Wednesday, April 24, 2013

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”
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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