Tuesday, May 31, 2011

Once Again Chevron Masquerades As A News Organization

Uses Employee’s Spouse -- A “Stay-Home Dad” -- To Undermine Environmental Group Critical Of Its Contaminated Legacy In Ecuador

In a press release issued today, the Amazon Defense Coalition revealed another example of Chevron posing as an independent “journalist” to send e-mails to funders of a small environmental organization that has been critical of Chevron’s management for refusing to pay the company’s court-ordered $18 billion liability in Ecuador.

This stunning revelation about Thorne’s e-mails comes just days after several large Chevron shareholders blasted Chevron CEO John Watson for displaying "poor judgment" in Ecuador which “has led investors to question whether [Chevron’s] leadership can properly manage the array of environmental challenges and risks that it faces.” The comments from the investors, who manage a combined $156 billion in assets and include New York’s pension fund, are contained in a letter sent to Chevron.

Alex Thorne

Thorne recently sent e-mails to several funders of the U.S.-based environmental group Amazon Watch in which he claimed to be working on an “article” for a publication he refused to specify. He also did not use his last name in the email, signing it only as “Alex.” The e-mails then asked the funders “if it is time” to “reevaluate” their support for Amazon Watch in light of Chevron’s oft-criticized claim that the 18-year legal case is part of an extortion racket.

Thorne is married to Kristen Thorne, Chevron’s senior policy advisor on environment and energy issues. Alex Thorne did not disclose in the emails to Amazon Watch’s funders that he is married to a high-level Chevron employee or that he has operated a pro-Chevron website critical of the leaders of the Ecuador lawsuit.

“Alex Thorne’s phony emails are part of Chevron’s Karl Rove-style campaign designed to intimidate American citizens who are trying to hold Chevron accountable for committing environmental crimes and fraud in Ecuador,” said Karen Hinton, the spokesperson for the Ecuadorian communities who brought the lawsuit.

In one email to the Moriah Fund, which was forwarded to Amazon Watch, Alex Thorne says: “I’m writing an article highlighting Amazon Watch’s top donors which will include mentioning the Moriah Fund… My article highlights organizations such as yours and questions whether it is time to reevaluate your support for Amazon Watch.”

Representatives of the Amazon communities have long charged that Chevron committed environmental crimes in Ecuador and that its “extortion” claim is nothing more than a last-ditch ploy to mislead shareholders. Two Chevron employees are currently under criminal indictment in Ecuador for lying about the results of a purported environmental cleanup that the plaintiffs say was a clear case of fraud.

Amazon Watch, which is based in San Francisco near Chevron headquarters, has a handful of staff members and a $950,000 annual budget. In contrast, Chevron has 62,000 employees and grossed $204 billion last year, or an amount roughly 200,000 times more than Amazon Watch’s annual expenditures.

Despite their lack of resources, Amazon Watch’s staff members have had an outsized impact on Chevron. They have infuriated Chevron’s management by filing complaints against the oil giant with the Securities and Exchange Commission, by confronting the company’s Board of Directors during shareholder meetings, and by organizing protests outside the home of Chevron CEO Watson.

Just last week at Chevron’s annual meeting, Amazon Watch Executive Director Atossa Soltani accused Watson of having a personal conflict of interest over the Ecuador issue while several Chevron Board members looked on in stunned silence.

Along with lawyers for the Ecuadorians, Amazon Watch also has accused Chevron of engaging in a Nixon-style “dirty tricks” campaign in Ecuador designed to sabotage the trial. These activities have been summarized in the sworn affidavit of Ecuador attorney Juan Pablo Saenz, filed in multiple courts and available here.

Chevron’s larger problem is that an Ecuador court in February imposed a cleanup tab of $18 billion for the deliberate discharge of billions of gallons of toxic waste into streams and rivers of the Amazon rainforest, where the company operated (via predecessor company Texaco) from 1964 to 1992. Chevron’s substandard operational practices in Ecuador – admitted to by the company at trial -- decimated indigenous groups and caused an outbreak of cancer and other oil-related diseases that will haunt tens of thousands of people for decades without a comprehensive remediation, according to evidence submitted by the plaintiffs.

For most of 2009, Alex Thorne maintained a website where he regularly attacked the leaders of the Ecuador lawsuit and Hinton.

After Hinton wrote in a press release about his wife’s participation in a “green technology” panel discussion that failed to describe Chevron’s environmental disaster in Ecuador, Alex Thorne created a separate website called “Hinton Communications Watch” that was designed to intimidate Hinton into stopping her work for the Ecuadorian indigenous communities, said Hinton. Alex Thorne later took down the websites and at the time apologized to Hinton.

This is not Chevron’s first attempt to use the image of independent journalists as cover for its campaign to undermine the legal claims of the impoverished Ecuadorian communities, said Hinton.

Last year, Chevron was caught trying to pay American free lance journalist Mary Cudahee $20,000 to spy on the plaintiffs in Ecuador by pretending she was conducting research for an article. Cudahee exposed the effort in The Atlantic.

In 2009, just days before a 60 Minutes segment critical of Chevron’s misconduct in Ecuador was slated to air, the company posted on the internet a pro-Chevron corporate video on Ecuador narrated by former CNN correspondent Gene Randall that was designed to look like a legitimate news broadcast. Chevron hid its role in paying for the production of Randall’s video until it was exposed by The New York Times.

Nor is Chevron shy about pushing the envelope when attacking its many vocal critics on the Ecuador issue.

Chevron CEO Watson ordered the arrest of five shareholder critics at the company’s 2010 annual meeting; Chevron took out newspaper advertisements attacking the U.S.-based Goldman Foundation for awarding its prestigious environmental prize to advocates for the Ecuadorian victims of Chevron’s human rights abuses; and Chevron recently filed a racketeering lawsuit in the U.S. federal court against 47 Ecuadorian villagers and their lawyers that named Amazon Watch as a “co-conspirator”.

Hinton noted that Chevron has been advised by CRC Public Relations, which launched the Swift Boat attacks ads that targeted 2004 presidential candidate John Kerry. CRC has close ties to the far right of the Republican Party and is a darling of the Tea Party movement.

CRC is one of at least six public relations firms and four corporate law firms used by Chevron General Counsel R. Hewitt Pate to deal with negative fallout from the Ecuador judgment, apparently the largest environmental liability in history other than the BP Gulf spill, said Hinton. Pate is a former high-level political appointee in the U.S. Department of Justice under President George W. Bush and is the person responsible for Chevron’s Ecuador litigation strategy, she added.

Monday, May 23, 2011

Chevron’s Big, Fat Lies To U.S. Judges. 

Oil Giant Met With Independent Court Expert, Later Refused To Pay Him After He Found Toxins At So-Called “Remediated” Sites

Chevron has been caught in yet another big, fat lie told to a dozen or more U.S. federal judges about interactions with court-appointed technical experts in the landmark trial in Ecuador over massive oil contamination of the rainforest.

Attorneys for Chevron’s Gibson Dunn have argued in American courts that inappropriate meetings took place between court-appointed technical experts and the Ecuadorian plaintiffs, who recently won an $18 billion judgment in an Ecuadorian court, after eight years of attempted efforts by Chevron to derail the lawsuit in the South American country.

Before these U.S. judges, the Ecuadorians’ attorneys have argued that such meetings were allowed, and the Ecuadorian judge, who ruled in their favor, found no wrongdoing in regard to meetings between the plaintiffs and court experts.

Recently, the Ecuadorians submitted to a U.S. court an October 29, 2010 letter written to Ecuadorian Judge Nicholas Zambrano by Dr. Marcel Muñoz Herrería, a neutral expert appointed by the court at Chevron’s request to conduct contamination testing at four oil well sites in March 2009. In the letter, Muñoz reveals that he met with Chevron officials for a “technical planning meeting” at Hotel Coca prior to the testing.

The plaintiffs also met with court-appointed experts for technical planning meetings, but Chevron maintains these meetings are inappropriate and point to them as evidence of fraud, which the Ecuadorians deny.

Muñoz wrote Judge Zambrano requesting that he be paid for the expert reports that he produced. Chevron refused to pay him because his reports found illegal levels of toxins at oil sites that Chevron claims had been cleaned. See here and here.

Interestingly, Chevron’s self-proclaimed “dirty tricks” operative Diego Borja was last seen working for Chevron at these oil sites. Borja has admitted that Chevron tampered with evidence at the oil sites.

And, for those of you following the Borja story closely, you will remember that a legal correspondent recently reported that Chevron has paid Borja at least $364,000 since the company moved him and his family from Quito to the U.S.  Exactly what these payments are for is known only to Chevron and its lawyers at Gibson Dunn and Jones Day.

Wednesday, May 18, 2011

New Shareholder Report Warns Chevron Investors of Risks Surrounding $18 Billion Ecuador Environmental Liability

Financial Analyst Raises Questions Over Chevron Management of Litigation & Misleading Disclosures to Shareholders

Raising the eyebrows of Chevron shareholders is a new report on the financial and operational risks to the company over its $18b legal liability for illegal dumping of toxic waste in the Ecuadorian Amazon rainforest. It warns investors about “misleading” disclosures made by Chevron’s management about the “significant risk” the liability poses to the company’s business and value.

Noted shareholder risk analyst Simon Billenness and shareholder-rights attorney Sanford Lewis authored the independent report, entitled “An Analysis of the Financial and Operational Risks to Chevron Corporation from Aguinda v. ChevronTexaco.” It was released as Chevron prepares for a May 25th annual meeting where shareholders are expected to voice their concern about Chevron’s handling of the lawsuit.

Billenness and Lewis write:
“While Chevron has admitted in sworn legal statements that the company is at risk of ‘irreparable injury to [its] business reputation and business relationships’ from potential enforcement of the Ecuadorian court’s judgment, the company has failed to characterize these risks to the company in its public filings and statements to shareholders.”

For example, the report describes Chevron’s assertion in its 10-K SEC filings that Ecuador’s courts “lack jurisdiction over Chevron” as “misleading” based on the company’s failure to disclose that the U.S. Second Circuit Court of Appeals has ruled that Chevron “assured the district court that it would recognize the binding nature of any judgment issued in Ecuador…As a result, that promise, along with Texaco’s more general promises to submit to Ecuadorian jurisdiction, is enforceable against Chevron in this action and any future proceedings between the parties.”

Nell Minow, a leading expert on corporate governance and investing, reviewed the report and found it “hard to dispute … that the company’s admissions about its liability risks in court documents are inconsistent with its financial reports and that its legal and public relations strategy poses an unacceptably high risk.” See her article here.

Meanwhile, Robert Kropp, a financial writer for Socialfunds.com, reported that “Trillium and its co-filers are preparing an Investor Statement, in which the company's failure to negotiate a settlement in the lawsuit raises questions about its ability to manage risks associated with environmental and human rights issues. Echoing the findings of Billenness and Lewis, it calls on the company to provide full disclosure of the risks associated with enforcement of the judgment in Ecuador.” Read his article here

Billenness and Lewis also criticize the Chevron board of directors for their failure to fulfill their duties to oversee management and respond to shareholder concerns regarding the Ecuador liability. According to the report, the board has been “unresponsive” to approaches by shareholders to discuss concerns regarding managements and quantification of the Ecuador litigation’s risk and liabilities.
“These choices may lead some investors to question the adequacy of the company’s public statements and disclosures and whether the board and management are fulfilling their fiduciary duties to properly manage this significant risk to the company’s business and value,” the report concludes.

See these stories for more information here and here.

The 2011 report is simply the latest in a long series of concerns expressed by shareholders over the company’s management of its environmental liabilities in Ecuador. As early as 2003, shareholders filed the first in a series of shareholder resolutions on the issue, culminating in a 2010 shareholder resolution asking Chevron to nominate an independent board member with a “high level of environmental experience” to oversee the company’s environmental actions, including the Ecuador liability.

Despite efforts by Chevron’s management to defeat the 2010 resolution and to downplay the environmental liability in Ecuador, the resolution garnered the support of more than 25% of the outstanding Chevron shares, equal to approximately $38 billion in shareholder value. Typically, any shareholder resolution opposed by management that gains more than 10% of shareholder support is considered a success.

Tuesday, May 17, 2011

Potential Witnesses Into Chevron Misconduct Possibly Being Paid Hundreds of Thousands of Dollars By The Oil Giant

One Living “Like A King” In Peru

A Chevron dirty trickster is apparently enjoying the good life on the beaches of Peru after unsuccessfully trying to derail the historic Ecuadorian lawsuit against the oil giant for oil contamination. His partner, another Chevron operative, has been on the Chevron payroll since June 2009, receiving $10,000 to $15,000 a month but doing no legitimate work for the company.

Sounds like a great deal for the two of them, who are both potential witnesses into Chevron’s misconduct in an Ecuadorian court, which recently awarded a group of Ecuadorians an $18 billion judgment against the company for massive oil contamination.

Providing anything of value or benefit to potential witnesses is certainly unethical and could be illegal, if found to influence testimony. But, that hasn’t stopped Chevron.

Chevron operative and drug felon Wayne Hansen, who along with Chevron contractor Diego Borja tried to bribe an Ecuadorian judge in 2009, recently wrote he is living “like a king” on $1,200 a month in a beach town in northern Peru, according to a subscribers-only Reuters story that highlighted an email from Hansen to a private investigative firm hired by the oil giant.

Reuters obtained the email from discovery documents now under seal in the Northern District Court of San Francisco.

The Ecuadorians have been trying to locate Hansen to subpoena him about the bribery scheme. Hansen had been living in Bakersfield, California, while working in concert with the Chevron contractor and self-proclaimed “dirty tricks” operative Diego Borja to bribe a judge hearing the Ecuadorians’ oil contamination lawsuit.

It’s now known that Chevron has paid Borja around $340,000 (if not more), according to the San Francisco Daily Journal, which recently reported that Borja has been receiving payments since June 2009.

Borja and Hansen secretly videotaped the judge after meeting with Chevron’s lawyers in San Ramon, the company’s corporate headquarters. The judge never discusses a bribe and, in fact, leaves the meeting when Hansen mentions it.

A private investigation conducted by the Ecuadorians found that both Borja and Hansen have complained about Chevron not paying them adequately for their bribery sting operation. Borja threatened to reveal evidence it had about Chevron’s misconduct in the Ecuadorian trial if the company did not compensate him appropriately.

Earlier this year the Ecuadorians successfully subpoenaed and deposed Borja but the U.S. federal judge hearing their discovery motion sealed the court documents. Some reporters, though, obtained some of the documents and emails when they were filed in a related case in the Southern District Court of New York.

Information obtained from discovery and three days of depositions by Borja will be used by the Ecuadorians in their and Chevron’s appeal of the $18 billion judgment in Ecuador. It also will be used to defend the Ecuadorians in Chevron’s so-called “extortion” lawsuit in New York federal court.

It is not clear if the San Francisco judge will unseal the documents before the Ecuadorian and U.S. courts hear arguments expected late this year, but it will be interesting when he does.  Stay tuned.

Thursday, May 5, 2011

Chevron fights justice in Ecuador on two fronts, but needs to win everywhere

"I'm not aware of any case where a court has ever even tried to restrain foreign plaintiffs from enforcing a foreign judgment in foreign jurisdictions."
"...even if Chevron wins the enforcement battle in the US, that doesn't end the matter, because the plaintiffs will go to other countries to enforce the judgment. The plaintiffs only need to win once or a few times, while Chevron needs to win everywhere."
Interesting observations from Marco Simon, Legal Director of Earth Rights International, about Chevron's effort to escape the $18 billion Ecuadorian judgment in U.S. federal court.

As Simon points out, Chevron wants an American judge to rule that the Ecuadorian judgment is unenforceable so the oil giant has a legal tool to use in foreign courts to prevent the Ecuadorians from obtaining the award by seizing Chevron's assets in foreign countries. (Chevron has no assets in Ecuador.) To get that ruling, Chevron has to jump a few legal hurdles, like -- Can an American judge tell Ecuadorians what to do, and can the American judge tell other countries' court systems what they can and can't do? Only time will tell, but Simon is exactly right when he says Chevron will have to convince dozens of countries (where Chevron has assets) that an American judge can tell their judges want to do.

Simon wrote:
"The Ecuadorians can go after Chevron in the US, but they can also try to enforce the judgment in Argentina, Brazil, Venezuela, and dozens of other countries where Chevron operates or has assets. Not surprisingly, Chevron is working hard to prevent that….
"...Chevron's entire case is premised on the notion that Judge (Lewis) Kaplan (the American judge) has jurisdiction over the Ecuadorian plaintiffs and other members of the plaintiffs' class action. That is a highly questionable position, and one that will receive considerable scrutiny from the Second Circuit. Even if Judge Kaplan can prevent the American lawyers from proceeding to enforce the judgment, if he doesn't have jurisdiction over the Ecuadorians, he cannot prevent them from going to other countries to seek enforcement."

And, then there is the nagging issue of Chevron's asking Judge Kaplan to act as the world's judiciary police chief.
"The Second Circuit may also be concerned with the propriety of interfering with foreign countries' judicial processes. I'm not aware of any case where a court has ever even tried to restrain foreign plaintiffs from enforcing a foreign judgment in foreign jurisdictions."
Simon also reminds us that Chevron is getting what it asked for:
"Chevron has every opportunity to challenge the judgment in the Ecuadorian courts; Chevron chose to litigate in Ecuador over the plaintiffs' objection, and the Second Circuit may well hold them to that choice. In fact, in a recent decision in a related case, the Second Circuit said that Chevron was bound by its original promise to satisfy any judgments in Plaintiffs' favor, reserving its right to contest their validity only in the limited circumstances permitted by New York's Recognition of Foreign Country Money Judgments Act."
Given Judge Kaplan's comments about Ecuador, its court system and the Ecuadorians themselves, no one thinks he won't rule for Chevron. His bias is obvious. Other judges in other countries may not share his sentiments, however.
"Ultimately, even if Chevron wins the enforcement battle in the US, that doesn't end the matter, because the plaintiffs will go to other countries to enforce the judgment. The plaintiffs only need to win once or a few times, while Chevron needs to win everywhere. Even Chevron wins twenty cases, just one loss could cost the company hundreds of millions or billions of dollars," wrote Simon.

Sunday, May 1, 2011

Accused of Bias, Federal Judge Lewis Kaplan Asked to Stop Presiding over Chevron’s Ecuador Lawsuit

Kaplan Also Trying to Avoid Appellate Review of His “One-Sided” and “Draconian” Decisions In Favor of Chevron

After advising Chevron to file civil criminal charges against the Ecuadorians suing the oil giant for contamination AND to drop one of the Ecuadorians’  lawyers from a charge effectively blocking the lawyer from defending himself.... After concluding that the $18 billion Ecuadorian judgment is likely fraudulent and not enforceable (even before arguments are heard) AND that a U.S. court has jurisdiction not only over Ecuadorians, living 3,000 miles away in the rainforest, but also over the entire Ecuadorian judiciary system, the Ecuadorians have asked that U.S. Judge Lewis Kaplan be recused from presiding over Chevron’s lawsuit filed in Kaplan’s court to try and escape justice in the South American country.

In a scorching motion recently filed in the Southern District Court of New York Kaplan is accused of engaging in “gratuitous disparagement” of the 47 named plaintiffs from Ecuador based on his adoption of “Chevron’s world view” that their lawsuit is an elaborate ruse.  Without holding an evidentiary hearing and without considering the voluminous 220,000-page record in the Ecuador trial, Kaplan has issued dozens of rulings to prejudice the Ecuadorians, according to the motion.

“With [Kaplan’s] jaded view obscuring the Ecuadorian’s legitimate claims, the Court developed and displayed a deep-seated antagonism toward the Ecuadorian plaintiffs and their counsel,” the motion asserts.  “The court’s prior determinations have infected this proceeding.”

The motion also says Kaplan has cleverly tried to insulate his “Draconian and one-sided” rulings from appellate review by creating the appearance that his decisions are not actually final.  “These efforts to frustrate the appeal, which have become increasingly tortured, indicate a level of personal investment in the outcome of the case that belies objectivity to any reasonable observer,” asserts the motion.

Examples of Kaplan’s bias, or appearance of bias, that are cited in the motion include:
  • Kaplan has called the entire Ecuador lawsuit a “game” that sprung from “the imagination of American lawyers” even though there are 64,000 chemical sampling results in evidence as part of a 220,000-page trial record.

  • Kaplan has questioned the very existence of the Ecuadorian plaintiffs, repeatedly using the adjective “so-called” to describe them.  The plaintiffs actually are thousands of rainforest residents and members of indigenous groups whose existence has been verified by numerous courts and major media outlets.

  • Kaplan has displayed “profound disrespect” for Ecuador’s judicial system, failing to even read the judge’s decision before issuing his preliminary injunction order and then inviting Chevron to bring the racketeering case over which he now presides.

  • Kaplan has made numerous intemperate remarks from the bench about the lawyers representing the Ecuadorians and come to conclusions about disputed factual issues that have yet to be tried.  For example, Kaplan apparently believes that Ecuador’s government is at fault for the pollution rather than Chevron – a key disputed issue that already has been decided in favor of the plaintiffs by the Ecuador court that had access to the full trial record.

  • Kaplan imposed what the motion calls “Draconian” measures on American lawyer Steven Donziger during an earlier Chevron discovery action, claiming he waived privilege on a minor technicality and forcing him to turn over his entire 18-year case file to Chevron as well as all of his personal files and  hard drives.  Kaplan also forced Donziger to sit for 14 days of depositions conducted by a tag team of Chevron lawyers and a court-appointed Special Master who clearly favored Chevron. 

  • Kaplan has created rigid motions schedules designed to prejudice the Ecuadorians and Donziger, systematically denying multiple requests for modest extensions of time to supplement the record after Chevron took months to prepare its lengthy lawsuit.  Kaplan also denied Donziger sufficient time to obtain a lawyer to respond to Chevron’s lawsuit, and then ruled that his lawyer (John Keker) waived the right to oppose Chevron’s request for an injunction.

  • The Special Master appointed by Kaplan, Max Gitter, is a former law partner of Kaplan’s at a law firm (Clearly Gottlieb) that does underwriting work for Chevron – posing a clear conflict of interest that neither that has not been disclosed.  According to the motion, Gitter “rapidly became a full-fledged Chevron advocate, actively participating in the examination of Donziger on Chevron’s behalf” and Gitter also “manipulated the answers in Chevron’s favor” by repeatedly refusing to allow Donziger to elaborate in response to Chevron’s barrage of questions.

  • Kaplan has shown “flagrant disregard” for the attorney-client privilege, allowing Chevron to question Donziger during depositions about communications with his clients and co-counsel.

“No reasonable person could conclude that a judge who invited, suggested, or encouraged plaintiffs to file a particular action could impartially preside over such an action,” the motion asserted.

U.S. federal law cautions that a judge should recuse himself from “any proceeding in which is partiality might reasonably be questioned.”

The trial record in Ecuador, created over an eight-year time frame, clearly proves Chevron is guilty of creating one of the worst oil-related disasters in history, say the plaintiffs.

On February 14, in a 188-page opinion, Ecuador Judge Nicolas Zambrano found the oil giant liable for dumping billions of gallons of toxic “formation water” into the Amazon and then trying to fraudulently cover it up with a sham remediation.  Zambrano imposed $8.6 billion in actual damages on Chevron and an equal amount in punitive damages after finding that the company and its lawyers had engaged in misconduct in the litigation.

Chevron operated a large concession in Ecuador from 1964 to 1990, building hundreds of wells and production sites and leaving behind roughly 1,000 unlined waste pits which leach their contents into soils and groundwater, according to the evidence.  Use of the sub-standard practices have decimated indigenous groups and led to widespread health problems.