Companies & Industries

Who's Financing the Pollution-Liability Suit Against Chevron?


Demonstrators representing Ecuadorians show support for a pollution judgment against Chevron in Manhattan last week

Photograph by Justin Lane/epa/Corbis

Demonstrators representing Ecuadorians show support for a pollution judgment against Chevron in Manhattan last week

One of the many remarkable things about the 20-year-old legal campaign to hold Chevron (CVX) responsible for contamination of the rainforest in Ecuador is that the campaign persists at all. Who’s paying for it?

Before I get to that question, some background: Chevron is in the midst of a civil-racketeering suit in federal court in New York against Steven Donziger, an American plaintiffs’ attorney who engineered a record-breaking $19 billion pollution judgment in Ecuador against the giant oil producer. In February 2011, an Ecuadorian court found Chevron liable for pollution linked to Texaco’s activities in that country in the 1970s and 1980s. Chevron, which acquired Texaco in 2001, has vowed never to pay the Ecuadorian verdict. The company alleges that the judgment stemmed from a vast fraudulent enterprise masterminded by Donziger, a New York solo practitioner who led a team of Ecuadorian and American lawyers. That’s why Chevron is now suing Donziger in federal court; the company hopes that by discrediting him it will undermine the Ecuadorian verdict and arrest ongoing attempts to enforce the judgment in Canada, Argentina, and Brazil. Donziger denies any wrongdoing.

Since the pollution litigation began in 1993, Donziger, unsurprisingly, has portrayed himself as a modern-day David fighting a corporate Goliath. He made that pitch again yesterday, complaining in open court to the judge presiding over Chevron’s civil-racketeering case that he lacks resources and therefore should be granted certain procedural dispensations. The protest appeared to irritate U.S. District Judge Lewis Kaplan. “There has never been a shred of evidence” that Donziger lacks for funds, Kaplan said sharply. He then noted that within the past year or so, Donziger has personally come into $1.9 million in trust fund money–an observation that caused the plaintiffs’ attorney to snap back at the judge, “That’s inappropriate!”

What to make of this unusual exchange? Kaplan knows about Donziger’s inheritance because Chevron brought it to his attention in the form of filings from a state court dispute in Florida. The Florida court papers show that after a tussle with the trustee of a family trust, Donziger did indeed come into the sum Kaplan indicated. So Donziger is not destitute. Still, his recent windfall doesn’t explain how he has retained a large legal team to defend him against Chevron’s suit—or how he has sustained his attack on the oil company for so many years.

One of Donziger’s talents is raising money. In addition to some $7 million contributed to the case by a Philadelphia plaintiffs’ law firm that has since bowed out of the litigation, Donziger has received millions of dollars from wealthy individuals and hedge funds. In return for some of this outside financing, he has promised shares of any winnings from the case. In the past year or so, a London-based investment firm called Woodsford Litigation Funding has chipped in to help finance the plaintiffs’ cause, according to people personally familiar with that arrangement.

Chris Gowen, a lawyer working as Donziger’s spokesman, says that Donziger did not personally receive money from Woodsford.  Executives with Woodsford did not respond to an e-mail seeking comment.

The Woodsford relationship follows an earlier $4 million investment by another British-based hedge fund firm called Burford Capital. The Burford relationship ended acrimoniously after the firm’s chief executive accused Donziger of fraud—an allegation Donziger denies.

None of this is to suggest that Donziger is on anything close to equal financial footing with Chevron. The oil company has a market value of $231 billion. It has defended itself—and gone after Donziger—with an army of attorneys whose compensation in recent years in all likelihood reaches into the hundreds of millions of dollars.

In contrast, says Gowen, most members of the Donziger defense team “are volunteers who feel passionately about the outrageous legal claims made by Chevron.” A dozen of Donziger’s defenders are living in a rented three-bedroom apartment during the current trial, Gowen adds. “I am personally sharing a room with three other lawyers and two law  clerks. Needless to say, I have not had a good night’s sleep in weeks.”

Donziger resides at home with his wife and young son in a comfortable apartment on a quiet block on the Upper West Side of Manhattan. Regardless of what one thinks about Chevron’s culpability or the tactics Donziger used to secure his mammoth court victory in Ecuador, the New York lawyer’s ability to keep his litigation vessel afloat can only be described as extraordinary.

 

Barrett_190
Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, which tells the story of the Chevron oil pollution case in Ecuador, will be published by Crown in September 2014.

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Companies Mentioned

  • CVX
    (Chevron Corp)
    • $132.42 USD
    • -0.82
    • -0.62%
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