Author Archive | Douglass Cassel

Lago Agrio: More on Guerra and a Response to Ted Folkman

By on February 7, 2013 in Uncategorized

More from Chevron advocate Doug Cassel on the latest development in Ecuador, and on the questions I posed to Chevron. The Goldhaber article is well worth your time. I will note that while Doug has given some reasons why Chevron didn’t disclose the Guerra bribery allegations until now, I don’t think he has responded to my legal point. Even if Chevron had very good strategic reasons not to raise the issue when it arose, is there not an argument for estoppel now? On the facts, in light of the El Universo case and the heavy-duty criticisms Chevron has made of the Correa government, is there really a reason to think that Chevron’s people are in less legal jeopardy now than they would have been had they published the allegations at the time?

Guerra’s Corroboration: The Plaintiffs’ Stab at a Reply:

Even as the plaintiffs remain MIA from Ted Folkman’s invitation to comment on Guerra’s claim that they bribed him, their PR person, Karen Hinton, attempted to answer questions posed by journalist Michael Goldhaber of American Lawyer’s Litigation Daily. Like Ted, Goldhaber is a long-time, cautious, fair-minded observer of the Lago Agrio case. Until now, Goldhaber has been restrained in assessing the plaintiffs’ fraud. But after reviewing the documents corroborating Guerra’s Declaration, he finds that “the documentary evidence of fraud (never mind the testimony) is now virtually unanswerable.”

Among other points, Goldhaber asked Hinton about the deposit slips showing that the plaintiffs’ administrative assistant deposited two checks for $1,000 each into Guerra’s bank account (see my earlier post). According to Goldhaber, Hinton replied that “no one ‘representing the Ecuadorians’ made a deposit to Guerra, and that both the signature and ID number on the bank deposit slips are too visually obscure to prove the depositor’s identity.” Goldhaber commented, “I find the ID number on one slip quite easy to read.” Linking to the slips, he invited readers to judge for themselves.

(Later Goldhaber appended a clarification: “With regard to bank slips that Chevron contends support its accusations of bribery, plaintiffs spokesperson Karen Hinton clarifies that she doesn’t contest that a national ID number is distinctly visible on the documents. Rather, Hinton told us she was referring to an account number that is partly redacted”).

Goldhaber also asked Hinton about the plaintiffs’ emails, written shortly before they made deposits into Guerra’s bank account, admitting that the plaintiffs were paying the “puppeteer” to move his “puppet.” Hinton, he reports, speculated that “‘puppeteer’ may simply have been a bantering reference to one of the plaintiffs’ consultants.”

But one of the emails in question was from the plaintiffs’ leader, Luis Yanza, to their American attorney, Steven Donziger. Hinton knows their phone numbers. She had no need to guess.

Answers to Questions for Chevron

In introducing my post, Ted also posed questions for Chevron. Although I have represented Chevron in regard to Lago Agrio, I do not speak for the company. Here is what I have been able to ascertain in reply to his questions:

  1. Why did Chevron not previously raise the allegations that Guerra offered to bribe its attorneys? An Ecuadorian attorney for Chevron did execute an affidavit in October 2009, contemporaneously memorializing Guerra’s oral bribe offers. Until Guerra came forward in 2012, however, there was no corroboration. Chevron lawyers could reasonably have decided that the probative value of the uncorroborated affidavit was not worth the risk of a criminal libel prosecution if it were to be published. The risk was real: criminal proceedings had already been brought against other Ecuadorian lawyers for Chevron. A US federal judge later found that these prosecutions “appear[] to have been instigated by Donziger and others working with him for the base purposes of coercing Chevron to settle …” 1

    In contrast, once Guerra came forward in 2012, the Chevron lawyer’s affidavit was corroborated, and the risk of a libel prosecution no longer real.

  2. Who initiated Guerra’s confession—Guerra or Chevron? According to a published affidavit by Chevron’s lead Ecuadorian attorney, Adolfo Callejas, another Ecuadorian lawyer for Chevron, Enrique Carvajal Salas, informed Callejas in April 2012 that Guerra had recently come up to Carvajal in the Lago Agrio courthouse, stating:

    ‘Dr. Carvajal, I want to tell you that I would like to make any kind of statement about the fact that I helped to prepare the first instance judgment.’ According to Dr. Carvajal, he immediately answered: ‘You and who else, you and who else?,’ after which Dr. Guerra replied, ‘Fajardo and Zambrano.’ Dr. Carvajal further reported that Dr. Guerra then added: ‘I am willing to make a public statement, which will be one more scandal. I have evidence and I can provide to the company my hard drive and, if necessary, I will be available to render an affidavit or statement in the U.S.A.’ As Dr. Carvajal related it to me, he told Dr. Guerra that he would follow up with me, and Dr. Guerra gave his cell phone number to Dr. Carvajal.

  3. Why did Guerra come forward? Chevron does not know. Maybe Guerra, like other witnesses who flip, saw the truth closing in and decided to cut his losses. Whatever the full explanation, he asked for money. Chevron did not pay for his testimony, but did agree to pay $38,000 for his computer and hard drive, pen drives, personal calendar, cell phones, banking, shipping, phone, credit card and email records, and for his time in assembling those records. One infers that his motive, in whole or part, was economic.
  4. What about Chevron’s ongoing support for Guerra? Once Guerra agreed to make public his accusations of judicial corruption, not only in the Lago Agrio case but in other cases as well, he felt – not unreasonably – that he would be in danger if he were to remain in Ecuador. If he were a witness facing similar risks in a criminal case, the government might consider placing him in a witness protection program. But this is a civil case. Chevron decided to safeguard his security by assisting him and his family to live outside Ecuador. According to CNNMoney reporter Roger Parloff, Chevron acknowledges making a “two-year commitment to pay Guerra’s family a total of $10,000 per month for living expenses and $2,000 per month for housing, plus health insurance and legal fees.” Chevron contends that the standard of living thus supported is less than Guerra had in Ecuador.

    Even so, as Ted notes, these payments make the evidence corroborating his testimony all the more important. Without it, I would be hesitant to credit Guerra’s bare Declaration. But with the documentary corroboration, as Michael Goldhaber rightly concludes, Guerra’s version is credible.

Notes:

  1. In re Chevron, 749 F. Supp. 2d 141, 162 (S.D.N.Y. 2010). ↩
Continue Reading · 1 ·

Tags:

Lago Agrio: Did The Plaintiffs Buy the Judgment?

By on February 4, 2013 in Recognition and Enforcement

In responding to the Declaration of former Ecuadorian Judge Alberto Guerra—who claims to have taken thousands of dollars from the plaintiffs to fix the outcome in the Lago Agrio litigation against Chevron—Ted Folkman is judicious. While reporting Guerra’s allegations and crediting Chevron’s lawyers for ferreting them out, Ted’s first reaction is that “I don’t trust anything Guerra says. He’s seriously corrupt.”

Ted wonders whether “documentary evidence (e.g., bank records, some of which are attached to the declaration) or computer forensic evidence might ultimately back up key points of his story.”

They do.

Like Ted, I would not take anything Guerra says—absent corroboration—at face value. By Guerra’s own testimony, once he was no longer a judge, he approached both parties in the Lago Agrio litigation for bribes to fix the case; he ghost wrote numerous orders in the Lago Agrio (and other) litigation for a new judge on the case (Nicolás Zambrano); he took thousands of dollars from Judge Zambrano to do the ghost writing; he also took thousands of dollars from the plaintiffs to conspire with Zambrano to fix the case; and, at Zambrano’s request, he ghost edited the draft final judgment in the case, a draft of which had been ghost written by the plaintiffs.

All of this, Guerra admits knowing, was illegal under Ecuadorian law. But did any of it happen?

Significant documentary and computer forensic evidence substantially corroborates key Guerra contentions. It evidences, first, that Guerra was indeed Judge Zambrano’s ghost writer and, second, that the plaintiffs in fact paid Guerra thousands of dollars to fix the case in their favor. (Most of this evidence is posted on Chevron’s web page; the rest, cited below, came from the plaintiffs in court-ordered discovery.)

Guerra the Ghost Writer and Editor

Guerra’s claim that he was Zambrano’s ghost writer is corroborated by his computer hard drive, shipping records from Tame Airlines, and Guerra’s bank records. Guerra’s hard drive contains at least eight prior drafts of orders entered by Zambrano in the Lago Agrio case. His computer register shows that each draft predated the actual orders later signed by Judge Zambrano.

Further, Tame Airlines shipping records show that, from July 2010 to February 2012, Guerra sent eleven shipments of “package with documents” (or similar descriptions) to Zambrano. The records show that Zambrano personally signed for most of the deliveries. The records also show at least five shipments from Zambrano to Guerra, who personally signed for each delivery.

In addition, although Guerra says Zambrano usually paid him in cash for his ghost writing services, on at least one occasion Zambrano deposited funds directly into Guerra’s bank account at Banco Pichincha. A copy of the deposit slip, certified by the bank, bears Zambrano’s signature and national identification number.

Guerra does not claim to have ghost written the final judgment against Chevron. Instead he explains that Zambrano asked him to edit a draft judgment received from plaintiffs, and to do so in Zambrano’s home, using a computer belonging to plaintiffs’ attorney, Pablo Fajardo. Although Guerra’s alleged role as ghost editor is not yet corroborated, US District Judge Charles Day recently found that Chevron—even before Guerra’s Declaration—had already made out a prima facie case that the plaintiffs ghost wrote the Judgment: “Chevron points to six documents internal to Ecuadorian Plaintiffs’ counsel … as being incorporated into that judgment. … Chevron has shown to anyone with common sense that this is a blatant cut and paste exercise.” 1

The Plaintiffs’ Payments to Guerra

Guerra claims that the plaintiffs paid him $1,000 per month “for writing the court rulings Mr. Zambrano was supposed to write.” Some payments, he claims, were given to him in cash by the plaintiffs’ attorney, Fajardo. The claim of cash payments is of course difficult to corroborate.

But Guerra claims that plaintiffs made at least two payments by deposits directly into his bank account. He asserts that amounts of $1,000 each were deposited into his account at Banco Pichincha on December 23, 2009 and February 5, 2010, “by Ms. Ximena Centeno, whom I know to be a worker at the Plaintiffs’ office.”

Bank records corroborate his claim. Attached to his Declaration are purported copies of the bank deposit slips, certified by the bank. Both are signed with identical signatures by Ms. Ximena Centeno. One also shows the depositor’s Ecuadorian national identification number as 1716841547. Ecuadorian Institute of Social Security records confirm that this number belongs to one “Ximena Maribel Centeno Viteri.”

Who is Ms. Centeno? The same Ecuadorian social security records show that she was paid a salary during 2009 and 2010 by “Selva Viva” (Living Jungle)—plaintiffs’ de facto office in Ecuador, then headed by Luis Yanza, a self-described “leader” of the plaintiffs’ litigation. A June 15, 2010 email, obtained by Chevron in discovery from plaintiffs’ attorney Steven Donziger, asked Yanza for a “list of all the people who work and who have worked at the offices in Quito and Lago Agrio.” Yanza responded by listing “Ximena Centeno” as “receptionist-librarian.” A July 8, 2010 email from plaintiffs’ attorney Eric Daleo, also produced in discovery, identifies “Ximena Centeno” not only as receptionist-librarian, but also as “Payment Administrator.”

Bank records thus corroborate Guerra’s claim that plaintiffs deposited at least two payments of $1,000 each directly into his bank account.

Plaintiffs’ internal emails (produced in discovery) appear to add circumstantial corroboration. On September 13, 2009, plaintiffs’ attorney Fajardo noted that Judge Zambrano might be taking over the Lago Agrio case. (Zambrano in fact did so). Two days later, speaking in code, Fajardo emailed plaintiffs’ legal team, stating: “The puppeteer is pulling the string and the puppet is returning the package… By now it’s pretty safe that there won’t be anything to worry about … The puppet will finish off the entire matter tomorrow …”

Who was the puppeteer and who was the puppet? The timing and circumstances suggest that they were Zambrano, the new judge on the case, and Guerra, his ghost writer.

The puppetry soon became expensive. On October 27, 2009, Fajardo emailed Yanza and Donziger, lamenting, “The puppeteer won’t move his puppet until the audience pays him something …” 2 Plaintiffs responded by paying their puppeteer. In a November 27, 2009 email on plaintiffs’ finances, Yanza explained to Donziger that “the budget is higher in relation to the previous months, since we are paying the puppeteer, …” Only one month later, as noted earlier, bank records show that Centeno made a $1,000 deposit into Guerra’s bank account, and only three months later (February 2010), she deposited a second $1,000 payment into his account.

Admittedly, the email corroboration is only circumstantial. Conceivably the plaintiffs’ puppeteer and puppet were persons other than Zambrano and Guerra. If so, I invite plaintiffs to explain.

Guerra’s Credibility Revisited

If it were uncorroborated, the declaration of the admittedly corrupt Guerra would carry little weight. But his key allegations are substantially corroborated by his computer hard drive and by records certified by Tame Airlines and Banco Pichincha. Suggestive, circumstantial corroboration appears in plaintiffs’ internal emails. If plaintiffs maintain that Guerra lied when he claimed that they paid him to ghostwrite favorable orders in their case, the burden is on them to explain away the draft orders in his hard drive, as well as the shipping and banking records.

Finally, any assessment of plaintiffs’ denials of Guerra’s allegations must be seen in context. As Ted has previously reported, an ever longer list of former supporters now accuses the plaintiffs of dishonesty: their former experts Reyes and Calmbacher, the Huaorani people, and their former funder Burford Capital, not to mention former plaintiffs’ attorney and bankroller Joseph C. Kohn. Are Guerra’s allegations—substantially corroborated—less credible than plaintiffs’ protestations?

Notes:

  1. Chevron v. Page, Civil No. RWT-11-0395, D. Md., Jan. 25, 2013, Transcript at 56-57. ↩
  2. The original Spanish used a characteristic double negative: “El titiretero no moverá hasta que el publico no le pague algo …” ↩
Continue Reading · 2 ·

Tags: , ,

Response to Ted Folkman

By on June 4, 2012 in Recognition and Enforcement, Symposium

In his various comments on the symposium contributions, our host Ted Folkman makes three points to which I respond here.

Case-Specific Exceptions Generally

First, Ted questions whether case-specific grounds for non-enforcement of foreign judgments are needed, so long as the systemic inadequacy of a foreign judicial system is a ground for non-enforcement. If the foreign system is inadequate, so the argument goes, no judgment emanating from it need be enforceable in the US. Conversely, if the foreign system is adequate, it should be trusted to correct any case-specific problems. Either way, there is no need for a case-specific ground for non-enforcement.

But the world is not that neat. Judicial systems worldwide are not black and white: most do not fall into clearly defined categories of either good enough always to be trusted, or bad enough never to be trusted. At the extremes, yes, such all-or-nothing categories can be defensible. For example, I would support a general rule, or at least a very strong presumption, in favor of enforcing any final judgment from Britain, and against enforcing any final judgment from (today’s) Zimbabwe.

The judiciaries in most countries, however, are not so clearly acceptable or unacceptable. They are mixed bags, often doing a reasonably good job, but with frequent exceptions. In such a world, we should not have to condemn an entire foreign judiciary merely because it might fail to correct serious problems in individual cases. Nor should we be bound to swallow individual judgments contrary to our fundamental principles, on the artificial assumption that since the system of which they are part is deemed adequate in general, therefore every individual judgment it produces must be deemed adequate as well. In the real world, we need not only systemic, but also case-specific, exceptions to enforcement of foreign judgments.

Forum Non Conveniens Cases

Second, Ted argues that whatever the rule on enforcement generally, the grounds for non-enforcement of a foreign judgment resulting from a defendant’s successful forum non conveniens motion should be more limited. Once a defendant vouches for the adequacy of a foreign system for FNC purposes, he argues, the defendant should be barred by a “new kind of estoppel” from a case-specific challenge to any resulting foreign judgment.

The flaw in this suggestion is the same as the flaw in the first: it assumes an all-or-nothing view of the adequacy of a foreign judiciary. More realistic is the approach taken by Texaco (defended by Chevron on appeal) when it agreed to accept jurisdiction in Ecuador: Texaco agreed to be bound by any resulting Ecuadorian judgment—but subject to the grounds for non-enforcement set forth in the New York statute. The implicit representation by Texaco was that it accepted the adequacy of the Ecuadorian judiciary in 2001 in general, but not to the point of extending a carte blanche. Texaco agreed to be sued, not defrauded.

Ted argues that equity “should be flexible enough to deal with new situations.” After all, he adds: “It’s equity, man!” But new or old, the essence of equity is fairness. A defendant which agrees to accept a foreign jurisdiction but only subject to conditions—and whose acceptance on that basis is approved by US courts, as in the Texaco case—should not, in fairness, be held to accept a resulting foreign judgment, no matter how fraudulent and no matter how badly deteriorated the foreign judiciary has subsequently become. (This conclusion is even stronger where the plaintiffs orchestrated or directly participated in the foreign fraud.)

Foreseeability

This brings me to Ted’s third point: that Ecuador’s judiciary has never been that good and that Chevron should have assumed the risk that the “political winds in Ecuador” would not continue to “blow its way.” This is a matter of degree. I agree that Texaco should have assumed the risks that the reformist winds of the period when the FNC motion was decided would not continue to blow in Ecuador, and that future political change might even lead to a retrenchment. Such variability was reasonably foreseeable.

But unless one applies a rule of strict liability, there are limits to foreseeable and assumable risk. By contemporary Latin American standards, the subsequent deterioration of Ecuador’s judiciary was so exceptional as not to be reasonably foreseeable. In the decade since Texaco accepted Ecuador’s jurisdiction, no country in Latin America—except Ecuador—has experienced the wholesale, summary dismissal of all the judges of all its top courts (Supreme Court, Constitutional Court, Electoral Tribunal) even once (let alone twice, as in the case of Ecuador’s Supreme Court). No Latin American judiciary—except Ecuador’s—has been left topless with no Supreme Court at all for over half a year. Nor did Ecuador’s exceptionalism result from a single, aberrational change of government: the independence of its judiciary has now plummeted through several consecutive presidents.

I have worked on judicial reform in Latin America for decades. In 2000, around the time Texaco’s FNC motion was litigated, I was elected by the Organization of American States to serve on the Board of the Justice Studies Center of the Americas, which promotes judicial reform throughout the hemisphere. I visited Ecuador during those years. I know of no one at the time who foresaw or predicted anything like the collapse of Ecuadorian judicial independence that began in 2004 and continues to the present.

One measure of Ecuador’s dramatic descent is reflected in the World Bank’s Rule of Law Index. In 2000 Ecuador ranked respectably—with countries such as Mexico, Brazil and Peru—in the middle of the third quartile of nations worldwide. Ecuador then was well ahead of bottom-feeders like Honduras, Guatemala and Paraguay. By 2010, however, Ecuador had fallen to nearly the bottom of the fourth quartile, and was ranked ahead of only one other Latin American nation (Venezuela, where the “rule of law” has been reduced to the “rule of Chavez”). (See the attached table).

Bottom Line

As Chris Whytock and Cassandra Robertson document, there exists a serious problem of the use of forum non conveniens motions, not to relocate justice, but to delay and defeat justice. Ted Folkman proposes to deal with the problem at the back end: by imposing estoppel (to an unfair degree in my view) and assumption of risk (even of what seem to me to be not reasonably foreseeable risks)—thus ensuring enforcement of foreign judgments (whether or not they are conscionable).

A better approach would be to deal with the problem at the front end, by raising the bar for granting FNC motions. (This is one part of what Whytock and Robertson recommend.) US courts should be more realistic in assessing the adequacy of foreign fora for FNC purposes. Even this, however, will not solve the problem: as my initial post in the symposium outlined, the US District Court that ruled on Texaco’s FNC motion did in fact conduct a realistic review of the adequacy of Ecuador’s judiciary at the time. So W & R’s further recommendation is also important: US courts granting FNC motions should retain jurisdiction, so that where the foreign judgment in a FNC case is so deficient as to be unenforceable, the US courts can resume proceedings on an expedited basis.

Continue Reading · 4 ·

Tags: ,

Older posts