Chevron Condemns Government of Ecuador's Attack on Chevron Attorneys

Earlier this week, Ecuador’s Prosecutor General indicted two Chevron attorneys associated with the company’s ongoing civil lawsuit between Chevron and 48 Ecuadorian plaintiffs. The politically motivated indictments mark a renewal of the Ecuadorian state’s attempts to disavow contractual obligations owed to Chevron from contracts signed in 1995 and 1998. The actions also ignore the findings of prior Prosecutor Generals who have repeatedly investigated fraud allegations and found them to be meritless.

In response, Chevron Vice President and General Counsel Charles James issued the following statement:

"By issuing these baseless indictments, it is clear the government of Ecuador is trying to intimidate Chevron into forfeiting its legal rights. This outrageous tactic won’t work. Chevron intends to continue pursuing the rights it is owed under the law and its agreements with the government of Ecuador.

"Recent events in Ecuador leave no doubt that there is improper collaboration between the government and plaintiffs’ lawyers. The systematic denial of Chevron’s right to a fair trial is obvious, and it is clear that the proceeding has been thoroughly corrupted. By persecuting Chevron’s counsel and collaborating with the plaintiffs to undermine Chevron’s legal rights, Ecuador’s government has intervened in the legal proceeding. The Ecuadorian state continues to call into serious question the legitimacy of its judiciary and its commitment to the rule of law.”

Chevron’s Note to Editors:

The government of Ecuador, in collaboration with American trial lawyers, is seeking to avoid its obligation to clean up its share of oil operations developed with Texaco Petroleum Company (a subsidiary of Texaco, Inc., which was acquired by Chevron in 2001). In return for remediating its portion of the operation, Texaco Petroleum received from state-owned Petroecuador and the Republic of Ecuador a final release agreement in 1998 that absolved Texaco Petroleum, as well as personnel and affiliates, of future liabilities and claims.

In 2004, Chevron commenced arbitration to enforce Petroecuador’s indemnity obligations toward Texaco Petroleum. Petroecuador refused, and the government of Ecuador now intends to avoid its obligations by using its legal system to declare that Chevron’s release agreement was obtained by fraudulent means. This allegation ignores the fact that Texaco Petroleum’s remediation work, and the subsequent release agreement, was reviewed at the highest levels of the Ecuadorian government.

It also ignores the fact that officials within the Ecuadorian government have repeatedly acknowledged that there is no evidence of fraud on the part of Texaco Petroleum or any of its employees. On August 9, 2006, the Prosecutor General of Ecuador concluded:

"A review of the report on the Special Examination referred to by the Comptroller General shows that he does not find civil or administrative liability in any of his conclusions, nor does he find evidence of any criminal liability for any crime whatsoever....Moreover, there is an obvious contradiction between the report on the Special Examination (by the Comptroller General), none of the findings of which indicate any evidence of criminal liability, and the criminal complaint, which the Controller General alleges to be based on evidence found in the Examination.”

Former Ecuador Attorney General Jose Maria Borja, in sworn testimony during a September 2006 U.S. Federal Court case, also admitted that he had neither facts nor evidence of fraud related to Texaco Petroleum’s remediation program.

Nonetheless, the government of Ecuador has forged an active partnership with plaintiffs’ attorneys to invalidate the agreements it has signed. In 2005 email correspondence, one of the Attorney General’s employees wrote to the plaintiffs’ attorneys:

"The Attorney General’s Office and all of us working on the State’s defense were searching for a way to nullify or undermine the value of the remediation contract (between Petroecuador, the Republic of Ecuador, and Texaco Petroleum).”

Ecuador’s attempts to undermine the remediation contract took on a new tone in April 2007 when Ecuador’s newly elected president, Rafael Correa, stated in a nationwide radio broadcast that the signatories to the release agreement were traitors and demanded that the Prosecutor General seek criminal indictments against all involved. Subsequently the Prosecutor General’s office decided to reopen the investigation without offering any new facts or evidence.

Meanwhile, it has become increasingly clear that the Ecuadorian state and advocates for the plaintiffs are working together to advance their common goal of shifting Petroecuador’s remediation obligations to Chevron. At the end of July 2008, the plaintiffs’ advocates held a news conference in Quito, Ecuador, calling for the filing of indictments against Chevron attorneys. In the days that followed, President Correa announced that he had met with plaintiffs’ advocates to discuss the case and revealed that the Prosecutor General had reopened the fraud investigation.