Chevron's Views
And Opinions On
The Ecuador Lawsuit.

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

Chevron is defending itself against false allegations that it is responsible for alleged environmental and social harms in the Amazon region of Ecuador. 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 did not remediate its majority share of pre-1992 impacts and has amassed a poor environmental record since that time. All remaining environmental conditions in the region are the sole legal responsibility of Petroecuador and in December 2011, Petroecuador announced a $70 million remediation program that would address the balance of the necessary clean-up.

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.

Nonetheless, in February 2011, an Ecuadorian judge ruled against Chevron and awarded more than $18 billion (later reduced to $9.5 billion)—nearly half of it in “punitive damages” that have no basis in Ecuadorian law. Chevron appealed this ruling on the grounds that it lacked scientific merit and ignores overwhelming evidence of fraud and misconduct, but in January 2012, an Ecuadorian appeals panel upheld the lower court judgment. At the time, the plaintiffs’ backers hailed the rulings as an unprecedented victory.

Chevron initiated a civil lawsuit in a U.S. court, and in March 2014, the U.S. District Court for the Southern District of New York ruled that the $9.5 billion Ecuadorian judgment was the product of fraud and racketeering activity, finding it unenforceable in the United States.

The nearly 500-page ruling finds that Steven Donziger, the lead American lawyer behind the Ecuadorian lawsuit against the company, violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO), committing extortion, money laundering, wire fraud, Foreign Corrupt Practices Act violations, witness tampering and obstruction of justice in obtaining the Ecuadorian judgment and in trying 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 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.

During the seven-week trial, Chevron presented unrebutted evidence detailing the extent of the fraudulent acts undertaken and directed by Donziger, his Ecuadorian legal team and other associates, 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:

The March 2014 ruling prohibits Donziger and his associates from seeking to enforce the Ecuadorian judgment in the United States and further prohibits them from profiting from their illegal acts.

The Ecuadorian judgment is being questioned in other jurisdictions as well: After reviewing extensive evidence of the fraud and corruption marring the Ecuadorian proceedings, the Permanent Court of Arbitration in The Hague has ordered the Republic of Ecuador to suspend enforcement of any judgment against Chevron until it resolves the claim Chevron has brought against Ecuador for violations of its investment treaty with the U.S. in connection with the case. Disregarding this order, the government of Ecuador has done nothing to suspend enforcement efforts and, in fact, has embarked on a global campaign against Chevron in an attempt to discredit the international arbitration system.

Separately, the tribunal issued a Partial Award, finding that the Settlement and Release Agreements that the government of Ecuador entered into with TexPet 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.

Chevron does not believe that the Ecuador ruling is enforceable in any court that observes the rule of law. The recent RICO decision validates this belief. The company will continue to seek to hold accountable the perpetrators of this fraud. Chevron will also 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.