Court Affidavit Exposes 18 Years of Chevron's Unethical Conduct in $9.5 Billion Ecuador Lawsuit

Oil Giant Attempted to "Buy or Bully" Its Way Out of Environmental Liability for Creating "Amazon Chernobyl"

Amazon Defense Coalition
7 March 2011 - FOR IMMEDIATE RELEASE
Contact: Karen Hinton at +1.703.798.3109

Note: This press release contains an updated amount in the judgment award, from $8.6 billion to $9.5 billion,
which includes the 10 percent awarded to the Amazon Defense Coalition.

New York, NY – A new 42-page sworn affidavit, backed by hundreds of pages of exhibits, has outlined in stunning detail Chevron's 18-year effort to undermine the Ecuador court that recently awarded a $9.5 billion judgment against the company for dumping billions of gallons of toxic waste into the rainforest of the South American nation and creating what locals call the "Amazon Chernobyl".

"After decades of exploiting the country and wielding its influence like a club as it extracted riches from the Napo Concession, Chevron believed it could use that same power to buy or bully its way to a swift dismissal of this case, or, at the very least, to delay the day of reckoning indefinitely," wrote Ecuadorian attorney Juan Pablo Saenz in his declaration to U.S. Judge Lewis Kaplan of the Southern District Court of New York (SDNY).

The declaration was filed in opposition to extortion charges filed by Chevron in New York against the Ecuadorian citizens bringing the lawsuit, and their lawyers and advisors. The charges are part of a flurry of legal activity launched by the oil giant to try to block enforcement of a judgment based on the overwhelming scientific evidence of contamination caused by the company's actions, according to legal papers filed by the plaintiffs.

Chevron's allegations are particularly ironic given that the company is seeking relief from the same U.S. court that it asked to send the case to Ecuador in 2002, claiming at the time the South American nation was a more appropriate venue for the trial.

"Chevron's attempts to portray itself as the ‘victim' ... are an insult to Your Honor's intelligence," said Saenz. "In light of the history of this case, Chevron's latest move in its game of jurisdictional musical chairs is a slap in the face to both the Ecuadorian and United States judicial systems."

Saenz quoted from 14 affidavits Chevron submitted in the 1990s to U.S. District Judge Jed S. Rakoff praising Ecuador's judicial system. The affidavits were used a basis to send the case to Ecuador over the objections of the plaintiffs, who filed it in the U.S. The trial was re-filed in Lago Agrio, a jungle town in the epicenter of a large oil concession that Chevron's predecessor company Texaco operated from 1964 to 1990.

The lawsuit accuses the oil giant of deliberately and unlawfully discharging more than 18 billion gallons of toxic waste into Amazon waterways, decimating indigenous groups and poisoning an area the size of Rhode Island with what experts believe is the worst oil-related contamination on the planet. It also accuses the company of committing a sham remediation in the 1990s and other acts of fraud to cover up its misconduct. The magnitude of the dumping dwarfs the size of the BP Gulf spill, according to the plaintiffs.

An Ecuadorian court, after an arduous eight-year trial hampered by Chevron's delay tactics, found on Feb. 14 that that the oil giant was guilty and ordered it to pay approximately $9.5 billion to remediate the damage. Both sides have appealed the decision, with the plaintiffs claiming the amount is too low to provide adequate compensation in light of BP's estimated liability of $60b to $100b for the Gulf spill.

"It is crystal clear that Chevron wanted this case to be heard in Ecuador because it believed that the Ecuadorian judiciary was too weak to handle these claims," wrote Saenz in his affidavit.

It was only when the Ecuadorian judiciary proved more independent than Chevron expected that the company did an about-face and started to attack Ecuador's courts.

While Chevron argues the court system in Ecuador has become politicized since the election in 2007 of President Rafael Correa, the reality is that Ecuador's judicial system in 2010 posted the same ratings by both the U.S. State Department and international organizations that it did in 2001 when Chevron was arguing the system in Ecuador was fair and adequate.

"In other words," Saenz said, "corruption is now less of an issue in Ecuador than it was back in 2001, when Chevron seemed to like the country."

In his declaration, Saenz summarized some of Chevron's gamesmanship and misconduct over a span of almost 18 years since the filing of the action in 1993 – including attempts to delay and derail the case, tamper with evidence and inappropriately influence Ecuador's government and the United States government to intervene on its side. For example:

• An internal company fax indicated Chevron officials in the 1990s ghostwrote a letter from the Ecuadorian ambassador to the U.S. Department of State, prevailing upon the agency to intervene and try to have the case dismissed when it was pending in federal court in New York City.
• Chevron lawyer Ricardo Reis Veiga, one of two Chevron officials criminally indicted in Ecuador for falsifying the results of a purported remediation, admitted in a 2006 deposition that he had met with Ecuador's attorney general in 2003 in an extrajudicial effort to have the executive branch of the Ecuadorian government order the lawsuit dismissed.
• A 1972 Chevron memo revealed that a company executive ordered the destruction of all documents relating to oil spills and demanded that company employees no longer keep records of such spills.
• Between 2003 and 2010, Chevron delayed the trial via subterfuge – including canceling a critical site inspection by fabricating a security threat, inundating the court with frivolous motions, refusing to pay court experts, and blocking the gathering of scientific evidence.
• In 2009, Chevron used an Ecuadorian employee and a convicted American drug trafficker to mount an unlawful sting operation against the presiding judge as part of a scheme to entrap him in a bribery scandal. Although the scheme was quickly discredited, the scandal delayed the trial by two years and served as a tool for Chevron to try to intimidate the court.
• Diego Borja, a member of Chevron's trial team in Ecuador, has been quoted saying he "cooked" evidence for Chevron and that he replaced contaminated samples with clean ones before submitting them to laboratories for testing. Borja also said "crime pays" and that he had evidence that showed Chevron's guilt that he would disclose unless the company compensated him.
• In February 2010, Chevron offered $20,000 to a U.S. journalist to spy on the plaintiffs under the false pretenses that she was writing a story.
• Throughout the trial Chevron has taken out paid advertisements in Ecuadorian media and in various online media outlets accusing judges and court-appointed experts of bias in an effort to intimidate the court.

Despite evidence of Chevron's misconduct in the Ecuador trial, company lawyers have made numerous allegations that the plaintiffs have engaged in fraud by cooperating with a court-appointed expert during the trial. According to representatives of the plaintiffs, Chevron is seeking to use its fraud allegations as a sort of "judicial get-out-of-jail-free card."

Saenz explains in his declaration that Ecuadorian court rules allow for ex parte meetings with judges and experts and details Chevron's relationship with an expert that was similar to how the plaintiffs interacted with the expert at issue, Richard Cabrera. Chevron has accused the plaintiffs of meeting secretly with Cabrera and "ghostwriting" his report on damages. In fact, while the court encouraged both sides to meet with Cabrera and provide him with information, Chevron publicly stated it would not cooperate with Cabrera.

In any event, the judge in his decision did not consider the Cabrera damages report and instead relied largely on the underlying scientific evidence as well as a report prepared by an expert Chevron requested.

"Indeed, it seems Chevron recognized that if it cooperated with the processes established by the Lago Agrio Court, it could not later claim to have been denied due process. But by placing itself in the role of outsider and antagonist, Chevron preserved its ability to resist enforcement of any judgment by claiming unfair treatment," Saenz said.

Chevron also has blamed Petroecuador for the contamination, but Saenz noted that the lawsuit was originally filed in 1993, the year after Chevron left Ecuador. "Chevron could not even have tried, with a straight face, to lay blame at Petroecuador's doorstep alone.... It would be a gross injustice if Chevron were permitted to benefit from its delay tactics," Saenz wrote.

The affidavit was submitted by the plaintiffs because under U.S. law a party with "unclean hands" does not have the right to seek the type of injunctive relief requested by Chevron to prevent enforcement of the Ecuador judgment. Chevron has removed all assets from Ecuador and has claimed it will not pay the judgment, even though years ago it had promised U.S. courts it would be abide by the Ecuador court's decision as a condition of the case being transferred to Ecuador.

In any event, the Ecuadorian plaintiffs have said the U.S. court has no jurisdiction over them and that after appeals they will retain the option of enforcing the judgment in any of dozens of countries around the world where Chevron has assets.