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Chevron General Counsel R. Hewitt Pate Misled Reporters About Arbitration Ruling In Ecuador Case

Submitted by: The Law Offices of Steven Donziger

Categories: Corporate Social Responsibility, Environment

Posted: Sep 25, 2013 – 03:00 PM EST


NEW YORK, Sep. 25 /CSRwire/ - Chevron General Counsel R. Hewitt Pate misled reporters about a ruling from an investor arbitration panel as part of the oil company’s campaign to hide the negative fallout from its historic $19 billion Ecuador liability, leaders of the affected rainforest communities charged today.

Pate last week put out a press release boasting that “the game is up” based on a partial award from the arbitration panel in favor of Chevron whose significance was wholly misrepresented by the company.  The panel stated expressly that its ruling about a release received by Chevron had no impact on the underlying environmental case.

An analysis of Pate’s misleading statements about the issue can be found on The Chevron Pit and in this article by Courthouse News.

“Chevron’s General Counsel has made misleading statements about the arbitration ruling to deceive shareholders and the public about the true extent of the company’s environmental crimes and fraud in Ecuador,” said Pablo Fajardo, the lead lawyer for the 80 affected farmer and indigenous communities that won the lawsuit.

The panel ruled that a release given to Chevron by Ecuador’s government in 1995 precluded environmental claims for “collective” clean-up against the oil giant based on a 1999 law.  But the arbitration panel expressly said it was not ruling on whether the claims in the Lago Agrio case were barred by the release. 

Courts in Ecuador already ruled against Chevron when it tried to claim the release barred the claims in the lawsuit.  The panel has no authority to overrule local court decisions on questions of local law, said Fajardo.

“The press release by Hewitt Pate is an example of highly inappropriate and unethical behavior by a corporate officer in a public company,” said Aaron Page, an American lawyer for the Ecuadorians.  “It was clearly intended to mislead the financial markets.”

Pate also misled the public in the press release as follows:

**Pate failed to disclose that the arbitration panel expressly ruled that its decision has no impact on private claims like those brought in the Lago Agrio litigation.

**Pate failed to disclose that the rainforest communities that won the judgment are not a party to the arbitration proceedings, and thus are not bound by the decision in any event;

**Pate failed to disclose that the arbitration panel has no ability to block enforcement lawsuits targeting billions in Chevron assets currently pending in Canada, Brazil, and Argentina;

**Pate failed to disclose that the arbitration panel’s existence is under dispute in that it fails to adhere to basic tenets of due process and violates international law by purporting to act as a Supreme Court with authority over the public justice systems of sovereign nations, as explained in this background document.

Chevron’s goal with the international arbitration is to get a taxpayer bailout for the clean-up of its toxic waste in Ecuador from the country’s impoverished citizens, said Fajardo.

“Chevron’s scheme with the arbitration is to orchestrate a public bailout of its liability,” said Fajardo.

An Ecuador court in 2011 found Chevron liable for dumping billions of gallons of toxic waste water into Amazon waterways.  The pollution led to the decimation of indigenous groups and an outbreak of cancer and other oil-related diseases, according to the court.

(For background on Chevron’s pollution, see this summary of the evidence, this 60 Minutes segment, and this video from the communities.) 

Under Pate’s guidance, Chevron’s management team has run into trouble for failing to properly disclose the Ecuador liability to investors and the markets.  Several shareholders and a U.S. Congresswoman have asked the SEC to investigate the company based on reports prepared by a Canadian securities lawyer, Graham Erion.

The latest Erion report is available here.  Letters requesting an SEC investigation are available here and here.

The blog also notes that Chevron lawyer Doak Bishop of the American law firm King & Spalding maintains an improper personal relationship with a member of the arbitration panel, Horacio Grigera Noan. Bishop continually has his corporate clients appoint Noan to panels, where he invariably rules in their favor and reaps enormous fees in doing so.

Each of the three arbitrators are private lawyers who charge upward of $1,000 per hour and can expect to profit to the tune of millions of dollars by working on the case for years and asserting jurisdiction as aggressively as possible, said the blog.  An academic article with details on the lack of due process in the opaque international arbitration business can be read here.

In the Chevron arbitration, the panel decided it had jurisdiction over the case even though Ecuador did not sign the treaty until 1997, five years after Chevron left Ecuador and closed down its investment in the country, according to the evidence.

Despite losing the Ecuador case, Pate recently received a large raise and earns approximately $7.5 million per year.  The average per capita income of the rainforest residents victimized by the company’s contamination is roughly $1,000.

Pate makes roughly 7,000 times more money than the average Ecuadorian who lives in the area where Chevron dumped billions of gallons of toxic waste, said Fajardo.

“And that’s not because Mr. Pate works harder or is inherently smarter than people in the rainforest,” added Fajardo.  “It’s because he benefits from the gross exploitation of vulnerable peoples from an American oil company that will do anything to evade accountability.”

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