Few people have much sympathy for Big Oil, even if, as the plight of BP at the hands of unscrupulous American lawyers of the ambulance-chasing persuasion shows, it is perfectly reasonable to do so on occasions. These companies make appealing targets.
Another example may be Chevron. In 1994, 30,000 indigenous Ecuadorians calling themselves the Amazon Defence Front sued over the alleged dumping of oil-drilling waste in the Amazon rainforest between 1964 and 1992 by Texaco. The tribespeople have enlisted help, over the years, from showbiz personalities including Sting and Bianca Jagger.
In 2001, Texaco was bought by Chevron. By the time that the case had come to court, in 2011, Patton Boggs, one of Washington’s most respected law firms, had been recruited, with backing supplied, in part, by Burford Capital, a British-based specialist in “litigation funding”, a fast-growing field where an investor can support a party involved in a commercial dispute in return for a share of any awards. Burford, chaired by Sir Peter Middleton, the former Barclays chairman, and boasting a glittering line up of shareholders including Neil Woodford, put up $15 million.
The Ecuadorian courts found for the tribespeople, despite Chevron arguing that in 1998 Ecuador’s government had agreed to spare Texaco from environmental claims after the company had spent $40 million cleaning up the area and that much of the contamination at the heart of the case had been caused by PetroEcuador, the government-controlled company that took over the fields when Texaco left Ecuador in 1992. Chevron, the world’s fourth-largest oil major, was ordered to pay more than $18 billion in compensation, although the size of the penalty was reduced later.
So far, so predictable. Another case of Big Oil behaving badly, you might say.
Yet look at what happened next. Chevron studied the ruling closely and concluded that parts of it had been written, more or less, by the plaintiffs. It filed a case in Manhattan under the Racketeer Influenced and Corrupt Organisation Act, a law passed in 1970 to tackle organised crime, on the basis that the Amazon Defence Front’s case amounted to extortion. The US District Court found for Chevron in July 2012 after concluding that some of the evidence brought against it in the original case was “tainted by fraud”. Among those testifying to that effect was one of the judges who had heard the original case in Ecuador.
Burford, smelling a rat, had long since walked away, selling its interest in the original case to a third party. Another law firm, the Philadelphia-based Kohn, Swift & Graft, also walked away from any involvement, with one of its leading lawyers claiming to have been lied to by those representing the Ecuadorians — a claim that, incidentally, they deny.
After the US District Court ruling, Chevron pursued Patton Boggs, accusing it of fraud, civil conspiracy and malicious prosecution, while also alleging that the law firm had defrauded Burford by persuading it to get involved. In May this year, Patton Boggs settled with Chevron, agreeing to drop its involvement with the case and making a public statement of regret for having become involved.
That, though, is not the end of the story. The Ecuadorians are appealing against the US District Court’s ruling, backed by Woodsford Litigation Funding, another London-based firm, which got involved last year. Alongside Woodsford is someone whose name will not exactly spark fond memories in the City: Russ DeLeon, best remembered as one of the quartet of founders who extracted almost £1 billion from the September 2005 stock market flotation of PartyGaming, the online poker business, on which dozens of fund managers lost their shirts. He has been a supporter behind the scenes since at least 2007 and is reckoned to have come up with the funds to keep the original case going when Burford walked away. Now Chevron is seeking to recover some of its legal costs from him, via the courts in Gibraltar, where he lives.
Litigation funding has its merits, not least in the way it can often help David to take on Goliath. However, in the words of Michael Goldhaber, an American legal journalist who has written a book on the case, this is a situation where “the truth is on the side of the big bad oil company, not on the side of the charismatic little guy fighting for indigenous people of the Amazon rainforest”.
Mr DeLeon has a reasonable excuse for being involved. He was at Harvard Law School with Steven Donziger, the tribespeople’s lead lawyer, who has been fighting their cause for more than 20 years. Nobody will blame him for helping an old friend. Yet Woodsford has some serious City heavyweights on board. Its investment advisory panel includes a former High Court judge and its chief executive is Charles Manduca, a former partner at the London-based law firm Lovells and the brother of Paul Manduca, the chairman of Prudential. Having become involved almost a year after the US District Court’s damning verdict, it and Mr DeLeon make unusual bedfellows.
City grandee is anything but bland
It never ceases to amaze what the great and good of the business world do on finally departing the corporate scene.
Take Sir Christopher Bland, the former BT chairman, who appeared on my Sky News show last week to discuss the company’s possible return to mobile. At 76, he has just had his first novel published. Ashes in the Wind is an Anglo-Irish epic that takes in the Irish war of independence, the civil war that followed and, later, the Spanish civil war.
Sir Christopher himself comes from an Anglo-Irish family — his forebears moved from Yorkshire to Co Kerry in the 17th century — and that connection brought him a little distinction of which he is rather proud: having served with the 5th Royal Inniskilling Dragoon Guards, Sir Christopher is, he says, the last FTSE 100 chairman to have done national service.
Yet there are plenty of foreign captains of industry to have done national service in their own country. Vittorio Colao, the Vodafone chief executive, who served in Italy with the carabinieri, springs to mind.
Perhaps Sir Christopher’s distinction may one day have to be tweaked to being the last British FTSE 100 chairman to have done national service.
Ian King is business presenter for Sky News. Ian King Live is broadcast at 6.30pm Monday to Thursday.