Crown Capital Eco Management - Allegation: Environmentalists bribed judge in order to secure multi-billion dollar judgment

Attorneys representing environmentalist groups in a lawsuit against a major oil company bribed an Ecuadorian judge to issue a multi-billion dollar judgment against that oil company, according to sworn testimony by a judge involved in the scheme.

The testimony could derail efforts by the environmentalist groups to recover damages resulting from the Ecuadorian judgment.

An Ecuadorian court handed down an $18.2 billion judgment against Chevron in February 2011, holding the company responsible for ecological damage surrounding the Lago Agrio oil field in Nueva Loja, Ecuador.

Texaco drilled for crude during the 1970s and 1980s at the site, which became the focus of years of legal battles. Chevron inherited the company’s legal liabilities when it bought Texaco in 2001.

Chevron alleged malfeasance in the Ecuadorian court proceedings and in its judgment against the company. A sworn declaration from Albert Guerra, a former judge in the case, appears to corroborate the company’s allegations that the plaintiffs illegally conspired with the court in crafting the February 2011 judgment.

Guerra, who presided over the case in 2003 and 2004, claimed the plaintiffs’ attorneys agreed to pay at least $500,000 to his successor, Judge Nicolás Zambrano, to issue the judgment against Chevron.

Guerra claimed in a sworn declaration filed Jan. 28 that the plaintiffs’ attorneys ghostwrote Zambrano’s decision.

The declaration was filed by Chevron in a New York court, where the company is suing the plaintiffs under the Racketeer Influenced and Corrupt Organizations Act, a law generally used to prosecute organized crime.

Guerra said he was paid to ghostwrite judgments for Zambrano for years and claimed the two initially approached Chevron with the bribery scheme.

“Mr. Zambrano told me that Chevron would have much more money than the Plaintiffs for this agreement, and therefore we could get a better deal and greater profits for ourselves,” Guerra said.

Guerra said they instead arranged a deal with the plaintiffs when Chevron rebuffed their overtures.

This “entailed Plaintiffs writing a draft of the judgment and Judge Zambrano signing it and issuing it as his own” in exchange for “a payment of at least USD $500,000 to Mr. Zambrano; and whatever amount I could negotiate or agree to for myself.”

“I am aware that by making this decision, I am risking the security of my life and the lives of my family, but I feel duty-bound to state the truth,” Guerra said, citing involvement by the government of Ecuador in the fraudulent judgment against Chevron.

Karen Hinton, a spokesperson for the environmental interests behind the lawsuit, dismissed Guerra’s claims in a pre-emptive statement released the day before Chevron filed its declaration in court.

“In exchange for living the good life in Miami at Chevron’s expense, Guerra is now trying to carve out a role in the company’s ongoing Nixon-style dirty tricks campaign to evade paying its $19 billion legal obligation for creating the world’s worst environmental catastrophe,” Hinton said.

Guerra’s revelations could derail efforts by environmentalist groups to enforce the Ecuadorian judgment in countries other than Ecuador. As Chevron has no assets in Ecuador, the judgment must be enforced elsewhere for the plaintiffs to recoup the judgment.

However, under United States law no judgment obtained abroad through fraud or other violations of due process can be enforced in the U.S. A district court in New York ruled in July that the Ecuadorian judgment was “unquestionably … tainted,” but declined to say the judgment was unenforceable.

Findings of significant fraud in Ecuadorian legal proceedings would hinder plaintiffs’ efforts to enforce the judgment elsewhere, said Roger Alford, a law professor at the University of Notre Dame specializing in international law and commercial arbitration.

Guerra’s declaration “will probably defer the chances” plaintiffs will recover damages from the Ecuadorian judgment, Alford said. If a U.S. court finds the plaintiffs committed RICO violations, Chevron can use that decision to fight attempts to enforce the Ecuadorian judgment in Brazilian and Canadian courts, where plaintiffs are attempting to recover damages.

The plaintiffs have already lost one of their financiers due to allegations they misled supporters about the merits of the case and attempted to cover up widespread fraud in obtaining the Ecuadorian judgment.

British hedge fund Buford Capital, which gave the plaintiffs $4 million in exchange for a 1.5 percent stake in any judgment recovered, cited other instances of apparent illegal collaboration between plaintiffs and the Ecuadorian court in withdrawing Buford’s support of the lawsuit.

A letter from Buford to the plaintiffs’ attorneys sent in September 2011 but only recently revealed as part of Chevron’s RICO suit, claimed Steven Donziger, one of those attorneys, had admitted that plaintiffs collaborated with a court-appointed scientific expert to fraudulently inflate the severity of environmental damage around Lago Agrio.

Donziger “admitted that plaintiffs had in fact ghost written the entire report and had worked very hard to cover that up,” Buford claimed.

According to a ruling by Judge Lewis Kaplan of the U.S. District Court of Southern New York, Donziger and other plaintiffs’ attorneys pressured an Ecuadorian judge to appoint Richard Cabrera as the court’s expert on environmental damages.

The attorneys paid up-front bribes to Cabrera, who allowed an environmental consulting firm hired by the plaintiffs to ghostwrite “substantial portions of the Cabrera report and its annexes,” Kaplan found.

It was not the first irregularity surrounding scientific analyses in the Ecuadorian case. One of the plaintiffs’ top experts testified under oathregarding a 2005 report showing significant environmental damage at Lago Agrio that he “did not reach these conclusions and … did not write this report.”

“I concluded that I did not see significant contamination that posed immediate threat to the environment or to humans or wildlife around it,” added the expert, Charles Calmbacher. He claimed the plaintiffs filed court documents in his name that did not reflect the conclusions he had reached.

According to findings detailed in Judge Kaplan’s decision, Donziger has been open about using the corruption of the Ecuadorian judicial system to his advantage.

Outtakes from a documentary about Lago Agrio commissioned by the plaintiffs showed Donziger advocating the use of public and political pressure to sway Ecuadorian judges, something, he said, “would never happen in the United States or in any judicial system that had integrity.”

Ecuadorian judges, he said in another outtake, are “all corrupt. It’s their birthright to be corrupt.”

Another attorney working for the plaintiffs warned Donziger that any disclosures of their involvement with court-appointed scientific experts could be “potentially devastating. … [A]ll of us, your attorneys, might go to jail.”