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Judge rules massive Chevron damages were the result of unethical practices

Will give Chevron the means to push back against international attempt to seize assets

A federal court has ruled that environmental-damage costs issued to Chevron were achieved through the use of unscrupulous tactics, giving the company the means to fight back against entities trying to seize its assets in Ecuador. The conclusion brings into question the validity of the $9.5 billion award, the largest environmental legal cost in history.

The initial lawsuit was actually levied against Texaco, which Chevron acquired in 2001. Texaco had set up a drilling partnership with the Ecuadorian government to give it access to oil fields within the nation’s jungles. While the oil giant settled other oil-waste claims filed by Ecuador in the 90s, it was charged with neglecting to aid in the cleanup of Lago Agrio, the contamination of which resulted in illness throughout local populations.

But while the outcome of the suit stemming from the Lago Agrio incident eventually ended in the massive $9.5 billion payout, U.S. District Judge Lewis Kaplan found that New York lawyer Steven Donziger landed the deal through a number of unethical methods. Among those practices, was the fabrication of evidence, bribing Ecuadorian judges, and laundering money.

"The wrongful actions of Donziger and his Ecuadorean legal team would be offensive to the laws of any nation that aspires to the rule of law, including Ecuador—and they knew it,” Kaplan wrote in his opinion.

While Donziger is expected to try and appeal the ruling, the news could give Chevron an edge in pushing back against international efforts to hold it accountable to environmental issues stemming from oil operations within Ecuador.

The case has bled over into numerous international courts, and the Wall Street Journal reports that an international arbitration tribunal in The Hague is weighing Chevron's request for a finding that Ecuador, not the oil company, is liable for any environmental damage.

On March 4, Chevron said it will shortly offer its own opinion on the issue.


For more on bribery in law, check out these stories:

The anti-corruption Olympiad

Chinese Premier outlines new anti-corruption strategy

Former Siemens executives to pay record bribery fines, rules court

Executive Editor

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Chris DiMarco

Chris DiMarco, Executive Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

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