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« Supreme Court says whistleblowers at private contractors are protected under SOX | Main | Call for papers for academic journal's anti-bribery law issue »
Wednesday
Mar052014

Judgment against Chevron in Ecuador tainted by bribery

U.S. District Judge Lewis Kaplan in New York said he found "clear and convincing evidence" that a two-decade legal effort to punish Chevron for polluting the Ecuadorean rain forest was tainted by corruption.

Judge Kaplan said on Tuesday the evidence showed that an American attorney Steven Donziger and his legal team bribed an Ecuadorean judge to issue an $18 billion judgment against the oil company in 2011.

Last year, Ecuador's high court cut the judgment down to $9.5 billion, leaving Ecuadorean villagers hopeful they could collect on that award.

The Ecuadorean villagers  argued that Texaco, before being bought by Chevron, polluted the rain forest by spilling millions of gallons of toxic wastewater into the  Ecuadorean Amazon between 1964 and 1992.

Chevron has accused Donziger, the lead attorney for the villagers, of fraud and racketeering.

The company has also argued that Texaco cleaned up its mess, and the remaining pollution was caused by the Ecuadorean national oil company.

Despite Chevron's fraud claims, the Ecuador high court upheld the original decision.

Chevron took its argument to the United States for a non-jury trial in November in the Southern District of New York.

Judge Kaplan said in his ruling that Chevron had presented "voluminous" evidence against Donziger, including coded emails, secret payments and private meetings with judges that "normally come out of Hollywood."

Chevron's main witness was a former Ecuadorean judge who testified that he was paid $1,000 a month to ghost-write favorable opinions for the presiding judge, Nicolas Zambrano. The witness also testified that Judge Zambrano told him Donziger would pay Zambrano $500,000 of the eventual damages as long as he agreed to a favorable verdict.

Chevron also presented footage of outtakes from a film starring Donziger and his fight for the Ecuadorean people called "Crude" in which a consultant tells Donziger there was no evidence contamination had spread from the oil pits.

In the outtakes, Donziger remains unpersuaded and says: "This is Ecuador, OK? At the end of the day, there are a thousand people around the courthouse; you will get whatever you want. Sorry, but it's true."

Judge Kaplan's decision does not dispute that pollution occurred and does not prevent enforcement of the Ecuadorean judgment. But it bars Donziger and two other representatives from "profiting from the egregious fraud that has occurred."

Tuesday's decision in Chevron Corp. v. Steven Donziger et al, S.D.N.Y., No.11-0691, can be found here.

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

Reader Comments (2)

The Chevron story is larger than a cautionary legal tale. There are geopolitical dimensions in the arbitrage of legal systems, psychological dimensions in the many ways in which opportunism caused professional judgement to be undermined and lessons in the increasingly distorted costs of complex commercial litigation. I suggest, however, that the most immediate and valuable focus should be on the interplay between the Guatamalan litigation and the burgeoning world of litigation funding.

Each of these topics, and more, warrant studies and commentaries. The lessons to be learned will, hopefully, be more insightful and objective than a continuing polemics driven by the interests being litigated in the US and at least four other countries. The final Chevron chapter looks to be at least a decade ahead, which will take this single episode beyond its age 50.
March 5, 2014 | Unregistered CommenterRichard Murray
My involvement with this case compels me to commend Chevron/Texaco on the comprehensive testing they performed to determine if pollutants were present at the drilling sites. My review of sites with which I was involved, showed that remediation of the sites by Texaco were more than adequate. No significant threat was presented by Texaco's activities. The case spearheaded by Donziger represented a little over 20 people, NOT the whole indigenous population of the Amazon in Ecuador. The idea of this suit was to make money for the lawyers and investors with a nominal payout to the few plaintiffs being represented. Dig deeper into this case to find out the machinations that were used to intimidate Chevron/Texaco into paying "hush money" to prevent bad public relations. Chevron didn't cooperate with Donziger's scheme. So, he became more radical and frantic in his efforts to intimidate Chevron into a pay-off. He rightfully got entangled in the devious web of his own design. Judge Kaplan's findings were true and just!
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