Thursday, January 4, 2018

Chevron's Use of Paul Manafort Might Be Another Attempt to Corrupt Ecuador Environmental Judgment

Given that Chevron's campaign to try to undermine the $9.5 billion environmental judgment against it in Ecuador hit major turbulence in 2017, it should not be surprising that the company might look for new avenues to corrupt the legal process to evade paying compensation to the indigenous peoples and farmer communities that it poisoned.

What looks like the latest Exhibit A in Chevron's Ecuador corruption file concerns none other than Paul Manafort, former Trump campaign manager and erstwhile Chevron lobbyist in the Ukraine and Russia. Manafort was indicted as part of the Robert Mueller investigation in October on multiple counts of money laundering and lying to the federal government. The indictment might have been expected, but we were absolutely stunned to find out recently that Manafort was in Ecuador in May (while Mueller was hot on his heels) for a top-secret meeting with the country's newly elected President, Lenin Moreno.

We suspect that we are not the only ones thinking that Manafort was in Ecuador to carry out another phase of Chevron's long-running "dirty tricks" campaign, with a hoped-for bonus payment for manipulating the new government such that the oil company might finally evade the judgment after years of trying and massive (and thus far futile) expenditures on at least 60 law firms. The many disturbing questions raised by the Manafort meeting in Ecuador ultimately might have to be answered by Mueller, or via an investigation with the power to force answers out of Chevron.

We at The Chevron Pit are highly skeptical that the Manafort meeting in Quito was an innocent coincidence. What we do know is that it happened during a period when Chevron's army of D.C.-based lobbyists have been furiously trying to leverage the Trump Administration to pressure Ecuador's new government to undermine the case as part of a supposed "re-set" of bilateral relations between the two countries -- in essence, just another form of attempted oil industry blackmail designed to externalize the costs of pollution onto the backs of vulnerable indigenous peoples.

Manafort for months kept quiet about the news of his meeting with Ecuador President Moreno, an indication something is foul-smelling. He only admitted it when he was forced to disclose to a U.S. federal court the details of his foreign travel as he was seeking bail. That opened our eyes to a Pandora's box of circumstantial evidence that seems to point the way of our suspicions.

Consider the facts as known and Chevron's obvious motivation:

**It is clear that Chevron's current management team is increasingly desperate regarding its Ecuador liability (now $12 billion with interest) as three straight Canadian appellate courts have issued unanimous rulings against the company in a judgment enforcement action to seize assets to force compliance with the rule of law in Ecuador. In total, 21 appellate judges have ruled against Chevron and in favor of the Ecuadorian rainforest communities in Ecuador and Canada, including the entire Supreme Courts of both countries. Not a single appellate judge in either country has ruled in favor of Chevron. Chevron shareholders publicly accused CEO of John Watson of "materially mishandling" the litigation. When it comes to Ecuador, it's steaming hot in the Chevron management kitchen at the moment.

**The Manafort meeting comes at a time when Chevron and certain of its attorneys at its outside U.S. law firm Gibson Dunn & Crutcher face a potential criminal probe by the U.S. Department of Justice over witness bribery, fabrication of evidence, and other corrupt acts carried out at the behest of the company in the Ecuador matter. Chevron's long pattern of trying to corrupt the environmental case (documented here by Amazon Watch) -- including a ham-fisted effort by company operative Diego Borja to orchestrate a sting operation against a sitting Ecuador trial judge -- strongly suggest the meeting was not an attempt by Manafort to lobby the government over Chinese investments, as has been claimed. Disturbingly, Gibson Dunn also has a long history of fabricating evidence and crossing the ethical line on behalf of corporate clients mired in scandal.

**It is undisputed that Chevron was slammed with its Ecuador liability after three layers of courts  found evidence it systematically and deliberately dumped billions of gallons of toxic waste into the rainforest, decimating local indigenous and farmer communities and causing a massive outbreak of cancer that has killed or threatens to kill thousands. One reason Chevron CEO Watson and General Counsel R. Hewitt Pate are in such a jam (aside from their lack of interest in a real settlement of the claims) is because the company insisted the trial be held in Ecuador. Chevron thought then it could use political pressure to engineer a dismissal of the case. We believe Watson still thinks politics and lobbying can solve his problem.

**With regard to Manafort, the high-powered lobbyist was indicted for activities mostly related to his prior work for Ukranian President Viktor Yanukovych, a patently corrupt dictator. Manafort also has extensive ties to Russian oligarchs and was a Chevron-paid lobbyist when he worked in the Ukraine with a charge to seek oil and gas deals for the company via the Yanukovych government, according to an expose published in 2016 in The New York Times.

**According to our sources in Ecuador, the meeting between Manafort and President Moreno was arranged by none other than the notorious Ivonne Baki, a a major Chevron lobbyist in the South American nation. Baki, who attended the meeting, has her own long history of trying to leverage her influence as a government official in Ecuador to assist Chevron in its campaign to undermine the legal claims of the indigenous peoples and farmer communities it harmed. The fact these communities comprise the very people Baki took an oath to protect seems not to matter to her. Baki is also reportedly is a good friend of Donald Trump, having hosted (on behalf of Ecuador's government) the Trump-owned 2004 Miss Universe Pageant in Quito.

It is worth reviewing some of the history of Chevron's and Baki's corrupt acts in the legal case to understand the possible context for Manafort's sudden and bizarre foray into the highest echelon of Ecuador's power structure.

This article by Mitch Anderson of Amazon Watch provides a partial summary of some of Baki's numerous corrupt acts on behalf of Chevron dating back to the 1990s, when as Ecuador's ambassador to the United States she signed a letter drafted by Chevron that was submitted to a U.S. court seeking dismissal of the case prior to trial. In 2012, Baki worked with Chevron to float the idea of a $500 million "donation" from the company to Ecuador's Yasuni environmental initiative in exchange for an illegal "dismissal" of the legal claims in the environmental case -- a move that we believe was in full motion before Anderson exposed it in The Huffington Post.

Baki's dealings with Trump is perfectly in keeping with her character. With the rural poverty rate in Ecuador in 2004 around 65%, Baki (as Minister of Tourism) made a fool of herself by spending at least $5 million of precious government money to defray Trump's Miss Universe production costs. Trump and Baki used the impoverished taxpayers of Ecuador to subsidize the Miss Universe pageant; Trump made greater profits, and Baki increased her influence. (As a curious aside, the 2004 pageant in Ecuador was hosted by none other than Billy Bush of the Access Hollywood tape.)

Aside from Baki, Chevron repeatedly has tried to corrupt Ecuador's government to evade its liability. In the early 1990s, just after the communities filed their lawsuit, Chevron hired the Clinton-era U.S. ambassador to Ecuador, Richard Holwill, to try to convince Ecuador's then-President to illegally quash the case. In 2010, Chevron hired a former high-level State Department official to lobby the Obama Administration to float the idea of a $700 million "aid package" to Ecuador that would not be granted unless the case was dismissed. Multiple clandestine efforts by Chevron to use the U.S. State Department and the U.S. embassy in Quito to kill off the case were amply documented by the Wikileaks cables.

In 2016, Chevron leveraged a certain official in Ecuador's then government to pressure a young lawyer on the legal team for the communities to unilaterally lift an embargo order against the company without consulting his clients. This one move resulted in the outrageous payment by Ecuador's government to Chevron of a $112 million judgment won under very suspect facts in a separate arbitration case. By law, the funds should have been used to help satisfy the environmental award and to start the remediation of Chevron's damage. The lawyer who lifted the embargo order, Pablo Fajardo, immediately was fired by the plaintiff's group in the case, the Front for the Defense of the Amazon (known as the "FDA" by its Spanish acronym).

Chevron also lied about a sham clean-up it conducted in Ecuador in the mid-1990s, where it spent less than 1% of the real cost of a remediation while covering up open-air waste pits with dirt (our Karen Hinton helped expose this in 2014); it also paid a witness, Alberto Guerra, $2 million in cash and benefits to fabricate evidence and perjure himself in a U.S.-based retaliatory civil RICO case. (See here and here for evidence of the Chevron-Guerra corruption scandal.)

It is awfully curious to us why Manafort, who appears to be cash-desperate as he faces mounting legal bills, would be in Ecuador while under the microscope of a high-profile investigation. He's either more of a fool than we thought, or was lured by a possible pay-out from Chevron that would be enough to compensate him for the enormous risk of engaging in acts that could have been worth billions of dollars to the oil giant.

If Chevron's interests were put forth in the meeting with Moreno, there is little doubt that additional crimes were committed not just by Manafort but also by any contacts in Chevron who put him up to it. A U.S. corporation trying to corrupt a foreign court judgment not only violates the criminal law in the host country, but also runs afoul of U.S. laws such as the Foreign Corrupt Practices Act.

Either way, we would encourage Mueller and the DOJ to determine what exactly happened during the Manafort trip to Ecuador. Chevron's shareholders should also demand that the company hire independent counsel to determine whether CEO Watson has created yet more risk due to the company's corrupt acts in Ecuador, both in prior years and with the Manafort meeting in Quito.

(We will continue to pursue this story as it unfolds. For further background on Chevron's fraud in the Ecuador case, see this report from 2006; see this press release and related links regarding multiple meetings held by Chevron officials with Ecuadorian government officials; and this video regarding how company scientists conspired to hide pollution from Ecuador's courts.)