U.S. District Judge Lewis Kaplan in New York said he found “clear and convincing evidence” that a two-decade legal effort to punish Chevron for polluting the Ecuadorean rain forest was tainted by corruption.
Judge Kaplan said on Tuesday the evidence showed that an American attorney Steven Donziger and his legal team bribed an Ecuadorean judge to issue an $18 billion judgment against the oil company in 2011.
Last year, Ecuador’s high court cut the judgment down to $9.5 billion, leaving Ecuadorean villagers hopeful they could collect on that award.
The Ecuadorean villagers argued that Texaco, before being bought by Chevron, polluted the rain forest by spilling millions of gallons of toxic wastewater into the Ecuadorean Amazon between 1964 and 1992.
Chevron has accused Donziger, the lead attorney for the villagers, of fraud and racketeering.
The company has also argued that Texaco cleaned up its mess, and the remaining pollution was caused by the Ecuadorean national oil company.
Despite Chevron’s fraud claims, the Ecuador high court upheld the original decision.
Chevron took its argument to the United States for a non-jury trial in November in the Southern District of New York.
Judge Kaplan said in his ruling that Chevron had presented “voluminous” evidence against Donziger, including coded emails, secret payments and private meetings with judges that “normally come out of Hollywood.”
Chevron’s main witness was a former Ecuadorean judge who testified that he was paid $1,000 a month to ghost-write favorable opinions for the presiding judge, Nicolas Zambrano. The witness also testified that Judge Zambrano told him Donziger would pay Zambrano $500,000 of the eventual damages as long as he agreed to a favorable verdict.
Chevron also presented footage of outtakes from a film starring Donziger and his fight for the Ecuadorean people called “Crude” in which a consultant tells Donziger there was no evidence contamination had spread from the oil pits.
In the outtakes, Donziger remains unpersuaded and says: “This is Ecuador, OK? At the end of the day, there are a thousand people around the courthouse; you will get whatever you want. Sorry, but it’s true.”
Judge Kaplan’s decision does not dispute that pollution occurred and does not prevent enforcement of the Ecuadorean judgment. But it bars Donziger and two other representatives from “profiting from the egregious fraud that has occurred.”
Tuesday’s decision in Chevron Corp. v. Steven Donziger et al, S.D.N.Y., No.11-0691, can be found here.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.