Respectfully submitted by Lawrence E. Rafferty (rafflaw)- Guest Blogger
Back in July of this year, we discussed a successful request by oil giant Chevron to subpoena 9 years of metadata from countless defendants and non-defendants. This was arguably an attempt to attack a $19 Billion dollar judgment handed down by an Ecuadorian court against Chevron by going after the parties involved in the lawsuit.
Chevron was not deterred when the United States Supreme Court refused to review the judgment. It merely went on the attack and found an allegedly friendly judge in New York to assist in refusing to pay the judgment owed to various indigenous communities that were devastated by Chevron’s predecessor’s actions in the rainforests where it was drilling for oil. We need to revisit this issue now that the RICO action filed by Chevron started this week in New York.
“But have you heard of Hugo Camacho? Or Javier Piaguaje? They’re not exactly household names. Nor gangster names for that matter. And that’s because one is a campesino farmer that makes about $200 a month growing cacao. The other is a leader of the Secoya indigenous people, and both are from the rainforests of Ecuador’s Amazon. Their crime? Suing the second largest oil company for the worst oil-related environmental disaster on the planet. And winning.
But starting today in a lower Manhattan courthouse, they are being accused using the same criminal statute under which the big crime bosses of our time have been prosecuted: Racketeer Influenced and Corrupt Organizations Act (RICO). It’s the latest in Chevron‘s scorched earth campaign to avoid paying a record environmental verdict against the company for massive contamination stemming from its operations in Ecuador’s Amazon between 1964 and 1990.” Reader Supported News
Our article in July discussed the First Amendment issues that occurred when Chevron subpoenaed the enormous metadata records of the successful Ecuadorian plaintiffs. Chevron is now proceeding with the RICO action claiming that the Ecuadorians engaged in fraud and therefore Chevron should not be required to pay the $19 Billion dollar judgment. You probably know that RICO stands for “Racketeer Influenced and Corrupt Organizations Act (RICO).”
The RICO act was designed to prosecute United States crime families and mob bosses and Chevron is using it to hide from a judgment that it doesn’t want to pay. It doesn’t want to pay it even though it was decided in a forum that Chevron requested. Complicating matters for the judgment creditors is the fact that Chevron does not own any assets in Ecuador. The judgment creditors are attempting to collect against Chevron in countries where it does own assets, but it is a long and expensive process.
Speaking of expenses, Chevron has hired a legal army in its attempt to avoid paying the judgment. “But Chevron, armed with more than 60 legal firms, some 2,000 legal professionals, top PR companies, the shadowy “investigative and risk” management firm Kroll and endless resources, has tried to outlast and vanquish the Ecuadorians and their advocates like Donziger. Unable to put a pair of cement shoes on him and drop in the Hudson, Chevron has ironically gone after Donziger and the Ecuadorians with a statute that is better applied to the company itself. Is there a business more fitting of RICO charges than the oil industry?” Reader Supported News
Does anyone else find it disturbing that a large oil company like Chevron, would not only hide from its lawful obligations to pay up for its disastrous practices in drilling for oil, but would personally attack the successful judgment creditors? I realize that the Supreme Court considers corporations to be people. Shouldn’t the people of Chevron be required to pay their bills like the rest of us?
This is a real life David versus Goliath moment. Would it be important to you in your review of this case to know that the judge, Lewis Kaplan, has a connection to Chevron? “After forum shopping for several years, Chevron found an ally in Judge Lewis Kaplan, who had worked previously for a firm that represented Chevron. Kaplan actually invited Chevron to bring RICO charges.” Reader Supported News
Since Chevron is alleging fraud on the parts of the judgment creditors, it is important to review Chevron’s actions during the trial process in Ecuador. I apologize for the length, but Chevron was so “busy” in Ecuador, that it is important to see the full extent of its activities there.
“When the Second Circuit Court of Appeals for New York remanded the case to Ecuador, a caveat of Chevron’s compliance with any judgment was if any type of fraud occurred. And that is what Chevron is conveniently now claiming. And fraud did occur alright, and many of Chevron employees should be in jail for engaging in it.
During the trial in Ecuador, Chevron:
- Orchestrated a deceptive “sting” operation involving a former Chevron employee and a convicted felon who attempted to bribe the sitting judge.
- When the scandal unraveled, Chevron helped move the former employee to the U.S. and continues to pay his rent, legal counsel and a generous monthly salary, though he does no work for the company.
- Worked with the Ecuadorian military to fabricate a false military report which delayed crucial judicial inspections of contaminated sites.
- Selected soil and water samples from conveniently illogical places, such upstream from contamination sources.
- Used an “independent” laboratory operated by the wife of a Chevron employee to process its sampling evidence, where samples were swapped or destroyed.
- Offered a former judge in the case a literal “suitcase full of cash” and helped move him to the U.S., where Chevron provides him with payments of $144,000 per month-approximately 30 times the basic salary in Ecuador.
- Offered the judge who issued the verdict a $1 million bribe in exchange for a favorable verdict. He rejected the bribe.” Reader Supported News
I guess I shouldn’t be surprised that an oil corporation might take dubious steps in attempting to hide from a lawful judgment. What is a surprise to me is that a United States court would allow the RICO statute to be utilized to shield that corporation/person from a lawful foreign judgment. What do you think?
Additional References: Common Dreams;
36 thoughts on “Chevron Owes $19 Billion and Doesn’t Want to Pay!”
You are making an assumption that Ecuador was highly paid for the oil rights. The bottom line is that the courts in Ecuador found Chevron liable for $19 Billion and even our Supreme Court refused to review the case. In case you read didn’t the entire article and the links, you should also know that Chevron chose the Ecuadorian venue.
$250K in shares of common stock (owned by Hagel) from Chevron, this being on the high end of the “anonymous” post will not net $15K in dividends.
Then I have to wonder how much the Ecuadorian government made from the extraction of oil by Texaco for decades before Chevron merged with the company in 2001. There are many more players involved.
While I am not a RICO expert, I do understand that there is a civil aspect to it. If the Ecuadorians can find assets in a contract that will honor the judgment, I do believe that they can collect. But when you have a company as large and wealthy as Chevron, they can spend millions in order to save Billions.
What I don’t understand… hopefully some of the legal minds can clear up : how it is that a company can bring a RICO case? I thought that was a function of prosecution. It does not belong in a civil case… or if it does, how does it?
Also, is there any gut sense by anyone , if this judgement will ever be paid? ie, will Chevron be able to ultimately say No, no matter what, or will Equador be able to attach assets in other countries… or maybe even have the US enforce the judgement?
Finally.. in a case like this when a defendant fights the judgement and looses, are they not liable for interest and expenses on the judgement amount? 9 years of interest on 19B seems like a lot… wouldn’t this be a deterent or at least a factor in the thinking of the defense.
Thanks for any reply… I am puzzled by this, as much as outraged like most.
Well said Lotta!
You are right that Judge Kaplan is a busy man.
Judge Kaplan’s a busy man:
“Snatched off the streets of Libya, interrogated on a U.S. Navy ship and finally appearing in a wood paneled courtroom in New York City, alleged al Qaeda member Abu Anas al Libi went before Judge Lewis Kaplan today to plead not guilty on terrorism charges.”
“Texaco/Chevron needs to pay and Judge Lewis Kaplan needs to be looked at very closely. -lottakatz
An interesting piece by Alison Frankel:
“Time, moreover, may not be on Chevron’s side. The Ecuadoreans are pursuing attachment action in Canada and Brazil based on the $18 billion Ecuadorean judgment. (The oil company does not have assets in Ecuador.) Chevron wants Judge Kaplan in New York to rule that the Ecuadorean judgment is a fraud that should be nullified, but even the 2nd Circuit Court of Appeals, when it vacated a preliminary injunction barring the Ecuadorean plaintiffs from enforcing their judgment against Chevron, expressed concerns about international comity and the application of U.S. rulings in overseas courts. The circumstances are different now, especially with Chevron’s new evidence that the Ecuadorean judgment was illegitimately procured, but even if Kaplan grants the company’s summary judgment motion, the plaintiffs will likely press international courts to enforce the Ecuadorean judgment while appeals are under way in the United States. Meanwhile, Chevron is in a nasty court fight with a major shareholder, the New York State Common Retirement Fund, over whether to settle the Ecuadorean case. The New York pension fund argues that it’s too expensive and distracting for the company to continue litigating; Chevron responded with an ethics complaint in November against the fund’s administrator, New York Comptroller Thomas DiNapoli, whom the oil company accuses of accepting campaign contributions from supporters of the Ecuadorean plaintiffs.
I’ve been writing about litigation long enough that I don’t have any illusions about what it can achieve. Litigation doesn’t often produce binary answers. Most cases settle because truth lies between the positions espoused by opposing sides. And in most cases, that’s a just outcome. But I’m not sure a settlement of the Chevron litigation, with all we’ve come to know about the Ecuadorean case and all that remains to be known, would bring justice to either side. In this case, truth and justice are too intertwined, and I don’t believe that continuing to litigate will answer the ultimate question of whether Chevron is responsible for ongoing environmental catastrophe in Ecuador. The Chevron case, more than any other I know, stands as a paradigm not only of how hard two sides can fight but also of how little they can ultimately accomplish.”
A little Chevron history, FWIW:
Senator Chuck Hagel and John G. Stumpf Nominated to Chevron Board of Directors
SAN RAMON, Calif. – Mar. 31, 2010
Nominee Hagel to cut ties with Chevron
By Zack Colman – 01/29/13
Former Sen. Chuck Hagel (R-Neb.) will divest from Chevron Corp. and leave the company’s board of directors if confirmed as Defense secretary, the Cabinet nominee said in disclosure forms released Tuesday.
President Obama’s Pentagon pick and his wife hold between $100,001 and $250,000 of Chevron common stock and earn between $5,001 and $15,000 in dividends. He also pulled $116,000 in income for serving on Chevron’s board.
As Defense secretary, Hagel would be in the driver’s seat for the Defense Department’s procurement strategy, where he would control a suite of military energy programs and contracts.
And many conservative groups oppose Hagel’s nomination because of his views on Israel, Iran and gay rights.
One of those groups, the American Future Fund, had previously questioned Hagel’s role with Chevron, attacking him for the relationship in an advertisement, asking, “How can Chuck Hagel run the Pentagon with so many ethical questions about his own record?”
This is sad…. A sad use of the governments judges….can a counter suit be filed under RICO…… Can or should the DOJ intervene…..
Excellent article raff….
The latest development in Ecuador. Hopefully, the Ecuadorean people decide against doubling down on oil extraction. One of biggest problems with Latin America is that, down there, democracy actually works.
ha the courts should tell the real reason the rain forests were destroyed. it wasnt only the oil…
[’64 to 90′ is the relevant time frame] “And pollute it did. Unlike a one-time spill such as the Exxon Valdez or BP Horizon spill in the Gulf of Mexico, Texaco’s operations were systematically drilling and dumping 24/7 for almost three decades. Over those 28 years, it spilled some 18 billion gallons of toxic wastewater, and roughly 17 million gallons of crude. The region, once a pristine tropical rainforest and an idyllic home for five indigenous groups, became a wasteland of superfund-worthy waste pits, gas flares, hundreds of miles of oil-covered roads and zigzagging pipelines, and flow lines that dumped toxins directly into streams and rivers that local communities used to drink, bathe, fish and wash their clothes.”
From linked article.
Texaco/Chevron needs to pay and Judge Lewis Kaplan needs to be looked at very closely.
Pete, I notice in a couple of those photos of Nigeria there are armed men in uniform, somehow I don’t think they’re present to shut down Shell for crimes against nature.
Thanks for doing a followup on this story. It’s a perfect example of how the “little people” rarely stand a chance against the corporate behemoths. One has to wonder how much Chevorn is spending on lawyers, etc., to keep from paying the $19 billion judgment.
1, October 20, 2013 at 2:15 pm
so what is the background for this story? How bad is the pollution? Did Texaco/Chevron follow Ecuadorian environmental laws? What damage has been done? What did the contracts with the Ecuadorian government require?
From personal experience in the early 80′s, oil companies are pretty good at keeping their sites clean and contained. On land and offshore
it’s not equador, but take a good look at clean and contained.
If that is the case, they should pay. I am surprised the country of Ecuador let them get away with this.
It does look pretty bad.
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