Court Appointee in Chevron Ecuador Lawsuit Tied to Ecuador State-Owned Oil Company
In a court filing today in Lago Agrio, Ecuador,
Chevron Corp.
(NYSE:CVX) provided newly discovered information showing that the author
of a report recommending that Chevron be ordered to pay $27 billion in
damages is the majority owner of an oilfield remediation company that
stands to gain financially from a judgment against Chevron. Due to the
remediation company’s relationship with Ecuador’s state-owned oil
company, Petroecuador, Chevron called upon the court to immediately
reject the work of Richard Cabrera on the grounds that he knowingly hid
his relationship and that he stands to gain from what was supposed to be
unbiased work for the court.
"For three years, Mr. Cabrera has concealed clear financial conflicts of
interest that disqualify him from acting as an independent and objective
evaluator of the evidence in the case,” Chevron Vice President and
General Counsel Hewitt Pate said. "While Mr. Cabrera’s financial
interests alone are sufficient grounds for his report to be rejected,
his intentional concealment of those interests further demonstrates that
the entirety of his work lacks honesty, integrity, or credibility.”
Recently uncovered records, from 2003 through 2008, show Cabrera is
co-founder, general manager, majority stockholder, and legal
representative of an oilfield remediation company, Compañía Ambiental
Minera-Petrolera S.A. ("CAMPET”), which is registered to perform
oilfield remediation and other services for Petroecuador. Cabrera failed
to disclose these business interests as required by law.
In his report, Cabrera absolves Petroecuador of any responsibility or
remediation obligations associated with past or present oil operations
despite its majority ownership of the Petroecuador-Texaco Petroleum
consortium, which operated until mid-1992, and Petroecuador’s sole
ownership and operation of the former consortium fields for the past 18
years. Disregarding Ecuadorian media reports and other evidence showing
that Petroecuador has spilled millions of gallons of oil since taking
over exclusive ownership and operations in 1992, Cabrera exclusively
attributes pollution in the Amazon region of Ecuador to Texaco
Petroleum, now a fifth-tier subsidiary of Chevron. Cabrera’s report says
that Chevron, because it acquired Texaco Inc. in 2001, is solely liable
for damages, citing grossly inflated remediation costs while ignoring
Petroecuador’s role in oil operations and its well-documented poor
environmental performance. Cabrera’s report also calls on Chevron to pay
$375 million to update Petroecuador’s oilfield equipment, which
Petroecuador has for decades failed to properly maintain or replace.
These findings make no sense as a matter of Ecuadorian law or common
sense, but are consistent with furthering Petroecuador’s interests, as
well as Cabrera’s own.
After knowingly omitting to disclose his financial interest in CAMPET,
as well as CAMPET’s status as a registered Petroecuador contractor,
Cabrera affirmatively misrepresented in court filings that he did not
have any impediment or conflict that would affect his performance as an
"independent” court-appointed witness. Cabrera violated the law by
accepting his appointment, which required an explicit acknowledgment of
public duties as an impartial analyst—an acknowledgment Cabrera could
not truthfully have made given his financial interests.
Cabrera’s recommendations and independence were already compromised
prior to the discovery of his conflict of interests:
-
The Amazon Defense Front, the named financial beneficiary of the
lawsuit, directly and improperly paid Cabrera more than $200,000 for
his work;
-
Sections of Cabrera’s $27 billion claim are copied word-for-word from
documents written by Amazon Defense Front lawyers;
-
Photographs and video show representatives of the Amazon Defense Front
conducting Cabrera’s field work as well as preparing soil and water
samples for Cabrera, who had promised to carry out his work
independently;
-
Nearly 90 percent of Cabrera’s $27 billion figure is allocated to
issues that he was not directed to examine and that are unrelated to
the actual claims in the Ecuador lawsuit;
-
Cabrera assessed more than $9 billion as compensation for cancer
deaths without providing any medical evidence or even the name of a
single alleged victim or family member beneficiary to support his
recommendation;
-
Cabrera recommends Chevron pay more than $8.4 billion for what he
deems "unjust enrichment,” despite the fact that Texaco Petroleum
earned less than $500 million in profits during the life of the
consortium while the government of Ecuador received more than $24
billion, more than ninety percent of the total revenue generated by
the consortium. Moreover, there is no basis in Ecuadorian law for such
an award;
-
Cabrera assessed $3.2 billion for groundwater remediation and $428
million to improve potable water systems even though he did not take
any samples of streams, rivers, municipal water sources or drinking
water wells, and states in his own report that he did not have enough
data to develop a groundwater remediation plan;
-
Cabrera recommends more than $2.7 billion dollars for pit remediation,
averaging more than $3 million per pit. This figure is vastly inflated
compared to the $85,000 per-pit actual cost for Petroecuador’s recent
remediation work that has been implemented to the full satisfaction of
the government. Proper remediation, therefore, of every pit that
Petroecuador is obligated to clean up would cost well under
$100,000,000;
-
Cabrera claims $1.7 billion in damages for oil infrastructure sites
that have been in constant use by Petroecuador for nearly two decades
and substantially expanded by Petroecuador since Texaco Petroleum’s
departure in 1992;
-
Cabrera assessed more than $1 billion in soil remediation for sites he
never visited.
Chevron previously challenged Cabrera’s lack of qualifications as well
as the biased and baseless substance of his report. But Judge Juan
Nuñez, who subsequently was disqualified for his involvement in a scheme
to solicit bribes in connection with letting remediation contracts that
were supposed to be funded with the proceeds of the judgment Cabrera
recommended, inexplicably ignored those challenges, thus shielding
Cabrera’s work from scrutiny. Now that Cabrera’s clear conflicts of
interest are revealed, Chevron has demanded that the court strike his
entire involvement in the case.
"Mr. Cabrera has placed his own financial interests, as well as the
interests of Petroecuador and the Amazon Defense Front, ahead of the
interest of justice,” Chevron’s Pate added. "Today’s disclosure further
illustrates the illegitimacy of Mr. Cabrera’s fictitious $27 billion
recommendation. Taken into account with Mr. Cabrera’s collusion with the
plaintiffs’ lawyers and representatives, it is clear that his report
should have no bearing in the outcome of this trial.”
Chevron Corporation is one of the world’s leading integrated energy
companies, with subsidiaries that conduct business worldwide. The
company’s success is driven by the ingenuity and commitment of
approximately 62,000 employees who operate across the energy spectrum.
Chevron explores for, produces and transports crude oil and natural gas;
refines, markets and distributes transportation fuels and other energy
products; manufactures and sells petrochemical products; generates power
and produces geothermal energy; provides energy efficiency solutions;
and develops the energy resources of the future, including biofuels.
Chevron is based in San Ramon, Calif. More information about Chevron is
available at www.chevron.com.
Editor’s Note
Corroborating evidence of Cabrera’s misconduct and collaboration with
the Amazon Defense Front can be accessed at: http://bit.ly/9Ux9FT
