- The Washington Times - Thursday, April 10, 2014

The environmental consulting firm accused by a judge of assisting “egregious fraud” by plaintiffs in the highly publicized lawsuit against Chevron Corp. successively received multimillion-dollar contracts from the U.S. government, including work on the infamous BP Deepwater Horizon oil spill, according to federal records obtained by The Washington Times.

Stratus Consulting Inc., the Boulder, Colo.-based firm whose work was used by plaintiffs’ attorney Steven Donziger to persuade an Ecuadorean court to find Chevron liable for oil pollution, has not been excluded from receiving federally funded contracts because of its role in the case.

A federal judge in New York last month issued an order barring Mr. Donziger and the Ecuadorean villagers he represented from collecting in the United States on a $9 billion judgment by an Ecuadorean court against the oil giant, saying the verdict was the result of “egregious fraud.”

One part of the fraud, the court found, was that key parts of the “independent” expert analysis commissioned by the Ecuadorean court were written secretly by Stratus analysts hired by Mr. Donziger.

In April 2012, Stratus was awarded a $20 million contract by the Department of Commerce’s National Oceanic and Atmospheric Administration to conduct a natural resource damage assessment after the BP oil rig explosion that resulted in an estimated 4.9 million barrels of discharge into the Gulf of Mexico.

Even after revelations about the firm’s involvement in the Chevron case, the agency defended its contract with Stratus, saying it has full confidence in the firm’s integrity.

“NOAA takes very seriously matters of research integrity and witness integrity,” said agency spokesman Scott Smullen. “Because of the rigorous protocols NOAA employs as a matter of standard operating procedure in data collection, analysis and validation, we are confident in the accuracy of the firm’s work for the agency on the Deepwater matter.”

According to the General Services Administration, a company can be considered for placement on the Excluded Parties List if it is convicted of fraud, embezzlement, theft, forgery, bribery, falsification or destruction of records, among other qualifications.

Stratus’ total government contracts add up to more than $169 million, according to the GSA.

Some analysts say is not uncommon for environmental consultants to be used as pawns in lawsuits against big corporations.

Tainted report

“Environmentalists, the real advocates, don’t always concern themselves with the legal fairness of the solution,” said Greg Meacham, a former FBI special agent accountant and executive vice president of MDB International, the firm hired by Chevron to investigate in Mr. Donziger’s lawsuit. “They see a horrific problem in the Amazon, and Chevron is a U.S. corporation with a ton of money. So what if they’re not 100 percent responsible? They have an ability to fix it, and these people are suffering.”

Another investigator from MDB International, Phillip Manuel, said Mr. Donziger’s actions in this case amounted to an abuse of Stratus’ concern for the environment.

“You have people who are sincerely concerned about the environment; however, the case will result in embarrassment,” Mr. Manuel said. “They will have to be more careful going forward.”

Stratus officials deny falsifying data, saying they disavowed the findings in the Chevron case “based on the understanding that the process in Ecuador was tainted.”

But Chevron, in its court filings, claimed that two Stratus employees talked directly with the Ecuadorean court expert and portions of the court report were written verbatim by the consultant in Boulder.

In a statement on the Stratus website, officials called the Ecuador episode an aberration. “We have taken steps to ensure that a situation such as this will never be repeated,” the company said.

Among those steps: “commissioning an independent, third-party audit of our management systems by an attorney who specializes in business ethics; retraining staff on appropriate practices for technical experts working both in the United States and internationally; and incorporating additional checks and balances in every aspect of our project execution.”

‘Anything but independent’

Stratus in April 2013 disavowed its work on the Amazon pollution case. As a result, Chevron released it as a named defendant.

Mr. Donziger has argued that Stratus analysts were pressured to disavow their findings in exchange for being dropped from the litigation.

Mr. Donziger initially won an $18 billion judgment in an Ecuadorean court for a class of 30,000 residents who sued Chevron for environmental damage to the Amazon. In 2011, the judgment was reduced to $9.5 billion, and Mr. Donziger spent several years trying to collect on the judgment in the U.S.

Mr. Donziger hired Stratus to conduct research on the pollution and health hazards caused by Texaco oil spills in the rain forest. Chevron became liable for the cleanup costs when it acquired Texaco in 2001.

“There’s no question that there’s horrific conditions in the upper Amazonian basin,” MDB International’s Mr. Meacham said. “The question is, is it legally attributable to Chevron? Should they be made to pay?”

While Stratus portrayed itself as a victim in the case, U.S. District Judge Lewis Kaplan in New York raised questions about the original judgment against Chevron.

When the Ecuadorean judge appointed a neutral, third-party environmental expert — Richard Stalin Cabrera Vega — to document the extent of the pollution caused by the defendants, Mr. Donziger and Stratus altered the report to give more weight to their own findings.

“Cabrera was anything but independent, and Stratus, in purporting to comment on Cabrera’s work, in fact was commenting on its own — it actually had written all or most of the Cabrera report,” Judge Kaplan wrote.

In some of the most dramatic testimony of the Chevron’s civil racketeering case against Mr. Donziger, a lawyer who once worked for the plaintiffs recalled how he quit the case after a top Stratus consultant told him the plaintiffs’ team had “ghostwritten” much of the court’s expert testimony.

“It was a shocking event and I remember it clearly,” attorney Jeff Shinder told the court last fall

• Kellan Howell can be reached at khowell@washingtontimes.com.

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