National Review Online
Tuesday, June 27, 2017
Steven Donziger, a left-wing lawyer with connections to the Obama administration and Andrew Cuomo’s administration in New York, attempted to orchestrate a multi-billion-dollar shakedown of Chevron in a case that was later thrown out by a federal judge as the product of “egregious fraud.” For once, the word “egregious” may not be quite strong enough: In dollar terms, Donziger’s case against Chevron may very well be the largest attempt at extortion in human history.
The case involves environmental damage in a remote part of the Ecuadorian rainforest. What might be of some interest is that Chevron — this may strike you as odd — has never drilled for oil, or done anything else in the way of petroleum extraction, at the site in question. But in 2002, Chevron acquired Texaco, which had drilled for oil in Ecuador as the junior partner to CEPE, now known as PetroEcuador, a state-run oil company. In 1993, PetroEcuador became the sole owner of the project.
As Texaco prepared to exit, it had the Ecuadorian government inspect the drilling sites it had operated for environmental assessment and remediation, should any be necessary. In 1995, after Texaco had done about $40 million worth of remediation work (mostly cleaning up waste pits), the Ecuadorian government pronounced itself satisfied, and Texaco exited the project with a government release from any further liability. PetroEcuador went back to drilling. Chevron does not deny that there has been environmental damage at the site — rather, it says that that damage was done subsequently by PetroEcuador, which, like many state-run oil companies, does not have an environmental record that is exactly sterling.
Years later, the same Ecuadorian government that had pronounced itself satisfied with Texaco’s remediation decided that it was unsatisfied to the tune of tens of billions of dollars, and it just happened that there was an American activist-lawyer, Steven Donziger, whispering in various ears in Quito about the possibility of an enormous payday — minus a hefty percentage for lawyers’ fees, of course.
And so began an audacious exercise in legal extortion, some of it almost laughably bold: An “expert” analyst’s report was written in English in part by a man who does not speak English. It turned out that the work of the “independent expert” was actually performed by a consultant hired by the plaintiffs’ lawyers in the case. The judge in the case told plaintiffs — on tape, while the trial was in progress — that he would rule against Chevron and that all further appeals would be denied. The same judge also asked for a $3 million bribe that was to be divided between him, the Ecuadorian president, and the plaintiffs. The judge was later forced to resign.
There was much more evidence of wrongdoing, so much, in fact, that Chevron took the unusual step of suing Donziger and his allies under federal racketeering laws — and won. The district judge in the case, Lewis Kaplan, pronounced himself amazed by what he had learned:
This case is extraordinary. The facts are many and sometimes complex. They include things that normally come only out of Hollywood — coded emails among Donziger and his colleagues describing their private interactions with and machinations directed at judges and a court appointed expert, their payments to a supposedly neutral expert out of a secret account, a lawyer who invited a film crew to innumerable private strategy meetings and even to ex parte meetings with judges, an Ecuadorian judge who claims to have written the multibillion dollar decision but who was so inexperienced and uncomfortable with civil cases that he had someone else (a former judge who had been removed from the bench) draft some civil decisions for him, an 18-year old typist who supposedly did Internet research in American, English, and French law for the same judge, who knew only Spanish, and much more.
He found that the plaintiffs had engaged in coercion, bribery, money laundering, and more, and that the Ecuadorian judgment against Chevron had been procured by “corrupt means.” And this corruption occurred, he found, with “Donziger’s express authorization.”
“Indeed,” Judge Kaplan wrote, “one Ecuadorian legal team member, in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, ‘apart from destroying the proceedings, all of us, your attorneys, might go to jail.’ It is time to face the facts. . . . Despite the case’s complex history, reach and its large cast of players, the events ultimately center on one man — Steven Donziger — and his team of Ecuadorian lawyers and U.S. and European backers.” That was enough to spook many of Donziger’s quondam allies: Burford Capital, which had invested millions of dollars in financing the case in exchange for a cut of the payout, walked away, protesting that it had been misled by the plaintiffs’ lawyers. The Philadelphia firm of Kohn, Swift & Graf, which also had put millions into the case, also walked. The politically connected Washington firm Patton Boggs ended up getting gutted over its involvement in the case, paying $15 million and issuing a public statement of regret. Stratus Consulting, which had worked for the plaintiffs’ attorneys, settled with Chevron, admitting that it was aware of attorney misconduct in the case and that the claims against Chevron had no scientific merit. Another financier, Woodsford, walked away, saying it was “deeply concerned about the ethical standards of attorney Steven Donziger.” Alberto Guerra, the original judge in the case, said that after his dismissal, he had been paid thousands of dollars by the plaintiffs’ lawyers to write a legal directive on behalf of the subsequent judge in the case in order to ensure favorable outcomes.
In June, the Supreme Court affirmed that the judgment against Chevron was unenforceable in the United States. Donziger and his colleagues are prohibited from profiting from the judgment anywhere in the world.
Judge Kaplan all but called for filing charges against Donziger and his allies in this matter, and now we call for them explicitly: The case against Chevron was, as the courts have affirmed, the product of egregious fraud, not only among corrupt politicians and judges in Ecuador but also among lawyers and political operatives here in the United States, all of them part of a fundamentally corrupt enterprise to pervert the legal system — and the well-intentioned concerns of environmentalists — into a ruthless ripoff with tens of billions of dollars at stake. Oil companies may not be very sympathetic defendants, but Chevron has been obliged to spend millions upon millions of dollars defending itself from these claims. And Chevron shareholders, who ultimately foot the bill for this, aren’t cigar-chewing Texas oilmen: Two of the largest public-pension systems in the United States, those belonging to California and New York, are major institutional investors in Chevron. That’s whom this extortion attempt ultimately was aimed at.
The evidence all suggests that Steven Donziger and his allies were involved in a criminal conspiracy to extort billions of dollars from Chevron and that they used corrupt means, ranging from evidence tampering to outright bribery, to do it. This can and should produce a criminal prosecution in the United States, and we call on the United States Department of Justice to undertake it.