Chevron (CVX) has produced some impressive evidence that the historic $19 billion oil-pollution verdict it faces in Ecuador floats on a lagoon of lies and corruption.
Now the New York plaintiffs’ lawyer whom the company portrays as the mastermind of the allegedly fraudulent judgment has finally stepped forward to deny under oath that he orchestrated the ghostwriting of the key February 2011 ruling in the case.
Or, more accurately, he has sort of denied it.
In late January, when we last reviewed the bidding in the epic 20-year litigation concerning contamination of the rainforest in eastern Ecuador, Chevron had produced a confessional declaration by a former Ecuadorian judge named Alberto Guerra, who for a time presided over the suit against the company. Guerra swore he was paid thousands of dollars by lawyers representing poor farmers and indigenous Indians for illegally ghostwriting judicial orders favoring the plaintiffs and issued under the name of a subsequent judge in the case.
Guerra, whom Ecuadorian judicial officials forced off the bench in 2008, said he secretly drafted the rulings for Nicolas Zambrano, the judge under whose name the mammoth February 2011 judgment against Chevron was issued. In addition, Guerra alleged that Zambrano told him he allowed the plaintiffs’ legal team, led by New York lawyer Steven Donziger, to draft the final trial judgment in exchange for a promise of $500,000 to be paid to Zambrano out of the plaintiffs’ recovery.
(Zambrano has also been fired as a judge because of alleged corruption related to drug-trafficking cases. All told, four of the six trial judges who at one time or another presided over the pollution suit in a provincial courthouse in the oil town of Lago Agrio have been forced to step down as a result of ethical questions.)
Chevron filed the Guerra allegation in federal court in New York, where the company has sued Donziger and some of his colleagues for civil racketeering. For years, Chevron has denied any liability for oil pollution in a region of lowland rainforest known as the Oriente. The company has said there’s no solid scientific evidence that contamination of soil and waterways caused harm to humans. And, according to Chevron, whatever pollution exists in the Rhode Island-size swath of jungle should be blamed on Petroecuador, the national oil company that took over after Texaco was kicked out in 1992. (Chevron acquired Texaco in 2001.)
Donziger, in a notably terse one-and-a-half-page affidavit filed March 18 in the New York case, says that Guerra is full of beans.
For example, Guerra said: “I was Mr. Zambrano’s ‘ghostwriter,’ and I wrote the great majority of the rulings issued in civil cases assigned to Mr. Zambrano, including the Chevron case.” Guerra also recounted: “Mr. Donziger thanked me for my work as ghostwriter in this case and for helping steer the case in favor of the plaintiffs.” Guerra provided bank records and other documentary evidence to back up his allegations.
Donziger, however, said: “I deny that this occurred. I am unaware that Guerra has ever ghostwritten decisions in the Lago Agrio litigation; I am unaware of any ‘help’ by Guerra to ‘steer’ the decision in favor of plaintiffs in the Lago Agrio litigations; and I never thanked Guerra for these things.”
What Donziger does not deny is that Guerra may have done ghostwriting that assisted the plaintiffs. Donziger merely claims not to know about it. This leaves open the possibility that the team of Ecuadorian lawyers with whom Donziger has worked for years, and whose salaries have been paid with funds he raised, may have been involved in the chicanery Guerra describes.
Donziger also denies that he ever promised Guerra and Zambrano a bribe of $500,000 to be paid out of the plaintiffs’ recovery. “I do recall being at a restaurant in Quito with Guerra when Guerra asked for a bribe of $500,000,” Donziger says in his affidavit. “I refused Guerra, and told him that neither I nor anyone on the Lago Agrio Plaintiffs’ team would do such a thing.” Donziger adds: “I have never sought to pay any money in exchange for a favorable verdict in the Lago Agrio litigation, nor have I encouraged or solicited anyone else to discuss or pursue paying money for a favorable verdict.”
Again, Donziger leaves open the possibility that his colleagues in Ecuador had dealings with Guerra that he doesn’t know about.
The nature of Donziger’s denial seems consistent with other recent developments in the case. Under the pressure of Chevron’s counterattack in federal court in New York, the Lago Agrio legal team is fracturing. Its long-time public relations spokeswoman, Karen Hinton, a close ally of Donziger’s, has been replaced by the Fenton PR firm.
Guerra is a compromised witness. Chevron has acknowledged that it has agreed to pay him several hundred thousand dollars over two years for his cooperation. Before she left the case, Hinton said: “Guerra has no credibility. Chevron CEO John Watson has resorted to authorizing the offering of lucrative benefits packages to former Ecuadorian judges in return for false testimony.”
Chevron has vowed never to pay a dime of the Ecuadorian verdict. The company has no assets to speak of in the Andean country. Donziger’s team has launched separate lawsuits in Canada, Argentina, and Brazil, seeking to collect on the Ecuadorian verdict in those countries, where Chevron does have billions of dollars in assets.
The controversy surrounding Donziger has become a legal industry unto itself. The finger-pointing by lawyers appears likely to continue for years to come. In the meantime, thousands of farmers and Indians in the Oriente continue to live hard by a polluted industrial zone. Petroecuador has belatedly promised to clean up some of the polluted sites, but the oil company continues to have its own problems with fresh contamination.
By Paul M. Barrett-Bloomberg Businessweek, April 04, 2013