Chevron Ecuador Judge Nunez bribery scandal - implications

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In a blockbuster development, Ecuador Judge Juan Nunez, the key legal figure in the Chevron Ecuador environmental damage case, is captured in a video shown here explaining that he plans to rule against the oil giant and for an award of $27 billion "more or less". The judge explains that the verdict will happen and that Chevron will be blocked from filing an appeal of his ruling. In that segment of the video, the Judge explains he's only there to talk about the verdict, not about "the other stuff" which refers to a $3 million payoff request. Later in the video its implied that Ecuadorian President Rafael Correa will benefit from the bribe amount.

On video today I talked to Chevron Media Relations representative Sean Comey about the video and Chevron's investigation.



In the video Judge Nunez, Aulo Gelio ServioTulio Avila ("Avila"), and Pablo Almeida and are talking with two gentleman, Wayne Hansen and Diego Borja who are environmental remediation contractors and in the Judge's chamber in Lago Agrio, Ecuador.  Hansen and Borja have pen-installed camcorders in their shirt pockets.  Diego Borja has worked for Chevron before, Hansen has not, according to Chevron.

Judge Nunez (on the left)

The idea of the meeting was for the Judge and his political associates to be paid by the environmental company for business that would come to them as a result of the Judge's planned verdict.  Here's what the Judge said from the video and the Amazonpost website:

Núñez:             “Any other questions for me as a judge?”
Hansen:           “Oh no, I, I know clearly how it is, you say, Chevron is the guilty party?”
Núñez:             “Yes Sir.”
Hansen:           “And the, the, the act (decision) is October or November of this year?”
Núñez:             “Yes Sir.”
Hansen:           “And it’s….?”
Núñez:             “No later than January.”
Hansen:           “January 2010. And the money is twenty-seven (billion dollars)?”
Núñez:             “It might be less, and it might be more.”

The Judge says "I have nothing to do with that other part" which is not explained in full but Garcia below fills in "the blanks" later, explaining that the Judge will be paid part of $3 million from the consulants.

 Patricio Garcia

The second part of the video has an operative Patricio Garcia (photo from the Amazonpost website) who's reportedly a member of Ecuador's ruling party talking about how the $3 million would be delivered and transfered. This is what was said by Garcia:

Borja: “OK. Of the three million … one million is for the judge?”


Garcia: “Yes.”


Borja: “One million for the presidency…?”


Garcia: “Yes.”


Borja: “And one million for the plaintiffs?”


Garcia: “Yes, that’s right.”


Borja: “But, Loco, for the plaintiffs, who gets the money? Fajardo?”


Garcia: “No. The thing is, we’re going to handle it here.”


Borja: “You mean Alianza PAIS would receive the payment here?”


Garcia: “Right.”

Here's the 30 minute version of the video (the full two hour version is here):



But there's more to this video than what's reported in the press thus far. The focus here is on President Rafael Correa, who's office is named by Patricio Garcia as a beneficiary of the planned bribe money as is "his sister" as stated in the video above. As of this writing Correa has not issued a statement, but his reputation has already come under attack.

The second part of the video was filmed at Alianza PAIS (which means "Proud and Sovereign Fatherland" according to the Wikepedia listing)  Offices June 22, 2009.   PAIS is a political movement led by President Correa.   Who Patricio Garcia is beyond his appearance in this video and his role in PAIS is still basically unknown as of this writing. 

Garcia says that the President's sister  Pierina will be helpful (presumably in making sure that the businessmen get their piece of the planned $27 billion pie) and will meet with "The Gringo" (that's Hansen).  I checked and "Prierina" is indeed  described here as "Pierina Correa, the president's sister and an Alianza País leader in Guayas province".  That confirms my assertion that Garcia is tied to the President and his family as he states in the video.


Shocking.  


Chevron wants Nunez taken off the case

The implication here is that as Chevron Media Relations representative Sean Corney said in my video above, Chevron wants Nunez taken off the environmental damage case.  But given that Chevron has informed the U.S. Department of Justice, the revalation could have deeper implications.  

It could cost the country its Andean Trade Preference Act (ATPA) status, which was just renewed in June of this year.  Whatever the case, this news sends a clear message that doing business in Ecuador is not the "clean" experience it should be. Until now, blogs have reported the problems of corruption in Ecuador and with respect to President Correa's involvement in the Chevron case, but now we have visible evidence to back those claims.

The news also forever destroys the claim made by Ecuador lawsuit legal advisor Steve Donziger and others who say that the lawsuit against Chevron has nothing to do with the Ecuadorian Government and is brought by citizens of the Amazon. But Correa has appeared with Donziger in public and has been interviewed about the case.

Right.  

One can see that the bribe money's not going anywhere near those groups of people Donziger claims to represent; the political party PAIS would get it and "handle it" as Garcia said in the video.  The question is, did Donziger or his associates in Ecuador and America know about this bribe plan?  Was he to be one of the plaitiffs that would get the bribe money? In the Amazon Defense Coalition statement today, he does not address the possibility that he may be involved, instead he said "As the facts come out it's going to backfire heavily on Chevron."



Amazon Defense Coalition defends Judge Nunez

Karen Hinton of the Amazon Defense Coalition told Reuters that the video shows Judge Nunez resisting the bribery matter. (This is Hinton's full statement.)  In point of fact, the video shows the judge saying that he's speaking in the role of Judge and "does not know about that other matter" which is a way of saying he does know but does not want it to be officially said that he does know.  It's called "plausible deniability ." 

Stay tuned.

Notes:

Full video transcripts:


Meeting 1 Transcript (228 KB)
Meeting 2 Transcript (195 KB)
Meeting 3 Transcript (218 KB)
Meeting 4 Transcript (217 KB)

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

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On YouTube.com

 

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.

Ecuador Mess: 118 Amazon Oil Spills

 

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At first I wasn't going to weigh in on the Ecuador issue for a bit, especially considering the recent and on balance really interesting 60 minutes segment that aired Sunday of this week. But then I ran across a paragraph that popped up in an Internet search for oil spills and Ecuador that reported this:

In 2006 to date, the country has reported 117 oil spills, which have jointly cost the company more than 27 million U.S. dollars in environmental compensation.

The "country" is Ecuador and the "company" is not Chevron, for who we in America have been almost programmed to think is responsible for all of the oil spills in that country, but Petroecuador, the state-run oil company. Now, from my reading Petroecuador's mentioned by Chevron but the blame for oil spills in the Amazon region doesn't stop there.

The simple sad fact is the government of the country of Ecuador has maintained a cozy relationships with multinational oil companies over the years. For example, in 2003 Ecuador embarked on a plan to expand oil production in the Amazon by constructing a then-new pipeline, the "Oleoducto de Crudos Pesados" or OCP and to the ire of AmazonWatch, which reported:

Set to go online in October 2003, the pipeline will transport heavy crude from the country's Amazon rainforest region to the Pacific Coast, placing fragile ecosystems and dozens of communities along the 300-mile route in jeopardy.


The damaging impacts of the new pipeline will be felt far beyond the immediate pipeline route. To fill the OCP, Ecuador must double current oil production by embarking on an unprecedented wave of new oil exploitation in vast areas of Amazon frontier forest. Plans are already underway for dozens of new oil wells, roads, flow lines, and associated processing plants that will litter some of the country's last remaining old growth rainforests and territories of isolated indigenous peoples.

And the country is trying to gain more oil revenues, called "petrodollars" by eliminating foreign country oil producers like Occidental Petroleum in 2007 and Chevron in 1992, and even the state-run organization in Brazil late last year, and in Canada, and move all production activities toward Petroecuador. And that all companies, not just Chevron and Petroecuador, have been responsible for oil spills and Chevron has not produced oil their since 1992, but again, the spills have been many since their departure.

Ecaudor's grab for money

The problem is the Ecaudor and Petroecuador lack the annual revenues to maintain oil facility production and performance, and so have embarked on a massive campaign to gain such monies by "user fees", the revenue from the new-to-Ecuador petrodollar sources, and the Chevron lawsuit.

There's no indication Ecuador intends to start environmental cleanup actions in the Amazon beyond what Petroecuador has done already. But Petroecuador's work and the large number of oil spills lead me to ask if the oil we saw on the waters in the Amazon shown on 60 Minutes was actually caused by one of these 117 oil spills? It's said that oil spills are almost a way of life in the Amazon today and it has been that way for some time and in the country in general.

For example, In 2001, 144,000 gallons of diesel and "bunker" fuel were spilled near the Galapagos Islands and then made its way to shore. And that same year in the Amazon itself Petroecuador failed to contain oil spilled from "an abandoned exploratory well." And in this year 2009, February, 14,000 gallons of oil were spilled by Petroecuador as the country's second largest pipeline ruptured, causing oil to ooze out onto the banks of the Santa Rosa river. “The river was completely covered with oil from bank to bank,” according to a Reuters' update.

Not all oil production activity in Ecuador has been by American companies. World environmentalists have waged war against a Canadian oil firm called EnCana. In a presentation of a documentary film called Between Midnight and The Rooster’s Crow it was reported that..

The Aguarico and the Napo rivers, which have sustained the native tribes—the Cofan, the Secoya, and the Siona—for thousands of years, have been systematically contaminated since intense oil extraction began in the 1970s. Drost documents crude oil leaking into the now noxious rivers, and interviews locals swearing that eating river fish tastes like eating pure crude. It appears as though while the oil companies have reaped their record profits, skyrocketing cancer, broken promises, miscarriage, and skin disease have been the dividends paid to the local populace...When the Amazonian locals decide to take direct action to ensure that their interests are not overlooked, the military and police step in with an excessive amount of force to ensure that nothing stops corporate profit (oil) from flowing. Drost—giving the viewer a candid glimpse at the seedy underbelly of corporate globalization—interviews a man who, while peacefully protesting at a roadblock with a group of locals who were demanding clean water, sewage, electricity, and jobs, was shot by Ecuadorian soldiers. Given that the soldiers who shot him were flown into EnCana’s private airport, picked up by EnCana trucks who were driven by EnCana drivers, one must wonder how Gwyn Morgan (President and CEO of EnCana—and before that President and CEO of AEC since 1994) keeps a straight face when he comments, at the end of the film: “People fail to understand how little influence companies have on government.”

That was by first-time Canadian filmmaker Nadja Drost who created the movie in 2003, and over ten long years after Chevron's presence in the Amazon region was replaced by Petroecuador, and shows the real truth: with so many companies both foreign and domestic involved in oil production in the region since 1992, the real cost of environmental damage is impossible to pin to just one company. Ecuador itself and many oil companies from various countries from the United States, Canada, Brazil, and Ecuador itself are responsible for the environmental damage caused by oil spills, and which continues through today.

Oh, and considering the level of interest in this by so-called activists, for the record, I'm not paid by Royal Dutch Shell, Occidental Petroleum, Chevron, or their affliates for this post. What bothers me here is the constant insistence that oil production problems here and in the Third World are the fault of rich, White American firms working against the poor people of color in those areas. If one tells the complex truth, where the assignment of blame is more complicated, they're demonized and told to shut up.

Ecuador: President Correa Faces Pressure From Indigenous Groups

More at Global Voices Online: “Despite protests and road blockades in southen Ecuador, a new mining law [es] (pdf format) was passed in Congress. Now the new bill will head to the executive branch for final approval from President Rafael Correa. Opposition to the bill is coming from indigenous groups, who have called for a national march to be held on January 20 to protest the government's support for the new law.

The mobilization is being led by the country's largest indigenous organization, the National Confederation of Indigenous Nations (CONAIE), which is stating that there was very little discussion regarding the new law and that it will be harmful to the environment and is going against the sovereignty of indigenous communities. ”

-- And this from the President who claims to be protecting indigeneous groups, as in the Chevron case, while letting Ecuadorian companies take advantage of them. The key need is for that country to improve its economic development practices.

Petroecuador Employees Fight Over Occidential Petroleum's Left Over Luxury Cars

If one needs any evidence of how divided Ecuador's class culture really is, and of how this still-poor country (even with its oil industry) has so little that its citizens scrap for everything, we have this report of Petroecuador employees actually coming to blows over luxury cars left behind after the state forced that American oil company out of the country.


Now, the resulting "wake" has improved the oil sector, if not the messy politics that defines it in this country. Now, Petroecuador controls 50 percent of all oil export production in Ecuador. And while Occidental has approached the Bush Administration for help in re-acquiring the assets seized by Ecuador, the nation's representatives are taking a hard line stance, not allowing a "an arrogant, portentous transnational that doesn’t respect Ecuadoran laws to harm our country,” according to Ecuadorian president Rafael Correa.