The U.S. District Court for the Southern District of New York ruled that the $9.5 billion judgment against Chevron Corporation in Ecuador was the product of fraud and racketeering activity, finding it unenforceable.
The nearly 500-page ruling finds that Steven Donziger, the lead American lawyer behind the Ecuadorian lawsuit against the company, violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO), committing extortion, money laundering, wire fraud, Foreign Corrupt Practices Act violations, witness tampering and obstruction of justice in obtaining the Ecuadorian judgment and in trying to cover up his and his associates' crimes.
The court found that Donziger and his team "wrote the [Ecuadorian] court's Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment." As Judge Lewis Kaplan stated in the court's ruling: "The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador – and they knew it. Indeed, one Ecuadorian legal team member, in a moment of panicky candor, admitted that if documents exposing just part of what they had done were to come to light, 'apart from destroying the proceeding, all of us, your attorneys, might go to jail.' It is time to face the facts."
"Decision is unequivocal: The Ecuadorian judgment against Chevron is a fraud and is the result of criminal acts by a handful of corrupt lawyers looking to enrich themselves," said Hewitt Pate, Chevron vice president and general counsel. "Chevron's reputation was taken hostage and held for a multibillion-dollar ransom. Rather than give in and pay these criminals off, Chevron exposed the truth. Chevron is pleased with today's judgment. We are confident that any court that respects the rule of law will likewise find the Ecuadorian judgment to be illegitimate and unenforceable."
During the seven-week RICO and fraud trial, Chevron presented unrebutted evidence detailing the extent of the fraudulent acts undertaken and directed by Donziger, his Ecuadorian legal team and other associates, including fabricating environmental evidence, pressuring scientific experts to falsify reports, plotting to intimidate judges into handing down favorable rulings, bribing court-appointed experts, ghostwriting court reports and even drafting the final judgment. Today's judgment made clear that Donziger and his associates resorted to fraud due to the lack of evidence to support their claims against Chevron.
Ruling prohibits Donziger and his associates from seeking to enforce the Ecuadorian judgment in the United States and further prohibits them from profiting from their illegal acts.
Chevron has never operated in Ecuador. Texaco Petroleum (TexPet), which became a subsidiary of Chevron in 2001, was a minority partner in an oil-production consortium in Ecuador along with the state-owned oil company, Petroecuador, from 1964 to 1992. After TexPet turned its remaining share of the oil operations over to Petroecuador in 1992, pursuant to an agreement with Ecuador, TexPet agreed to conduct a remediation of selected production sites while Petroecuador committed to perform any remaining cleanup. The government of Ecuador oversaw and certified the successful completion of TexPet's remediation and fully released TexPet from further environmental liability. Petroecuador, however, failed to conduct the cleanup it promised and has continued to operate and expand oil operations in the former concession over the past 20 years.
An international arbitration tribunal in The Hague has already ruled that the Republic of Ecuador released Texaco – and therefore Chevron – from liability for all public interest or collective environmental claims through agreements signed in the 1990s. The Lago Agrio plaintiffs' lawyers have repeatedly admitted, and the relief in the Lago Agrio judgment makes clear, that their claims are exclusively collective and not individual.
"Chevron believes that the people of the Oriente deserve a better quality of life. They lack basic infrastructure, including water and sewage treatment. We hope that this ruling will prompt the government of Ecuador and Petroecuador to finally take responsibility and address the issues facing the region and its people," Pate added.