D.C. Lobbying Firm to Pay Chevron $15M

Latest blow to efforts to enforce judgment against oil company

Chevron sign
May 7, 2014

Prominent Washington, D.C., lobbying firm Patton Boggs has agreed to pay Chevron $15 million in a settlement announced on Wednesday, the latest blow to efforts to enforce a multibillion dollar judgment against the oil company that critics have decried as fraudulent.

The settlement represented a "stunning and highly unusual setback" for the law firm that was assisting plaintiffs who claimed Chevron was responsible for environmental damage in Ecuador, the Washington Post reported. Patton Boggs is struggling financially and exploring potential mergers with other firms.

An Ecuadorian court in 2011 originally ordered the U.S. oil company to pay $19 billion to Amazonian farmers for pollution allegedly committed in the rain forest by Texaco, which was later bought by Chevron in 2001. Ecuador’s highest court lowered the fine to $9.5 billion last year.

Chevron said Texaco cleaned up the mess and that any remaining pollution is contained in oil fields owned by Petroecuador, the state oil company.

A U.S. federal judge in March delivered the first blow to the plaintiffs by ruling that their legal team had engaged in "egregious fraud" to secure the judgment in Ecuador. The ruling said lead attorney Steven Donziger and his associates had ghostwritten a purportedly independent environmental report for the court and bribed the deciding judge.

Chevron on Wednesday said that the Ecuadorian judgment was "fraudulent" and "extortionate."

"We are pleased that Patton Boggs is ending its association with the fraudulent and extortionate Ecuador litigation scheme," Hewitt Pate, Chevron’s vice president and general counsel, told the Post in a statement. "Chevron detailed its objections to Patton Boggs’ conduct in its counterclaim, and today’s agreement brings that litigation to an end. Chevron encourages others to disassociate themselves from this fraud."

Donziger and the Ecuadorian plaintiffs said Patton Boggs had committed a "sad and unethical betrayal" and continued to criticize Chevron for its alleged "campaign of extortion and intimidation." They vowed to appeal the March ruling and challenge the settlement.

Ecuador President Rafael Correa previously called the Washington Free Beacon "corrupt" for reporting on the Chevron case. Correa has been widely condemned by human rights groups for his domestic crackdown on press freedoms and authoritarian governance.

Ecuador’s electoral council on Tuesday rejected a petition to hold a nationwide referendum on oil drilling in the Amazon rain forest, prompting critics to level accusations of hypocrisy against Correa.

The council said the petition submitted by YasUnidos, an environmental coalition opposed to the oil activity, failed to gather enough valid signatures to force a referendum. Although the coalition submitted more signatures than required, the president of the electoral council alleged that some of them were forged.

The failure of the referendum effort could pave the way for state oil drilling in the Ishpingo-Tambococha-Tiputini (ITT) block, a biologically diverse area in Ecuador’s Yasuni national park.

Correa aggressively backed the attempted judgment against Chevron and initially opposed drilling in the ITT block.

He said in 2007 that he would solicit $3.6 billion from the international community to make up for the lost oil revenues. The Ecuadorian leader changed his mind in August after only securing $13.3 million.

"We need money to overcome poverty," Correa said last year after abandoning the effort.

Ecuador’s government continued to face pressure from environmental groups that protested Correa’s reversal on drilling. The country’s interior ministry responded in December by closing Fundacion Pachamama, an environmental nongovernment organization (NGO), for "affecting the public peace."

Natalia Greene, a member of YasUnidos, said the coalition would appeal Tuesday’s announcement by the electoral council and claimed that the government had engaged in fraud to avoid a referendum.

"Once again it has been shown that in the country there is no separation of powers," Greene told the Wall Street Journal. "For us, this process has just begun, it is not done yet."