Chevron Demands Victims of Its Amazon Pollution Pay $33 Million for Court Costs in Ecuador Environmental Case

NEW YORK, Apr. 03  - Although Chevron refuses to pay a historic $12b environmental judgment for polluting the Amazon, the oil giant is now trying to force Ecuadorian rainforest inhabitants who live in communities devastated by the company’s toxic waste to turn over $837,000 – and possibly as much as $32 million -- for costs and legal fees associated with its discredited retaliatory “racketeering” case in the United States.

Chevron’s order for the $837,000 in court costs, which is being appealed, was imposed in late February by controversial U.S. judge Lewis A. Kaplan on Secoya indigenous leader Javier Piaguaje and farmer Hugo Camacho. Both reside in an area of Ecuador called the “Amazon Chernobyl” – considered one of the most polluted places on earth -- after Chevron (operating as Texaco) discharged billions of gallons of benzene-laced “formation waters” into local waterways from 1964 to 1992 and abandoned roughly 1,000 toxic waste pits.

Piaguaje and Camacho are two of the 47 named Ecuadorian plaintiffs in the class action environmental lawsuit that resulted in the damages award against Chevron. Along with U.S. attorney Steven Donziger, who has advised the Amazon communities since the case began in 1993, they were sued by Chevron in the “racketeering” (or RICO) case in New York in 2011 for $60 billion before the company dropped all damages claims on the eve of trial to avoid a jury of impartial fact finders. (See here for a summary of Chevron’s fraud in its RICO case.)

Camacho, who earns about $200 monthly farming mostly corn and cacao on a small plot of land near Chevron’s former Sacha oil field, said he had no plans to pay the company nor comply with Kaplan’s orders. The Ecuadorians – represented by their non-profit coalition Front for the Defense of the Amazon (FDA) -- have generated significant momentum by winning three consecutive unanimous appellate decisions in Canada, where they are enforcing their judgment against Chevron’s substantial assets in the country. (See here for details.)

“Chevron has destroyed much of our precious rainforest and still refuses to accept responsibility,” Camacho said. “For Chevron and an American judge to now demand that the very people who suffer from the company’s pollution should pay court costs is insulting and arrogant. Communities should not do business with Chevron because it respects neither the environment nor people.

Chevron also seems to be using the costs issue to try to knock out Donziger from the case by forcing him into debt or even bankruptcy. (See here.) Donziger has been a member of the legal team for the Ecuadorians since the inception of the case, but he says Chevron’s efforts will only backfire over the long-term. “This is a bad look for a public company that lost a litigation on the merits in the forum of its choosing,” said Donziger. (See here for a summary of the evidence against Chevron.)

Chevron also is demanding that Kaplan order the Ecuadorians and Donziger to pay $32 million to the company to reimburse it for legal fees for the case, which turned largely on false testimony from a Chevron witness paid $2 million by the company and coached for 53 days before he took the stand. (See here and here for background.) Several attorneys, led by prominent trial lawyer John Keker, have harshly criticized Kaplan for his condescending attitude and pro-business decisions, with one calling his racketeering trial against the Ecuadorians and Donziger a “Dickensian farce”. (Here is Keker’s critique.)

Chevron claims to be seeking the funds to reimburse it for what appear to be millions of dollars in fees the company secretly paid to two U.S. court officials appointed by Kaplan (known as Special Masters) who helped sway the civil non-jury “racketeering” case against the villagers. Filed in 2011, the Chevron racketeering case was designed to retaliate against Donziger and the communities after they helped to win the $9.5b judgment (now $12b with interest) against the company. Chevron’s theory was that the villagers were acting like “mobsters” simply by seeking compensation for the environmental damage.

In reality, Chevron is using the costs issue as a pretext to try to "harass and put pressure" on its victims because the company lost the case on the merits and wishes to evade its liability, said Patricio Salazar, the lead Ecuadorian lawyer for the communities. He also said the Chevron payments to the Special Masters – particularly those to Max Gitter, a close friend of Kaplan and his former law partner -- appear to be part of a corrupt schemeorchestrated by the oil company. (See here.) Chevron and Kaplan have fought efforts to disclose the full amount of the secret Chevron transfers to Gitter’s private account, said Salazar.

Chevron’s strategy to try to punish the villagers financially for bringing the case is nothing new. Faced with its declining prospects in Canada, Chevron recently tried to impose a $1 million costs order on the Ecuadorians in that country but failed. That was after a Chevron official threatened the villagers with a “lifetime of litigation” if they persisted in pursuing the case.

Rex Weyler, the co-founder of Greenpeace, described Chevron’s latest move as one of the most “repugnant” acts by an oil company that he had seen in more than four decades of activism. “Chevron clearly is in a class by itself given that it committed ecological crimes in Ecuador and is now trying to harass and bankrupt its victims into submission,” said Weyler, who toured the “Amazon Chernobyl” zone in Ecuador last September. (See this article by Weyler on the case.)

Donziger, a sole practitioner who has been targeted with what observers say is the most well-financed corporate retaliation campaign in history, said Chevron’s attacks are designed to quell free speech and would be considered illegal by any neutral judge.

“Going after your adversaries personally and financially during a litigation is not only wrong as a matter of law, but it is also a sign of increasing desperation in the Chevron camp,” said Donziger. “Chevron’s desperation follows a string of courtroom defeats in Canada, the collapse of its much-vaunted RICO case, a profound loss of credibility by Judge Kaplan, and increasing discomfort by major shareholders with management’s high-risk litigation strategy.

"Kaplan is the only judge keeping the Chevron charade alive, but shareholders are not buying it and judges in Canada appear not to be buying it either,” he added.

Chevron reported revenues last year of $134 billion and profits of close to $40 billion, while rainforest villagers generally cannot afford to buy basic medicines nor access potable water – a real challenge given that most natural water sources in the affected area have been poisoned with Chevron’s oil waste, said Weyler.

Although Chevron has spent an estimated $2 billion to hire 60 law firms and 2,000 lawyers to target the villagers and their lawyers since the case began, the Ecuadorians continue to move forward in Canada to seize company assets after Ecuador’s Supreme Court unanimously ruled in 2013 that Chevron had dumped billions of gallons of untreated carcinogenic oil waste into the rainforest. Chevron also has an estimated $15 billion to $25 billion of assets in Canada, or more than enough to pay the entirety of the Ecuador judgment.

(Here is a summary of the evidence against Chevron relied on by Ecuador’s courts. See this photo essay of Chevron’s victims by journalist Lou Dematteis.)

In all, the Ecuadorians not only have won significant courtroom victories in Canada but also have attracted the support of the country's powerful national indigenous federation(the Assembly of First Nations) as well as former National Chief Phil Fontaine and Grand Chief Ed John. The courtroom victories and increasing public support for the Ecuadorians has infuriated Chevron given that it thought the RICO decision would effectively end the case, said Salazar.

“The RICO decision not only did not end the case, it backfired against Chevron because of the company’s fabricated evidence and the obvious bias of the judge,” said Salazar. “The RICO judgment is now being used in Canada to illustrate the lengths to which Chevron will go to commit unethical and even corrupt acts to evade paying its liability to the people it harmed. That's not how the company's General Counsel planned it.”

Ecuador's courts found that Chevron’s toxic dumping in the rainforest violated industry standards at the time and decimated the cultures of indigenous groups and farmer communities by poisoning their lands and waterways. An outbreak of cancer related to oil pollution in the area has killed or afflicted thousands of people, according to independent health evaluations.

Chevron faces the risk of losing another critical court argument April 17 in Toronto when the Court of Appeal for Ontario will determine whether the assets of a wholly-owned subsidiary, Chevron Canada, can be used to satisfy the Ecuador judgment. According to public documents required by Canada’s transparency law, Chevron Canada recently disclosed that it has been funneling billions of dollars of payments to foreign governments on behalf of its parent company, suggesting a possible effort to cover up some type of corrupt behavior, said Donziger.

In all, 21 appellate judges in Canada and Ecuador, including the entire Supreme Courts of both countries, have validated all or parts of the Ecuador court judgment.

Chevron nevertheless was able to convince U.S. judge Kaplan otherwise after company lawyers at the Gibson Dunn law firm paid a witness at least $2 million for his testimony about a supposed judicial bribe. The witness, Alberto Guerra, later admitted he had perjured himself and a forensic report further undermined his testimony after Kaplan had relied on it for his findings. Gibson Dunn has a history of ethically questionable conduct, including being accused of engaging in “legal thuggery” and other misconduct on behalf of its corporate clients.

(For a detailed explanation of Chevron’s witness fraud in the RICO case, see this amicus briefand blog from Earth Rights International and this press release from the FDA.)

The problems with Chevron's fraud in the RICO case led to a criminal referral letter against the company and its lawyers to the U.S. Department of Justice (see this press release). In the meantime, Chevron shareholders have accused management of “materially mishandling” the litigation and two shareholder resolutions related to the case received overwhelming support at Chevron's 2017 annual meeting.

Chevron also has been accused of engaging in a sham clean-up in Ecuador where it covered a handful of open air toxic waste pits with dirt, rather than cleaning them of toxins; the company used junk science and fraudulent testing methods to ensure it would not find contamination at its polluted sites in the Amazon during the trial; company lawyers threatened judges in Ecuador with jail time unless they ruled in its favor; and, Chevron tried to grind the Ecuador trial to a halt by filing repetitive and duplicative motions, including 39 in less than one hour. Chevron also worked closely with the U.S. embassy in Quito to try to undermine the case, according to Wikileaks documents.

In another sign of its increasing concern, Chevron recently sent former company lobbyist and Trump campaign manager Paul Manafort -- now under indictment on 12 felony counts in the Robert Mueller investigation -- to meet with Ecuador’s newly elected President in what the villagers believe was an effort to explore ways to illegally quash the case. Chevron has refused to comment on Manafort’s meeting with Ecuador President Lenin Moreno, which took place last May just days after his election victory.

For more information, please contact:

Karen Hinton
Phone: 703-798-3109

Steven Donziger