Environmental Fanaticism, Political Corruption and Greed

In early 2009, I received a call from a friend of mine who was working for a Washington DC-based think tank. He told me they had been invited to analyze a legal action started in Ecuador some years before by a group of indigenous people against the Chevron oil company. The plaintiffs claimed that Texaco, later acquired by Chevron, had caused great environmental damage in the Amazon region of South America, where they had operated for about 20 years, between 1972 and 1992. My friend said that they had excused themselves from looking into this because the case had complex political ramifications. He asked me if, as an independent petroleum geologist, I would be interested in taking a look. There would be no compensation involved.

I said, sure, I would. I had been in the area once, working for the Inter-American Bank, and had a basic knowledge of the issue. For the next five years,  I followed the Chevron Lago Agrio trial taking place in Ecuador, talking to parties from both sides of the case. I always felt someone should write a book or, even, make a motion picture about this complex legal battle that has lasted some 20 years and is not yet quite finished.

Law of the Jungle is one of the first books written on this subject. The author, Paul M. Barrett, is a senior writer at Bloomberg Businessweek. He presents the results of his excellent research in an organized manner that reads, almost, like a movie script.

Take 1

The origins of the legal action can be found in the efforts of John Bonifaz, an Ecuadorian-American citizen who had read an article in 1992 about oil pollution in Ecuador, written by Judith Kimmerling, an American attorney. Placing the entire blame on Texaco, later acquired by Chevron, Bonifaz felt something should be done about it. He joined forces with Steven Donziger, a young American attorney who would become the central figure in the saga. Barrett has done extensive research on Donziger’s background as a journalist, later as a law student at Harvard, describing him as combative, liberal-minded admirer of Nicaragua’s Sandinistas. While at Harvard, Donziger organized a study group that went to Iraq, unduly appropriating Harvard’s name for his work. The study group was critical of the U.S. role in Iraq, while refraining from criticism of Sadam Hussein.

In 1993, Donziger arranged for a group of indigenous Ecuadorians, Cofán Indians, to appear with him in New York City for the filing of a class action suit against Chevron. The case came to be known as Aguinda vs. Chevron. After several years, in 2001, the U.S. courts decided that they had no jurisdiction and finally dismissed the suit. Bonifaz had attempted to settle out of court, asking the oil company for $140 million but the company refused to settle. In retrospect, says Barrett, a settlement could have been beneficial for all concerned.

Take 2

In 1999, the passing of a new environmental law in Ecuador, drafted with the assistance of Bonifaz and Donziger, paved the way for the plaintiffs to bring the class action suit back to Ecuador. The trial was held in the town of Lago Agrio. Judge Alberto Guerra would be the first of six judges involved in the trial (four of whom would end up accused of grave improprieties). The opening of the trial became another opportunity for theatrics by the plaintiffs, complete with Indians in native costumes, an appearance by Bianca Jagger and street parades. The degree of pollution caused by Texaco, claimed Donziger, was worse than Chernobyl. He hired an Atlanta consultant and asked him to get a “big number” for the estimate of environmental damages. In a matter of a few weeks the consultant arrived at a figure of $6.1 billion, using a method he himself would later define as SWAG, “scientifically wild – assed guessing.

In contrast with the way a trial would be conducted in the United States, the Lago Agrio trial began in the court room before starting on discovery. When the collection of field data finally started, it promptly became a circus. In the process, Judge Guerra was replaced by a second and, still, a third judge. While taking a very long time, the inspections proved to be favorable to Chevron. This brought Donziger and his team to their first disastrous decision — to try to stop the collection of field data and suggest the naming of a single expert to collect the data, report on the findings and make a recommendation on the basis of his findings. What they had in mind was to find a suitable expert for their ends, recruit him and write the report for him, together with the recommendations for damages. Although an Ecuadorian member of the team, Pablo Fajardo had said, before joining the Donziger team, that the Ecuadorian oil company, Petro Ecuador, was worse than Texaco, he was now actively engaged in proving the very opposite. It would appear that this was a critical moment in the saga, the point at which whatever idealism had been present was discarded in favor of the obsession to win at all costs. Donziger, says Barrett, outlined a three-prong strategy: “Convince the court that inspections should end, to be replaced by a single expert allied to the plaintiffs; bring political pressure to bear on the plaintiffs; and, increase media campaign and raise enough money to survive the process and see victory.

In doing this, Donziger even went to the extreme of blackmailing the judge. They had discovered that the judge was prone to trade jobs for sex and told him they would expose him unless he stopped the inspections and appointed a single expert. Sure enough, the judge cancelled the remaining inspections and eventually, approved the expert who had been recruited by the plaintiffs. Donziger knew what he was doing. In his personal notes he wrote: “I feel like I have gone over to the dark side.”

Rafael Correa gets elected president of Ecuador

The arrival in 2007 of Rafael Correa to the presidency of Ecuador gave Donziger’s cause a big boost. Correa was an ultra – nationalist and from the very start sided publicly with the plaintiffs. He would actively instruct his underlings to help the plaintiffs. He denounced all Ecuadorians working or representing Chevron as traitors to the fatherland.

At the same time, Donziger had found his “expert.” His name was Richard Stalin Cabrera Vega. While researching the case, I remember reading his credentials and rapidly concluding that the man was totally unfit to be the expert. Barrett describes a preliminary meeting between the plaintiffs and Cabrera, in March 2007, in which a “work committee” was formed to help Cabrera write his report. In this meeting, Donziger’s sidekick, Pablo Fajardo, presented a “Plan for the Global Expert Assessment.” When one of the participants in the meeting asked, “Isn’t Cabrera supposed to be independent?” Fajardo replied, “No. He will sign the report…… but all of us have to contribute….” Another participant added, “But not Chevron,” which made everyone laugh. When Cabrera took his oath at the courthouse he swore to carry out his duties “with complete impartiality and independence.”

Cabrera apparently did what Donziger and Pablo Fajardo told him to do. The report was essentially written for him by STRATUS, a Denver based consulting company hired by Donziger. For a $1.7 million fee this company generated a 3,000 page report delivered to Donziger, stating on the first page that it was the work of… Richard Cabrera. This “independent” expert recommended to the court that Chevron should pay $16 billion in damages. Pit remediation, that would have really cost some $85,000 each, was estimated in the report at $2.2 million per pit. “Excessive cancer deaths” would require a compensation of $9.5 billion. In November 2008, Cabrera revised his estimate upwards, to $27.3 billion. For his services the Donziger team paid Cabrera some $392,000.

The tide starts to turn  

When Chevron demanded full disclosure of the takes of the film “CRUDE,” originally made to serve as propaganda for the cause of the plaintiffs, the tide turned against Donziger’s team. These takes, and Donziger’s notes, memos, e-mails requested by Chevron told a story of deceit and fraud of obscene proportions. When this new evidence surfaced some of Donziger’s financial supporters began to abandon him. Experts who had testified against Chevron recanted and the Denver based consultants from STRATUS admitted they had acted in a criminal manner. Months before judge Zambrano delivered his ruling in Lago Agrio against Chevron, Donziger became the defendant in a RICO suit filed under the Racketeer Influenced and Corrupt Organizations Act by Chevron in Manhattan in 2011. Ecuadorians Pablo Fajardo and Luis Yanza, the legal firm Patton Boggs, environmentalist group Amazon Watch, consulting firm STRATUS and the original group of indigenous Ecuadorian plaintiffs were all named as co-defendants.

Back in Ecuador, Judge Nicolas Zambrano finally delivered his decision condemning Chevron to pay damages for $9 billion, later increased to $18.1 billion, since Chevron refused to apologize. However, as it was later found, the verdict had largely been written for the judge by Donziger’s team, who had bribed the judge by promising him $500,000.

Barrett’s narrative essentially ends at this point, although he includes a brief account of the New York suit against Donziger, which concluded with a victory for Chevron.

The book by Barrett inevitably has few heroes and many anti-heroes. Although they were victims of a colossal fraud attempt, Chevron-Texaco did not perform the job of remediation they could and should have done. The state-owned oil company, Petro Ecuador, is seen as more responsible than Texaco for any pollution in the region, since they operated in the area for years after Texaco’s departure. The Ecuadorian judicial system was revealed in all its shocking corruption. Political leaders in Ecuador, from Correa on down, were shown to act for their own self-interest, rather than for the national interest. Technical consultants and court experts proved to be little more than mercenaries, willing to do anything for money. The Donziger team, without exception, behaved in a despicable manner, some of them originally idealists, tragically transformed into vulgar bounty hunters. The prestigious American law firm of Patton Boggs sold their name to a criminal cause and paid a heavy price for it, as Barrett has documented in Politico Magazine.

How to make a motion picture without heroes?

Barrett’s book is a Goliath vs. Goliath story. One Goliath, Chevron, was mighty powerful because of its almost limitless financial capability and corporate stubbornness. The other Goliath, Donziger, proved to be almost equally powerful, thanks to the support of the famous for being famous (Bianca Jagger, Darryl Hannah, Danny Glover, Sting) and to the forces of ideological fanaticism, political corruption, greed and false idealism.

I sided with the less wrong.

Gustavo Coronel, who served on the board of directors of Petróleos de Venezuela (PdVSA), has had a long and distinguished career in the international petroleum industry, including in the USA, Europe, Venezuela and Indonesia. He is an author, public policy expert and contributor to SFPPR News & Analysis.