Chevron alleges fraud in billion-dollar oil pollution case

2013-11-27 09:51
Spanish singer-songwriter Luis Eduardo Aute shows his oil-covered hand at Aguarico 4 oil well in Aguarico, Ecuador. (Juan Cevallos, AFP)

Spanish singer-songwriter Luis Eduardo Aute shows his oil-covered hand at Aguarico 4 oil well in Aguarico, Ecuador. (Juan Cevallos, AFP)

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New York - Chevron claimed on Tuesday that corrupt Ecuadoran plaintiffs mounted an elaborate fraud to win a multi-billion-dollar case against it for polluting the Amazonian rainforest, in arguments before a US court.

"It was a scheme so audacious, so bold it would make a Mafia boss blush," argued Randy Mastro, a lawyer for the US oil company. "But Chevron didn't give in and that's why Chevron is here to get justice."

Chevron has asked US Judge Lewis Kaplan to block Ecuador from enforcing a $9.51bn Ecuadoran court award against the American company, alleging widespread corruption in the case.

In closing arguments in the US District Court in New York following a six-week trial, Chevron alleged fraud under the Racketeer Influenced and Corrupt Organisations Act in the handling of the lawsuit.

Mastro outlined an alleged scheme in which the Ecuadoran plaintiffs' team, led by New York attorney Steven Donziger, conspired to use fraud and bribery to win the huge judgment in Ecuador.


Under the 2011 ruling, Chevron was ordered to pay a $9bn fine for polluting the Amazon when the US oil company Texaco operated in Ecuador between 1964 and 1990.

Chevron acquired Texaco in 2001. The fine, later increased to $19bn, was reduced by Ecuador's Supreme Court to $9.51bn on November 12.

Attorneys representing Ecuadoran plaintiffs say the charges are meritless and that Chevron is trying to evade payment with endless legal challenges.

Ecuadoran Foreign Minister Ricardo Patino challenged Chevron on Tuesday to prove its case that there was fraud.

"They say the trial was improper. Let them prove it. That is their challenge," he told a press conference.

The case has become a cause celebre for many environmental activists. The rock star Sting, who has supported the litigation against Chevron, attended one of the earlier days of testimony.

Thousands of villagers in the polluted area say they were sickened and many have cancer from the contamination of their water supply from oil spillage.


Mastro's charges included that Donziger and allies ghost wrote a report assessing the scale of the environmental damage that was supposed to be led by independent consultant Richard Cabrera.

Other allegations include that Donziger and allies bribed Ecuadoran judges to win the 2011 ruling and ghost wrote parts of the ruling.

Chevron has spared no punches in its attack on Donziger, who studied with Barack Obama at Havard Law School. "Steve Donziger has shamed our profession," Mastro said.

Donziger has acknowledged his side wrote parts of the Cabrera report, but argues this was not illegal in Ecuador, where there is a different standard in determining the independence of experts.

Richard Friedman, an attorney representing Donziger, also highlighted the weakness of one of Chevron's main witnesses, former Ecuadoran judge Alberto Guerra.

Guerra testified that he received bribes from Ecuadorian plaintiffs in exchange for ghost writing rulings on the case for another judge.

Lawyers representing the defendants have criticised the US judge for accepting the case in the first place, which they said inappropriately overreaches US authority over foreign courts.

"Ultimately, what Chevron is asking you to do is to extend the reach of common law... to the far reaches of the globe," Friedman said.

"Chevron is asking the court to do some extraordinary things and take some extraordinary positions."

President will resign

The defendants have also criticised some of Kaplan's earlier rulings that blocked evidence about the environmental conditions in Ecuador from the case.

A handout from Donziger's spokesperson predicted an adverse ruling, citing "Kaplan's bias".

Earlier in the litigation, Kaplan granted Chevron the right to a huge trove of documents, including Donziger's private notes, his correspondence with plaintiffs and hundreds of hours of outtakes from the film documentary "Crude," which chronicled the case.

In a preliminary ruling in July 2012, Kaplan determined that the Cabrera report was "tainted" and that there were "serious questions" about the judgment.

But Kaplan said there was not sufficient evidence at that point to conclude that these problems prevented Chevron from receiving a fair case.

The case could have implications for lawsuits in Canada and Brazil, where the plaintiffs are going after Chevron's assets. Chevron has almost no assets in Ecuador.

Last week, Ecuador's president, Rafael Correa, promised to resign if Chevron proved his government interfered in the Ecuadoran trial.

A decision is expected in 2014.

Read more on:    chevron  |  rafael correa  |  ecuador  |  us  |  energy  |  health  |  pollution
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