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.
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