Chevron Plays 'Victim' To Deflect Media Coverage of Goldman Award for Ecuadorian Activists

On April 13, 2008 the Goldman Environmental Prize announced that one of it's annual prizes for 'eco-leaders' had been awarded to Pablo Fajardo Mendoza, 35, and Luis Yanza, 46, from Ecuador. "In the Ecuadorian Amazon, Fajardo and Yanza lead one of the largest environmental legal battles in history against oil giant Chevron, demanding justice for the massive petroleum pollution in the region," the prize announcement stated.

Defending Communities and Defending A Clean Up
In the supporting statement, the Goldman Environmental Prize sketched an overview of what is described as "an unprecedented community-driven legal battle against a global oil giant". Led by Luis Yanza and Pablo Fajardo, local residents have launched legal action against Chevron, which took over Tewxaco in 2001, demanding that they pay for a cleanup of what they allege was "nearly 17 million gallons of crude oil and 20 billion gallons of drilling wastewater" that were dumped "directly into the Ecuadorian Amazon". (The legal action is referred to in legal parlance as as Aguinda v. ChevronTexaco.) Yanza co-founded the Amazon Defense Front, which launched the legal action against Chevron on behalf of the the northern Ecuadorian Amazon while Pablo Fajardo, is the lead lawyer in the case.

The Goldman Environmental Prize found that the work of pair has prompted the government of Ecuador to pass stronger environmental laws and had a substantial effect on public thinking.The foundation also noted that "Yanza, Fajardo, their families and a number of their colleagues have become targets of death threats, harassment and intimidation. In December 2005, the Inter-American Commission on Human Rights of the Organization of American States issued precautionary measures for Yanza and Fajardo in an effort to protect their lives. Fajardo’s brother was killed just months after he joined the legal team; no investigation has taken place and no one has been arrested for the homicide. Fajardo has been forced to vary his daily routine, often sleeping in a different place each night."

Chevron's Reaction
In a classic PR crisis management counter-attack, Chevron responded early and aggressively, seeking to position itself as the 'victim' and ensure that any media coverage of the awards for Fajardo and Yanza mentioned Chevron's counter-claims. Writing in the San Francisco Chronicle, Phillip Matier and Andrew Ross wrote that "once San Ramon's Chevron got wind of the Goldman Foundation selections, the oil giant began gearing up for a full-scale media counterattack" including hiring "high-priced San Francisco PR crisis manager Sam Singer to push its assertion that the company is the victim of trumped-up charges and greedy lawyers." It also sent a letter on Friday - two days before the awards ceremony -- to Richard Goldman, the founder of the Goldman Environmental Prize.

On the Sunday, the day that the prize for the Ecuadorian activists was announced, Chevron's public affairs spokesman, Kent Robertson, circulated a media advisory. Instead of of criticizing the Goldman Environmental Prize directly, they also sought to portray them as having been duped. "Chevron regrets that the organizers of the Goldman Environmental Prize were skillfully misled into naming Mr. Fajardo and Mr. Yanza as prize winners ... These two men have twisted the facts in a legal case waged against Chevron for pure financial gain. Fictitious claims of cancer made by their associates have been thrown out of Federal Court in San Francisco. Mr. Fajardo and Mr. Yanza are ignoring the ongoing pollution in Ecuador by Petroecuador and are using it to seek billions of dollars in damages for decades ago operations in the region by Texaco Petroleum. Chevron became a convenient but unjust lawsuit target after it acquired Texaco in 2001," Robertson claimed.

At 7am the the following morning, Roberston issued a further media alert announcing that Chevron officials would be available at the Fairmont Hotel "to speak with reporters about the company's objection to the Goldman Foundation" over Fajardo and Yanza being awarded the prize. (In its alert, Chevron tagged Fajards as a "personal injury lawyer"). After discovering that Fajardo and Yanza had scheduled a news conference at the Fairmont Hotel on Monday at 10 a.m., "Chevron held one of its own one floor up, at 9," Lisa Richardson reported in the Los Angeles Times.

While the Goldman Environmental Prize defend the duo as being "motivated by a single desire: to ensure that their corner of the Amazon – one of the world’s most contaminated industrial sites – is cleaned up" - Chevron had further counter-attacks in the pipeline. In an interview with Associated Press reporter Michael Liedtke, Chevron spokesman, Don Campbell, foreshadowed that the company would run an aggressive full-page advertisement in the San Francisco Chronicle on the Tuesday after the awards ceremony. "We feel these guys are nothing but con men," Campbell said.

Chevron's Legal Woes
The air of desperation to Chevron's claims reflected their increasingly dire legal situation in the case before to Ecuadorian courts. Several weeks earlier, a geologist appointed by the court had estimated that the range of costs for the cleanup of Texaco's operations ranged between $7 and $16 billion. In late March 2008, Amazon Watch revealed that in a February 2008 submission to the the office of the U.S. Trade Representative, Chevron wrote that it expected "a near-term unfavorable finding from the Ecuadorian court and potentially enormous ... financial liability." In a letter urging the U.S. Securities and Excahnge Commission to take action against the company for failing to keep shareholders informed, Amazon Watch executive director, Atossa Soltani, argued that "Chevron misleads its shareholders by claiming in public that it has no liability in Ecuador, while in private it claims to face an enormous liability."

In an interview with Business News Americas, a Chevron attorney, Sylvia Garrigó, explained the company's legal and PR predicament. "The cards do seem to be increasingly stacked against us. For the first couple years of the trial, things were going pretty well," she said.

"What can we do?," Garrigó rhetorically asked. "First and foremost, we're defending ourselves in court because we're creating a record to demonstrate we're not getting a fair and impartial trial and that there are external influences on the judge that don't permit him to act in an independent and objective manner," she said.

"Our second strategy," she continued, "is to have the public and opinion leaders and US constituents made aware of the fact the process has been completely corrupted, that the expert analysis also is corrupt. Eventually, any judgment that comes out of the court system in Ecuador, if it continues on this track, is also going to be a product of this fraud and corruption. As such, if there is a political agenda against the company in Ecuador and an adverse judgment is issued, that political agenda will only have effect in Ecuador. In other words, the judgment will not be enforceable outside Ecuador. No court that adheres to due process, adheres to the rule of law and looks at this judgment to determine whether it was based on legitimate evidence, will enforce it."

Of particular concern to the company, is that in return for pushing to have the case moved from the U.S. court system to the Ecuadorian court, it had agreed to have any findings enforceable in the U.S. With the realization that the case wasn't going its way, Chevron has determined that it will do everything to avoid complying with any adverse findings. Chevron's PR adviser, Kent Robertson, explained to Business News Americas that "we do have to work through the in-country process first. We have to exhaust our options there, which still will take several years." Once their options before the Ecuadorian courts are exhausted, Chevron is anticipating it could seek international arbitration.

Chevron's Advertising Artillery
For Chevron, its reaction to the Goldman Environmental Prize award to Fajardo and Yanza was simply designed to dovetail int to its long-term legal strategy of avoiding U.S. enforcement of an adverse judgment from the Ecuadorian courts. The company's advertisement in the San Francisco Chronilce and its public commentary on the awards was less designed for a local audience and more to help gain national coverage aimed at discrediting the Ecuadorian courts.

To maximise the impact of an ad in a local paper, Chevron's Kent Robertson dispatched a media alert with the full text of the ad. While the preamble to the ad text once more re-iterated the claim that Fajardo and Yanza "are deceiving the Goldman Foundation, the public and the media about oil pollution in Ecuador's rainforest" the advertisement itself zeroed in solely on Fajardo.

Chevron's ad:


 * described Fajardo as a "trial lawyer" who was a "front man for a group of Ecuadorian and American trial lawyers pursuing a claim against Chevron" and that its was the trial lawyers - and by implication not a broad base of Ecuadorian residents of the areas where Texaco had operated - who "are the driving force behind a proceeding that has been marred by judicial irregularities, attorney misconduct and interference by the Government of Ecuador."


 * that the lawsuit was "an attempt to blame the current environmental damage caused by government-owned Petroecuador's ongoing oil production entirely upon Chevron" and that he had "purposely ignored the real polluters, Petroecuador, and has even waged an active campaign to prevent the state-owned company from cleaning up its polluted sites."


 * that evidence of the deception promoted in the case against Chevron could be "found in a U.S. Federal Court decision handed down just last year. An Ecuadorian lawyer who initiated the case, with whom Mr. Fajardo has worked closely, was fined and sanctioned in San Francisco for bringing knowingly false cancer claims against Chevron on behalf of Ecuadorian clients." (emphasis added).


 * the advertisement concluded that "an honest conversation about the environmental problems in the Ecuadorian Amazon region is long overdue. People truly are suffering. It is unconscionable that these individuals present themselves as environmental champions while complicit in protecting polluters. These are not the actions of someone deserving of The Goldman Environmental Prize."

The same day as the advertisement, Chevron's vice president and general counsel, Charles A. James, had an opinion column in the San Francisco Chronicle -- titled "Chevron victim of a shakedown" -- echoed the themes of the advertisement. In its James argued that the Texaco subsidiary, TexPet, which had been a one-third shareholder in an oil operation with Petroecuador until 1992 had spent $40 million as its share of clean up costs and been given a release of liability by Petroecuador and the then government. James argued that as the lawsuit was solely against Chevron "Petroecuador has been given a free licence to pollute", that the legal proceedings were biased as "Ecuador's judicial system has allowed itself to be compromised" and that "the very lawyer responsible for all the Ecuador litigation was recently fined and sanctioned by a federal judge in San Francisco after bringing a new case against Chevron." James concluded by posing a rhetorical question: "If the environmentalists truly care about the environment and lawyers act in the interests of their clients, why haven't they also waged their campaign against Petroecuador?"

(Curiously, neither Chevron's advertisement or James's opinion column are featured in Chevron's main website or its Ecuador specific website. )

Countering Chevron's Parry
The day after Chevron's advertisement and Charles A. James's opinion column were published, Luis Yanza and Pablo Fajardo responded to their key claims in a detailed four-page rebuttal as a letter to the Chevron's CEO and Chairman of the Board, David O'Reilly. "Chevron’s assertions that use false information to hide the likelihood of a massive potential liability from shareholders, and which put us and others leading the lawsuit at even greater personal risk of harm, cross the line that separates healthy debate from outright misinformation," they wrote.

in particular they took issue with:


 * James's claim that the plaintiffs had "first filed a lawsuit in 1993 against Texaco Inc., which Chevron acquired in 2001. That lawsuit was dismissed by a federal court in New York because the judge determined that the claims did not belong in a U.S. court."


 * In their letter, Yanza and Fajardo wrote that "as a former Assistant Attorney General of the United States and a sophisticated lawyer, Mr. James must surely know he is falsifying information. The Aguinda matter has never been dismissed by any court. It was sent to Ecuador in 2001 by a U.S. judge at Chevron’s request because the U.S. court accepted Chevron’s argument that Ecuadorian courts were transparent and impartial. As a condition of this removal, Chevron consented to jurisdiction in Ecuador. Only recently, when the evidence in the Ecuador trial began to clearly point to Chevron as being responsible for the contamination, and when it became clear that Chevron itself was proving the existence of extensive contamination at its former sites, did your company launch a misinformation campaign that claimed the trial was unfair."


 * They also dismissed James's claim, which was also referred to in the advertisement, that "the very lawyer responsible for all the Ecuador litigation was recently fined and sanctioned by a federal judge in San Francisco after bringing a new case against Chevron."


 * "The San Francisco court case referenced," Yanza and Fajardo wrote, "had no connection to the Aguinda case and never involved anybody we represent; the lawyer in that case has no ties to the current litigation in Ecuador. Again, Mr. James and your public relations representatives are falsifying information by trying to conflate the claims in the dismissed case with our own, when in fact they are completely different."


 * They also rejected James's claim that in return for the company's $40 million remediation plan the company "had received a full and complete release of liability from not only Petroecuador, but also the government of Ecuador."


 * In response Yanza and Fajardo wrote that Chevron's 'remediation' was for "a limited, cosmetic clean up of a small portion of the total number of waste pits in Ecuador" and that "Chevron excluded most of the pits, the soils around all of the pits, groundwater contamination under and near the pits, health and economic impacts, impacts to indigenous culture, and infrastructure problems that continue to produce contamination from the oil production system Chevron installed."


 * As for the company's claim that it had been granted indemnity from liability Yanza and Fajardo wrote that "the release Chevron received from the Ecuadorian government did not apply to the claims in the Aguinda case, which at the time was already pending in a New York court. Those claims and all others held by private citizens were clearly carved out in the plain language of the release. Yet Chevron falsifies the scope of its limited release to try to convince the public that it applies to all claims, when in fact it applies only to claims the government could bring. Further, the court expert found that Chevron’s so-called remediation had no impact – trial results demonstrate there is simply no difference in the levels of toxins found at Chevron sites that were remediated compared to those that were not. As a result, Ecuador’s government has filed a fraud against Chevron with the U.S. Department of Justice, raising the possibility Chevron used deception to secure the limited release."


 * Yanza and Fajardo also rejected Chevron's claim that current environmental problems were the fault of Petroecuador which has operated the oil facilities since TexPet left in 1992. They noted that while the extent of Chevron's liability will be determined by the court case, the Texaco subsidiary"it bears mention that Chevron’s predecessor company, Texaco (now Chevron), was for 26 years the exclusive operator of a consortium that built 356 wells and 22 production stations in Ecuador’s Amazon in an area roughly the size of Rhode Island. Chevron built this system with greater concern for its production costs than for the value of human life, indigenous culture, and the preservation of the rainforest ecosystem."


 * "Chevron had admitted at trial that it dumped on a daily basis millions of gallons of toxic waste water into the Amazon instead of re-injecting into wells, which had been the customary oil industry practice for decades before Chevron entered Ecuador. In addition, Chevron gouged roughly 1,000 waste pits out of Ecuador’s jungle floor and filled them with toxic and carcinogenic drilling muds and sludge. These contaminated pits, some the size of football fields, still leech toxic substances into the soil and groundwater and decades later their grotesque forms are visible to anybody who visits the region. Chevron knew that the state-owned oil company that inherited this flawed production system would continue to use it, yet Chevron never invested the capital to upgrade the system before leaving Ecuador in 1992. Therefore, Chevron continues to bear responsibility not only for the contamination it caused, but also for the contamination others have caused using the same negligent system Chevron designed, built, and operated knowing it violated legal standards. That said, base communities in the Amazon work closely with the existing oil company in Ecuador to deal with underlying problems left by Chevron – but that does not alter Chevron’s ultimate responsibility for these problems," they continued.


 * as for Chevron's claim that the legal case was simply a 'scam' perpetrated by a 'trial lawyer', they pointed out that Fajardo had come from a poor background to gain a legal degree via correspondence and that the personalised attack on his credibility potentially increased the risk of harassment. in their letter they noted that Fajardo had received "numerous death threats" and that "your company’s personal attacks on Mr. Fajardo increase the danger he faces in Ecuador, and therefore can be seen as extrajudicial attacks on the trial process itself and the rights of the people Mr. Fajardo represents to assert their claims against Chevron. We again ask that you cease targeting Mr. Fajardo personally with distorted information and that you respect the trial process in which he plays such a vital role."


 * "In the interests of basic decency and your own fiduciary obligations to shareholders, we ask that you correct these factual inaccuracies immediately and order your General Counsel and public relations representatives to cease repeating them. We are copying this letter to Chevron’s Board of Directors, the Securities and Exchange Commission, and the United States Department of Justice," they concluded.

Chevron have not responded to their letter.

Chevron's 'Victim' Pitch Doesn't Cut Much Ice With Readers ....
The public reaction to Chevron's counter-attack on the Ecuadoran activists was skeptical. "If someone hires San Singer, then that is sufficient evidence that they are guilty," wrote one in a comment posted to the website of the San Francisco Chronicle. Another reader echoed the sentiment:"Sam Singer has no credibility, and Chevron has shown their true colors hiring him."

If Charles James was playing for the sympathy vote with his disingenuous opinion column, he didn't get far. "Now that an independent expert has said they need to pay up to $16billion to clean up their mess, they are going after environmental activists in a desperate attempt to hide the truth and divert attention. It's pathetic and it won't work. Chevron can lie and hide, but the reality is they are responsible for the worst oil related environmental disaster in the world, and they WILL pay to clean it up," wrote one. "For shame! Caught red handed perpetrating one of the worst environmental disasters in history, Chevron now goes on the offensive, calling itself the "victim" and blaming everybody but itself: the Ecuadoran government and courts, the indigenous people themselves, other oil companies, and "trial lawyers" (an irony for a hatchet job written by the company's general counsel, who oversees a huge litigation budget)," wrote another. "Scapegoating activists who won an international prize for pointing out the pollution you swept under your rugs and stacked in your closets is poor form and unworthy of the company your advertising insists you are,"wrote another.

Another was more blunt: "Public relations can save you for the moment but you will end up as just another chapter in the history books of Corporate Criminality. Hope your grandchildren are better than you are." They also had a practical suggestion for Chevron executives and lawyers: "Why not truck up some of the water from the areas that have been so effectively cleaned up? Have all of the Chevron lawyers and CEOs drink it for a year. And have their wives and children drink it for a year. Any takers Chevron? It is clean water after all."

While some respondents to James's op-ed did echo his themes, one took issue with the San Francisco Chronicle itself. "If the Chronicle dared to have an Open Forum to the let Chevron's VP air its sad victim story, it should have allowed a similar space for the activists on the other side: Pablo Fajardo Mendoza and Luis Yanza. The way the Chronicle handled this story was far from objective. Shame on the Chronicle!" (The Chronicle has not published an equivalent op-ed presenting Fajarado and Yanza's point of view).

... But Impresses A Wall Street Journal Editorialist
While James's "victim" pitch didn't get far in San Francisco audience, not surprisingly it got a far more receptive hearing on the editorial page of the Wall Street Journal (WSJ), which echoed Chevron's central complaints. The company, they wrote, "will seek international arbitration should it lose in Ecuador's kangaroo courts" and opined that the case "deflects attention from the real source of Ecuador's pollution while burnishing the country's reputation as a banana republic." The estimate by a consultant appointed the Ecuadoran court estimated that Chevron should pay, at the low end, $2.9 billion and, at the high end, and additional $8.3 billion for "unjust enrichment", also came in for derisive treatment from the anonymous WSJ editorial writer. The consultant, Richard Stalin Cabrera, was tagged "'expert'" - a designation the editorial writer was clearly wary of accepting.

The WSJ also echoed Chevron's claim that in return for the $40 million remediation plan the government of Ecuador "'absolved, liberated and forever freed' the company from 'any claim or litigation by the Government of Ecuador concerning the obligations acquired' by Texaco." The editorial also implied that the Fajardo and Yanza case was a re-incarnation of another case against Chevron that had been dismissed by the U.S. courts. In all respects, the WSJ's was entirely uncritical of Chevron's claims.

However, the WSJ editorialist's embrace of Chevron's arguments didn't go without challenge. Steven Donziger, a legal adviser to the plaintiffs, wrote that "the special master whom Mr. James accuses of being part of an "extortion" plan is a respected geologist whom Chevron paid in the past for his work as a court-appointed expert." As for both Chevron and the WSJ editorial writer's disdain for the Ecuadoran legal system, Donziger had little time."Once the weight of the evidence started to tilt against Chevron, Mr. James launched a full-scale assault on the court. What had once been a trial Chevron sought in courts it praised became an 'extortion' plot. I think we can identify the animating principle: Praise the fairness of foreign courts when you think you can win and claim 'extortion' when it appears you are going to lose."

Ecuador's Ambassador to the U.S., Luis Gallegos, also took issue with the WSJ editorial writer's characterization of his country's judicial system. "To avoid trial in the U.S., Chevron filed 10 affidavits before U.S. federal judges praising the fairness of Ecuador's court system. Chevron then stipulated to a U.S. federal court that it consented to jurisdiction in Ecuador as a condition of transferring the case.," he wrote.

"President Rafael Correa's government has drawn a clear line between where sympathy for contamination victims ends and interference in an ongoing complex legal dispute begins. The same cannot be said for Chevron, which has lobbied various Ecuadorian presidents, including Mr. Correa, to use their authority to halt litigation. It is Chevron, not Ecuador, that would like to "politicize" the case. Happily, its PR efforts have been frustrated by the fact that Ecuador no longer has "banana republic" institutions that can be controlled through extrajudicial pressure. Chevron should respect the legal process and let it conclude," he wrote.

Atossa Soltani, the Executive Director of Amazon Watch, took issue with both Chevron and the WSJ editorial's claim that Chevron was being unfairly singled out despite being in a joint venture with Petroecuador and the suggestion that Fajardo and Yanza's case was the same as one that had been dismissed by U.S. courts. "Chevron," she wrote, "was the sole operator of the concession and as such is entirely responsible for building a system that was designed to pollute. The dismissed San Francisco case against Chevron has no connection to the Ecuador matter and involved entirely different legal claims."

Related SoureWatch Articles

 * crisis management
 * issues management
 * Kent Robertson
 * Charles A. James
 * Sam Singer
 * Don Campbell

External Articles

 * Goldman Environmental Prize, "Seven Eco-Leaders Win World-Renowned Goldman Environmental Prize", Media Release, April 13, 2008.
 * Goldman Environment Prize, "2008 Recipients for South and Central America - Pablo Fajardo Mendoza & Luis Yanza, Ecuador", Media Release, April 13, 2008.
 * Chevron, "Chevron Officials Contest Choice of Goldman Environmental Prize Recipients", Media alert, April 13, 2008.
 * Phillip Matier and Andrew Ross, "Prize fight", San Francisco Chronicle, April 13, 2008.
 * Richard Goldman, "Press Statement on Chevron's Objection to the Goldman Environmental Prize's Selection of Pablo Fajardo and Luis Yanza", Media release, Goldman Foundation, April 14, 2008.
 * Michael Liedtke, "Chevron sharpens attacks in legal battle", Newsweek, April 14, 2008. (This is an Associated Press  story).
 * Chevron, "Chevron Advertisement Criticizes Goldman Ecuadorian Award Winners: Says They Deceived Public, Press and Goldman Family", Media Release, April 15, 2008.
 * Charles A. James, "Chevron victim of a shakedown", San Francisco Chronicle, April 15, 2008.
 * Tyche Hendricks, Controversy mires choice for Goldman Prize", San Francisco Chronicle, April 15, 2008.
 * Amazon Watch, "Press Briefing Wednesday 10:00 a.m. About $16 Billion Damages Claim against Chevron Over Amazon Environmental Disaster", Media Alert, April 15, 2008.
 * "Ecuadoran heroes who took on Chevron", Letters to the Editor, San Francisco Chronicle, April 15, 2008.
 * Luis Yanza and Pablo Fajardo, "In Letter To O'Reilly Activists Correct Chevron's Distorted Claims About Ecuador Trial", Frente de Defensa de la Amazonia, April 16, 2008.
 * Amazon Watch, "Amazon Watch Blasts Consultant Sam Singer for Designing Chevron Attack on Goldman Prize Winners", Media release, April 16, 2008.
 * David Morse, "Chevron's whining", Letter to the Editor, San Francisco Chronicle, April 16, 2008.
 * Lisa Richardson, "Chevron takes on the plaintiffs", Los Angeles Times, April 16, 2008.
 * Randy Woods, Sylvia Garrigó/Kent Robertson: Attorney/Media relations advisor/Chevron, Business News Americas, April 17, 2008.
 * "Banana Republic and Friends", Editorial, Wall Street Journal, April 19, 2008; Page A10.
 * David Feige, "Pursuing the polluters: An environmental suit may open the door for small countries to take on the multinationals", Los Angeles Times, April 20, 2008.
 * Carl Pope, "Pity the Poor Oil Company", Huffington Post, April 25, 2008.
 * Steven Donziger, "Chevron Is to Blame for Ecuador's Oil Pollution", Letter to the Editor, Wall Street Journal, April 26, 2008; Page A8
 * Luis Gallegos (Ambassador, Embassy of Ecuador, Washington D.C., "Chevron Is to Blame for Ecuador's Oil Pollution", Letter to the Editor, Wall Street Journal, April 26, 2008; Page A8.
 * Atossa Soltani, "Chevron Is to Blame for Ecuador's Oil Pollution", Letter to the Editor, Wall Street Journal, April 26, 2008; Page A8.