ISSN 2330-717X

Ecuador: Claims Trial Against Chevron Is Corrupt

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The court ruling ordering Chevron to pay Ecuadorian communities damages arising from its operations is the “product of fraud,” James Craig, a representative of the oil company, says.

By Gonzalo Ortiz

Chevron, the second largest U.S.-based oil company, believes that, to overturn the verdict ordering it to pay 9.5 billion US dollars in damages for polluting the Ecuadorian Amazon and causing health problems to its population, the best defence is a good offence on all fronts.

The ruling, issued on Feb. 14 by a provincial court in Ecuador, is “corrupt, illegitimate, unenforceable, and the product of a fraud,” according to the company’s Latin American spokesperson, James Craig, interviewed by Tierramérica.

Ecuador
Ecuador

As it prepares to appeal the sentence, the company has presented a request for clarifications from the acting judge, Nicolás Zambrano. But it has also brought an action against the Ecuadorian state in the Permanent Court of Arbitration, seated at The Hague, and is suing the lawyers and lead plaintiffs in a U.S. District Court in New York, accusing them of inventing a fraudulent case against the company.

Craig claims that the judge failed to take into account “many elements that came out in the proceedings,” that he based his ruling only on the studies submitted by the plaintiffs, and that he ignored the fact that the report presented by Richard Cabrera, the expert witness commissioned to conduct an independent assessment, was actually drafted by the plaintiffs.

Although Zambrano explicitly noted in the ruling that he had ignored Cabrera’s questioned report, Craig insists that “the trial is totally corrupted.”

Texaco conducted oil exploration and extraction operations in northeast Ecuador from 1964 to 1990, in association with the state, and it retained a 37.5-percent share in the business until 1992. In 2001 the company was acquired by Chevron.

According to the reports filed, Texaco drilled around 350 oil wells across an area of approximately 6,900 square kilometres in the Amazon rainforest. It dug out 900 unlined open-air pits for oil sludge disposal, and dumped some 68,000 litres of wastewater discharged by its production processes -a mixture of petroleum, acid chemicals, and other toxic substances known as production water-, which seeped into rivers and streams. What follows is an extract of the interview with Craig.

TIERRAMÉRICA: Even before the ruling had been issued in the first instance, Chevron filed a complaint with the court in The Hague demanding that in the event of an adverse ruling against the company, the Ecuadorian state be held accountable for any damages awarded. Why should the state be made to pay if it was your company that operated in that area from 1964 to 1990?

JAMES CRAIG: Texaco was one of the operators in the consortium from 1972 to 1990, when the government of Rodrigo Borja (1988-1992) decided that it no longer needed a foreign partner. The operator for the last 20 years has been the (state-owned company) Petroecuador.

When Texaco left, it was agreed that a number of remediation actions would be carried out in certain places that had been impacted by the consortium’s operations. The state, as the majority shareholder, and Texaco, as the minority shareholder, then signed an agreement in 1995 whereby Texaco was to cover one third of these environmental liabilities and the state was to cover the other two thirds.

Texaco cleaned 162 ponds and six spill areas, it installed seven produced water re-injection facilities, and invested over five million U.S. dollars in social work. And in the year 1998 the final document releasing the company from any responsibility or obligation was signed. (Craig shows the document executed by Ecuadorian authorities and Texaco executives).

If there are any environmental problems, the only one responsible is the Ecuadorian state.

TIERRAMÉRICA: But that agreement did not release Texaco from third-party liability. The state attorney general, Diego García, says that this is a conflict between private parties and therefore the court in The Hague does not have jurisdiction.

JC: We have abundant evidence that shows how this case has been influenced by the government and politics. Besides numerous statements by President (Rafael) Correa against Chevron, we have a press bulletin from the presidency where the government not only declares its support for the plaintiffs, it also undertakes to gather proof to help them.

We have a video of Alexis Mera (legal secretary of the presidency) meeting with attorney (Pablo) Fajardo, (activist Luis) Yanza, and attorneys (Julio) Prieto and Alejandro Ponce Villacís (members of the plaintiff’s litigation team) to discuss how they could go about invalidating the 1998 agreement.

TIERRAMÉRICA: How did you obtain recordings of meetings held in the presidency?

JC: The plaintiffs commissioned a documentary on their “struggle against the evil multinational corporation,” and over the course of two or three years the filmmaker (Joe Berlinger) accompanied them to all their meetings, taping and filming everything for a documentary that was finally released in 2009 under the title “Crude.”

We filed a request with a U.S. court to obtain access to the footage that was not included in the film, and the judge ruled that that material had to be turned over to the company. I have two CDs here -which I’m going to give to you- containing 16 of these videos, although the meeting with Mera is not included. (At the end of the interview, Craig presented a flash drive with images of that meeting).

TIERRAMÉRICA: Before determining whether or not it has jurisdiction, The Hague court ordered the Ecuadorian state to suspend the enforcement of the judgment against Chevron. But any lawyer knows that a judgment cannot be enforced until it becomes final.

JC: The lawyers for the plaintiffs have said themselves that they were going to take the first instance ruling to international forums to begin seizing our assets. Which is why The Hague court decided to take measures to prevent irreparable damage, such as the seizing of offshore platforms or refineries.

TIERRAMÉRICA: But a statement like that, even coming from the plaintiffs, has no legal basis.

JC: That question would have to be answered by The Hague court, which has much of that evidence. We have hundreds of thousands of documents, tens of thousands of compromising email messages.

TIERRAMÉRICA: Also obtained through court orders?

JC: Of course. From hard drives we obtained through several proceedings we initiated last year.

TIERRAMÉRICA: You’ve said that Chevron came in good faith to Ecuador to appear as a respondent in the trial. But when the case was originally brought in the United States, in 1993, you manipulated the proceedings arguing that the case could not be heard in a U.S. court.

JC: If you say “manipulated” you’re twisting the facts. We defended our position with the argument that the courts of the United States were not the proper forum for resolving an issue that was clearly Ecuadorian.

The first instance court agreed with us. The court of appeals did too, but it added as a condition that we could not oppose Ecuador’s jurisdiction if an action was brought against us there. Which is why Chevron came to Ecuador to respond in good faith to the action.

TIERRAMÉRICA: Where does the case go from here?

JC: We don’t know. The response to our request for clarification depends on the judge. We will then have three days to appeal. We’ll appeal to the Higher Court of Sucumbíos and, if necessary, to the National Court of Justice and the Constitutional Court, and, if it comes to that, we’ll take our appeal outside the country.

We have another case pending in New York against Fajardo, Yanza, (U.S. attorney Steven) Donziger, who is the leading attorney, and others who participated in the fraud, colluded with the judges, pressured justice, and induced the government to interfere.

TIERRAMÉRICA: What are you accusing them of?

JC: Fraud, conspiracy and extortion.

TIERRAMÉRICA: And are you suing them for a specific sum of money?

JC: We’re not asking for a specific sum. It’s a civil action. But we do expect to be reimbursed for what we have spent in our defence.

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Tierramérica is a joint project of the United Nations Environment Programme (UNEP), the United Nations Development Programme (UNDP) and The World Bank (WB), with IPS serving as the executive agency.

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