Chevron trial nears its end

Ecuadorean court cuts record $19B in damages

Chevron’s fraud case against Steven Donziger reaches a climax this week as the New York celebrity lawyer takes the stand for the first time to defend himself against charges that he engineered a record-breaking $19 billion judgment against the oil company for contamination of the Amazon rain forest.

Even as the Donziger case reaches a critical stage in a Manhattan U.S. District Court, a separate court in Ecuador last week delivered a big break to Chevron Corp. by slashing in half the outsized verdict against the company for failing to safeguard its oil operations against lethal spills that sickened thousands of natives of the rain forest.

The Ecuadorean Supreme Court threw out $9 billion in punitive damages previously awarded by lower courts for harm caused by the pollution, but it left standing the original $9.5 billion judgment which found Chevron liable for the environmental harm caused by its subsidiary Texaco, which dumped billions of gallons of untreated toxic waste in the forest and streams during decades of oil operations there.

The big reduction in the landmark judgment did not satisfy Chevron, however; it insists the case was irrevocably tainted by fraud and should be dismissed altogether. It vowed to keep pursuing its precedent-setting New York racketeering suit against Mr. Donziger, who represented the plaintiffs in the Amazon case, to prove that the entire judgment was invalid.

“The judgment is just as illegitimate and unenforceable today as it was when it was issued almost three years ago,” said Hewitt Pate, Chevron vice president and general counsel. “The government of Ecuador should be investigating the lawyers who are using its courts to commit fraud, rather than issuing another court opinion in furtherance of that fraud.”

Chevron has not paid any of the massive Ecuadorean judgment and its goal in the New York lawsuit is to produce evidence that the underlying case was irretrievably flawed and to win a judgment from the U.S. court making it hard or impossible for the Amazon plaintiffs to recover any damages from Chevron in Brazil, Canada or Argentina, where they have moved to seize Chevron assets.

Chevron became the defendant in the massive Amazon lawsuit by virtue of its acquisition of Texaco in 2001. It never owned or operated any drilling sites in Ecuador, and Texaco ceased drilling there in 1990, putting the company’s assets out of reach of the Ecuadorean court.

In five weeks of trial in New York, Chevron has called in witnesses who testified that Mr. Donziger and other lawyers in the Amazon case ghostwrote the court verdict giving them a huge win, while engineering the outcome of scientific studies finding gross environmental violations at the Texaco wells and waste disposal sites.

In one highlight from previous testimony, the judge who signed the Ecuadorean verdict, Nicolas Zambrano, appeared in flamboyant dress in the courtroom and fiercely denied he was paid off to use a ghostwriter. But he proved unable to recollect key details of the verdict under cross-examining by Chevron lawyers, and often appeared to contradict himself during three days of testimony.

Mr. Donziger, who is scheduled to appear in his defense Monday, took the unusual step of pre-releasing his written testimony to reporters at the end of last week, some of which could be disallowed by District Judge Lewis A. Kaplan. Mr. Donziger accuses the judge of being biased against him and stacking the case in favor of Chevron through rulings that, among other things, forced him to turn over personal and confidential documents that Chevron is now using against him.

While admitting to some “errors” in handling the Ecuadorean case, Mr. Donziger flatly denies having offered Judge Zambrano a $500,000 bribe or having even seen or met with the judge. He said the only evidence Chevron has of the alleged bribe is the testimony of another Ecuadorean judge who disgraced himself and undermined his testimony by himself soliciting a bribe from Mr. Donziger.

Many of the juicy new details about the long-running legal saga in Mr. Donziger’s testimony, including what he alleges is Chevron’s collaboration with the Ecuadorean military to intimidate the Amazon plaintiffs, are sure to further spice up the New York trial and put it on the list of top contenders for turning into a Hollywood movie.

Mr. Donziger said he kept copious notes on his activities in the Amazon region — notes which now are ironically being cited by Chevron as evidence in the fraud case against him — with the goal of possibly writing a book about it when it was over.

“I recognized the litigation in Ecuador was unprecedented and could some day make for an interesting or educational book or memoir,” Mr. Donziger wrote.

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