Chevron v. Ecuador - Chevron Files Response To "Fraudulent" Court Report

I'm just updating you on news related to the ongoing legal battle between Chevron and Ecuador:

California-based oil major Chevron (NYSE: CVX) has filed a written response to a court-ordered report in a trial related to alleged environmental damage in Ecuador.

The superior court in Nueva Loja, Ecuador, asked Richard Cabrera to write the report after the plaintiffs aborted a judicial inspection process of the alleged pollution in Ecuador, Chevron said in a statement.

"The findings of the Cabrera report are clearly fraudulent and intended to cause damage to this US company and its shareholders," Chevron general counsel Charles James told reporters in a conference call.

"This report would not withstand scrutiny - be it technical, scientific or legal - in any responsible independent court anywhere in the world," he said.

Chevron believes Cabrera, helped by the plaintiffs, "manipulated" findings to justify false conclusions. Cabrera failed to present evidence for a number of claims and did not look at drinking water samples to prove contamination, according to the Chevron statement.

"It is hard to read Mr Cabrera's report and find a single table, page, assertion or data point that we wouldn't take issue with," James said when asked whether there was any truth to the Cabrera report. "He did put his name on the report and I presume that's correct."

The Cabrera report estimates damages of US$7bn-16bn - a "reasonable" amount that actually "underestimated the number of deaths from cancer due to the oil contamination," the Amazon Defense Coalition, a NGO that supports the plaintiffs, said in a statement.

In fact, plaintiffs have submitted papers to the court asking Cabrera to calculate how much it would cost to remediate groundwater and surface water not included in the assessment.

"There is significant evidence of groundwater and surface water contamination in the record yet no damages to remediate the impacts," Pablo Fajardo, the Ecuadorian lawyer for "dozens" of Amazon communities and five indigenous groups suing Chevron, said in the NGO's statement.

The trial stems back decades, when Ecuador's state oil company Petroecuador led an E&P project with partner Texaco Petroleum (Texpet), which years later merged into Chevron. The Petroecuador-Texpet partnership resulted in total crude production of 1.7Mb, with Texpet - which stopped operating in the country in 1992 - taking 5% of the financial proceeds, according to Chevron figures.

Ecuador's government in 1999 enacted a new environmental statute that allows any Ecuadorian resident to file a collective suit for environmental reparations. As a result, plaintiffs filed suit against Chevron in 2003, alleging environmental damage under the Texpet project.

Although Texpet had a minority stake in the project, plaintiffs allege it did substandard work and made major decisions about project technology and methodology.

Chevron denies the allegations and says it performed a US$40mn remediation project that gave it final immunity from claims resulting from its participation in the consortium.