Despite an adverse court ruling out of Ecuador, Chevron continues to remain on the offensive against trial lawyers who are suing the company over environmental allegations that have been hotly disputed.  An Ecuadorian appeals court in Lago Agrio  upheld a ruling earlier this month ordering the company to pay $18 billion in damages to plaintiffs who claim the oil company is responsible for polluting the Amazon and damaging the health of local residents.

Chevron became a target for litigation after it took over Texaco in 2001. Farmers and tribe members claim Texaco damaged parts of the jungle with faulty drilling practices in the 1970’s and 1980’s. In response, Chevron officials have said that Texaco properly re-mediated the areas where it had operations. Moreover, the company has produced reams of evidence that demonstrate plaintiff attorneys have been operating in collusion with Ecuador’s judiciary to produce fraudulent rulings. Chevron has also sought international legal recourse with considerable success.

Under the U.S.-Ecuador Bilateral Investment Agreement Treaty, a Hague Tribunal has ordered Ecuador to suspend enforcement of the ruling pending further investigation. Several federal judges in the U.S. have also ruled in the company’s favor. Chevron has also submitted a letter to Galo Chiriboga, Ecuador’s prosecutor general that documents the fraud and corruption allegations. The plaintiffs’ representatives including Steven Donziger, Pablo Fajardo, Juan Pablo  Saenz, Julio Priento and Luis Yanza worked in covert partnership with Judge Zambrano to craft a ruling  that would be favorable to their case, according to the letter.

Chevron’s evidence against the Ecuadorian court includes the following:

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Chevron oil company is being sued in Ecuador for $27 billion. It’s a big number. The gross domestic product (GDP) of Ecuador in 2008 was $54 billion. So $27 billion is 50% of the GDP of the entire country. And the $27 billion claim is sheer fantasy. The damage claim against Chevron is based on a gigantic scam.

Donald Moncayo (yellow shirt) of the Amazon Defense Coalition (the named financial beneficiary in the case) assisting the court's “independent expert” Richard Cabrera (leaning on tree) during a site inspection.

It goes back a while. Between 1965 and 1990, the old Texaco company developed oil concessions in Ecuador. (Texaco merged with Chevron in 2001, hence Chevron is now in the dock.) Between 1977 and 1990, Ecuador progressively nationalized Texaco assets, and transferred them to the state oil firm, Petroecuador.

In the early 1990s, Texaco and Petroecuador agreed to clean up a number of oil sites. Texaco kept its side of the bargain, and in 1998 the government of Ecuador certified that Texaco successfully cleaned up its share of the operations.

Nonetheless, in 1994 a group of U.S. attorneys sued Texaco in the U.S. They made novel legal claims for “environmental justice.” Eventually, the case was dismissed in the United States and a new case was filed against Chevron in Ecuador.

The Ecuadorean court appointed an “expert witness” to make factual findings and to calculate damages. Turns out that the “expert” is a mining engineer named Richard Cabrera, who has direct financial ties to the plaintiffs and as we learned this week, hidden ties to Petroecuador.

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