Lago Agrio: Guerra Unravels?

The transcripts of the Track 2 hearings in the Lago Agrio BIT arbitration have now been made public. In this post I want to focus on the proceedings of April 23 and 24, namely, the cross-examination of Alberto Guerra Bastidas. Guerra, recall, was one of Chevron’s key witnesses—maybe the key witness if you had to pick just one—at the RICO trial.

Pastel De Manzana
Honey & Honey’s Pastel De Manzana. Credit: Vivi (used by permission from Foodspotting)
He is the witness whose testimony led Judge Kaplan to conclude that the plaintiffs had ghostwritten Judge Zambrano’s judgment. He is the witness who claims he had the key meeting with Steven Donziger, Pablo Fajardo, and Luis Yanza at the Honey & Honey in Quito. He is the witness who says he tried and failed to bribe Chevron. He is, in other words, a big deal. To be sure, even without Guerra’s testimony, Chevron had a strong case for fraud in the first-instance proceedings, focused on the fake Cabrera report. But as I just noted yesterday, if the plaintiffs are right there may be a very significant difference between intrinsic fraud and extrinsic fraud, between fraud on the court and fraud by the court.

I’ve expressed serious doubt about Guerra’s testimony before, mostly focused on the following points:

  • In an important respect, I think that Judge Guerra’s testimony undercuts Chevron’s own case. Guerra’s testimony was that he tried to bribe Chevron first and only turned to the plaintiffs when Chevron said no. This seems inconsistent with Chevron’s argument that the Ecuadoran judiciary as a whole is the puppet of President Correa, and it makes the corruption in the case—if indeed the judgment was ghostwritten—seem much less systemic and much more mundane. If Guerra and Zambrano were just in it for the money, and if fear of the President was not their main motivation, then significant pieces of what Chevron wants to prove fall away.
  • Chevron has claimed that various business records—banking records, shipping records, and the like—corroborate Judge Guerra’s story of his dealings with Judge Zambrano. I took a deep look at one example, a bank deposit slip, and found that at bottom, the only witness who vouched for the supposedly corroborating exhibit was Guerra himself. This is the kind of case in which the often-maligned formalism of our law of evidence proves its worth. The hearsay rule really focuses our attention on the key question, which is whether any witness actually has personal knowledge of the assertions that the bank deposit slip makes. If it turns out that the only witness who might have that knowledge is the witness whose credibility the exhibit sets out to bolster, then—well, you get the point. By the way, I haven’t done this kind of analysis for all of the supposedly corroborating documents.
  • Judge Guerra’s testimony has deep internal credibility problems. His testimony is a liar’s paradox, and one thing you can say for Judge Zambrano’s testimony is that it doesn’t suffer from this flaw. But Chevron’s large payments to Guerra are also highly problematic, because Chevron’s story is premised on the notion that Guerra is the kind of guy who can be motivated to do the wrong thing with enough cash.

No matter what the quality of the cross-examination of Guerra at the RICO trial (day 1, day 2) may have been, it had very little impact on Judge Kaplan’s decision. With that in mind, let’s take a look at the very lawyerly cross-examination in the arbitration by Eric Bloom of Winston & Strawn.

The plaintiffs have trumpeted the following bit of testimony, which Adam Klasfeld also picked up. I’m giving you the whole context, not just the highlight. The testimony concerns the negotiations between Guerra and Chevron for his cooperation in making Chevron’s case for ghostwriting:

Q. In fact, they said to you—and I’m quoting—”the Americans have a saying that I believe is good also. They say ‘money talks.'”

A. Yes. He made a reference in those terms somewhat, yes, I do remebmer that.

Q. And you responded by saying: “There’s a saying here, and I think it’s worldwide. It says: “Money talks, gold screams.'” That’s how you responded to him; isn’t that right?

A. Yes, sir.

Q. Now, when Chevron’s representatives said to you that money talks, what did you think that meant?

A. I understood that they were assuring to me that once I met the objective of linking them with Zambrano which, in my understanding, was their wish, the wish that they had, then I was going to receive an automatic benefit.

Q. And what did you mean when you said that “money talks” but “gold screams”?

A. I was seeking somehow to indicate to them that in Latin America that we also have expressions that are somewhat similar to the American expressions that they cited.

Q. Did you intend to convey to the Chevron representatives that the more they gave you, gold compared to just money, the more you were willing to cooperate with them, the more you would give them what they wanted?

A. I did not, sir.

Q. And just to be clear, you were always looking to maximize your negotiating position, were you not?

A. Somehow, yes, I was trying to improve my position so that—ahead of a possible future negotiation.

Q. Can you recall how you tried to increase your negotiating position with the Chevron representatives? For example, if this will help you, can remember things you said or did with the purpose of increasing your leverage in the negotiation?

A. Yes, some things—I must recognize that I did exaggerate about them, yes.

If you allow me, when we are looking for a job, you say, how much experience do you have, and in fact you really don’t have any experience, and you say, well, I have ten years of experience really. It’s a situation just like that.

Q. And among the ways you tried to leverage your position was to falsely tell the Chevron representatives that the Plaintiffs had offered you $300,000; isn’t that right?

A. Yes, sir. I lied there. I recognize it. I wasn’t truthful. That statement was never made by the representatives of the Plaintiffs.

Randy Mastro Examines Judge Zambrano
Judge Zambrano. Illustration by Elizabeth Williams, used with permission.
Now, before you get too excited, Guerra isn’t saying that the plaintiffs didn’t bribe him and Zambrano; he’s just saying he lied to Chevron about the amount he had been offered. But what really shines through is Guerra’s utter corruption. Who can believe anything he says? And thus we are back to the question of corroboration—you might believe even someone like Judge Guerra if his otherwise incredible testimony is sufficiently corroborated. Which takes me to my favorite part of the cross-examination. Recall that I previously cast doubt on whether there really was good corroboration of Guerra’s claims, for example, that he received money from Judge Zambrano for helping with the ghostwriting, or that he had delivered parts of the ghostwritten judgment to Judge Zambrano. The supposed corroboration for the first claim comes from bank records and some of Guerra’s own notes. The supposed corroboration for the first claim comes from shipping records, supposedly from Guerra to Zambrano.

Let’s look at the evidence about the money. ZambranoGuerra had told various stories about this. He had first told Chevron that Zambrano was paying him $1,500 to $2,000 per month. Later, he said that Zambrano was paying him approximately $1,000 per month. But during the forty-two months of the arrangement, Guerra admitted in the cross-examination, he had corroborating evidence for only six payments, and none were for $1,000. Moreover, all six of the payments, he admitted, occurred after the Lago Agrio judgment was issued in early 2011. Moreover, for three of the payments, the only corroboration was Guerra’s handwritten note, which, if you think about it, is not really corroboration at all. The other three transactions were evidenced by bank documents such as (I think) the document I examined in my post. Guerra admitted the records do not provide the source of the money or the purpose of the payments. Again, one has to rely on his word, which is not too valuable.

What about the shipments of documents? Recall that versions of nine of Judge Zambrano’s orders in the Lago Agrio case were found on Judge Guerra’s computer. Guerra had testified that he had sent Lago Agrio-related documents to Zambrano via TAME, an airline shipping service. Guerra had identified eleven shipments directly from himself to Judge Zambrano. But on cross-examination Judge Guerra admitted that none of them had anything to do with the Lago Agrio case. Moreover, several of the orders Judge Zambrano issued in the case but that Judge Guerra claimed to have written predated any shipments directly from Judge Guerra to Judge Zambrano for which there is any documentary evidence. Guerra and Chevron pointed to twelve shipments that went from Guerra to people other than Zambrano. Guerra admitted three of them, which were sent to Coca, not to Lago Agrio, were not relevant. Of the nine remaining packages, there were five recipients, but only the packages sent to two, Narcisa Leon and Fernando Albán, were potentially relevant, Guerra testified. Guerra admitted that none of the packages to Albán had anything to do with the nine Lago Agrio orders he claimed to have written. The only packages left were the two sent to Leon. And the only evidence that they contained what Guerra claimed they contained, namely documents for Judge Zambrano, was Guerra’s word. The upshot is that there seems to be much less corroboration of Judge Guerra’s testimony in these respects than it appeared at first.

I asked Chevron for a comment on Judge Guerra specifically. Here is Chevron’s statement, which relates to the hearing in its entirety, not just to the Guerra testimony:

These transcripts make clear that Chevron proved its case before the International Arbitration Tribunal. Witness and expert testimony confirmed that the Ecuadorian judgment against Chevron was ghostwritten by Steven Donziger and his team and that the Ecuadorian government is responsible for any further remediation. Chevron also proved that Ecuador breached the U.S.-Ecuador Bilateral Investment Treaty and international law.

But in my view, the new testimony has only compounded my doubts about Guerra. I said it before and I’ll say it again: there seems to be little if any reason to believe anything he says.

Now, assuming I’m right about Guerra, I see few if any consequences for the US RICO litigation. That case has already gone to judgment; Judge Kaplan came to a different conclusion, and as I have noted, Donziger is not really claiming on appeal that the judge’s findings of fact were clearly erroneous. So while I have it on good authority that Donziger’s team is going to bring the new testimony to the Second Circuit’s attention in some way, I’m not really sure what that will accomplish. I think, however, that we can expect to see the new Guerra testimony referenced in the Canadian proceedings, as the LAPs look for reasons why the Canadian court should not give preclusive effect to Judge Kaplan’s finding of fact.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

5 thoughts on “Lago Agrio: Guerra Unravels?

  1. Thanks once again, Ted, for the great reflections you provide on this blog. It seems that the comments on your Chevron-related posts have dropped off, but you should know that many, many of us with deep interests in this case continue to read your work and to learn much from it. Many thanks! (And, I am extremely curious to see how this new testimony enters into the Canadian proceedings.)

  2. Hello Ted
    This is, as usual, a very good review of the important elements of this latest development. Your blog provides the most balanced analysis of this case that I’ve found on the web. That said, I’m struggling with some of your conclusions, and I’m hoping you won’t mind helping me understand.

    You state in the second paragraph ‘He (Guerra) is the witness whose testimony led Judge Kaplan to conclude that the plaintiffs had ghostwritten Judge Zambrano’s judgment.He is a big deal.’ I don’t think many would disagree. So why do you conclude that this will make little difference to the RICO appeal?

    You say that ‘Donziger is not really claiming on appeal that the judge’s findings of fact were clearly erroneous’ and admittedly I’m able to find very little in his appeal other than the line ‘To be clear, Mr. Donziger vigorously contests these allegations’. However, he has always denied wrongdoing, and I put his appeal strategy down to it being very difficult to overturn findings of fact. That is, however Donziger might feel about the findings, the second circuit were more likely to be persuaded by technical arguments of standing, unavailability of injunctive relief, comity etc than by the prospect of finding that Kaplan was wrong in his findings.

    But that was then, and surely this changes everything. The star witness has admitted he lied, and his corroboration has just vanished. He has also admitted that the government never intervened, shooting another hole into Judge Kaplans findings of fact. Could Kaplan have made the same findings had the cross examination revealed all this in his courtroom? If not, surely the appeal court must take note.

    1. Peter, thanks for the note. I guess my point has three parts. First, the Second Circuit reviews the record in the SDNY, not evidence from another proceeding. So this new testimony won’t be considered on appeal. You can bring a motion to expand the record, but I’m not sure why that would be appropriate here. (But Deepak Gupta and Burt Neuborne are very smart guys, so I am sure they will think of something!)

      Second, if I recall, Donziger’s brief does not ask the Court to reverse Judge Kaplan’s findings of fact. They say, “ask and you shall receive,” and the converse, in the law of appeals, is “don’t ask and you can’t receive.” On the other hand, as you say, Donziger’s brief does focus a lot of attention on the perceived problems with the judge’s factual findings.

      Third, it was already clear in the RICO trial that Guerra was a liar. So I don’t know that “this changes everything.” As I note in the post, the piece of testimony that the plaintiffs and Donziger have been trumpeting is Guerra’s admission that he lied about the amount of the bribe he was offered. But that’s just icing on the cake—it doesn’t change the fundamentals of his earlier testimony, as far as I can tell.

      I’m not guaranteeing this is right, but it’s how I see things, anyway!

      1. Thanks for the response, which I can relate to and I see where you are coming from. It will be interesting to see where it goes from here. I do believe there is some mileage in it for the LAPs RICO appeal, as these proceedings have cast doubt on the corroboration that Judge Kaplan relied on.

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