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Fraud allegation turns up heat in Lago Agrio case

Bob Tippee
OGJ Editor

Chevron Corp. has raised stakes in the legal battle it calls a “runaway farce” over environmental damage in Ecuador.

The company on July 14 lodged a complaint with Ecuadoran legal authorities alleging fraud against an important figure in the case, called Lago Agrio, against it.

In a letter to Prosecutor General Washington Pesantez Munoz, Chevron says a court appointee who was supposed to conduct an independent evaluation of environmental damage colluded with plaintiffs and their lawyers.

The company says the appointee, Richard Stalin Cabrera Vega, was to have assessed environmental damage of an oil-producing area developed by a group led by Texaco until Ecuador’s state-owned oil company became operator in 1990 and took over the concession in 1992.

Cabrera found a mess. Chevron, which inherited the lawsuit when it absorbed Texaco in 2001, blames sloppy work by the state company, now called Petroecuador.

In fact, the company says Texaco spent $40 million on environmental remediation before pulling out and received approval of its work from the Ecuadoran government.

Cabrera didn’t concern himself about details like that when he priced out the environmental harm. According to Chevron, he didn’t concern himself with his obligation to work independently, either.

In its letter to Pesantez, Chevron alleges that Cabrera’s report contains work by a US consultancy affiliated with plaintiffs “for many years.” Further, it says, two members of Cabrera’s team have had past ties to the plaintiffs. In video edited out of a documentary about the case, one of them was recorded meeting with plaintiffs’ lawyers Steven Donziger and Pablo Fajardo and with another associate of plaintiffs, Chevron says.

The company says its information “shows that the Cabrera Report is a fraud and that the plaintiffs’ representatives and Mr. Cabrera worked in concern to perpetrate that fraud.” It says Cabrera and the plaintiff’s representatives have tried to conceal their collusion.

The US-based lawyers are working on a contingency-fee basis, meaning they’ll receive a chunk of whatever damages they win in court. Based on Cabrera’s report, damages could be as high as $27 billion. The “b” is correct.

Nothing more needs to be said.

(Online July 16, 2010; author’s e-mail: bobt@ogjonline.com)


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