Monday, April 26th 2010
Reeling from the public revelation that they submitted fraudulent expert reports to the court in Lago Agrio, the Amazon Defense Front’s lawyers are trying to change the topic of conversation. In doing so, however, they are only making things worse.
On April 20, 2010 Karen Hinton, the Front’s publicist, responded to a Washington Times editorial critical of the trial lawyers’ misconduct by stating, “contamination results submitted to the Ecuadorian court by Chevron itself show illegal levels of contamination dangerous to human health and the environment at the very pits Texaco said it cleaned.” This statement is false:
- There is overwhelming scientific evidence demonstrating that Texaco Petroleum’s remediation work was effective and complies with the applicable standards established by the government of Ecuador at the time of the remediation.
- Independent scientific analysis of every remediated site performed by technicians working for the government of Ecuador at the time of the clean-up further corroborates the effectiveness of the remediation.
- Subsequent to the remediation, Ecuadorian Prosecutors General serving two separate administrations have commissioned additional scientific analysis of Texaco Petroleum-remediated sites. In both instances, the scientific results demonstrate that Texaco’s remediation met and complied with applicable standards.
As the basis for their claims, the plaintiffs’ lawyers point to a 1,000 parts per million (ppm) total petroleum hydrocarbon (TPH) standard in Decree 1215, a regulation enacted by Ecuador’s Ministry of Environment in 2001. While Decree 1215 was intended to govern environmental aspects of hydrocarbon production, the Ecuadorian constitution prohibits the unfair and retroactive application of a 2001 standard to remediation that was completed in 1998. Moreover, the 1,000 ppm standard only applies to “patrimony national natural areas or others identified in a corresponding environmental study”—national parks or other designated protected areas. At no point in time did the remediated oil fields at issue meet this definition. Further, not even Petroecuador, Ecuador’s state-owned oil company uses this standard. Petroecuador currently remediates below 2,500 ppm TPH (1215’s agricultural land standard) with the full approval of the government of Ecuador.
In trying to shift public attention away from their own misconduct, the Front and its lawyers are attempting to conceal the truth, only reinforcing their reputation as a one-stop-shop for misinformation. Indeed, instead of explaining why the Front’s lawyers submitted fabricated evidence to the court in Lago Agrio, Ms. Hinton instead questions why the plaintiffs’ former expert, Dr. Charles Calmbacher, who until his recent deposition was unaware that the plaintiffs lawyers had filed fabricated expert reports in his name, “wait[ed] six years to speak up.” Facts are stubborn things, and it is time for the contingency-fee lawyers behind the Front to end their game of misdirection, and answer for their misconduct in Lago Agrio.
Monday, April 5th 2010
In Sworn Deposition, Expert Denies Authoring Reports Submitted in His Name
SAN RAMON, Calif., Apr. 5, 2010 – Lawyers for the plaintiffs suing Chevron Corp. (NYSE: CVX) submitted fraudulent reports to an Ecuadorian court claiming dangerous contamination was found at Amazon oil well sites, the original technical expert for the plaintiffs revealed in sworn testimony last week.
Charles W. Calmbacher, Ph.D, a U.S. biologist and industrial hygienist who was the first expert appointed on behalf of the plaintiffs in the litigation pending against Chevron in Lago Agrio, Ecuador, testified in a court-ordered deposition last week that reports associated with inspections of the Sacha 94 and Shushufindi 48 well sites were submitted in his name without his knowledge or consent. Dr. Calmbacher said he had never concluded the sites posed a risk to human health or the environment and that his opinions were known to the plaintiffs’ legal and technical teams in Ecuador. Nevertheless, the plaintiffs’ lawyers submitted reports contradictory to Dr. Calmbacher’s conclusions, fraudulently using his signature months after he ceased his participation in the case.
“Their own expert has testified that two of the plaintiffs’ earliest reports are fraudulent, confirming that the trial in Ecuador has been tainted from the outset,” said Hewitt Pate, Chevron vice president and general counsel. “Chevron will petition the Lago Agrio court to strike the plaintiffs’ false Sacha 94 and Shushufindi 48 reports and call on authorities to investigate the misconduct.”
After the lawsuit was filed against Chevron in 2003, the plaintiffs’ lawyers nominated Dr. Calmbacher, and the court appointed him to conduct judicial inspections of oil well sites in the former Petroecuador-Texaco Petroleum Co. concession area to assess alleged environmental damage. Dr. Calmbacher led those inspections for the plaintiffs, supervising the taking of soil and water samples, from August to October 2004.
The fraudulent reports were filed in February and March 2005, and later used by Lago Agrio court appointee Richard Cabrera in his $27 billion damage assessment against Chevron. Cabrera never investigated Sacha 94 or Shushufindi 48, yet specified more than $101 million damages based on the fabricated findings. Dr. Calmbacher also inspected Sacha 6 and Sacha 21, yet the plaintiffs’ lawyers failed to submit reports containing his conclusions regarding those well sites. Dr. Calmbacher testified that he did not find a risk to human health or the environment, or a need for further clean-up, at any of the Texaco Petroleum-remediated sites he inspected. He also said he never concluded that Texaco Petroleum’s remediation in Ecuador in the 1990’s was not successful.
In his March 29 deposition ordered by a U.S. federal court, Dr. Calmbacher said he sent signed signature pages and initialized blank pages to the plaintiffs’ legal team by overnight courier in late 2004 for the submission of reports he thought would contain his true findings. Dr. Calmbacher also testified that the plaintiffs’ lawyers never informed him that the Lago Agrio court had ordered him to answer questions on the reports after they were submitted under his signature in 2005.
Chevron has long claimed the lawsuit is baseless and tainted by scores of irregularities and fraud. The company last September filed a demand for arbitration with the Permanent Court of Arbitration at The Hague asserting that Ecuador’s handling of the Lago Agrio litigation amounts to a breach of the U.S.-Ecuador Bilateral Investment Treaty.
To view Dr. Calmbacher’s full sworn deposition, see www.chevron.com/ecuador/depo.pdf. Additional information on the Ecuador lawsuit can be found at www.chevron.com/ecuador.
Chevron is one of the world’s leading integrated energy companies, with subsidiaries that conduct business worldwide. The company’s success is driven by the ingenuity and commitment of its employees and their application of the most innovative technologies in the world. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.
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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.”
