Peter Foster: Up the Amazon without a legal paddle

Financial Post - Peter Foster 16/08/2016

The Canadian justice system now appears to be the last hope for the rancid US$9.5 billion claim for environmental damage against Chevron Corporation by the Ecuadorian court system.

Last week, the United States Court of Appeals for the Second Circuit unanimously affirmed a lower court finding that the claim, masterminded by lawyer Steven Donziger, a Harvard law classmate of Barack Obama, was the product of fraud and racketeering.

Donziger is now beginning to look like the Black Knight in the Monty Python movie who has had all his limbs hacked off but claims that it’s “just a flesh wound.”

However, he and his dwindling round table of backers are also still pursuing their payday in Canada, where the Ecuadorean government has been wooing trade unionists and aboriginal groups, and inciting the kind of people who only need to hear the words “big corporation,” “poor native villagers” and “rainforest” to fire up the websites and pull out the placards.

The case is based on the operations of Texaco – which was subsequently acquired by California-based Chevron – in Ecuador from 1964 to 1992. When Texaco’s partner, state oil company Petroecuador, acquired Texaco’s operations, Texaco paid for environmental remediation, and was released by the government from further liability. Petroecuador continued to make a mess in the area, and the whole mess formed the basis of Donziger’s suit on behalf of affected “villagers.” The case became a predictable cause celebre for environmental radicals and Hollywood has-beens.

In many such cases, particularly when they are fighting governments, corporations cut a deal, however weak the case against them. In this case, Chevron famously vowed to fight until hell froze over, then fight it on the ice.

In 2014, a New York court found Donziger to have violated the federal racketeering act. Chevron lawyers demonstrated without rebuttal that Donziger had fabricated environmental evidence, pressured scientific experts to falsify reports, plotted to intimidate judges, bribed court-appointed experts, ghostwritten court reports and even drafted the judgment.

The higher court has backed these findings. Donziger has also suffered legal defeats in Brazil and Gibraltar, so Canada, where the case washed up in 2013, is now his faint hope.

An Ontario judge originally ruled that Chevron had no case to answer. However, that decision was appealed and last September the Supreme Court of Canada allowed it to proceed, although that decision said nothing about the merits of the case.

Donziger claimed at a press conference in Spanish last week that the Canadian Supreme Court had sympathy with his natives, and understood Chevron’s “abuses,” which is simply untrue.

Hearings are due back in Ontario next month, but again not on the merits of the case but whether judgment can be sought against Chevron’s Canadian subsidiary. Chevron is looking for summary dismissal.

This case has been stranger-than-fiction from the start. Donziger was effectively taken down by his own ego, when he allowed his extra-legal campaign to be filmed for a documentary titled “Crude.” Chevron got access to the outtakes, which showed Donziger suggesting that it was the “birthright” of Ecuadoran judges to be corrupt, and that a judge’s fear of assassination might be useful.

Recently Wikileaked emails (somewhat ironic given that Wikileak founder Julian Assange is holed up in the Ecuadorian Embassy in London) revealed the direct involvement of autocratic president Rafael Correa in the U.S.-based “Dirty Hand of Chevron” campaign, which sought to recruit celebrities to tour what Donziger had dubbed the “Chernobyl of the Amazon.” Correa was frustrated that only B-listers such as Bianca Jagger signed on.

No attempt appears to have been made to recruit Canadian celebrities (surely Naomi Klein would have been available), but Ecuador managed to get a delegation from the United Food and Commercial Workers Canada, UFCW, to tour and demonstrate solidarity. Ecuador has also been reaching out to Canadian aboriginal groups opposed to domestic oil pipelines.

Correa is no stranger to blackmail. Several years ago he said that if the “international community” did not come up with US$3.6 billion he would have to drill for oil in the country’s Yasuni Amazonian nature reserve. Perhaps he was inspired by National Lampoon’s classic 1973 cover: “If You Don’t Buy This Magazine, We’ll Kill This Dog.” Still, Correa was true to his word. Nobody paid up, so he set about drilling.

Another set of leaks revealed that Ecuador had spied on environmental opponents of drilling at Yasuni, and that Correa has used terms such as “stupid lefty” to describe them, as opposed, presumably, to the stupid lefties he seeks to recruit against Chevron.

In Canada, the Ecuadorian case is being pursued by well-regarded lawyer Alan Lenczner, who has been on the Dirty Hands tour and suggested that Chevron might pay up because, after all, what’s a few billion to such a rich company?

Last week’s U.S. court decision has been framed by Donziger’s defenders and radical allies as an example of U.S. legal “imperialism,” or dark corporate power, or all about putting profits before people.

As far as Canada is concerned, the main reason to hope that this case gets tossed out is that otherwise every corrupt regime and corporate shake down artist in the world will look to clog up the Canadian system with their smelliest cases.