Bloomberg News

Chevron Adversary Testifies ‘Juicy Check’ for Law Fees Was Joke

November 19, 2013

A Manhattan lawyer who’s spent his career battling Chevron Corp. over pollution in Ecuador said he may collect as much $600 million in fees if his court victory in the South American nation is enforced.

The attorney, Steven Donziger, testified yesterday in a Manhattan trial over Chevron’s allegations that Ecuadorean plaintiffs secured their 2011 victory through bribery, fraud and coercion. The misdeeds amounted to a racketeering and extortion plot, the San Ramon, California-based company said in its lawsuit against Donziger, who joined the Ecuador case in the 1990s and became its lead adviser.

While questioned by a lawyer for Chevron, Donziger acknowledged that his contingency fees would be about $600 million if the $9.5 billion judgment against the company is collected in full.

“You expect to get paid,” Randy Mastro, the lawyer for the oil company, said while asking Donziger what he meant in previous comments about trying to get a “juicy check” from Chevron.

“It was a joke,” Donziger said.

Harvard Law

The Harvard Law School-educated sole practitioner has inspired comparisons from some writers to the Bible’s David and Goliath tale and Moby Dick’s Captain Ahab for his pursuit of claims against the second-largest U.S. energy company on behalf of Ecuadorean villagers. His efforts attracted attention from filmmaker Joe Berlinger, who made the 2009 documentary “Crude” about the case, and from celebrities including Trudie Styler, wife of musician Sting. Styler and her husband were present in the courtroom yesterday during Donziger’s testimony.

The plaintiffs won a $19 billion judgment in Ecuador in 2011 on behalf of rain-forest dwellers living in the country’s Lago Agrio region. The award was cut in half by the Ecuadorean National Court of Justice on Nov. 12. Chevron has refused to pay any of it and seeking a court order barring it from being enforced.

Donziger is giving testimony in a nonjury trial that began last month before U.S. District Judge Lewis Kaplan in an attempt to refute claims he and Ecuadorean associates exploited corruption in the country’s judiciary, bribed a judge, and ghostwrote an expert report and the court ruling against Chevron. His testimony will continue today.

Donziger said in the written testimony that he was “hired” by the Ecuadoreans for his skills in “advocacy for the disadvantaged,” and believed it was important to wage the case through the media, through protests and by speaking directly to influential people.

‘Corrupt Activities’

The goal in the case “was never to politically influence the legal process, but to safeguard that process from corrupt activities on behalf of Chevron,” Donziger said in the prepared testimony.

Mastro attacked Donziger’s allegation that he was was an employee of the villagers, asking why the lead litigator in Ecuador, Pablo Fajardo, referred to him as the “comandante,” or commander in Spanish.

“He used the term comandante as a term of affection, more as a buddy or something,” Donziger said yesterday.

In one year during the case, Fajardo was also paid just $24,000 while Donziger received $150,000, Mastro said.

Spokesmen for Donziger and Ecuadoreans who were also sued called Chevron’s racketeering proceeding a “show trial” intended to discourage activists in other developing countries from challenging corporations over alleged human rights violations.

In the underlying litigation, the plaintiffs accused Texaco of dumping billions of gallons of toxic oil-drilling waste in the Amazon from the 1960s through the early 1990s, causing cancer, birth defects and other ills among the indigenous people.

State Company

Chevron, made part of the litigation through its purchase of Texaco, contended its predecessor cleaned up its share of the damage under agreements with Ecuador, and that Petroecuador, Texaco’s state-owned partner, was responsible for most of the pollution.

Donziger’s team says Petroecuador’s contribution to the damage wasn’t at issue in the judgment.

The racketeering trial has included testimony from two former Ecuadorean judges who handled the pollution case: Nicolas Zambrano, who issued the ruling, and his former colleague Alberto Guerra. Guerra, who now lives in the U.S., receiving a $12,000 monthly stipend from Chevron, told the court he regularly ghostwrote rulings for Zambrano because the former prosecutor wasn’t as experienced handling civil judgments.

Promised Proceeds

Guerra testified he also helped write the 188-page judgment based on materials from the plaintiffs, and that he and Zambrano were promised proceeds from the ruling to throw the case in the Ecuadoreans’ favor.

Zambrano denied he was bribed and told the court that while Guerra regularly helped him draft some rulings, he worked on the Chevron judgment with help only from an 18-year-old assistant.

Donziger said he didn’t bribe Zambrano and didn’t know of anyone on the plaintiffs’ team who had.

Chevron built its racketeering case against Donziger after pre-trial information exchanges produced hundreds of hours of outtakes from “Crude,” and a sporadic journal Donziger kept.

The journal, which Donziger described as “personal notes,” was intended to help remind him of details if he wrote a book, he said in his draft testimony.

Chevron contended the material showed Donziger discussing ways to take advantage of Ecuador’s weak judiciary and pressure judges. Donziger said the outtakes were edited by Chevron and that some of his statements were taken out of context.

The personal notes “reflect that I always believed in the bona fides of this underlying evidence,” Donziger said in the draft testimony.

The racketeering case is Chevron Corp. (CVX:US) v. Donziger, 11-cv-00691, U.S. District Court, Southern District of New York (1071L:US) (Manhattan).

To contact the reporter on this story: Christie Smythe in Brooklyn at csmythe1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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