President Correa’s Libel Suit and the Fraud Against Chevron
The Chevron Ecuador lawsuit and Correa’s libel suit discussed by Theodore J. Boutrous, Jr. in Forbes.
The scandal that engulfed Ecuadorian President Rafael Correa’s $42 million criminal libel judgment against the newspaper El Universo (and the three-year prison sentences for its editors and directors) provides powerful new evidence why courts around the world should reject efforts by U.S. plaintiffs’ lawyers to enforce a fraudulent $18.2 billion Ecuadorian judgment against Chevron. While the two cases involve different types of legal claims, they are products of the same corrupt judiciary and trials marred by remarkably similar violations of the rule of law.
As detailed in a Washington Post editorial, the handling of the case was “alas, worthy of a banana republic. After four changes of judge, a ‘temporary’ magistrate took over the case, held one hearing, and—33 hours after his appointment—issued the 156-page ruling. A subsequent independent investigation determined that he did not write it, and that the author was probably Mr. Correa’s attorney.”
Recently, a judge previously assigned to the case provided further details corroborating that the President’s attorney wrote the judgment against the paper. She also revealed that she had been offered a bribe by Mr. Correa’s attorney to rule in his favor (which she refused). After going public, she immediately fled the country fearing for her safety.
Last week, Nobel laureate Mario Vargas Llosa wrote that these developments show, “how unreliable the Ecuadorian courts are in matters of justice due to their feudal ties to political power.”
In the face of that condemnation and mounting international outrage, Mr. Correa issued “pardons” in the case – but Mr. Correa already got what he wanted out of the El Universo affair. He sent a clear message to the press and everyone else that he controls the courts, and can use them as a weapon whenever and however he wants, including to punish and chill free speech by his critics. It is ironic that, in pursuing a lawsuit he brought to attack a newspaper for calling him a “dictator,” Mr. Correa demolished two key pillars of a democracy: a free press and an independent judiciary.
Meanwhile, American plaintiffs’ lawyers are pursuing fraudulent environmental claims against Chevron in Ecuador. The parallels to the El Universo and Chevron cases are striking.
Court rulings and documents establish that the Chevron case, like El Universo’s, features direct interference by President Correa, a judicial bribery scheme, superhuman judicial speed reading, a judgment ghostwritten by the plaintiffs’ lawyers, bogus criminal charges, irregular selection of temporary judges, and an offer to eliminate part of the judgment in exchange for a coerced “apology.” In both the El Universo and Chevron cases, international bodies have ordered Ecuador to prevent enforcement of these improper judgments.
Seven U.S. federal courts have found that the record shows fraud tainting the Ecuadorian proceedings against Chevron. One court said evidence of “inappropriate, unethical and perhaps illegal conduct” by the Ecuadorian plaintiffs’ representatives has sent “shockwaves through the [United States’] legal communities.” Another judge remarked, “what has blatantly occurred in this matter would in fact be considered fraud by any court.”
These courts were reacting to videotaped evidence obtained through discovery showing that the plaintiffs’ representatives ghostwrote the report of a purportedly “independent” court expert to support their baseless claims for billions of dollars, and evidence of secret payments made to the expert. When details of this scheme emerged, the plaintiffs’ attorneys admitted in internal emails that they could all “go to jail.”
Chevron’s case is now pending before the same Ecuador court that affirmed the judgment against El Universo. Anticipating that the fix is in and they will win, the plaintiffs’ lawyers already are threatening to bring multiple foreign actions to enforce their fraudulent judgment against Chevron, which has no assets in Ecuador. But courts that respect the rule of law should refuse to enforce a judgment procured by fraud in a judicial system lacking due process and impartial judges.
The Chevron case exemplifies a disturbing phenomenon: U.S.-based plaintiffs’ lawyers colluding with corrupt foreign courts to fabricate whopping civil judgments against American companies, and then using the bogus judgments to try to coerce a big settlement. Federal courts in Florida recently refused to enforce a $97 million Nicaraguan judgment against Dole Food and other U.S. companies.
The lawyers suing Chevron are well aware that the Ecuador judiciary is plagued by corruption, as the U.S. State Department and multiple international organizations have recognized. Indeed, the Ecuadorians’ lead U.S. lawyer is caught on tape declaring all the Ecuadorian judges are “corrupt! It’s – it’s their birthright to be corrupt” and admitting that he and his team engaged in “dirty” tactics, which they “would never do . . . in the United States.”
The lessons of the El Universo debacle should help thwart the fraud underway against Chevron and bolster its ongoing international arbitration with the Republic of Ecuador over the case. Hopefully, it will also curb the appetite of U.S. plaintiffs’ lawyers seeking to exploit corrupt and politicized foreign courts for their own personal gain.