Toronto, Canada – The lawyer for Ecuadorian villagers in the trial to enforce the $9.5 billion Ecuador judgment said he was ready to question Chevron’s star witness Alberto Guerra on the stand about his false allegations of bribery, but that Chevron appears “afraid” to bring him up to Canada for grilling in open court.
And in another stunning setback for Chevron in Canada, the oil giant’s lawyers admitted last week in open court that a Canadian judge will make his own factual determination and not be bound by the findings of a controversial U.S. trial judge about whether the Ecuador environmental judgment can be enforced against Chevron’s assets in Canada. Chevron’s admission is a significant advance for Ecuadorian rainforest communities trying to remediate oil pollution on their ancestral lands.
The flurry of admissions and argument took place during a four-day motions hearing last week in Toronto that is expected to determine the scope of the enforcement trial targeting Chevron’s assets to force the company to comply with the Ecuador environmental judgment. Chevron has at least $15 billion of assets in Canada, or more than enough to pay the entirety of the judgment plus interest.
Chevron is trying to avoid a trial altogether by arguing that the communities could never collect assets in Canada because they are held by a wholly-owned subsidiary. The Ecuadorian communities have proposed a compromise that would include a mini-trial on two discrete issues related to Chevron allegations of bribery and ghostwriting, but nothing else. Justice Glen Hainey is expected to rule on the pre-trial issues in the coming weeks with an enforcement trial likely to take place in 2017.
Chevron’s admission that the findings of U.S. Judge Lewis A. Kaplan have little relevance to the Canadian proceeding is critically important. For years, the company has tried to argue that Canadian courts should defer wholesale to Kaplan’s findings that the judgment in Ecuador is fraudulent, a determination contrary to the findings of three courts in Ecuador that – unlike Kaplan – heard the fully panoply of evidence against the oil giant.
Kaplan based his “fraud” findings largely on the controversial testimony from Guerra, who was paid more than $2 million by the company and who later admitted lying on the stand. Kaplan also refused to consider voluminous technical and scientific evidence demonstrating the oil giant’s toxic dumping in Ecuador, and he made comments from the bench that members of the affected rainforest communities considered highly offensive, among other deep flaws in his proceeding. (Kaplan also did not disclose that he had investments in Chevron while ruling in favor of the oil company.)
Lenczner said he was ready for Guerra, who was coached by the oil giant’s lawyers for a whopping 53 days before being allowed to testify in open court in the U.S.
“Bottom line is that we are not here to determine what Kaplan found or didn’t find,” Lenczner told the court. “We are here to determine what Chevron brought forward to the Ecuador courts… what is also clear that the findings of Kaplan have no legs. But if they say there is a bribe, let’s have a trial on the bribe and bring Guerra here. And I will tell you, Chevron is afraid to bring Guerra into this courtroom.”
Lenczner later repeated to Hainey that if the Canadian court wanted to litigate Chevron’s supposed evidence about an alleged offer of a bribe then, “Bring it on…. Let’s bring up Alberto Guerra and have a trial on the bribe. We will fight like hell till it freezes over and then fight it out on the ice, just like Chevron said it would.”
Aaron Marr Page, a U.S. legal advisor to the rainforest communities, also praised the independence of Canadian courts in not deferring to Kaplan’s findings. Canada’s Supreme Court already ruled unanimously against Chevron and in favor of the villagers on a key jurisdictional question that the oil giant had used to try to block the enforcement action, sending the matter back to the Ontario trial court in Toronto.
“What Chevron really wants is for the Canadian courts to defer to Kaplan’s flawed findings point by point which is something that will never happen,” said Page. “Chevron also knows any such argument is baseless and even insulting – Canadian courts are plenty capable of making their own findings, and certainly do not look kindly on findings based on paid ‘fact’ witness testimony and countless other procedural abuses of the sort that took place before Kaplan.”
“Chevron’s admission in Canada that Kaplan’s erroneous factual findings will have little if any relevance is a huge victory for the affected communities and demonstrates how the company’s legal position is weakening,” added Page.
In the motions hearing, attended by roughly two dozen lawyers and executives from Chevron, the company ran headlong into the reality that its “fraud” narrative adopted by Kaplan could easily blow up in Canada, potentially forcing payment of the entire Ecuador court judgment. Chevron has spent an estimated $2 billion on more than 60 law firms and 2,000 legal personnel to avoid precisely that outcome.
Justice Hainey, the Canadian judge, made it clear that he would be making his own determination – one that likely will be based at least in part on key evidence that Kaplan refused to consider, say lawyers for the affected communities. This not only includes the evidence that Guerra admitted lying on the stand, but also new forensic evidence that proves Chevron falsified evidence before Kaplan on the issue of the authorship of the Ecuador trial court judgment.
A former Ecuador judge who admitted to accepting bribes while on the bench, Guerra remains the centerpiece of a Chevron narrative initiated to try to taint the 2011 Ecuador judgment. Almost 13 months after Kaplan ruled, Guerra recanted key elements of his testimony during a related arbitration dispute between the Government of Ecuador and Chevron.
By 2013, Ecuador’s highest court – ruling in the country where Chevron insisted the trial be held and where it had accepted jurisdiction – affirmed that Chevron as responsible for the intentional dumping of billions of gallons of toxic water into streams and rivers used by locals for their drinking water. (For the unanimous Ecuador Supreme Court ruling, see here.) Cancer rates in the region have skyrocketed, according to several independent studies. The company also was found to have abandoned roughly 1,000 toxic waste pits gouged out of the jungle floor which continue to contaminate soils and groundwater, according to expert evidence.
Because Chevron sold all of its assets in Ecuador as the evidence mounted against it during the Ecuador phase of the trial, the Ecuadorians have been forced to seek payment of the damage award in other jurisdictions. Chevron has an estimated $15 to $25 billion in assets in Canada.
Chevron also is trying to make the technical argument to Justice Hainey that the enforcement trial should not take place at all because the company’s assets are held by a wholly-owned subsidiary called Chevron Canada, not by Chevron itself. That argument has very little chance of prevailing, said Lenczner in this brief he submitted on the question.
In Ontario, the Ecuadorians also are arguing Canadian and international law preclude Chevron from re-litigating what the Ecuador courts have ruled on already, or from hearing evidence that was available to Chevron to present. Lenczner said Chevron knew of Guerra’s now-disputed evidence when it appealed the lower court’s judgment in Ecuador but did not present it. Nevertheless, he said that “as a compromise with the court,” the Ecuadorians are prepared to have a “mini-trial on the bribery and ghostwriting charges” involving Guerra’s testimony
In his recantation, Guerra conceded that he was not offered payments by the villagers as he had testified, and that he had told Chevron the lie only to increase company payments to him. Chevron has signed two contracts with Guerra paying him a monthly salary of $12,000 even though he was paid only $500 monthly in his last job in Ecuador. Chevron also pays Guerra’s health insurance, the fees for an immigration lawyer for him and his entire family, and his federal income taxes in the United States, as well as other expenses.
Lenczner also said “impressive” evidence showed Chevron received a fair trial in Ecuador. He said, “I’ll show you involvement: 216,692 pages of evidence, 100 expert reports, 56 site visits, Chevron participated at every level. The company brought 1000 motions, 20,000 pages of new evidence was submitted to the intermediate court of appeal, and another 10,000 pages was submitted to the National Supreme Court.”
The villagers originally filed their claims against Chevron in 1993 in U.S. federal court before the company shifted the case to Ecuador by promising to abide by any judgment issued there. Chevron later reneged on that promise and promised the villagers a “lifetime of litigation” if they persisted in pursuing their claims.
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