A news release from Chevron today provides more compelling evidence that the activist/trial lawyer/Ecuadorian government’s legal shakedown of the company is based on falsehoods and naked self-interest and can only succeed where the rule of law is absent. From “Court Appointee in Chevron Ecuador Lawsuit Tied to Ecuador State-Owned Oil Company“:

SAN RAMON, Calif., Feb. 9, 2010 - In a court filing today in Lago Agrio, Ecuador, Chevron Corp. (NYSE:CVX) provided newly discovered information showing that the author of a report recommending that Chevron be ordered to pay $27 billion in damages is the majority owner of an oilfield remediation company that stands to gain financially from a judgment against Chevron. Due to the remediation company’s relationship with Ecuador’s state-owned oil company, Petroecuador, Chevron called upon the court to immediately reject the work of Richard Cabrera on the grounds that he knowingly hid his relationship and that he stands to gain from what was supposed to be unbiased work for the court.

“For three years, Mr. Cabrera has concealed clear financial conflicts of interest that disqualify him from acting as an independent and objective evaluator of the evidence in the case,” Chevron Vice President and General Counsel Hewitt Pate said. “While Mr. Cabrera’s financial interests alone are sufficient grounds for his report to be rejected, his intentional concealment of those interests further demonstrates that the entirety of his work lacks honesty, integrity, or credibility.”

Recently uncovered records, from 2003 through 2008, show Cabrera is co-founder, general manager, majority stockholder, and legal representative of an oilfield remediation company, Compañía Ambiental Minera-Petrolera S.A. (”CAMPET”), which is registered to perform oilfield remediation and other services for Petroecuador. Cabrera failed to disclose these business interests as required by law.

That’s just the start of a very detailed dissection of Cabrera’s self-interest, explaining how he could reach the fantastical figure of $27 billion in damages against Chevron for previous operations of Texaco in Ecuador. The bigger the pot, the bigger the payout for Sr. Cabrera.

And for the Amazon Defense Front, which also happens to be guiding and rewarding Cabrera. Chevron had previously documented that:

• The Amazon Defense Front, the named financial beneficiary of the lawsuit, directly and improperly paid Cabrera more than $200,000 for his work;
• Sections of Cabrera’s $27 billion claim are copied word-for-word from documents written by Amazon Defense Front lawyers;
• Photographs and video show representatives of the Amazon Defense Front conducting Cabrera’s field work as well as preparing soil and water samples for Cabrera, who had promised to carry out his work independently;

The Amazon Defense Front and its PR flacks — doing the work of the U.S. trial lawyers — like to accuse the critics of their shakedown of conducting “dirty tricks.” But the facts keep showing that the dirty tricks of the trade are really the tools of the anti-Chevron campaigners.

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 …

• Wall Street Journal, “Ecuador:To Defend ‘Vigorously’ From Chevron Arbitration Claim”
• The Associated Press, “Ecuador rejects Chevron arbitration claim”
• Oil & Gas Journal, “Chevron’s arbitration move called ‘forum shopping’”
• Bloomberg “Chevron Seeks to Foist $27 Billion Amazon Liability on Ecuador

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.

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.

More…

• 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.

Blogger Bob McCarty, who has done much good reporting on the trial lawyer/environmentalist/Ecuador lawsuit against Chevron, provides an update in the wake of videos released by Chevron that forced the Ecuadorian judge to step down. The videos also implicated the ruling party of President Rafael Correa in a fully corrupted legal process.

It seems the Ecuadorian government sees the entire litigation as a money-making venture, with Washington Pesantez, the South American country’s prosecutor general, now admitting as much.

From “Proving Amazon Watch, Others Wrong Too Easy“:

[Amidst] the furor over Chevron’s release of video tapes that appear to implicate Ecuadoran government officials — including President Rafael Correa and Juan Nunez, the judge who was hearing the case but has since recused himself — in a $3 million bribery scheme, Pesantez held a press conference Sept. 4 in his Quito office.

During that press conference, Pesantez said a number of amazing things, one of which stands out: he stated that 90 percent of the $27 billion award pending against Chevron would go to the government of Ecuador. To understand exactly what he said, read the transcript of the prosecutor general’s press conference English or Spanish.

Funny, we thought all the money was going to go to the Amazon Defense Coalition.  Were the issues not so serious — a naked shakedown of a U.S. company by an increasingly anti-American government, aided by propagandizing NGOs and U.S. trial lawyers — we’d almost laugh at the prospect of them fighting among themselves.

The movie “Crude” uses documentary film techniques to launch a one-sided, fact-challenged but well-crafted attack against Chevron for environmental damage supposedly caused by the operations of Texaco in Ecuador. (Chevron bought Texaco in 2001.) The directors have been showing the movie to friendly audiences around the film-festival circuit, including last week at the American Film Institute’s “SilverDocs“* festival in Silver Spring, Md.

Perhaps despite themselves, the moviemakers reveal an awful lot about the nature of the litigation scheme.

The photo shows U.S. trial lawyer Steven Donziger, the moving force behind the lawsuit filed on behalf of the Frente de Defensa de la Amazonia (AKA Amazon Defense Coalition), being introduced to Rafael Correa, the president of Ecuador. As the post immediately below describes, Correa is a radical, anti-American politician in the mode of Venezuela’s Hugo Chavez and Bolivia’s Evo Morales.

In the movie Donziger and his Ecuadorian colleague, Pablo Fajardo, fly to Philadelphia to solicit more financial support for their litigation from Joe Kohn, a partner in Kohn, Swift and Graf. Kohn cheerfully explains to the camera that the lawsuit is, indeed, intended to be a money-making venture. (Photo below: Kohn, left, chats with Donziger in the Philadelphia law offices.)

And here’s the House lobbyist registration form from 2008, in which über-lobbyist Ben Barnes signs his firm up to lobby for Kohn, Swift and Graft on issues related to Ecuador and the environment. Which would be…

The campaign against Chevron rests on a foundation of falsehoods, misrepresentation and emotional appeals.

But when you have the Ecuadorian government, self-styled documentarians, big-time lobbyists, not to mention Sting’s wife Trudie, all on your side, who needs the facts?

More on the film and the alliance against a U.S.-based energy company soon.

* The SilverDocs prizes were announced today. “Crude” did not win any awards.

Disclosure: I recently traveled to Ecuador on Chevron’s dime to get a first-hand view of the territory over which the lawsuit makes numerous claims. Chevron is a member of the NAM. But I’ve been posting on this lawsuit since September 2008.

Chevron holds its annual shareholders meeting in San Ramon, Calif., tomorrow, and a well-organized alliance is attempting to hijack the meeting for pecuniary and political purposes. Trillium Asset Management — part of the activist “social investment industry” — is taking the lead in pushing a shareholder resolution that would require Chevron to conduct a study of its overseas operations as they relate to the host country’s health and environmental laws.

The resolution itself is an attack on Chevron’s reputation, part of a coordinated campaign meant to bully the company into settling a multibillion dollar lawsuit brought by U.S. trial lawyers; the suit, Aguinda v. Chevron/Texaco claims that Texaco (which Chevron bought in 2001) caused environmental damage in Ecuador that still harms the health of local residents. We’re written about the issue before, and Chevron has facts on its side as detailed at the company’s Chevron in Ecuador site.

But there’s a lot more at stake than just Chevron’s operations and the $26 billion in damages being demanded from the company. ($26 billion!) The proposal and protests at the shareholders’ meeting tomorrow represent U.S. trial lawyers make common cause with foreign governments, NGOs and activist groups to shake down American companies. In the United States legal system, the rule of law, standards of evidence and absence of corruption protect the interests of U.S. companies and their shareholders, but in the less developed world where anti-Americanism is potent? Pursue your case there and use it as leverage here.

As Charles James, Chevron’s general counsel and executive vice president, described the dynamic in a conference call with bloggers* today, “They take your professional reputation hostage and they try to ransom it back to you for money.” The activists groups led by Amazon Watch have scheduled a protest, and you’ll have your usual visuals of Amazonian Indians and celebrities to attract the TV cameras. An umbrella group of left-wing groups will release what they call an alternative annual report, “The True Cost of Chevron.” It’s certainly well-packaged (lots of money having been spent) accusing Chevron of environmental crimes all over the world, not just Ecuador. The attacks are becoming even more shrill.

James from the blogger call:

It’s sort of an unprecedented, new way in which the trial lawyers are trying to play the game. It’s got nothing to do with what’s happening in court, and it’s got everything to do with trying pressure companies into settling these cases and in doing so in these big, broad coalitions with people who have a community of interests — Third World, developing world governments, who are trying to bolster their image as being anti-corporate, anti-U.S., and also trying to excuse a lot of their own failings; trial lawyers, who want money; lobbyists, who want money; and NGOs who make sport out of these campaigns.

Unless people start asking about that and how it’s done, you’re just going to see more and more of it continuing into the future.

*Disclosure: Chevron is paying for several bloggers, including me, to visit the former Texaco/Petroecuador sites in the Ecuador Amazon sometime in the future. The company is not making any demands on what we write as a result. Chevron is a member of the NAM.