Chevron case finds trial lawyer in court after remarks caught on video

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It’s a precedent-setting court case that is playing out like a soap opera. A celebrity lawyer, triumphant after winning the biggest environmental judgment in history, is in danger of causing his own downfall as he is caught on video appearing to admit to misconduct and fraud — just the latest twist in a high-stakes, decadeslong court battle over oil pollution in the Amazon rain forest.

The battle pits Chevron Corp., the giant American oil company hit with a record $19 billion fine by an Ecuadorean court in 2011 for fouling the Amazon rain forest, against Steven R. Donziger, the colorful and well-known New York lawyer who orchestrated the monumental Amazon case. The lawyer even starred in a documentary in which he was portrayed as the hero who brought justice to impoverished Indians in the Amazon whose health and homes were destroyed by a Chevron subsidiary’s oil drilling operations there in the 1960s.

The case is playing out in the U.S. District Court in Manhattan, which ruled this summer against bids by Mr. Donziger to delay a trial scheduled for October and to lodge countercharges against Chevron for ruining his reputation and livelihood. Chevron is brandishing evidence based in part on outtakes of the Hollywood-made documentary “Crude,” in which Mr. Donziger seems to admit to fabricating evidence and other frauds in his drive to win the Amazon case.

Also playing a bit part in the drama is Ecuadorean President Rafael Correa, who has been the leading cheerleader for the judgment against Chevron, which found the company liable retroactively for damages from not having conducted a more thorough cleanup of the Amazon than required by the laws on the books at the time the company was drilling there. Chevron said its subsidiary Texaco, which the company acquired after the Amazon incident in 2001, obtained a certificate from the Ecuadorean government saying it fulfilled its legal obligation to conduct a cursory cleanup of the 16 billion gallons of toxic drilling waste dumped in the rainforest and streams of the Amazon during the years it drilled there, releasing the company from any future liability.

After two decades of seemingly endless litigation over the drilling incident in Ecuador, the action is centered in New York as Chevron seeks to undermine the widely questioned and oversized Ecuadorean verdict. Environmental groups say Chevron has spent more than $1 billion and hired an army of 2,000 attorneys from 60 top law firms to prosecute the case but spent only about $40 million to clean up the Amazon after a decadeslong wave of contamination there that dwarfs all other environmental spills in size.

A favorable ruling by the Manhattan court might render uncollectable the giant $19 billion 2011 verdict against Chevron, which Mr. Donziger and Ecuadorean groups are seeking to enforce with motions to seize Chevron assets in Canada, Argentina and Brazil. Chevron has refused to pay any of the fine on the grounds that the verdict in Ecuador was a fraud. If it loses the case, the consequences for Chevron also could be severe, giving impetus to the Ecuadorean case against the company in international courts.

N.Y. court favors Chevron

Chevron has scored some early wins as the court showdown nears.

Mr. Donziger recently complained to the Manhattan court that the barrage of charges and court filings Chevron has levied against him in the civil racketeering case may bankrupt him and “devolve into a mockery of justice and due process.” Chevron has dropped $60 billion in damage claims against two co-defendants of Mr. Donziger from Ecuador, but it is still seeking the huge sum from the attorney.

Despite charges of foul play, District Judge Lewis A. Kaplan has largely sided with Chevron to the point that Mr. Donziger’s original legal team in the case resigned this year, citing bias by the judge. Mr. Donziger also fell behind in paying his legal bills.

The judge noted that Mr. Donziger — in one of the many rich subplots in the case — at one point gained millions of dollars in financing for the legal battle from a hedge fund and Patton Boggs, a deep-pocketed Washington law firm, in exchange for a share of the huge settlement against Chevron. The hedge fund, Burford Capital, backed out of the transaction after providing an initial payment of $4 million, citing the allegations of fraud against Mr. Donziger.

Chevron has been delighted by a sympathetic ear from the New York court and several other courts in the U.S. that have looked into the matter during years of litigation.

“There is abundant evidence before the court that Ecuador has not provided impartial tribunals or procedures compatible with due process of law,” Judge Kaplan said in an early ruling in the racketeering case.

Chevron is charging Mr. Donziger with fraud and misconduct for, among other accusations, ghost-writing the Amazon verdict after bribing an Ecuadorean judge, who has admitted to the fraud in an affidavit; paying off witnesses; and engineering a bogus report providing critical scientific evidence that led to Chevron’s conviction.

The research firm that wrote the scientific report, Stratus Consulting, later renounced all its conclusions that Chevron had contaminated the drinking water of thousands of Amazon natives, leading to deaths, cancer and other serious health problems. In exchange for recanting its testimony, Chevron withdrew fraud charges against the consulting company.

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