Wall Street Journal 18/02/2015
The fallout continues from what is arguably the greatest legal fraud in history—the case against Chevron for allegedly polluting the Ecuador jungle. On Monday Chevron announced it has reached a settlement with James Russell DeLeon, a leading funder of the fraudulent lawsuit. This is a deserved humiliation for Mr. DeLeon, a resident of Gibraltar who has said he invested some $23 million to finance left-wing activist Steven Donziger in his Captain Ahab pursuit of Chevron. In return for his cash, Mr. DeLeon was supposed to receive a 7% stake in what was a $9.5 billion judgment in the Ecuador courts against the oil giant.
But Chevron fought back in U.S. courts, and last March federal Judge Lewis Kaplan found the Ecuador ruling was the result of fraud and racketeering and judged it unenforceable in the U.S. Judge Kaplan also found Mr. Donziger liable for racketeering violations, and Chevron filed a claim against Mr. DeLeon in Gibraltar.
Under the settlement, Mr. DeLeon agreed to turn over to Chevron his financial interest in “Crude,” a propaganda film about the case that he also helped to finance. Mr. DeLeon also issued a public statement that included the following: “I have concluded that representatives of the Lago Agrio plaintiffs, including Steven Donziger, misled me about important facts. If I had known these facts, I would not have funded the litigation.”
In return, Chevron says it has dropped its claims against Mr. DeLeon, whose associate Julian Jarvis and funding entity Torvia Ltd. are also party to the settlement.
The settlement and public mea culpa are also useful rebukes to one of the more unsavory developments in modern law—the investor-backed tort. Politically driven litigants like Mr. Donziger are increasingly turning to wealthy investors to finance their lawsuits against business, however dubious the claims.
Funders figure the advance outlay is worth the risk because most companies settle rather than endure the legal costs and reputational damage of going to court. The funders then get a big and easy payday, like lawyers in a securities derivative suit.
Chevron deserves plaudits as a rare business that refused to roll over—not least because for years it had to endure hits from Mr. Donziger’s propaganda machine that bamboozled reporters from the likes of the New York Times and CBS’s “60 Minutes.”
Chevron says it is still pursuing claims in Gibraltar against Woodsford Litigation Funding Ltd., of the United Kingdom, among others, for their role in funding the Donziger lawsuit. This legal mopping up is important for justice in this case and as a warning to tort mercenaries that financing legal frauds has damaging consequences.
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