Chevron accuser paid $200K to Ecuador court's economist

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Ecuador's President Rafael Correa - does he know about this?

As you may or may not know, San Ramon, Ca-based Chevron is in a legal battle against an organization called "The Amazon Defense Coalition" (ADC) which represents a group of citizens in the Amazon River Delta region of Ecuador that the ADC charges were the victims of environmental damage caused by oil production by Chevron from 1968 to 1992, when Chevron / Texaco sold it's facilities to the state-run organization PetroEcuador.

One of the key claims made by ADC was that an economist, Richard Cabera, appointed by the court in Ecuador where Chevron's being sued, discovered damage estimated at $16 billion; Cabrera then updated his study to $27 billion. While Chevron has long dsiputed that study, the ADC, and much of the media, used those numbers in articles and blog posts to dramatize the extent of Chevron's alledged impact. But a new finding has been reported, one that should alter the course of events in this case; Cabrera was paid $207,000 by the ADC, according to the work of blogger Bob McCarty.

Normally, an expert is called as a witness during a trial and represents one side, either the plaintiff or the defense. In this case, Ecuador had a court-appointed economist who's by that title is supposed to be non-biased. But the discovery that Cabrera was paid $207,000 - and McCarty has photos of the check to prove it right on his blog - effectively tosses out any claim that Cabrera's unbiased. The ADC disputes this idea.

Karen Hinton, the terrific PR and communications representative for the ADC told McCarty it's common for such expertise to be paid for both in Ecuador and in America. But in the USA, expert witnesses are paid for by either side to present their case, not an unbiased view, unless supeonaed by the court to testify. But in that case if one is using the English system and this appears to be the case in Ecuador, the expert witness is required to be unbiased, so this revalation of payments goes against even the English code.

According to the affiable McCarty, Chevron not only didn't pay Cabrera, they were not approached to do so and didn't want to because they asserted his resume was "thin." With this, the Ecuadorian court employed him anyway.

McCarty's investigative work led him to pin-point the writer of the checks:

Similarly, all of the checks were issued by Selviva, a limited-liability company formed in Ecuador in 2004 by Alberto Wray, the lead attorney in charge of the litigation when it began in Ecuador the previous year, and three other individuals.

Wray has been working on the case against Chevron with Donziger as far back as 2003. The fact that Wray has been writing these checks to Cabrera and in turn the economist is Ecuadorian court-ordered, also backs Chevron's fear that the trial is fixed to go against them.

In fact, Chevron's assertion of a "kangaroo court" scenario is such the firm approached the U.S. Department of Commerce earlier this year calling for a "close review of Ecuador’s eligibility under the Andean Trade Preference Act (ATPA)" according to a letter sent to me just a few days ago by Chevron's media department. At first, the letter seemed of little value so early in the court case process and it came "out of the blue" without request by me; now it's of high value as the ATPA clearly deals with such issues as corruption in trade operations and legal systems.

What is the ATPA?

According to the U.S. Government, the ATPA was:

enacted in December 1991, to help four Andean countries (Bolivia, Colombia, Ecuador, and Peru) in their fight against drug production and trafficking by expanding their economic alternatives. To this end, the ATPA provided reduced-duty or duty-free treatment to most of these countries’ exports to the United States.

The ATPA consists of a 20-point set of criteria so loose in interpretation that Chevron could claim Ecuador was not operating in a "fair trade" fashion and indeed, as part of the "Business Community Roundtable" has done so. The portion of the letter sent to U.S. Trade Representative Ron Kirk and that I have obtained and is the meat of all this reads as follows:

We are writing to urge your close and careful review of Ecuador’s continued eligibility under the Andean Trade Preference Act (ATPA) required by section 208(a)(2) (19 U.S.C. 3206). As you know, ATPA was originally enacted in 1992, and extended by the Andean Trade Promotion and Drug Eradication Act (ATPDEA) as part of the Trade Act of 2002, to foster the rule of law and legitimate economic development opportunities in the Andean region. While both Peru and Colombia have successfully used this program to promote economic diversification and new opportunities, while also strengthening their own legal systems and respect for the rule of law, the same cannot be said of Ecuador.

In particular, there are serious concerns within the U.S. business community about breaches of the basic rule of law that are occurring in Ecuador, contrary to the basic eligibility requirements of section 203(c). As found by the State Department in its annual human rights report on Ecuador released in February 2009, there are concerns with “corruption and the denial of due process within [Ecuador’s] judicial system.” U.S. businesses have also continued to see Ecuador’s repudiation of its legal obligations to U.S. investors and a politicization of the judicial system.

Given these basic gaps in the rule of law, we believe that the automatic renewal of Andean preferences for Ecuador would send the wrong message to other developing countries in the hemisphere and throughout the world that have worked to meet the basic eligibility criteria to qualify for U.S. trade preferences. We note that Bolivia has already lost its ATPA benefits as a result of its failure to meet the ATPA eligibility criteria and that Bolivia’s actions continue to worsen.

We urge you, therefore, to closely review Ecuador’s eligibility to continue to receive preferences under the ATPA.

Remember, this letter isn't just from Chevron; it represents a number of U.S. businesses that have experienced problems operating in Ecuador, most notably Occidental Petroleum, which was kicked out of Ecuador in 2006 after an alledged breach of contract with the government, which then took over its oil production facilities and even the luxury cars left behind.

While there's no official indication the U.S. Government will step in and respond to the letter, written June 9th, this new information of payments to Cabrera will change the climate around which the letter was written. Indeed, before the discovery, the Government was clearly aware of problems of corruption in Ecuador:

Ecuador has been reported to suffer from high levels of corruption. Weak judicial institutions, sometimes susceptible to political influence and lack of transparency in regulatory bodies, are frequently cited as root causes of corruption in Ecuador. There are few non-governmental institutions that fight corruption. President Correa has cited fighting corruption as an important administration goal.

What about the Amazon's people?

The main problem of environmental damage caused by oil exploration will not be solved by this trial, and these payments are a great indication this will not happen, if that was ever Ecuador's objective. I think Donziger's a very good man with the right idea, but the wrong focus, and working with the wrong people. Ecuador has shown no real sign of true interest in solving the environmental problems caused by oil exploration.

Oil spills are common in the Amazon to this day, and while Chevron's not been a player in oil exploration there since 1992, many companies from the European Union and Canada have.

Oil is that country's number one revenue-generator. President Rafael Correa has crafted a public image of being an "environmentalist man of the people" and attracted World attention with his request for $4 billion from companies to avoid producing oil in the Yasuni National Park within the Amazon.

Correa's idea is innovative, but gives pause. He's asking for companies to pay to keep the oil under Yasuni untouched, but there's a problem: oil production's already taken place in Yasuni and there's every indication Ecuador's gotten no takers for Correa's deal because of the knoweldge that the Yasuni's "touched" already. Moreover, and this is little reported, Correa has said that if doesn't get the $4 billion, Ecuador will "drill there anyway" which means Petroecuador expands operations. Correa's real interest has been the continued nationalization of oil production, almost, it seems, by any means necessary.

So much for environmental concerns; Correa's playing genius-level politics. The reality is Ecuador's zoned a whopping 65 percent of the Amazon for oil production according to a recent study you can download here. Who's really watching out for the living conditions of the poor of Ecuador's Amazon region? That's a good question. A very good one, indeed.