30,000 Ecuadorians Want Canada to take $10 Billion from Chevron to Clean Up the Amazon by Justin Ling, January 13, 2015, Vice.com
Two decades. Seven countries. Hundreds of lawyers. Scores of public relations specialists. Billions of dollars. Tens of thousands of barrels of oil. That’s the scorecard of the Lago Agrio case. In what may well be one of the world’s more complex and far-reaching lawsuits, the legal battle between 47 Ecuadorians, represented by their dogged American lawyer, and one of the world’s biggest oil companies has stretched into its second decade. And the venue for one of its most important showdown is, surprisingly, Canada.
The story begins in 1964, when Ecuador’s military junta decided to get into the oil-drilling business. Looking to boost a flagging economy, they partnered with American-based Texaco Petroleum to develop the Lago Agrio region of the Amazon. They set up a consortium—state-owned Petroecuador would own two thirds of the partnership, and Texaco, which would later be acquired by Chevron, controlled the rest. Texaco was chiefly responsible for the dirty work of extracting the oil and doing away with the toxic wastewater. They developed the area over 30 years, drilling hundreds of wells and filling nearly 1,000 pits full of toxic waste in an area that is, otherwise, largely untouched. In the process, they spilled roughly 17 million gallons of crude oil, thanks to pipeline ruptures. The return on the project has been some $25 billion.
The consortium’s contract was up in 1992, and Petroecuador bought out Texaco’s one-third stake in the company. Texaco agreed to clean up a third of the wells and pits it had helped create. A Texaco report says it remediated 161 of the 430 oilfield pits and seven oil spill areas for which it was responsible: “a proportion that was equal to their share in the consortium.” The whole package ran the company about $40 million. By way of comparison, a ruptured line in Michigan, which unloaded less than 900,000 gallons (roughly five percent of the size of the Lago Agrio spills), had a price tag of $1 billion.
Environmentalists allege that Texaco didn’t live up to its pledge. Not even close. They point to a 2006 report from the Ecuadorian government that found 85 percent of the pits Texaco claims to have cleaned up are still dangerously toxic. “These pits continue to pollute the environment, contaminating the water table and polluting the rivers and streams that 30,000 people depend on for drinking, cooking, bathing, and fishing,” reads a report for AmazonWatch, an environmentalist NGO which has followed development in the region.
Peer-reviewed studies have also found significantly elevated cancer rates in the area.
Chevron doesn’t dispute that there might be some problems in the area, but contests that it’s not their fault. “Petroecuador has been slow to remediate its majority share of pre-1992 impacts and has amassed a poor environmental record since that time,” reads a statement on a Chevron website. “All remaining environmental conditions in the region are the sole legal responsibility of Petroecuador.” The Ecuadorians disagree, and say that signing a waiver with the company doesn’t absolve Chevron of its, supposedly, shoddy work.
So, in 1993, 47 Ecuadorians filed a class-action lawsuit in a New York City court, on behalf of the 30,000 who they say have been affected by the contamination. The legal history that ensued is fraught and complicated—Texaco, which was acquired by Chevron in 2001, argued that the case should be heard in Ecuador, not America. When they finally won, and the case restarted in Ecuador, they continued trying to have it thrown out.
The 2011, an Ecuadorian court found that the contract that waived Texaco’s responsibility for the cleanup didn’t protect the company from litigation, as it was signed with Petroecuador, not the government itself. The court found Chevron liable for $8.6 billion, and ordered the sum to be doubled if the company didn’t apologize within 15 days.
Chevron tried to throw a wrench into the machine: they went to an international trade arbitration panel in the Hague to declare the judgement void, because it violated a trade agreement between the United States and Ecuador. An Ecuadorian appeal court and the country’s Supreme Court ignored the tribunal and subsequently upheld the ruling, albeit cutting the judgment from the initial $17 billion to $9.5 billion.
What may have seemed like a victory for the Ecuadorians was really just a small step forward. They now faced the gargantuan task of trying to collect the money. … Speaking to Newsweek in 2008, one Chevron lobbyist swore: “we’re going to fight this until hell freezes over—and then we’ll fight it out on the ice.” That prediction has, ironically, come true.
The American courts were forbidden from hearing the case, after an American judge sided with Chevron in finding that Donziger and his associates ran the gambit of shady legal practises in order to obtain a favourable judgement in the initial Ecuador ruling, everything from bribing judges to ghostwriting experts’ reports. Donziger rejects those claims and says Chevron is merely continuing its drawn-out attempts to destroy his credibility. He points out that the judgement was reviewed and upheld by two subsequent courts. Donziger is appealing that case in a New York court.
The cases in Brazil and Argentina, meanwhile, have been moving at a glacial pace. Donziger and his team don’t exactly have time on their side—Chevron has aggressively pursued its financial backers, most of whom are based in Gibraltar, accusing them of funding a shakedown operation. It’s succeeded against some, and scared off others. That’s left the Ecuadorian side cash-strapped.
That leaves the Canadian courts. Chevron moved to have the case thrown out from the get-go, arguing that the Great White North has no jurisdiction to hear the case. A lower court sided with Chevron, while an appeal court found that the Ecuadorians did, indeed, have standing. That leaves the Supreme Court to play the role of tiebreaker.
On a frigid day in Ottawa, with 20 centimetres of fresh snow on the ground, Canadian lawyers for both sides jousted before the nine justices of the Canadian Supreme Court. Chevron, and its Canadian subsidiary, argued that Ecuador and America, where Chevron is based, are the only two appropriate forums for the lawsuit. Donziger’s Canadian counterparts rebutted that Canada has an obligation under international law to enforce Ecuador’s ruling.
There is a litany of legal issues here. The Ecuadorians’ lawyers are asking the Canadian court to enforce a judgment that has been declared illegal in both an international tribunal and an American court. Beyond that, Chevron doesn’t actually have a penny in Canada—everything is owned by its Canadian subsidiary, which runs a sizeable operation in Alberta’s oil sands. Under Canadian law, companies can’t be held liable for the actions of their subsidiaries. In theory, the principle should also work in reverse.
Chevron Canada, however, sends billions back to its American parent every year. If the Ecuadorians win the case, even if they are forbidden from sending repo guys to seize Chevron’s equipment in Alberta, they might be able to seize the cross-border profit before it reaches Chevron’s hands.
The Supreme Court could issue its ruling anytime in 2015. The justices, during the hearing, seemed inclined to let it go forward. [Emphasis added]
Meet the Lawyer Chevron Tried to Destroy by Justin Ling, January 23, 2015, Vice.com
Steven Donziger is the face of an international effort to collect nearly $10 billion from oil giant Chevron. Over 20 years, his efforts have consumed, and very nearly wrecked, his entire life. He’s been sued, harassed, vilified in the media, and flatly accused of overt corruption. He even alleges he’s been followed by ex-spooks. Worst of all, he may have sacrificed his morals in the process.
In the first part of the Lago Agrio oil fields case, VICE looked into how Donziger and his team are using the Canadian courts to force Chevron to pay their bill. But any story about one of the world’s most fiercely fought lawsuits can’t be told without looking at who is arguably the central character.
Chevron’s game plan in the Lago Agrio case has been to aggressively pursue its claims—sometimes at the expense of Donziger. Donziger first went to Ecuador in 1993, brought by a university friend to witness the devastation caused by a joint oil exploration project between the government and Texaco. “There was oil all over the road and people were walking barefoot with oil on their feet and bodies,” Donziger told VICE. “There were fires burning in a lot of the pits because the company would deliberately set them on fire as a way to burn off their contents, which would cause terrible air pollution.” He described it as “apocalyptic.”
In a briefing with VICE, Chevron maintained two things: that it’s the Ecuadorian government’s responsibility for both the environmental degradation and the cleanup, and the sites Texaco cleaned up when they left Ecuador in 1993 remain safe. Arguments to the contrary, they say, are just a product of Donziger’s take-no-prisoners approach to the lawsuit.
Donziger, naturally, contests both points. Fighting in an Ecuadorian courtroom, he laid out a mountain of evidence and expert testimony that contradicted the company’s line. Locals, like indigenous leader Humberto Piaguaje, have attested to the damage.
In the courts, Donziger’s experts presented evidence that the areas Texaco supposedly cleaned up were, in fact, still heavily contaminated.
So Chevron went after the experts. The company produced proof that Donziger and his team hired a consulting firm to ghostwrite those experts’ reports, using the scientists as trojan horses for junk science. Donziger and his team says they did nothing wrong, and that, while they did write up some of the expert testimony, they never changed the experts’ findings.
The problem is, several of Donziger’s experts came forward to disavow his case and claim their research was fabricated or contorted. The environmental consulting firm hired by Donziger stated publicly that it was “not aware of any scientific evidence that people in the former concession area are drinking water contaminated with petroleum.” That admission was not exactly voluntary. Months earlier, the same firm swore that “contamination was present at every single well site and station that was sampled.” Stratus’ reversal came after Chevron came after them with a hefty lawsuit. That lawsuit was later dropped.
It’s a common theme in the case. Donziger presents evidence of contamination, often obtained through murky circumstances, and Chevron sends its legal team to destroy it. [How will Encana and the Alberta government destroy the evidence of contamination they collected?]
A prime example is Alberto Guerra, a former Ecuadorian judge and the linchpin of Chevron’s allegations against Donziger. He claims, in a sworn affidavit, that he had an ongoing arrangement to ghostwrite trial judge Nicolás Zambrano’s rulings. Zambrano presided over the Chevron case and delivered the $17-billion pro-plaintiff 2011 ruling. In his sworn affidavit, Guerra also claimed that the plaintiff attorneys, including Donziger, paid both himself and Zambrano to deliver the favorable ruling. Along with the testimony of the experts who turned on Donziger, it makes his case look outright fraudulent. Guerra isn’t exactly a credible witness, though. He was presiding over an earlier leg of the Lago Agrio case before he was removed from the bench for an unrelated corruption case. He was also, in Donziger’s words, “nearly destitute and desperate to join his son and daughter living in the United States.” Chevron stepped in to help out— they paid Guerra $38,000 and got him and his family into America. They also kicked in health insurance, a car, and other perks. Donziger’s team says the cash and benefits top out at over $2 million. Chevron’s people say Guerra’s life was in danger, and they were merely helping out.
The spiralling list of allegations read like the plot of a John Grisham novel and has become a constant back-and-forth of accusations.
Donziger says Chevron buried evidence that the drill sites were dangerously contaminated. Chevron says they have video evidence of Donziger laying out his scheme to corrupt the Ecuadorian judicial system. Donziger says Chevron set up a sting operation to try and entrap an Ecuadorian judge into taking a bribe, which failed, just to have him thrown off the case.
Chevron’s take-no-prisoners tactics in the courtroom highlight just how much the company cares about winning this case. [How many more Chevron billions in liability at stake elsewhere and how many billions of toxic liability caused by other oil and gas companies?]
The company rolled all these allegations against Donziger into one of the most extraordinary lawsuits in American history. Chevron lawyers brought him up on racketeering charges. The Racketeer Influenced and Corrupt Organizations (RICO) Act has been instrumental in jailing corrupt politicians and mafia families for decades. It’s primarily criminal legislation. But some clever lawyers on Chevron’s team [aided by corrupt legal system?] had the novel idea of using civil court to bring charges against Donziger for colluding with the Ecuadorian courts in a campaign of bribery, intimidation, and forgery to extort Chevron. Surprisingly, Chevron won. [Or more accurately, unsurprisingly?] New York Judge Lewis Kaplan found that Donziger had indeed run an unscrupulous campaign against Chevron.
Donziger is appealing the decision, and both he and the lawyers who represented him during the case have argued that Kaplan was outright biased in favour of Chevron.
Judge Kaplan did take some extraordinary steps. He had Donziger’s hard drives and personal journal entered into evidence. It was an extraordinary breach of attorney-client privilege that nevertheless uncovered clandestine meetings between Donziger’s team and the supposedly corrupt officials, as well as secret bank accounts used to pay experts. However, even this evidence is mostly circumstantial and doesn’t prove outright fraud—unless you consider Guerra’s testimony.
The judge also ordered 600 hours of raw video footage entered into evidence. The footage supposedly proves Donziger’s malicious intent. Donziger says the footage has been edited to look nefarious. But to get it, Kaplan ordered the footage be seized from a documentary filmmaker who had profiled the Lago Agrio story. Many, including Robert Redford, called it an assault on the freedom of the press.
Putting aside all the fighting over the initial 2011 decision, Donziger raises a compelling counterpoint: the initial judgment he supposedly bought with bribes was upheld by an Ecuadorian court of appeal and the country’s supreme court. There’s no evidence that there was impropriety in the two subsequent court cases, which re-evaluated all the evidence.
Even if Donziger wins his RICO appeal, it will be years before he’s allowed to pursue the case in America again. As the fight gets nastier, it’s just a matter of who cracks first.
“Our [long-term] strategy is to demonize Donziger,” reads an internal Chevron email posted on Donziger’s personal website.
Chevron has the resources at its fingertips to prolong the fight against Donziger. He reckons that Chevron has dropped around $2 billion on this case since the early 1990s between lawyers, PR firms, and private investigators. … Donziger says the company has even employed ex-CIA and FBI agents to tail him. “They have physically followed me around Manhattan and Ecuador. They have videotaped my comings and goings in Ecuador while I was there,” he says.
Donziger’s side isn’t exactly a mom-and-pop operation, however. He’s had his resource-intensive lawsuit bankrolled by venture-minded law firms, investment funds and wealthy benefactors. They’re all in it for a cut of the eventual judgement. Chevron has been trying to put the kibosh on that. In September, lawyers filed lawsuits against three of Donziger’s backers in Gibraltar. Subsequently, several of the law firms and companies helping with Donziger’s case have backed out due to his lack of funds. Others have fled because of the bad press. Still others have flat-out gone after Donziger, saying they were misled and tricked.
What’s clear from the whole mess is that no one—save, perhaps, the Ecuadorian villagers who’ve had their territory devastated—can claim a clear conscience. [Emphasis added]
[Refer also to:
Supreme Court of Canada to hear Chevron v. Yaiguaje on December 11, 2014; Why did Canadian Bar Association try to help Chevron and hire Blakes Cassels & Graydon LLP (“acts for Chevron in other matters”) without member consensus?
2015 01 18: Supreme Court of Canada won’t hear toxic Canadian tar ponds lawsuit, Case dismissed with costs; Lower Court already ordered the people to pay $736,000 in costs to provincial and Harper governments
The Sydney tar ponds were comprised of pools of black muck left behind after almost a century of steelmaking at the Sydney Steel plant in Cape Breton. The pools contained one million tonnes of raw sewage, heavy metals, dioxins, PCBs and other toxins.
Spina Bifida, holes in the heart, malformation of major blood vessels and a host of other defects were identified in women living within 1.8 miles of dumps containing highly dangerous chemicals and heavy metals.
A team from the London School of Hygiene and Tropical Medicine surveyed 231 landfills in Britain, France, Italy, Denmark and Belgium and their conclusions seem to justify the concerns being expressed by the Frederick St. residents. They say they are suffering from a variety of physical and stress related illnesses resulting from the close proximity of their homes to Canada’s worst area of environmental contamination.
With an estimated 700,000 tons of polycyclic aromatic hydrocarbons and polychlorinated biphenyls filling the site, the tar ponds and a neighbouring landfill site are thought to be leaching 10,000 tons of contaminated sludge a day into Sydney Harbour. [Emphasis added]