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The Fraudulent Case Against Chevron in Ecuador

The Facts About Chevron and Texaco in Ecuador

Ecuadorian Judgment Declared Fraudulent

U.S. Federal Court finds Ecuadorian judgment against Chevron a product of fraud and racketeering.

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Chevron is defending itself against false allegations that it is responsible for alleged environmental and social harms in the Amazon region of Ecuador. In February 2011, an $18 billion judgment—later reduced to $9.5 billion—was rendered against Chevron by a court in Lago Agrio, Ecuador, for alleged contamination resulting from crude oil production in the region.

The 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.

This decision was unanimously affirmed by the United States Court of Appeals for the Second Circuit on August 8, 2016. The appeals court stated that Donziger and his team engaged in a “parade of corrupt actions…including coercion, fraud and bribery.”

Chevron to Ecuador: Keep Your Promise, Clean up the Amazon

For years, the Ecuadorian government, activist groups and calculating lawyers have used images of oil pits, spills and indigenous people in the Amazon to mislead the public. Here’s the real story:

Unable to refute the evidence of fraud, Donziger and his team have resorted to personal and professional attacks against anyone who has challenged their scheme. They embarked on an international smear campaign against journalists, judges, human rights experts, women’s rights groups and anyone else who spoke the truth about the case.

After learning of the extent of the fraud, many of Donziger’s former supporters, including fundersinvestorsscientific experts and legal counsel have abandoned the scheme.

Chevron has never operated in Ecuador. Texaco Petroleum (TexPet), which became a subsidiary of Chevron in 2001, was a minority partner in an oil-production consortium in Ecuador along with the state-owned oil company, Petroecuador, from 1964 to 1992. After TexPet turned its remaining share of the oil operations over to Petroecuador in 1992, pursuant to an agreement with Ecuador, TexPet conducted a remediation of selected production sites while Petroecuador committed to perform any remaining cleanup. The government of Ecuador oversaw and certified the successful completion of TexPet’s remediation and fully released TexPet (827 KB) from further environmental liability. Petroecuador, however, failed to conduct the cleanup it promised and has continued to operate and expand oil operations in the former concession over the past 20 years.

Chevron is seeking to hold the Republic of Ecuador accountable for their role in denying Chevron justice through an international arbitration tribunal in The Hague, which is convened under the authority of the U.S.-Ecuador Bilateral Investment Treaty and administered by the Permanent Court of Arbitration at The Hague.

The tribunal has already ruled (88 KB) that the Republic of Ecuador released TexPet—and therefore Chevron—from liability for all public interest or collective environmental claims through agreements signed in the 1990s. The Lago Agrio plaintiffs’ lawyers have repeatedly admitted, and the relief in the Lago Agrio judgment makes clear, that their claims are exclusively collective and not individual.

The “Legal Fraud of the Century” in 3 Minutes

Fraud. Bribery. False allegations. Learn the facts behind the “legal fraud of the century.

The following are the most recent updates about the major components in the case:

Chevron RICO Lawsuit Against Plaintiffs’ Lawyers and Consultants

Chevron brought a civil lawsuit in U.S. federal court under the Racketeer Influenced and Corrupt Organizations Act (RICO) against Steven Donziger, the American lawyer behind the Ecuador lawsuit, and his associates to prove that the judgment was the product of fraud.

The RICO complaint was filed in February 2011 to hold the plaintiffs’ representatives accountable for fraud, extortion and other misconduct associated with the Lago Agrio litigation.

The case went to trial in October 2013. During the trial, Chevron called 24 witnesses, offered deposition testimony from 21 others, and submitted more than 3,000 exhibits into evidence.

Testimony was also included from those formerly aligned with the plaintiffs, who provided firsthand account of corruption:

  • Environmental Consultants: The plaintiffs’ key environmental consultants, from Stratus Consulting, provided sworn testimony disavowing their work for the plaintiffs’ lawyers and affirming that there is no scientific merit to the plaintiffs’ claims against Chevron.
  • Funders: One of the largest financial backers of the plaintiffs, Burford Capital, provided sworn testimony documenting fraud and other misconduct on the part of the plaintiffs’ lawyers to secure funding.
  • Former Judge: A former Ecuadorian judge who once presided over the case testified that the judge who issued the ruling was promised a half-million dollar bribe from the plaintiffs’ lawyers in exchange for ghostwriting the judgment in their favor.

On March 4, 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. This decision was unanimously affirmed by the United States Court of Appeals for the Second Circuit on August 8, 2016. The appeals court stated that Donziger and his team engaged in a “parade of corrupt actions…including coercion, fraud and bribery.”

International Arbitration Tribunal

In September 2009, Chevron initiated arbitration against Ecuador under the U.S.-Ecuador Bilateral Investment Treaty (BIT) for breaches of contractual obligations under settlement and release agreements Ecuador had entered into with TexPet in 1995 and 1998 and for breaches of various BIT obligations.

On September 18, 2013, the international arbitration tribunal issued a Partial Award (2.5 MB) in favor of Chevron and its subsidiary, Texaco Petroleum Company (TexPet). The Tribunal found that the Settlement and Release Agreements that the government of Ecuador entered into with TexPet released TexPet and its affiliates of any liability for all public interest or collective environmental claims.

On February 7, 2013, the international arbitration tribunal ruled (673 KB) that the Republic of Ecuador has violated the tribunal’s prior interim awards by not preventing the attempted enforcement of an $18 billion judgment against Chevron.

In prior rulings, (30 KB) the tribunal put the Republic on notice that if Chevron’s arbitration ultimately prevails, “any loss arising from the enforcement of (the Lago Agrio judgment) may be losses for which the (Republic) would be responsible to (Chevron) under international law.”

In February 2012, the tribunal had issued a Second Interim Award (455 KB) ordering the Republic—and all of its branches, including the judiciary—to take all necessary actions to prevent enforcement and recognition of the Lago Agrio judgment, both inside and outside of Ecuador. That award expanded upon an earlier award (595 KB) requiring Ecuador to “take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment.”

Fourth Interim Award (672 KB)

PCA Decision on Jurisdiction (1.2 MB)

Second Interim Award (1.2 MB)

Ecuadorian Environmental Claims Disavowed Under Oath by Plaintiffs’ Own Experts

On April 12, 2013, Chevron settled pending fraud and extortion claims against Boulder, Colo.-based Stratus Consulting, the lead environmental consultants to the plaintiffs’ lawyers in the Ecuador trial.

Stratus scientists provided sworn declarations outlining the firm’s knowledge of the plaintiffs’ lawyers’ misconduct in the ongoing litigation as well as testifying that there is no scientific merit to the plaintiffs’ damages claims against Chevron and Texaco Petroleum.

In the sworn declarations, Stratus details the role the firm and the plaintiffs’ lawyers played in drafting the supposedly independent damages report of Richard Cabrera, which serves as an evidentiary basis of the 2011 judgment against Chevron in Ecuador. Testimony also provides a direct account of lead plaintiffs’ lawyer Steven Donziger’s control of Cabrera’s report and the pressure Donziger applied to contrive damages attributed to Chevron.

Donziger’s other scientific experts have also testified against his misconduct and disavowed their findings.

Fourth Interim Award (672 KB)

PCA Decision on Jurisdiction (1.2 MB)

Second Interim Award (1.2 MB)