Chevron's Views
And Opinions On
The Ecuador Lawsuit.

The Facts: Chevron in Ecuador & Plaintiffs’ Strategy of Fraud

The Facts About The Legal Fraud of the Century

The false allegations against Chevron Corporation in Ecuador have been called the “legal fraud of the century” by the Wall Street Journal.  Here are the facts:

In February 2011, an $18 billion judgment (later reduced to $9.5 billion) was issued by an Ecuadorian court against Chevron Corporation, claiming Chevron was responsible for alleged environmental and social harms in the Amazon region of Ecuador. Chevron appealed the ruling on the grounds that it lacked scientific merit and ignored overwhelming evidence of fraud and misconduct. However, in January 2012, an Ecuadorian appeals panel upheld the lower court judgment.

Based on overwhelming evidence of fraud and misconduct throughout the Ecuadorian lawsuit and trial, Chevron initiated a civil lawsuit in the U.S. District Court for the Southern District of New York. In March 2014, the court ruled that the Ecuadorian judgment was the product of fraud and racketeering activity, finding it unenforceable in the United States.

The nearly 500-page ruling found that Steven Donziger, the lead American lawyer behind the Ecuadorian lawsuit, violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO) in obtaining the Ecuadorian judgment. Among other things, the court found that Donziger committed extortion, money laundering, wire fraud, Foreign Corrupt Practices Act violations, witness tampering and obstruction of justice, and that he tried to cover up his and his associates’ crimes.

The court found that Donziger and his team “wrote the [Ecuadorian] court’s Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment.” As U.S. federal judge Lewis Kaplan stated in the court’s ruling:

“The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador – and they knew it. Indeed, one Ecuadorian legal team member, in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, ‘apart from destroying the proceeding, all of us, your attorneys, might go to jail.’ It is time to face the facts.”

This decision was unanimously affirmed by the United States Court of Appeals for the Second Circuit in August 2016.  It affirmed the factual findings made by the trial court, noting that Donziger and the Ecuadorian plaintiffs did not challenge the trial court’s factual findings. The appeals court stated that Donziger and his team engaged in a “parade of corrupt actions…including coercion, fraud and bribery.”

In June 2017, the United States Supreme Court denied a petition seeking review of the appeals court’s decision.  As a result, the U.S. legal system has finally and conclusively found that the Ecuadorian judgment is the product of fraud and bribery.

Firsthand Accounts of Corruption

During the racketeering trial against Steven Donziger and his team, Chevron presented unrebutted evidence detailing the extent of the fraudulent acts undertaken and directed by Donziger, including fabricating environmental evidence, pressuring scientific experts to falsify reports, plotting to intimidate judges into handing down favorable rulings, bribing court-appointed experts, ghostwriting court reports and even drafting the final judgment.

Chevron called 24 witnesses, offered deposition testimony from 21 others, and offered more than 3,000 exhibits into evidence. Testimony included those formerly aligned with the plaintiffs, who provided firsthand accounts of corruption:

After learning of the extent of the fraud, described in detail by the U.S. federal court, many of Donziger’s former supporters, including funders, investors, scientific experts, and legal counsel have abandoned the scheme.

Other Jurisdictions Also Questioning the Validity of the Ecuadorian Judgment

Despite the U.S. federal court decision, Donziger and his team are attempting to enforce the fraudulent Ecuadorian judgment in Canada, Brazil and Argentina.

Canada: On January 20, 2017, a Canadian court rejected an attempt to enforce the Ecuadorian judgment against Chevron’s subsidiary, Chevron Canada Limited. The court found that Chevron Canada Limited is a separate entity from Chevron Corporation, not a party to the Ecuadorian lawsuit and not a debtor to the judgment. In its decision, the court stated, “Chevron [Corporation] and Chevron Canada are separate legal entities with separate rights and obligations.” As a result, the court found that “plaintiffs’ claim cannot succeed against Chevron Canada” and dismissed the claim against it.

Brazil and Argentina: Federal prosecutors in both Brazil and Argentina have issued recommendations to the high courts in their respective countries against recognizing the fraudulent Ecuadorian judgment.  In his recommendation, Brazil’s Deputy Prosecutor General stated that the judgment was “issued irregularly, especially under uncontested acts of corruption”.

International Arbitration Claims Against Ecuador

Chevron is seeking to hold the Republic of Ecuador accountable for its role in denying Chevron justice through an international arbitration tribunal, which is convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty and administered by the Permanent Court of Arbitration at The Hague. In September 2009, Chevron filed an arbitration claim against the Republic of Ecuador.  After reviewing extensive evidence of the fraud and corruption marring the Ecuadorian proceedings, the Permanent Court of Arbitration in 2012 ordered the Republic of Ecuador to suspend enforcement of any judgment against Chevron until it resolved the claim Chevron brought against Ecuador for violations of its investment treaty with the U.S. in connection with the case. For the following 6 years, Ecuador defied the Tribunal’s awards and did nothing to suspend enforcement efforts.  Instead, it embarked on a global campaign against Chevron to discredit the international arbitration system.

In September 2018, the international tribunal issued an award in favor of Chevron, finding that the Republic of Ecuador violated its obligations under international treaties, investment agreements and international law. The tribunal unanimously held that a $9.5 billion judgment rendered against Chevron in Lago Agrio, Ecuador, in 2011 was procured through fraud, bribery and corruption and was based on claims that had been already settled and released by the Republic of Ecuador years earlier. The tribunal concluded that the fraudulent Ecuadorian judgment “violates international public policy” and “should not be recognized or enforced by the courts of other States.” As a matter of international law, this award confirms Chevron is not obliged to comply with the Ecuadorian judgment.

The tribunal held that Ecuador breached its obligations under a 1995 settlement agreement releasing TexPet and its affiliates from public environmental claims—the same claims on which the $9.5 billion Ecuadorian judgment is exclusively based. The tribunal found “TexPet spent approximately $40 million in environmental remediation and community development under the 1995 Settlement Agreement” carried out by a “well-known engineering firm specializing in environmental remediation” and that Ecuador in 1998 executed a final release agreement “certifying that TexPet had performed all of its obligations under the 1995 Settlement Agreement.” The tribunal found “no cogent evidence” supporting Ecuador’s claim that TexPet failed to comply with the terms of the remediation plan approved by Ecuador. To the contrary, the award recites the sworn testimony of Ecuadorian officials that TexPet’s “technical work and environmental work was done well,” while Ecuador’s national oil company “during more than three decades, had done absolutely nothing” to address its own environmental remediation obligations in the area, even though Ecuador and its national oil company received 97.3% of the oil production revenues from the project. The award further recounts in detail the testimony of numerous former members of the plaintiffs’ environmental team and scientific experts who admitted under oath that they found no evidence to support the plaintiffs’ environmental claims against Chevron and TexPet.

Separately, the Arbitral Tribunal issued a Partial Award, finding that the Settlement and Release Agreements that Chevron’s subsidiary, Texaco Petroleum Co. (TexPet), entered into with the government of Ecuador released the company and its affiliates of any liability for all public interest or collective environmental claims. This award confirms that the fraudulent claims against Chevron should not have been brought in the first place.

Texaco’s Successful Remediation

Chevron has never conducted oil production operations in Ecuador and its subsidiary, Texaco Petroleum Co. (TexPet), fully remediated its share of environmental impacts arising from oil production operations prior to 1992.

After the remediation was certified by all agencies of the Ecuadorian government responsible for oversight, TexPet received a complete release from Ecuador’s national, provincial and municipal governments prior to being acquired by Chevron in 2001. Ecuador’s state-owned oil company, Petroecuador, was the 62.5 percent majority owner of the consortium in which TexPet participated until 1992 and has been the sole owner of greatly expanded oil operations over the past two decades. Petroecuador has not remediated its majority share of pre-1992 impacts and has amassed a poor environmental record. All remaining environmental conditions in the region are the sole legal responsibility of Petroecuador.

Chevron has thoroughly investigated the plaintiffs’ lawyers’ claims of social, health and environmental harms. At Chevron’s request, many of the world’s top toxicologists, epidemiologists, ecologists, anthropologists and geoscientists have considered the evidence—including more than 1,500 environmental samples—and have concluded that there is no scientific support for the claims. To the contrary, all of the legitimate evidence presented to the Ecuadorian court demonstrates that former Texaco Petroleum Company operations present no risk to residents’ health and have not resulted in any significant impact to groundwater, drinking water, biodiversity, or indigenous culture. The plaintiffs’ lawyers’ continued claims to the contrary, in the face of this overwhelming scientific evidence, are untrue.

Conclusion

Chevron does not believe that the Ecuadorian judgment is enforceable in any court that observes the rule of law.  The federal racketeering opinion, which is final and can no longer be appealed, validates this belief. The company will continue to seek to hold the perpetrators of this fraud accountable and continue to pursue relief against Ecuador in our pending arbitration. Chevron will resist any enforcement effort and seek to hold anyone who would attempt to enforce the fraudulent judgment in another jurisdiction accountable to the full extent of the law.

For a more detailed account of Chevron’s position on this matter, please visit www.chevron.com/ecuador or http://theamazonpost.com.