Petroecuador Archives - Shopfloor

Videos Reveal Anti-Chevron Strategy: Politics, Pressure and Lies

By | Briefly Legal, Energy, General, Trade | 4 Comments

Ever since Shopfloor began blogging about the Ecuador-based litigation against Chevron in May 2007, we’ve argued that the lawsuit was a blatant shakedown by U.S. trial lawyers. In claiming Chevron owed $27 billlion — and then $113 billion — for environmental damage from Texaco’s oil drilling in the Amazon, the U.S. attorneys and Lago Agrio plaintiffs in Ecuador were really trying to pressure Chevron (which had bought Texaco in 2001) into a huge settlement. The bigger the settlement, the bigger the check for the U.S. lawyers being paid on a contingency basis.

Their preposterous claims relied not on facts or the law, but rather a multifaceted and ugly public relations and political campaign. At work was a combine of U.S. trial lawyers, environmental activists and anti-corporate bloggers, magnifying their accusations through a sympathetic mainstream media. The shakedown campaign recorded several PR victories, including a  “60 Minutes” hit piece against Chevron and most notably a full-length, overwhelmingly pro-plaintiffs’ film, “Crude,” by well-known documentarian Joe Berlinger.

In Ecuador the plaintiffs’ team manipulated the court system and made common cause with the leftist, anti-American regime of President Rafael Correa. (More on that in a later post.)

The response to our arguments? Chevron lies, America exploits the Third World, Ecuadorians are dying and you’re an inhumane corporate shill.

Now, thanks to outtakes from “Crude” that Chevron successfully obtained through the U.S. courts,  the trial lawyer/activist/media combine can no longer pretend any sort of moral high ground. Footage reveals Steven Donziger, the lead U.S. attorney who has directed the anti-Chevron campaign in Ecuador and the United States,  to be a cynical, arrogant and foul-mouthed commentator. And, unfortunately for the plaintiffs’ case, Donziger is remarkably frank.

Take for example, this video below. At a June 6, 2007, meeting Donziger outlined the plaintiffs’ strategy to intimidate the Ecuadorian courts through the show of brute force. [Warning: Language]


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Note to Activists: Petroecuador, Petroecuador, Petroecuador

By | Briefly Legal, Culture and Entertainment, Energy | One Comment

In a Financial Post blog entry, “Turning the tables,” Silvia Santacruz, an Ecuadorian economist based in New York and the publisher of Ecuador Mining News.com, provides knowledgeable perspective about the trial lawyer/activist litigation against Chevron.  She also critiques the one-sided and misleading documentary-style film about the dispute, “Crude.” Companies usually try to buy peace in circumstances like these, Santacruz observes, funding NGOs in order to avoid a PR beating to their market capitalization. But…

[One] American firm — Chevron — is not only fearless of green campaigners’ tactics, it is giving them a taste of their own medicine. In the process, it may also highlight the problems with government ownership of natural resources, including eco-disasters, that environmentalist activists blithely ignore.

In this case, the government-owned operator is Petroecuador, which has continued to develop the Amazon region’s oil resources after ending its consortium with Texaco — later bought by Chevron — in 1992.  Santacruz, who recently traveled to the Lago Agrio region in Ecuador, reports the reality ignored by the activists, U.S. trial lawyers and, too often, the U.S. media who report on the litigation.

During my visit to the oil spills, I found some reforested sites, others being cleaned up, and just a few crude spills collected in pools. At one site, known as the “Presidential Well” after Correa gave a press conference there, I noticed that the pipelines were warm. Petroleum was being pumped, and the spill was recent — I threw a stone that sank instantly. I had no doubt: Petroecuador is currently operating there. So, how can Correa and environmentalists accuse Texaco of a “pollution 30 times greater than the Exxon-Mobil,” when the company left 20 years ago?

Recent data reveal that state-owned Petroecuador has caused 1,415 crude spills between 2000 and 2008, an average of one incident every other day. But environmentalists in Ecuador do not care about Petroecuador and continue to point fingers at Chevron instead. Astonishingly, my country’s ecological disaster does not make the green campaigners blink. State-owned companies’ pollution is simply not on their radar screen. They seem to care not so much about my country’s indigenous people as they do about Chevron’s pockets.

So that was actually Petroecuador oil that the actress Daryl Hannah stuck her hand into for all those anti-Chevron publicity photos. She seemed not to care so much about the country’s indigenous people as she did about her own self-promotion, but that’s Hollywood environmentalism for you.

Santacruz is an Ecuadorian, an economist, and a person with first-hand knowledge of the energy industry in developing countries. Her insights merit serious attention. Instead, we predict, the Amazon Defense Coalition will attack her motives and dream up some sort of nefarious connection. That’s SOP for the activists, who seem to care not so much about truth as they do about Chevron’s pockets.

‘Crude’ Footage Reveals Lies Behind Trial Lawyers’ Suit Against Chevron

By | Briefly Legal, Energy, First Amendment and Lobbying | 11 Comments

Now, THIS is a blockbuster. Footage from the documentary-style film, “Crude,” reveals that U.S. trial lawyers strategized with a supposedly independent court-appointed expert in Ecuador who went on to recommmend penalizing Chevron $27.4 billion for environmental damage in the Amazon.

In a court filing today in U.S. District Court, Southern District of New York, attorneys for Chevron detailed the collusion among Steven Donziger, the U.S. trial lawyer who has masterminded the suit, the Ecuadorian lawyers who serve as the public face of the anti-Chevron campaign, and Richard Cabrera, an engineer later appointed as the court’s “special master” charged with assessing the pollution and damages. It is Cabrera who recommended the $27.4 billion damage figure, earning him praise from anti-Chevron activists who hailed his findings as proof of the company’s greed and criminality.

The damning revelations are the result of Chevron’s successful legal efforts to gain access to outtakes from the movie, “Crude,” which the director, Joe Berlinger, claimed to be a fair and balanced effort to show both sides in the litigation over Texaco’s operations in Ecuador between 1964 and 1990. Chevron purchased Texaco in 2001.  Berlinger claimed journalistic privilege and fought to keep control of the footage, but was ordered by the Second Circuit Court of Appeals on July 15 to turn over relevant material.  The review by Chevron’s lawyers of the first batch of outtakes shows that not only that the legal case against Chevron is built on lies, but that Berlinger’s reputation as a serious, fair-minded documentarian is hollow.

The opening of Chevron’s memorandum filed today reads like a good movie, with the added virtue of being true. From the document, “Chevron Corporation’s Memorandum of Law in Support of Motion for a Preservation Order, and to supplement and enforce the subpoenas,” filed by Chevron’s attorney, Randy Mastro, with Gibson Dunn & Crutcher:

“Hold on a second, you know, this is Ecuador. . . . You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want. Sorry, but it’s true.” “Because at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bullshit. It really is. We have enough, to get money, to win.” Ex. F at 195-05.1 So says Lago Agrio Plaintiffs’ counsel and New York licensed lawyer Steven Donziger in an outtake from Crude produced just days ago pursuant to the orders of this Court and the Second Circuit. Donziger makes these statements during a meeting with Plaintiffs’ U.S. environmental consultants Charles Champ, Ann Maest, and Dick Kamp, after Maest tells him, point blank, that they need evidence of groundwater contamination, because Plaintiffs did not submit any and “right now all the reports are saying it’s just at the pits and the stations and nothing has spread anywhere at all.” Id. When Champ continues to press on the lack of evidence, Donziger looks at the camera and says, “There’s another point I got to make . . . with these guys, but I can’t get this on camera,” and then the camera goes off. Id.

Chevron has thus far been able to review only a small fraction of the outtakes produced, but already it is clear that they contain conclusive evidence that Plaintiffs’ counsel, consultants, and associates have knowingly participated in a fraudulent enterprise to corrupt the legal proceedings pending in Ecuador against Chevron. The express goal of their scheme is to procure a fraudulent, multi-billion dollar damages recommendation from a supposedly independent “Special Master,” and then to use that fraudulent recommendation either to extort a settlement from Chevron or to obtain a fraudulent judgment from the Ecuadorian court.

We’ve uploaded the court filing here. (Scribd here.) The 39-page document provides a wealth of details about the sordid  orchestration of the claims against Chevron, with Steven Donziger being the cynical conductor. The key factual point appears on page five:

The Crude Outtakes Show That Plaintiffs’ Counsel and Consultants Planned and Created the Supposedly Independent $27.4 Billion “Global Expert Assessment”

The outtakes that Chevron has reviewed so far leave no doubt that Plaintiffs arranged for Cabrera’s appointment and decided what Cabrera’s report would say, and that Plaintiffs’ lawyers and their U.S. consultants—not independent experts working for Cabrera—drafted Cabrera’s initial work plan and ultimately his damages assessment in the Lago Agrio Litigation.

We have followed this case because the litigation captures so well the modern shakedown campaigns that trial lawyers and activists carry out against U.S. businesses, often cheered on by a biased media. The evidence was always there, conclusions ready to be drawn. Now there’s no denying it — the corruption behind this litigation is on film.

Earlier posts about Chevron, “Crude,” and Donziger.

Disclosure: As I have disclosed repeatedly, Chevron paid for several bloggers, myself included, to take a trip to Florida and Ecuador in June 2009, during which Chevron presented its side of  the case. No one at Chevron has ever told me what to write on the issue.

Rafael Correa Explains the Western Hemisphere

By | Briefly Legal, Energy, Trade | No Comments

Ecuador’s leftist president, Rafael Correa, earned a doctorate in economics from the University of Illinois-Urbana, and he returned to the U.S. campus Thursday to accept the Madhuri & Jagdish N. Sheth International Alumni Award for Exceptional Achievement.

Correa’s government appears to aspire to excesses of the Bolivarian movement as committed under Hugo Chavez in Venezuela, including political persecution of the independent media. (See Reason Magazine, “The Bolivarian Rot Spreads.”) The judiciary is both corrupt and under political pressure, and foreign investment is insecure. (See Department of State’s 2010 Investment Climate Report.) The Heritage Foundation’s ranks Ecuador 147th among nations in economic freedom, 26th out of the South American, Central American and Caribbean nations: “Ecuador performs particularly poorly in business freedom, property rights, investment freedom, and freedom from corruption.”

Yet in his otherwise unremarkable speech Thursday, Correa seems to recognize the destructiveness of this anti-investment, anti-American behavior. The most interesting passage (as we can best make out given our rudimentary Spanish and Google translation):

Another thing that I admire a lot about the Anglo-Saxon world is its pragmatism and sense of responsibility. If you commit a mistake here, you make a corresponding analysis, apply the necessary sanctions, and, above all, you take corrective action so it doesn’t happen again. But if you make a mistake in Latin America, we’re going to throw stones at the U.S. embassy. That is, it’s never our fault, it’s always someone else’s fault, and in that way we don’t determine responsibility and reach worse remedies. As Einstein said, insanity is doing the same things but expecting different results. We even invented a theory to blame others for our poverty – the Dependency Theory. It says, we are poor because you are rich. No one can deny the mechanisms of exploitation that have been applied throughout history …but to solve our problems we have to accept that we are the primary ones – although not the only ones – responsible for our own situation.

Good. But then how does one explain the government-abetted litigation against Chevron when the government-owned PetroEcuador’s responsibility for Amazonian pollution is so clear and continuing?

For more coverage of Correa’s speech in English, see…hey, there isn’t any coverage! Although the alumni office interviewed him in English, with an .mp3 of the discussion here.

When the Rule of Law Applies, Chevron Wins

By | Briefly Legal, Energy, General | No Comments

Chevron has recorded several significant victories in recent weeks in resisting the outlandish and orchestrated claims made against it for environmental damages in Ecuador. U.S. trial lawyers and perpetually outraged activists have fomented a $27 billion lawsuit against the company, ostensibly filed on behalf of the Amazonian natives who were harmed by Texaco’s oil operations in past decades; Chevron acquired Texaco in 2001.

The truth of the matter is that Texaco remediated the sites it was responsible for and the Ecuadorian government released it of legal liability after the clean-up. PetroEcuador, the government-owned oil company, has in the meantime continued its environmentally suspect operations. Nevertheless, the combine of trial lawyers, activists and media continue to promote the litigation, and their biggest ally is Ecuador’s leftist government headed by Rafael Correa.

But in undermining the rule of law in Ecuador, Correa is actually helping Chevron: In venues where the rule of law still applies, Chevron succeeds.

The latest example does not involve the trial lawyer/activist litigation, but it certainly makes the case that Ecuador’s government ignores contracts and legal obligations. From Chevron, a news release, “Chevron Wins Arbitration Claim Against the Government of Ecuador.”

SAN RAMON, Calif. – Mar. 30, 2010 – An international arbitration tribunal has ruled in favor of Chevron in a claim against Ecuador related to past oil operations by Chevron’s subsidiary, Texaco Petroleum Company. The tribunal, administered by the Permanent Court of Arbitration in The Hague, found that Ecuador’s courts violated international law through their delays in ruling on certain commercial disputes between Texaco Petroleum Company and the Ecuadorian government…

In its decision, the tribunal found that Ecuador had violated the United States-Ecuador Bilateral Investment Treaty by failing to provide effective means of asserting claims and enforcing rights. As a result, the tribunal awarded Chevron and Texaco Petroleum Company approximately US$700 million in principal damages and interest as of December 22, 2006, pending further proceedings to determine applicable taxes, compound interest, and costs.

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The Latest ‘Crude’ Review, Wrong Like Most of The Others

By | Culture and Entertainment, Energy, Media Relations, Trade | 4 Comments

From The Boston Globe, with a reviewer who strikes a tone we hadn’t see in the other reviews of the anti-Chevron movie, a world-weary cynicism. The inaccuracies are still the same, though.

From “An ecological disaster meets a media circus“:

In “Crude,’’ the anger onscreen spreads as slowly and inexorably as toxic sludge. The documentary follows a pending class-action lawsuit filed by 30,000 Amazon tribespeople against the US petro-giant Chevron for contaminating an area of land the size of Rhode Island.

But it’s not a class-action suit and it wasn’t filed by 30,000 Amazon tribespeople.

Even the Amazon Defense Coalition’s PR person, Karen Hinton, eventually admitted this basic fact — a basic fact that the Globe gets wrong.

Gee, if the reviewer starts off with a glaring error, wonder what else in wrong in the piece?

P.S. Today is the movie’s last day in Washington, D.C. It had a two-week run at the E Street Cinema, which the producers must regard as a success.

Using Foreign Courts to Attack U.S. Companies; Dole Still Wins

By | Briefly Legal, Trade | No Comments

From Bloomberg, “Dole Doesn’t Have to Pay Nicaraguan Verdict, U.S. Judge Rules“:

Oct. 21 (Bloomberg) — Dole Food Inc., the world’s biggest fresh fruit and vegetables producer, can’t be forced in the U.S. to pay a $97 million verdict issued by a Nicaraguan court, a federal judge said.

The award, won four years ago by 150 Nicaraguans who claimed they suffered injuries from pesticides used at Dole’s banana plantations in the 1970s, can’t be enforced because it was based on a law that violates international legal standards, U.S. District Judge Paul Huck in Miami said in a ruling yesterday.

“The law under which this case was tried stripped defendants of their basic right in any adversarial proceeding to produce evidence in their favor and rebut the plaintiffs’ claims,” Huck said.

A major ruling, with obvious implications for the lawsuit against Chevron in Ecuador, where the rule of law has deteriorated under leftist President Rafael Correa amid compelling evidence of judicial corruption.

UPDATE (11:52 a.m.): And here’s a good piece at The Wall Street Journal’s Law Blog, with many links, “Dole on a Roll: Court Declines to Enforce $97M Judgment“:

Nicaraguan courts since 2002 have issued judgments in 32 such suits for a total of $2.05 billion against Dole and pesticide makers, Dole said. The company said that if the plaintiffs had won in Miami, their lawyers would try in U.S. courts to collect the other judgments that the companies have refused to pay.

“This is a powerful ruling,” said Ted Boutros, a lawyer for Dole. “It will be a major deterrent to bringing other verdicts to the U.S.”

Chevron and Ecuador: What a Remediated Site Looks Like

By | General | One Comment

As a follow-up to Saturday’s post about photos used to illustrate stories about litigation against Chevron, a $27 billion lawsuit that claims the company is responsible for oil pollution in Ecuador, we offer a photo of a drilling site remediated by Texaco (which Chevron bought in 2001).

We took this photo on a trip to Ecuador in June made on Chevron’s dime.

Catching up on developments, we note that Chevron has filed for international arbitration against Ecuador. From the September 23 news release, “Chevron Files International Arbitration Against the Government of Ecuador Over Violations of the United States-Ecuador Bilateral Investment Treaty”:

SAN RAMON, Calif., Sept. 23, 2009-Chevron Corp. (NYSE:CVX) has filed an international arbitration claim against the government of Ecuador citing violations of the country’s obligations under the United States-Ecuador Bilateral Investment Treaty, investment agreements, and international law. The complaint stems from the government of Ecuador’s exploitation of the ongoing lawsuit against Chevron in Ecuador, as well as the government’s failure to uphold its duties under decade-old contracts. The arbitration proceeding has been commenced before the Permanent Court of Arbitration in The Hague under the Rules of the United Nations Commission on International Trade Law.

Chevron’s claims relate to the lawsuit currently pending against the company in Lago Agrio, Ecuador, where Chevron’s subsidiary, Texaco Petroleum Company participated until 1992 as a minority member of a consortium that explored for and produced oil under contracts with Ecuador and Ecuador’s government-owned oil company, Petroecuador. Through the filing, Chevron seeks to enforce prior settlement and release agreements that the government of Ecuador entered into with Texaco Petroleum when the consortium was terminated, and to hold Ecuador accountable for its obligations under Ecuadorian law and existing international treaties.

News coverage …

We note the NAM and other major business groups sent a letter to the leaders of the House Ways & Means Committee and the Senate Finance Committee last week opposing an extension of Andean Trade Preferences Act benefits to Ecuador (and Bolivia) because of the deterioration of the rule of law.

What Photo Do You Use to Illustrate Misleading Journalism?

By | Briefly Legal, Energy, Global Warming, Media Relations, Taxation, Trade | 15 Comments

The New York Times features a longish piece today about the litigation brought by a New York trial lawyer and the Amazon Defense Coalition against Chevron over claims of environmental damage in Ecuador, “Ecuador Oil Pollution Case Only Grows Murkier.”

Well, maybe it’s murky because the paper doesn’t bother to report basic facts, like who actually brought the lawsuit. It’s as if the $27 billion in legal claims just appeared.

The lawsuit is being financed by the Philadelphia law firm of Kohn, Swift and Graf, directed by New York trial lawyer Steven Donziger, and marketed by the Amazon Defense Coalition, which would receive the money from any settlement. And the legal/activist lawsuit is indeed a shakedown intended to force a settlement from Chevron for pollution supposedly left by Texaco, which Chevron purchased in 2001. Texaco operated in Ecuador as Texpet in a joint exploration and production venture with the government-owned oil company, Petroecuador, up until 1992. (See this Texaco history, “Chevron in Ecuador.”)

1992. 1992. 1992. 1992. We stress the year because any oil now appearing as liquid in Ecuador is the responsibility of Petroecuador. First, TexPet remediated all the sites assigned to it for clean-up by the government of Ecuador, which released the company from future claims. Second, oil doesn’t stay liquid on the surface for 17 years!

Those facts notwithstanding, here are the photo and caption the Times used to illustrate today’s story. (In the paper, it’s a five-column black-and-white photo, 6-1/2 inches deep, i.e., big.)

A pool of oil in Lago Agrio, an Ecuadorean town in the Amazon where Texaco left contamination. Chevron, which acquired Texaco, has inherited its legal troubles.
A pool of oil in Lago Agrio, an Ecuadorean town in the Amazon where Texaco left contamination. Chevron, which acquired Texaco, has inherited its legal troubles.

So the Times has illustrated a story about charges of pollution against Chevron with a photo of an oil pit (and flare-offs) created by Petroecuador. And doesn’t bother to tell the readers what they are seeing in the paper has nothing to do with Chevron.

The activists use the trick all the time, pointing to unrelated pollution and claiming Chevron is to blame, but shouldn’t the Times have higher standards? The truth isn’t THAT murky.

Crude Falsehoods

By | Briefly Legal, Culture and Entertainment, Energy, General, Trade | 3 Comments

Falsehoods upon falsehoods are at the core of the legal shakedown against Chevron by U.S. trial lawyers, environmental activists and the Ecuadorian government, aided by an uncritical media. We see another round of unquestioningly repeated falsehoods in the recent coverage of “Crude,” the anti-Chevron movie now being released around the country.

Here, from today’s The Los Angeles Times, the review by Kenneth Turan, who simply accepts the movie’s claims as true.

The outrage in question is the subject of a class-action suit filed by 30,000 citizens of Ecuador against Chevron, the world’s fifth-largest corporation, alleging that 18 billion gallons of toxic wastewater were dumped into the Amazon between 1972 and 1990, fatally poisoning the land and water and sickening inhabitants

That’s a lot of propaganda packed into a single paragraph, starting with the word “outrage.” And …

Class-action suit? No. That’s wrong. There are no class-action suits in Ecuador. Class action litigation is, alas, an American legal malady.

Filed by 30,000 citizens of Ecuador? No. That’s wrong. The suit was filed on behalf of 48 plaintiffs and all the damages would go to the Amazon Defense Coalition, with U.S. contingency trial lawyers getting their cut. (Although the Ecuadorian government now claims it would get 90 percent.)

18 billion gallons of toxic wastewater were dumped? Only in the most tendentious interpretation of the term “toxic wastewater.” In fact, it was “production water,” i.e., the water produced in the drilling of wells, everywhere in the world. It was handled according to the prevailing environmental standards at the time — and Texaco (Chevron’s predecessor) — was released from environmental claims by the Ecuadorian government after completing its remediation work on well sites. Meanwhile, Ecuadorian law still allows the discharge of produced water.

Think about it: 18 billion gallons of toxic waste? It’s a preposterous claim on its face, yet it’s a familiar charge in the attacks against Chevron, one that is simply repeated as true by documentarians and reporters alike.


  • We review “Crude” here.
  • And for Chevron’s perspective — and a useful supply of facts — see this summary.
  • As we’ve noted repeatedly, Chevron paid our way for a quick trip to Ecuador in June to see first-hand the oil region and to discuss the claims against it.