By R. Robin McDonald, From Daily Report

With the legal winds in a 20-year environmental damages suit beginning to blow in Chevron’s favor, the company’s top lawyer shared his take on the case in Atlanta last week, revealing that Chevron has spent more than $200 million defending itself and fighting to overturn an epic $9.5 billion judgment in Ecuador.

Speaking to members of the International Bar Association, Chevron Vice President and General Counsel R. Hewitt Pate said the legal battle—first in Ecuador, then in New York, and now in courtrooms across the globe—was tainted by a judgment ghost-written by the plaintiffs, a $500,000 bribe to the Ecuadorean judge who entered the $9.5 billion judgment, and a deal the plaintiffs made in which they agreed not to seek damages from the government oil company that was the drilling partner of Chevron’s subsidiary.

The sensational tactics employed against Chevron also included wanted posters of Chevron board chairman and CEO John Watson that were posted in Watson’s neighborhood and public effigies of Chevron’s Ecuadorean lawyers in prison garb and in coffins as “traitors to the country,” Pate said.

In a speech lasting nearly two hours, Pate claimed that lawyers for the plaintiffs—a class of 30,000 impoverished people living in the Amazon rain forest in Ecuador—also resorted to incessant attacks against any judge who ruled against them.

“It’s taken a lot of bravery to handle the case,” Pate said of his counterparts in Ecuador. “I’m here telling you this because this is the biggest business fraud in the century, and I’m confident we’re right.”

Chevron’s legal fight is by no means over, but it won a huge victory in March. A federal judge in New York barred enforcement of the Ecuadorean judgment, holding that New York human rights lawyer Steven Donziger—the lead attorney for the plaintiffs in Ecuador and a defendant in the New York case—violated federal racketeering laws and engaged in extortion, money laundering, wire fraud, witness tampering and obstruction of justice in securing the Ecuadorean judgment and then covering up his own crimes and those of his associates.

Chevron has also secured a judgment from an international arbitration tribunal in The Hague, finding that the Ecuadorean government had released Chevron’s subsidiary and all affiliates from any liability and that the Ecuadorean courts had failed to fairly adjudicate the case.

U.S. District Judge Lewis Kaplan’s ruling is on appeal. While enforcement of the Ecuadorean ruling is barred, for now, in the U.S., Pate said Chevron is fighting efforts by the plaintiffs to have it enforced in other courts abroad.

Neither Donziger nor his spokesman Christopher Gowen could be reached for comment. Donziger, who has represented Ecuadorean villagers for more than 20 years, has accused Chevron of using the racketeering litigation as a smokescreen to hide its own criminal and fraudulent activity in Ecuador. And he has criticized Kaplan for “implacable hostility” toward him and his clients, contending that they could not get a fair trial.

The litigation stems from oil exploration and production in the Ecuadorean rain forest during the 1960s by Texaco Petroleum, which has been a subsidiary of Chevron since 2001. Pate, who served as an assistant attorney general and a deputy attorney general in the U.S. Justice Department from 2001 to 2005, said that TexPet had a concession to drill for oil from the Ecuadorean government in partnership with state-owned Petroecuador.

Pate said that in the 1990s, Petroecuador decided to take over the joint oil drilling operation. TexPet, he said, had made $500 million off the venture when Petroecuador pulled out. But the Ecuadorean government earned $22 billion in taxes and royalties during the partnership, and its profits from the oil drilling and refining operations now total about $70 million. Despite the Ecuadorean government’s deep involvement—and extensive financial interest—in the drilling operations, Pate said that the plaintiffs’ driving narrative was “that but for the evil, greedy, Chevron,” the drill sites would long ago have been cleaned up.

“That’s one of the reasons I find the [plaintiffs’] narrative so hard to take,” he said. Petroecuador, he added, “has maintained a truly unfortunate record of spills and environmental damage in Ecuador.”

Pate contended that TexPet had offered to help clean up contaminated sites in the rain forest, “but the government of Ecuador said, ‘No, we don’t want to spend the money.'”

The resulting environmental damage for which the plaintiffs have sought recompense included billions of gallons of contaminated waste water they say that TexPet dumped into streams and riverways feeding into the Amazon and toxic waste pits that contaminated the surrounding soil and ground water.

TexPet, Pate said, eventually agreed to “clean up its share” of the environmental damage, about 40 percent of the sites, and secured from the government and from Petroecuador a release of all environmental claims.

At that time, he said, “all the rights to environmental claims belonged to the [Ecuadorean] government.” But the plaintiffs’ lawyers, sued Chevron on behalf of rain forest occupants, largely impoverished, as individuals.

Pate conceded that photos of TexPet’s abandoned oil operations “were not particularly pretty,” even though he insisted that the oil subsidiary’s cleanup efforts conformed to regulations in existence at the time.

Pate said that when the plaintiffs filed suit in the U.S., Chevron moved to have the case transferred to Ecuador because the global settlement with the government left only small individual damage claims, mostly by rain forest subsistence farmers.

Pate also said that discovery rules in the U.S. courts could be “so burdensome” that Chevron determined that it would push the cost of litigation far higher than resolving the case in Ecuador. “The plaintiffs would say that Chevron had a favorable, sympathetic government and thought those individual claims would be quashed,” he said. “That wasn’t the record. Some were paid. Some were not.”

What Chevron didn’t anticipate was “a change in political fortunes” with the election of Rafael Correa as president, said Pate, who described Correa as “not a strong separation-of-powers guy.” Correa, he said, purged the Ecuadorean Supreme Court, replacing judges with his “strong allies.” Correa, he said, also instigated passage of a law mandating that if a judge ruled against the government, and was reversed on appeal, he could be held personally liable to the government for the ruling.

Correa’s election—and his hold on the courts—bolstered the plaintiffs’ case, Pate said, because “if you are on the wrong side of the government, the judiciary is basically going to do what the government says.” The plaintiffs also allegedly benefited by what Pate described as “retail-level corruption” in which “lawyers for an opponent … fill a gym bag with money to take to the courthouse.”

Pate said that Correa and Donziger “enjoyed a quite close relationship.” During the racketeering case, which Chevron filed against Donziger, cocounsel Pablo Fajardo and the plaintiffs they represented in the Ecuadorean litigation in federal court in New York after being socked with the whopping $9.5 billion judgment in Ecuador, Pate said that emails and memos obtained during discovery from plaintiffs’ lawyers referenced Correa and noted that the president “will call the judge and have a word with the judge.”

That discovery also revealed that Donziger repeatedly counseled Ecuadorean government ministers not to talk about the case, other than to say that the government “should have nothing to do with it,” Pate said. That is because the government previously had settled all environmental claims, he said.

During early stages of the litigation, Pate said the plaintiffs also agreed they would never seek the kind of environmental damages from Petroecuador that they were seeking from Chevron. Pate said that during the Ecuadorean litigation, the plaintiffs also repeatedly sought to place public pressure on Chevron to settle with “a constant barrage of press releases” and a website, ChevronToxico. Celebrities, including Hollywood stars, spoke out against Chevron, he said, adding that some of the celebrities were paid “tens of thousands of dollars in appearance fees to express their outrage.”

The plaintiffs, he said, sought to vilify Chevron lawyers, seeking to have them prosecuted and branding Chevron’s Ecuadorean counsel as “traitors to the country.”

Pate said that one of the lead plaintiffs’ lawyers—Pablo Fajardo—”was involved in bribery,” in stark contrast to the lawyer’s international image. In 2007, CNN named Fajardo as one of its CNN Heroes in its “Fighting for Justice” category for his work representing the Ecuadorean plaintiffs against Chevron. In 2008, Fajardo was awarded the Goldman Environmental Prize, which honors grass-roots environmentalists across the globe for their efforts to protect the environment, for his work on the Ecuadorean litigation.

Fajardo said in a news release issued by Donziger via his blog last week that Chevron had masked damaging evidence “that proves the company tried to tamper with witnesses and corrupt legal proceedings.”

Plaintiffs’ lawyers are claiming that an expert report has labeled as false the testimony of a key witness, a former judge who claimed he had solicited the $500,000 bribe from Fajardo and Donziger on behalf of Nicolas Zambrano, the Ecuadorean trial judge who entered the judgment against Chevron in 2011.

Plaintiffs’ lawyers are now accusing Chevron of paying the witness more than $2 million in cash and other benefits—including the relocation of his entire family—in return for his testimony in the New York racketeering case.

Kaplan held in his 500-page ruling that Zambrano “agreed with Fajardo to fix the case for a payment of $500,000 paid out of any judgment proceeds, Fajardo did so with Donziger’s express authorization, the [plaintiffs] drafted all or most of the judgment, and Zambrano signed their draft without consequential modification as part of the quid pro quo for the promise of $500,000.”

Kaplan, Pate said, “found there was clear and convincing evidence that criminal laws were broken.” And he pointed ruefully to what he suggested was a double standard for corporate defense litigators and the plaintiffs’ lawyers who had built their reputations on championing human rights.

“If I or anyone at Chevron was within a thousand miles of any of that conduct … we would be arrested and put under the jail,” he said.

IMAGE: R. Hewitt Pate spoke about Chevron’s legal battle over alleged environmental damages in Ecuador. Rebecca Breyer

For more on this story go to: http://www.international.law.com/id=1202678631250/Chevron-GC-Im-Confident-Were-Right-in-Epic-Environmental-Case?back=GA#ixzz3LbyWOqKt