Ecuador Judge Testifies to Taking Bribes in Chevron Suit

A former Ecuadorean judge who presided over a pollution case against Chevron Corp. (CVX) testified that he and a colleague who issued a $19 billion judgment against the company in the environmental lawsuit were bribed.

The judge, Alberto Guerra, took the stand yesterday in Manhattan federal court during the trial in a racketeering suit in which Chevron alleged that the verdict in Ecuador was procured through fraud.

Guerra has said in a declaration filed with the court that he was paid thousands of dollars by lawyers for the plaintiffs to steer the case in their favor. Another former Ecuadorean judge who issued the $19 billion ruling, Nicolas Zambrano, was promised $500,000 from the proceeds, Guerra said in the November filing. Guerra said he also routinely ghost wrote judgments for Zambrano and was paid for those services.

“It could not seem as though all of the orders were being issued for the benefit of the plaintiffs,” he said through an interpreter in court yesterday, explaining why some of the rulings he was involved with favored Chevron. “The idea was to not have it look suspicious.”

Guerra said in court that he was given the bribes sometimes in the form of deposits in his bank account and other times in envelopes filled with $20 and $50 bills.

Zambrano has denied that he was bribed by the plaintiffs and that Guerra or the plaintiffs were involved in writing his decisions. He may testify later on behalf of lawyers for the Ecuadorean plaintiffs, who sued over pollution in the Amazon rainforest, the attorneys said.

20-Year Battle

Chevron, the second-largest U.S.-based energy firm, claims that lawyers for the plaintiffs, led by Manhattan attorney Steven Donziger, engaged in a scheme to extort money from the company during a 20-year legal battle over pollution in an Ecuador oil concession.

The company is seeking an order from U.S. District Judge Lewis Kaplan barring lawyers for the Ecuadoreans from trying to enforce the 2011 pollution judgment in countries where Chevron has assets.

Central to the “scheme to defraud and extort Chevron is the fact that Ecuador’s judiciary has developed systemic weaknesses and corruption,” the San Ramon, California-based company said in a complaint filed in February 2011. “The conspirators are aware of this fact, and have sought to exploit it.”

The company alleges Donziger and his associates “lobbied” judges by meeting with them outside of court and intimidated them by inciting protests. Donziger claims his tactics were lawful and that Chevron engaged in similar activities.

Guerra’s $326,000

Donziger claims that Chevron has agreed to pay Guerra at least $326,000 through 2015 for cooperation and favorable testimony. Guerra said in his November declaration that the company paid him for computer equipment and for gathering evidence useful to the case and not for the testimony.

In the environmental case, Donziger and other lawyers for indigenous people in Ecuador’s Lago Agrio region sought damages for Texaco Inc.’s alleged dumping of toxic drilling wastes from 1964 until about 1992 that polluted about 1,500 square miles (3,885 square kilometers). The lawsuit continued against Chevron when it acquired Texaco in 2001.

Petroecuador, Texaco

Chevron contends that state-owned Petroecuador, a former Texaco joint-venture partner, is responsible for most of the pollution. Texaco paid $40 million to clean up its share and was released from liability under agreements with Ecuador in 1995 and 1998, Chevron said. An international arbitration tribunal affirmed the accords’ validity in September.

Randy Mastro, a lawyer for Chevron, told the judge in opening arguments in the nonjury trial on Oct. 15 that Donziger could get as much as $1.2 billion if the judgment is collected in full.

During the openings, Richard Friedman, a lawyer for Donziger, denied his client had engaged in any bribery or other wrongdoing and instead compared him to civil rights leaders.

“Like Thurgood Marshall, like Ralph Nader, like a host of human rights lawyers before him, Mr. Donziger understood you need legal and social change,” Friedman told the judge.

The racketeering case is Chevron Corp. v. Donziger, 11-cv-00691, U.S. District Court, Southern District of New York (Manhattan). The appeals court case is In Re Naranjo, 13-00772, U.S. Court of Appeals for the Second Circuit (Manhattan).

To contact the reporter on this story: Christie Smythe in Brooklyn at csmythe1@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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