New Evidence of Chevron Fraud From Final Judicial Inspections in $27 Billion Environmental Case

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QUITO, Ecuador - Evidence that two Chevron lawyers committed fraud in Ecuador apparently has grown stronger with a new court-ordered report finding extensive levels of toxic contamination at two oil well sites that the company claimed to have "remediated" in the mid-1990s, representatives of indigenous and farmer communities said today.

The report was submitted this week to an Ecuador trial court in a high-profile environmental lawsuit where Chevron faces a $27.3 billion liability for dumping billions of gallons of toxic waste into the waterways of the Amazon rainforest over an area roughly the size of Rhode Island. It covers information from the final eight judicial inspections of 102 total performed in the case, clearing the way for a decision in the coming months.

The plaintiffs had charged that the eight inspections were requested by Chevron earlier this year as part of an 11th-hour effort to further delay the end of the trial. That move clearly backfired against Chevron with the results, which were submitted by Dr. Marcela Munoz, a respected Ecuadorian scientist who was appointed by the court but paid by Chevron for the work, said Pablo Fajardo, the Ecuadorian lawyer who represents the communities in the class action case who have pressed the lawsuit since 1993.

"In this case, more inspections produces more evidence against Chevron," he said.

Chevron has reported it expects an "adverse" decision in the case and is preparing for appeals, while representatives from the communities say they will seek to enforce any judgment against the oil giant immediately in U.S. courts based on evidence that Chevron has tried to corrupt the trial process and has stated it will refuse to pay any judgment.

The latest results likely will be used in a criminal fraud indictment pending in Ecuador against two Chevron lawyers and seven former Ecuadorian government officials for lying about the results of the purported remediation in the mid-1990s in exchange for a release from government claims against the company, said Fajardo.

Chevron has attempted to use the remediation as a defense in the trial, but in light of the evidence it has little or no value, said Fajardo. Chevron's continued use of the defense in the face of scientific evidence clearly exposing the remediation as a sham calls into question the company's credibility on all aspects of the trial, he added.

"Not only does the remediation fail as a defense at trial, it has backfired into a criminal indictment against Chevron lawyers who orchestrated a fake clean-up with the apparent help of corrupt Ecuadorian government officials," Fajardo said.

The so-called remediation, performed by Texaco between 1995 and 1998, consisted largely of dumping dirt over a small portion of the 916 unlined pools of toxic waste to hide them from local residents, said Fajardo. All 45 of the "remediated" sites previously inspected during the trial showed extensive and illegal levels of Total Petroleum Hydrocarbons (TPHs), some thousands of times higher than Ecuadorian norms, according to a damages assessment produced in April 2008 by a team of court-appointed experts.

Of the final eight inspections, two were of well sites that Texaco claimed to have "remediated" in the mid 1990s. Both of the sites – Auca 17 and Auca 19 – contained levels of TPHs in the soil and water at levels several times higher than the maximum allowed by Ecuadorian law.

For example, Auca 19 had TPHs at 5,710 ppm, or more than five times the maximum tolerance allowed under Ecuadorian law. Auca 17 reported TPHs at 1,580 ppm, or more than 50% higher than the norm. Chevron had certified both sites as "remediated" to Ecuador's government in the mid-1990s as part of its clean-up plan.

Results from three other sites inspected – Yulebra, Yuca Central, and Auca Central – also reported soil contamination several times higher than Ecuadorian norms, according to reports submitted by Dr. Munoz. (No samples were tested for hydrocarbons at three of the eight sites because the parties did not request them.)

The results are consistent with the damages assessment from April 2008, which found that 100% of the 94 Chevron well sites previously inspected during the trial were extensively contaminated with cancer-causing toxins, some at rates hundreds of times higher than permitted by Ecuadorian law.

The earlier damages report found the oil giant might be liable for up to $27.3 billion in damages for polluting the soils with the unlined waste pits and systematically dumping billions of gallons of toxic waste into Amazon waterways while Texaco (now Chevron) was the sole operator of an oil concession from 1964 to 1990. Experts have dubbed the disaster the "Amazon Chernobyl" and said a clean-up would involve the largest decontamination effort in history.

Chevron's top lawyer in Ecuador, Rodrigo Perez Pallares, signed checks to Dr. Munoz totaling more than $20,000 for his work in preparing the reports on the final eight sites. This is significant because Chevron has tried to claim that similar checks signed by the plaintiffs to other experts in the case prove undue influence, when in fact they were ordered by the judge consistent with Ecuador court rules -- as were Chevron's payments to Munoz.

Perez Pallares is one of two Chevron lawyers under indictment in Ecuador. The other is Ricardo Reis Veiga, who is Chevron's associate general counsel for Latin America litigation.

The case was transferred to Ecuador from U.S. federal court in 2002 at Chevron's request. As a condition of the transfer, Chevron agreed to submit to jurisdiction in Ecuador and be bound by any ruling there. The trial in Ecuador began in 2003.

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