Chevron – Ecuador
litigation: New York Court finds lawyer Steven Donziger
and his allies guilty of Racketeering
Case
1:11-cv-00691-LAK-JCF Document 1874 Filed 03/04/14 Page 1 of 497
A 497 page
opinion of Judge Lewis Kaplan, a New York District Judge, supports a verdict
that represents a rotund victory for ChevronTexaco in its case against lawyer
Steven Donziger and his allies, the plaintiffs of the Lago Agrio, Ecuador litigation against the U.S. oil company.
According to the
verdict Steven Donziger will not be able to enforce the Lago Agrio, Ecuador
verdict against ChevronTexaco in the United States and will be prevented from
benefitting from any further action against Chevron in connection with this
case. Says Judge Kaplan in his opinion:
“They
[the Lago Agrio plaintiffs], LAP, submitted fraudulent evidence. They coerced one
judge, first to use a court-appointed, supposedly impartial, “global expert” to
make an overall damages assessment and, then, to appoint to that important role
a man whom Donziger hand-picked and paid to “totally play ball” with the LAPs.
They then paid a Colorado consulting firm secretly to write all or most of the
global expert’s report, falsely presented the report as the work of the
court-appointed and supposedly impartial expert, and told half-truths or worse
to U.S. courts in attempts to prevent exposure of that and other wrongdoing.
Ultimately, the LAP team wrote the Lago Agrio court’s Judgment themselves and
promised $500,000 to the Ecuadorian judge to rule in their favor and sign their
judgment. If ever there were a case warranting equitable relief with respect to
a judgment procured by fraud, this is it.”.
The opinion adds: “one
Ecuadorian legal team member [for the Lago Agrio plaintiffs] , in a moment of
panicky candor, admitted that if documents exposing just part of what they had
done were to come to light, “apart from destroying the proceeding, all of us,
your attorneys, might go to jail.”.
The verdict
claims that Steven Donziger and his allies behaved like gangsters in their
efforts to extort billions of dollars from ChevronTexaco. His allies included
P.R. specialists, Technical Companies such as Denver- based Stratus (settled
with Chevron out of court), lawyers,
consultants, “environmental” organizations such as Amazon Watch, investors trying to get a piece of the booty,
even the judges. In short, an unprincipled legion of bounty hunters. Donziger
stood to pocket $600 million if he had succeeded.
The Lago Agrio,
Ecuador litigation started in 2003. In a cynical fashion the lawyers working
for Donziger at this stage explained their objectives as follows: “to exceed the $6 billion figure, while still
passing the
laugh test.” DX 731 (Apr. 15, 2006 Email from D. Fisher to
S. Donziger and A. Page), in page 50 of the opinion.
When I became
interested in this case I first met with Ms. Karen Hinton in Washington DC, the
person who was handling the P.R. work for Steve Donziger and the rest of the
plaintiffs. I wanted to hear the two
sides and eventually did so. After she explained their position to me I told
her that, as a petroleum geologist with some knowledge of the Ecuador oil
industry, I felt they had a weak case and that the Court expert, Mr. Richard
Stalin Cabrera, did not seem qualified to evaluate this complex case, judging
by his credentials and performance. Little did I know that Mr. Cabrera had met
several times with Donziger’s team before being appointed “expert” and that Mr.
Cabrera’s report would actually be written by the Donziger’s team!. Judge Kaplan says: “it was obvious that the plaintiffs had
already predetermined the findings of the global assessment, that they
themselves would write a report that would support their claim for billions of
dollars against Chevron and would simply put Mr. Cabrera’s name on it. The
purpose of the meeting was to establish all the conditions for controlling and
managing the expert’s work, in secret, in accordance to the plaintiffs’
interests”, page 79 of the opinion. In
2007, Mr. Cabrera had the gall to say the following:
“I should
clarify that I do not have any relation or agreements with the plaintiff, and
it seems to me to be an insult against me that I should be linked with the
attorneys of the plaintiffs”. But he was!
In this first
and only meeting I told Ms. Hinton, in all candor, that I felt they should
settle with Chevron and that Petro Ecuador should be part of the settlement,
even if not mentioned as co-defendant in the litigation. She asked if I had any
figure in mind and I said one billion dollars, to be contributed half and half,
an arbitrary amount I admit, but one that, based on my experience in the oil
industry, I felt adequate for the size of the environmental problem in the
Oriente of Ecuador. I could see she was shocked at an amount she considered too
low. At the time I did not realize they were not looking for justice but
looking for big money.
Rafael Correa
won the presidency of Ecuador while the litigation against Texaco was going on
and immediately threw his weight against the oil company. “THE PREZ WAS VERY UPSET AT
TEXACO. HE ASKED THE ATTORNEY GENERAL TO DO EVERYTHING NECESSARY TO WIN THE
TRIAL AND THE ARBITRATION IN THE U.S. . . . THIS SATURDAY HE WILL REPORT ON THE
MATTER ON NATIONAL TELEVISION, OFFICIALLY NOW. AT THAT TIME HE WILL CLARIFY
SEVERAL POINTS IN ORDER NOT TO HURT US
IN THE TRIAL. In a further note, the LAPs’ media agent wrote
that President Correa “GAVE US FABULOUS SUPPORT. HE EVEN SAID THAT HE WOULD CALL THE JUDGE.”, page 121 of the
opinion.
“President Correa took to the radio on April
28, 2007, denouncing the “homeland selling” lawyers defending Chevron-Texaco,
“who for a few dollars are capable of selling souls, homeland, family, etc.,”,
page 122 of the opinion.
Donziger wrongly
assumed, thinking of the Las Vegas movie, that what happened in Ecuador would
stay in Ecuador. However, the dealings with Cabrera and the murky behavior by
the Denver consultants, Stratus, leaked and became known by Chevron. From then
on the whole disaster started to unravel. After finding out about this, Mr. J.
Kohn, one of the investors funding the plaintiffs, severed his ties with
Donziger. He said: “I relied on Mr. Donziger to tell me the truth about what was going on
in the Ecuadoran litigation . . . and I now know that Mr. Donziger did not tell
me the truth. It is now clear to me that Mr. Donziger deceived and defrauded
me, and that, as a result, we continued to pay millions of dollars to that
litigation that we never would have paid had we known the truth.”, page
163 of the opinion.
After he lost
Kohn’s support Donziger managed to obtain the support of Washington’s law firm Patton Boggs and finance
organization Burford Capital. Patton Boggs became heavily involved in the
venture and persuaded Burford to put their money in the case. Donziger agreed
that “Burford’s
return on its investment would be paid from the Lago Agrio plaintiff’s share of
any recovery on a judgment net of the portion allocated to the attorneys’ fees”.
In other words he was protecting his money.
The judge who
claimed to have written the verdict, Nicolas Zambrano, lied and was found to be
bribed by the plaintiffs. Judge Kaplan said:
“the Court finds that Zambrano did not write the Judgment issued under
his name. He was astonishingly unfamiliar with important aspects of its contents.
His testimony at trial was evasive and internally inconsistent…. his responses
and explanations at trial varied from one minute to the next…. “
So, if Zambrano
did not write the verdict, who wrote it? : an analysis made by Court experts
concluded that the verdict was written by the team of Lago Agrio plaintiffs,
this is, the Donziger team, pages 200-220 of the opinion.
According to the
judge Donziger was evasive repeatedly at his deposition in the action against him,
his deposition in this case, and again at trial. In his June 2013 deposition in
this case, Donziger replied “I don’t know” or “I don’t recall” to more than 180
questions, nearly every substantive question posed to him. And during his
cross-examination at trial, Donziger so responded over one hundred times.
The judge adds: “The likelihood that Donziger’s memory was as bad as these answers
suggested is very small”, page 265.
In reaching his
verdict Judge Kaplan stated, giving detailed reasons, that Steven Donziger and
his team had incurred in ethical violations: bribery, coercion, corruption,
deception, ghost writing and fraud, pages 330-339.
Furthermore the
judge details how Donziger engaged in money laundering, obstruction of justice
and witness tampering, pages 380-390.
The judge
concludes:
“All of the
property that Donziger now has and which he hereafter may receive as a result
of the Judgment are and will be the products of the Judgment obtained in
consequence of his predicate acts of racketeering”.
The Court also
found that the judicial system in Ecuador is below standards and quoted
President Correa as saying: “the Judicial Branch depends on the
Executive Branch. If I don’t give it money it has no means to act”. To illustrate this assertion the judge further
quoted from government officers, as follows: “The president of the Civil and
Criminal Commission of the National Assembly stated in 2009 that “[w]e have a
justice administration system that has entirely collapsed.”. And in June 2010, the Judicial Council
publicly declared that “the Judicial Branch is not independent,” and noted
“serious risks” that affect the ability to dispense justice.
The verdict
represents a remarkable triumph for ChevronTexaco. I am gratified about this
verdict because I like to see justice win. This case was used and misused by
political extremism, by ignorant movie stars, by ideologically poisoned
organizations, by corrupt politicians, to blame a company for wrong doings that
another company had committed. A group of gangsters tried to get billions of
dollars in their pockets through fraud.
They ( almost) got away with it.
