Breitbart.tv – The B-Cast: Ecuador, Hollywood & Trial Lawyers vs. Chevron = Liberal Hypocrisy

Wednesday, December 30th 2009

Watch the video here:

http://www.breitbart.tv/the-b-cast-ecuador-hollywood-and-trial-lawyers-vs-chevron-equals-liberal-hypocrisy/

What’s behind the $27 billion figure?

Thursday, December 17th 2009

U.S. trial lawyers representing 48 Ecuadorian plaintiffs (not 30,000) are attempting to hold Chevron liable for more than $27 billion. Amazingly, this astronomical number mostly goes unquestioned. So what goes into creating a figure that is 10 times the cost to remediate the nation of Kuwait post Gulf War?

First, one must consider its origin.  The $27 billion was presented by Richard Cabrera, a mining engineer with no oilfield remediation experience.  Cabrera was named by the court to assess possible environmental damage in the former concession area and, if any, determine the cause and work needed to fix it. In addition to being unqualified, Cabrera ignored court instructions and improperly expanded his work scope to invent categories of damages unrelated to the issues raised by the lawsuit or with environmental remediation. Not surprisingly, his appointment was fully supported by the plaintiffs’ representatives who ultimately paid Cabrera more than $200,000 for his work.  Perhaps most egregious, however, is the fact that Cabrera staffed his technical team with plaintiffs’ representatives and portions of his “independent” report were developed by organizations affiliated with the plaintiffs [click here] and [here].

Following is a breakdown of Cabrera’s fraud:

Pit remediation: Proposed damages ($2.743B)

Petroecuador has publicly acknowledged responsibility for remediation of all existing oilfield pits associated with their nearly 40 years of operations in the Oriente region of Ecuador, including all of the remaining pits in the former Petroecuador-Texaco concession.  In 2005, Petroecuador initiated a $121-million remediation program, termed the “Pit Remediation Project of the Amazon District” (PEPDA), with the goal of completing the closure of all pits, spills, and other affected areas in accordance with applicable Ecuadorian regulatory standards by 2010.  As of December 2007, the PEPDA program had initiated and/or completed remediation of more than 40% of the 370 open pits identified in the former concession area, with formal inspection and approval by the government regulatory agency, DINAPA (Dirección Nacional de Protección Ambiental).  Under a new program, designated UMR (Unidad de Mitigación y Remediación), a successor program to PEPDA, Petroecuador remains committed to completing the remediation of all remaining pits and oil spill areas in the Oriente within the next few years.

In the Chevron case, the plaintiffs have charged that the oilfield pits in the Oriente pose a grave danger to local residents and the environment, and they have demanded that Chevron, whose subsidiary Texaco Petroleum served as a minority partner of Petroecuador nearly 20 years ago, pay the plaintiffs for the cost of remediation – regardless of the fact that these same pits have already been or will soon be remediated by Petroecuador.  Indeed, the lead attorney for the plaintiffs, Pablo Fajardo, has even protested the Petroecuador cleanup program, complaining that it is “changing the lawsuit” and “hiding” evidence.  In October 2007, he submitted a formal letter to the court demanding that the remediation be stopped.

Coincidentally, Cabrera’s $2.743 billion estimate for pit remediation, over 150 times the Petroecuador budget of $18 million for this work, is based upon a highly inflated unit cost (over 36 times the actual per pit cost reported by Petroecuador) as well as a highly inflated estimate of the number of pits (over 4 times the actual number of oilfield pits remaining in the former concession).

Groundwater remediation: Proposed damages ($3.236B)

Cabrera arrives at this figure with no evidence to substantiate a damage claim. He took NO samples from rivers, streams, wells or potable water sources.  His handful of “groundwater samples” in the former concession area, actually come from borings taken from within pit areas and are in no way representative of what geologists or hydrologists would consider groundwater.

Healthcare system: Proposed damages ($480 MM)

While health is a serious concern in the region due to widespread fecal contamination of drinking water, the construction of a health care system is clearly not Chevron’s responsibility, nor has it ever been part of the litigation. Plaintiffs’ attorney Julio Prieto underscored this in a recent Radio Majestad interview when he said, “in the claim we have not requested any health issue in particular.”

It’s the sole responsibility of Ecuador’s government, which encouraged massive migration to the region and failed to provide the most basic sanitation services like sewage treatment.

Impacts on indigenous populations: Proposed damages ($430 MM)

Populations of all indigenous groups in the region have grown markedly throughout the period since oil was discovered in Ecuador’s Amazon. Meanwhile, deforestation and encroachment on indigenous lands by settlers was a direct result of the Ecuadorian state’s colonization policy, not oil development. When oil exploration began in the 1960’s, the population of the region was approximately 25,000 – largely native peoples and missionaries. Today, the region is among the fastest growing in Ecuador, home to more than 300,000 citizens who have converted jungle to agricultural lands at the government’s behest.

Potable water system construction: Proposed damages ($428 MM)

Numerous potable water systems exist in the region, but Cabrera failed to take samples from them. Likewise, Cabrera failed to sample rivers, streams, or wells.  So, how does he know more potable water systems are needed? And how does he justify holding Chevron liable for creating a potable water system for the entire region when the main problem with drinking water is bacterial – not hydrocarbon – contamination?

Petroecuador’s infrastructure: Proposed damages ($375 MM)

Ecuador’s government and state took in approximately $25 billion over the 20-year life of the consortium. Texaco Petroleum earned $490 million, its contract expired in 1992 and it left Ecuador after successfully conducting remediation, carrying out social programs and upgrading equipment under an agreement with the state. For two decades, Petroecuador has been exclusive operator of the former consortium oilfields, earning 100 percent of an estimated $50 billion in additional revenue. So, having earned some $75 billion, shouldn’t Petroecuador maintain, replace and build out its own infrastructure?

Excess cancer deaths: Proposed damages ($9.527B)

Neither Cabrera, nor the plaintiffs’ lawyers, have ever presented to the Lago Agrio court the name of a single cancer victim, a single medical report or a single death certificate to substantiate this claim. What’s more, official cancer mortality statistics in Ecuador reveal that, not only are Cabrera’s assertions false, but the cancer rate in the oil-producing region is actually lower than in non-oil producing regions of the country. Finally, the only time a lawyer for the plaintiffs presented specific cancer claims before a court (in U.S. federal court in San Francisco), the claims were thrown out after Chevron showed them to be false.  The lawyer, the originator of the Lago Agrio case, was fined $45,000 and sanctioned for the fabrications.

Deforestation of stations, wells and roads: Proposed damages ($875MM-$1.697B)

Ecuador’s government required that the consortium construct roads throughout the region to facilitate the state’s colonization program. Moreover, the total footprint of actual oil operations in the former concession area amounts to roughly 6.8 square kilometers. If roads are included, the footprint grows to just over 44 square kilometers. This is an important fact to consider in a concession area of 4,429 square kilometers that produced approximately $25 billion for the Republic of Ecuador.

Unjust enrichment: Proposed damages ($8.421B)

Central Bank figures show that Texaco Petroleum earned $490 million while the Republic of Ecuador received, through taxes, royalties, internal market subsidies, dividends from Petroecuador’s majority stake and other revenue, approximately $25 billion during the 20-year consortium.

Problems with Cabrera’s work are not limited to his absurd damage recommendations. The reports themselves are filled with mathematical and scientific errors. On a number of occasions he simply fabricates evidence. He gathered much of his “evidence” with the help of the plaintiffs’ technical team. He copied into his reports whole blocks of text from the plaintiffs’ court filings to justify some of his most outlandish assertions, such as his cancer claims and the remediation estimates. He fails to mention Petroecuador’s responsibility for environmental problems in the region despite its 62.5-percent majority stake in the consortium and its status of exclusive operator in the former concession area for almost 20 years.

Cabrera also fails to acknowledge Texaco Petroleum’s $40 million remediation related to its approximate one-third stake in the consortium, or the 1998 release from future claims granted to the company by the government and Petroecuador. Finally, the court’s appointee is unconstrained by the fact that the plaintiffs are suing Chevron strictly for environmental remediation costs. “So,” you may ask, “with all of the above in mind, how could a law-abiding, fair-minded, and independent court allow such absurd damage claims stand as the basis for a verdict?” The answer is, “a law-abiding, fair-minded, and independent court couldn’t.”

Politics Daily – Ecuador, Hollywood and Trial Lawyers vs. Chevron Equals Liberal Hypocrisy

Wednesday, December 16th 2009

“It was nice to see a slice of the commentariat point out the gaudy display of hypocrisy coming from the left in Copenhagen, where the limos and private planes of the emissaries of climate change emitted their requisite greenhouse gases so everyone could talk about how to reduce emissions. But that is just the tip of the iceberg. And, global warming or not, when it comes to liberals’ double standard, this metaphorical iceberg is hardly shrinking.”
Read more »

Reuters – Will Ecuador drought dry up Correa’s popularity?

Wednesday, December 16th 2009

“A drought in Ecuador is causing power blackouts throughout the country, slowing the economy’s recovery and helping to push Rafael Correa’s popularity to the lowest point of his presidency.”
Read more »

LA Times – by Dave Samson – If Ecuador wants free trade with the U.S., it should earn it

Wednesday, December 16th 2009

“The Times’ Dec. 3 editorial, “Trading with Ecuador,” ignores evidence of Ecuador’s hostility to the United States and misleadingly asserted that Chevron is calling for an end to beneficiary status for Ecuador under the Andean Trade Preferences Act.”
Read more »

Science Daily – Innovative Plan To Save Rainforest, Reduce Greenhouse Gas Emissions

Wednesday, December 16th 2009

“An innovative proposal by the Ecuadorian government to protect an untouched, oil rich region of Amazon rainforest is a precedent-setting and potentially economically viable approach, says a team of environmental researchers from the University of Maryland, the World Resources Institute and Save America’s Forests.”
Read more »

Time – Ecuador Officials Linked to Colombia Rebels

Wednesday, December 16th 2009

“Several former officials of the Ecuadorian government had ties with Colombia’s Marxist guerrillas, a commission named by President Rafael Correa conceded Tuesday. The announcement is sure to stir up new questions about how deeply South America’s political left, including Venezuelan President Hugo Chávez, has aided a rebel force condemned worldwide as drug traffickers and terrorists. And it raises the risk, said the commission’s coordinator, Francisco Huerta, that Ecuador is “becoming a narco-democracy.””
Read more »

Chevron’s Statement on the Extension of Ecuador’s Trade Preferences Under the Andean Trade Preferences Act (ATPA)

Tuesday, December 15th 2009

Chevron supports the legislation passed today to extend trade preference programs including GSP and the Andean Trade Preferences program.  We have long supported trade preference programs for the important benefits they bring to U.S. firms, workers and to the beneficiary countries.  We are pleased that Congress has seen fit to include an accelerated review of Ecuador’s compliance with the program, which will provide the Administration with the opportunity to continue to monitor the issues raised about Ecuador in its June 30th report to the Congress on the operation of the Andean Trade Preferences Program.

Concerns about the rule of law, politicization of the judicial process and treatment of U.S. companies in Ecuador require regular monitoring to ensure that Ecuador meets the obligations required in order to enjoy these trade benefits.  We also believe the shorter term extension provides an opportunity for the program’s important benefits to be extended while Congress undertakes a broader review of the programs.

Trial Lawyer Finally Tells the Truth about Remediation Costs

Thursday, December 10th 2009

“It will be very expensive to clean up, but far less than the profits they took out of Ecuador.” – Steve Donziger, lead trial attorney.  Commondreams.org: 10/29/09.

Mr. Donziger’s math is finally adding up and, perhaps unintentionally, Mr. Donziger has exposed one of the most fraudulent aspects of the Ecuador trial – the $27 billion damage recommendation known as the “Cabrera Report.”

The assessment developed by the plaintiffs’ representatives and delivered to the court by mining engineer Richard Cabrera looks to hold Chevron liable for more than $27 billion in damages. In part of the dubious $27 billion claim, Cabrera recommends Chevron pay damages of $2.743 billion for pit remediation.  In comparison, Petroecuador, the government-owned oil company responsible for the current condition of Ecuador’s oil fields, remediates pits to current laws and standards at a cost of $85,000 per pit. Cabrera’s estimates imply a per-pit remediation cost of up to $3 million per pit. This recommendation is more than 30 times higher than the cost the state pays for pit remediation.

Meanwhile, Texaco Petroleum made less than $500 million during the days of the consortium.  The vast majority of the proceeds, approximately $25 billion, went to the government of Ecuador.  And, at the conclusion of the consortium, Texaco Petroleum performed remediation work at 108 of 321 well sites – work that corresponded with the company’s 37.5% stake in the consortium. The remaining remediation is the admitted responsibility of Petroecuador.

So, no matter how you slice it, Mr. Donziger has finally conceded the truth about remediation costs.  Any realistic assessment of the conditions in Ecuador clearly shows that the remediation work for which Petroecuador is responsible would cost a fraction of what Mr. Donziger and his colleagues have contended.  Now, if they would only focus their efforts on the responsible party rather than the deep pockets, some solutions might actually occur.

Trial Lawyers Bankroll Lawsuit, Bank on Payday

Wednesday, December 9th 2009

“This lawsuit started in the United States and is financed by a law firm.” – Julio Prieto, plaintiff’s attorney

In a December 7th interview with Ecuadorian radio station Majestad, plaintiff’s attorney Julio Prieto makes mention of a law firm bankrolling the environmental lawsuit currently pending against Chevron in Ecuador.

The referenced firm is Kohn, Swift & Graf PC of Philadelphia, the primary entity providing a majority of, if not all of the funding for the lawsuit against Chevron.

When U.S.-based trial lawyer, Cristóbal Bonifaz, first concocted the original lawsuit against Texaco in 1993, he contacted Harold Kohn, a Philadelphia class-action lawyer. Shortly thereafter, Kohn’s son, Joe, who later became a partner at Kohn Swift & Graf, signed on. Subsequently, Kohn enlisted Steven Donziger, a New York-based trial lawyer who went to law school with Bonifaz’s son.

When asked about his motivation for taking on the case against Chevron in the movie Crude, Joe Kohn candidly stated, “it was not taken as a pro bono case, you know, a lot of my motivation is, at the end of the day… it will be a lucrative case for the firm.”

As part of the Kohn, Swift and Graf financed PR campaign to take Chevron’s reputation hostage and ransom it back to the company in the form of a large settlement, Kohn has hired DC lobbyist Ben Barnes to lobby the US Congress on “environmental matters resulting from oil exploration in Ecuador.” Barnes then hired DC based PR representative Karen Hinton to spread misinformation and distort the facts of the case.

Years of misinformation and distortion spread by U.S. trial lawyers and their PR cohorts lead the public and media to believe that 30,000 indigenous Amazonians are behind this lawsuit, and that any financial award from a settlement or verdict would go to the indigenous peoples of the Oriente.

However, the truth tells a different story.  Kohn’s firm has coordinated a series of economic and political relationships between the Ecuadorian government, U.S. trial lawyers and activist groups in an effort to put pressure on a small rural courtroom in Lago Agrio, Ecuador, to find Chevron guilty in an environmental lawsuit. Any financial awards as a result of a settlement or judgment against Chevron would invariably go only to the Ecuadorian government and the U.S. contingency fee lawyers driving this frivolous lawsuit. In fact, Washington Pesántez Prosecutor General of Ecuador confirmed that “90% [of any judgment against Chevron] would be delivered to the State…”

One thing is certain, Chevron will continue to fight this misguided and disingenuous lawsuit until justice prevails.

Ecuador’s Trade Preferences: The Real Story

Tuesday, December 8th 2009

A recent Los Angeles Times editorial on Ecuador’s trade preferences with the United States curiously ignores evidence of Ecuador’s hostility to the United States and erroneously asserted that Chevron is calling for an end to beneficiary status for Ecuador under the Andean Trade Preferences Act.  While more than one organization is calling for “halting the trade agreement” with Ecuador, Chevron is not.  Chevron argues that countries should not be unconditionally rewarded with unilateral trade benefits even as they flout commercial obligations with the United States.  Because Ecuador has taken a series of actions to undermine trade and investment rules, Chevron is calling for treating Ecuador differently under the Andean trade act than the other two countries included in the act, Peru and Colombia.  Chevron is proposing several ways for Congress and the administration to treat Ecuador differently, including statutory periodic reviews or limiting preferences to private entities and firms in Ecuador, not to government-owned entities such as Ecuador’s state-owned oil company, Petroecuador.

The claim made by the Los Angeles Times, that Ecuador has “demonstrated a willingness to work with the U.S.” does not reflect what is actually happening with the bilateral relationship.  In the last year alone, Ecuador has taken a variety of actions that demonstrate its hostility to U.S. interests.  For example, it evicted the United States from an air base where it ran drug interdiction efforts for at least a decade.  It also became only the second country in history (after Bolivia) to withdraw from a 156-member international dispute settlement body after calling the body “an atrocity” that “signifies colonialism” and “slavery . . . to Washington.”  It also announced intent to withdraw from investment treaties with the United States and a dozen other countries, and it provided Ecuadorian interests a roadmap for using U.S. intellectual property rights without permission.  The situation in Ecuador has gotten so bad that in November, Transparency International called Ecuador one of the most corrupt governments in the Americas, with a score worse than 27 of the 31 countries tallied in the Hemisphere and 146th out of 180 countries total worldwide.

Ecuador once was a U.S. ally that respected the rule of law, but that has not been the case in recent years, and its treatment of U.S. investors and its obligations on investment and contractual matters reflects that change.  The U.S. government, Transparency International, and the World Bank have all noted serious concerns with Ecuador’s judicial system and adherence to the rule of law.  Contrary to the editorial’s assertion, Chevron is not asking the U.S. to force a favorable outcome in the case.  It asks for a fair hearing, a hope that Ecuador will honor its contractual obligations, and consideration of Ecuador’s actions on well-established trade and investment treaties and guidelines.

Chevron has been a longstanding supporter of trade preferences program.  However, we believe that extending unilateral trade preferences should carry with it some type of recognition that the recipient countries must adhere to the rule of law and trade and investment obligations.  We would hope that U.S. policymakers, and Los Angeles Times editorial writers, believe in this same standard.

Wall Street Journal – Ecuador Seeks To Block Chevron

Monday, December 7th 2009

“The government of Ecuador asked a U.S. court on Friday to intervene in its long-running environmental battle with oil giant Chevron Corp.

The federal court filing is tied to a multi-billion-dollar lawsuit taking place in Ecuador that seeks to hold Chevron responsible for environmental damage allegedly caused by Texaco Inc., which operated there from 1964 to 1990.”
Read more »

Dow Jones – Ecuador’s President Issues Warning To Foreign Oil Companies

Monday, December 7th 2009

“Ecuador President Rafael Correa said private oil companies they should leave the country if they don’t invest in their oil fields.”
Read more »

Reuters – Ecuador gives oil firms until March to sign deals

Monday, December 7th 2009

“Oil companies operating in Ecuador have until March to sign new contracts or the government will “change the rules of the game” to give the state more control over the sector, President Rafael Correa said on Saturday.”
Read more »

Reuters and AFP – Correa bewails China negotiations

Monday, December 7th 2009

“Negotiating with China is “worse than the IMF,” Ecuadorean President Rafael Correa said on Saturday after rejecting China’s conditions for a US$1.7 billion loan to build a hydroelectric plant.”
Read more »

Ecuador Files Frivolous Lawsuit Against Chevron To Evade International Arbitration Hearings

Saturday, December 5th 2009

“By commencing the arbitration, it is Chevron that is trying to escape its commitments,” – Eric Bloom, attorney representing the Government of Ecuador

On the contrary, the Republic of Ecuador’s complaint against Chevron in the Southern District of New York is frivolous in much the same way as the lawsuit against Chevron in Ecuador.  Both are based on the made-up idea that Chevron agreed in 2001 to submit itself to the jurisdiction of Ecuador’s courts.   But Chevron, which was in no way involved in the proceedings in 2001, never consented to anything, and Texaco certainly never agreed to submit to jurisdiction in Ecuador to face fabricated claims, biased courts, and corrupt proceedings being dictated against it by Ecuador’s government.  That is precisely why Chevron initiated its BIT arbitration.  The arguments made by the Republic in its New York lawsuit ignore these basic truths and are not grounds for enjoining arbitration anyway.   Given the extensive docket of international arbitration claims challenging Ecuador’s repeated disregard for its legal obligations and the rights of investors in its country, it is not surprising that Ecuador would seek to evade another reckoning by an honest, international panel.

Dow Jones – Approval Rating For Ecuador’s Correa Continues To Slide – Poll

Friday, December 4th 2009

QUITO – Ecuadorian President Rafael Correa’s approval ratings fell again in November, according to a Cedatos-Gallup International poll released Wednesday.

The poll said 42% of the 2,104 people surveyed approved of Correa, down from 44% in October and sharply down from 70% in January 2009.

The poll, taken from Nov. 27 to Nov. 30, put Correa’s credibility rating at 40% in November, unchanged from October.

Correa’s popularity has fallen amid corruption scandals, high unemployment, the global economic crisis and electricity shortages.

The Cedatos-Gallup poll said it has a margin of error of 3.4 percentage points.

Correa, a U.S.-trained economist and self-avowed socialist, was re-elected for a second four-year term in April 2009.

Reuters – Ecuador’s Correa supports bill to regulate media

Wednesday, December 2nd 2009

Ecuadorean President Rafael Correa said Tuesday he backs a media reform bill that has sparked outrage from journalists who claim it would clamp down on freedom of expression in the Andean country.

Lawmakers loyal to leftist Correa have introduced a measure to form a government-controlled watchdog panel with powers to punish journalists who break rules that will be outlined in the proposed legislation.

“You have to regulate and control the media,” Correa told reporters in his strongest statement yet on the subject. “Freedom without prior responsibility is libertinism.”

Correa regularly criticizes the press, which he accuses of siding with business groups that oppose his socialist reforms.

Other left-leaning South American countries like Venezuela and Argentina have also taken steps to control the media.

Link to story

The Huffington Post – 21st Century Socialism’s Impact on Latin American Economic Performance

Wednesday, December 2nd 2009

“Although investment levels have slowly risen in Honduras since 2002, this trend is likely to be reversed based on the political change that occurred in the country earlier this year. Investment levels in Ecuador have been declining since 2004, and like Nicaragua and Bolivia, have always been under $1 billion per annum.”
Read more »

Latin American Herald Tribune – Ecuador Feels “Ill-Treated” in Loan Talks with China

Wednesday, December 2nd 2009

“Ecuadorian President Rafael Correa said Tuesday that during the course of the negotiations his government is pursuing with China to obtain financing for the Coca Codo Sinclair hydroelectric dam, Quito “sometimes feels ill-treated.””
Read more »

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