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The Ecuador Lawsuit.

Conflict of Interest – Cabrera’s Financial Ties to Petroecuador Exposed

Date: Feb 9, 2010

Chevron has revealed new information showing that the author of a report recommending the company pay $27 billion in damages has a conflict of interest that he illegally hid from the court. As it turns out, Richard Cabrera, the report’s author, is the majority owner of an oil field remediation company that stands to gain financially from a judgment against Chevron.

Records from 2003-2008 show that Cabrera is co-founder, general manager, majority stockholder, and legal representative of an oilfield remediation company, CAMPET, which is registered to perform oilfield remediation and other services for Petroecuador.  Cabrera failed to disclose these business interests as required by law.

In his report, Cabrera absolves Petroecuador of any responsibility or remediation obligations associated with past or present oil operations.  Yet, Petroecuador was the majority owner of the Petroecuador-Texaco Petroleum consortium which operated until mid-1992.  Moreover, there is substantial evidence that Petroecuador has spilled millions of gallons of oil since taking over exclusive ownership and operations.

Instead, Cabrera exclusively attributes pollution in the Amazon region of Ecuador to Texaco Petroleum, now owned by Chevron.  Cabrera’s report says Chevron, because it acquired Texaco Petroleum in 2001, is solely liable for $27 billion in damages, citing grossly inflated remediation costs while ignoring Petroecuador’s role in oil operations and its well-documented poor environmental performance. These findings make no sense as a matter of Ecuadorian law or common sense, but are consistent with furthering the interests of Petroecuador, as well as Cabrera’s.

Not only did Cabrera hide his financial interests in the remediation company, he affirmatively represented to the court that he did not have any impediment or conflict that would affect his performance as an “independent” court-appointed witness.  Moreover, Cabrera knowingly omitted his interest in CAMPET, as well as CAMPET’s status as a registered Petroecuador contractor, in his submissions to the court.  Finally, Cabrera further misled the court by accepting his appointment, which required an explicit acknowledgment of his duties to the court as an impartial analyst—something Cabrera could not have done in good faith, given his financial interests.

Due to the remediation company’s relationship with Ecuador’s state-owned oil company, Petroecuador, Chevron has called upon the court to immediately reject the work of Richard Cabrera on the grounds that he knowingly hid his relationship and that he stands to gain from what was supposed to be unbiased work for the court.