pain, and slowly my feet would start to rot, and the skin would fall off piece by piece. All of this sickness was caused by the contamination that Chevron left here in the Amazon."

Luz Trinidad Andrea Cusangua

Tarbotton will be featuring the opinions of other people from across the globe in future blogs.

Chevron will dismiss these people and say that they are lying; that others are to blame; that there is a grand worldwide conspiracy to extort money from the company.

But it cannot be that so many people from so many countries are so wrong, and Chevron is so right.


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Wednesday, May 16, 2012

Chevron's Grand Shareholder Deception

Hew Pate, Chevron's $7.8 Million Lawyer, “Celebrates" Another Legal Defeat At the Hands of Ecuador's Rainforest Communities


The rulings this week by U.S. federal judge Lewis A. Kaplan denying Chevron's motion for attachment in the Ecuador case was by any reasonable measure a setback for the oil giant in its campaign to evade paying the $18 billion court judgment.  In fact, it is the latest of string of stunning losses for Chevron in courts in the U.S. and Ecuador over the last several months -- losses that can be laid at the doorstep of R. Hewitt Pate, Chevron's General Counsel and the mastermind behind the company's increasingly confused legal strategy in the Ecuador matter. See here.

These losses include a unanimous reversal in January by a U.S. federal appeals court of an injunction purportedly barring enforcement of the Ecuador judgment and an affirmance earlier this year by the Ecuador appellate court of the overwhelming evidence that the company committed crimes and fraud in Ecuador. See here and here.

Chevron's contamination in Ecuador also has been confirmed by numerous independent journalists and is simply indisputable -- see this 60 Minutes segment and this video prepared by the plaintiffs.  In addition, Chevron's lead outside law firm in the case -- Gibson Dunn & Crutcher -- has been sanctioned repeatedly for committing ethical violations even as it bills the company hundreds of millions of dollars as part of a "rescue operation". See here.

One would never know from Pate that the legal prospects of Chevron are dimming or that the company is being taken for a ride by Gibson Dunn.  In a press release that can only be described as the ultimate in chutzpah, Pate celebrated Chevron's latest legal defeat yesterday by claiming "victory" because the judge tossed out only a few of the fraud claims the company filed against lawyers for the plaintiffs as opposed to all of the claims.  In keeping with his spin, Pate failed to mention in his press release that Kaplan expressly found that Chevron is unlikely to prevail on the remaining fraud claims.

We have said it before:  Pate and the higher-ups in Chevron management are leading Chevron and its shareholders down a dangerous path over the Ecuador liability, and possibly over a cliff.  The spin is getting increasingly desperate as the walls begin to close in on the company's plan to evade paying the judgment.

Whether spinning bad news into fake news is a deliberate strategy or a function of internal self-delusion can be sorted out by others -- including SEC regulators who have been called on to determine whether the company is producing materially false and misleading information about the Ecuador liability. See here.

These are our takeaways on the Kaplan decisions this week:

1) Pate's latest press release shows the company continues to mislead shareholders over the Ecuador liability, as documented in stunning detail by Canadian securities lawyer Graham Erion in this report released in April. Pate's press release was designed to sugarcoat an adverse legal decision, exactly the kind of gamesmanship that regulators frown upon.  Expect a new report soon from the plaintiffs on how Pate's press releases on the Ecuador case are designed to hide risks from shareholders and the markets.

2) Judge Kaplan, who used to consistently favor Chevron in his decisions, has started to lose his appetite for the case after getting sternly rebuked in January by the U.S. court of appeals in New York.  Not only did Kaplan deny a Chevron motion to attach the assets of the Ecuadorians for the second time, he also dismissed two fraud claims and cast serious doubt on Chevron's remaining RICO claims against American lawyer Steven Donziger. (The Ecuadorians maintains that Chevron's claims are baseless and are a ruse to distract attention from its own criminal misconduct in Ecuador.)

3) It is increasingly clear that Chevron's RICO case is a dog reluctant to hunt.  Worse for Chevron, if the case hunts -- as in, actually survives various motions to dismiss and gets to a jury -- it can bite Chevron far more harshly than it can bite Donziger or his Ecuadorian clients.   Chevron will be on the defensive because of counterclaims about its attempts to corrupt the Ecuadorian judicial system.  A jury will be able to hear evidence about Chevron's sham remediation, its efforts to bribe Ecuador's government, its attempts to doctor evidence through its "dirty tricks" operative Diego Borja, and its threats to judges.  All of this has been detailed in a sworn affidavit from Juan Pablo Saenz, an Ecuadorian lawyer.

4) Pate is going to have a whale of a time explaining the Ecuador problem at the company's upcoming annual meeting on May 30.  How he explains why several prominent law firms around the world have rallied to the cause of the Ecuadorians when the case is supposedly an "extortionate scheme" will be interesting to watch. Further, a large group of Chevron shareholders is pressuring the SEC to investigate Chevron based on the Erion report, which exposes out of control risk-taking and an apparent cover-up.  Expect several pension funds to speak out with a more forceful voice.

Multiple lawsuits against Chevron assets in various jurisdictions are now looming over the company.  Once these actions are filed and start progressing through the courts, Chevron will have a hard time entering into partnerships or making further investments in countries that could be strategically important to the company's growth.

In the meantime, Chevron's feckless Board of Directors awarded Pate a 75% pay increase (to $7.8 million) for losing the Ecuador case. See here. Because of Pate's bungling of the Ecuador matter, billions of dollars of Chevron assets are now at risk of being attached, seized, and auctioned off at fire sale prices because the company refuses to comply with its legal obligations.  In the double-dealing inside world of Chevron-land, this merits an extraordinary pay raise.



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