Witnesses say U.S. lawyer used fraud in Chevron case in Ecuador

NEW YORK Wed Oct 16, 2013 8:03pm EDT

A Chevron gas station sign is seen in Del Mar, California, April 25, 2013. REUTERS/Mike Blake

A Chevron gas station sign is seen in Del Mar, California, April 25, 2013.

Credit: Reuters/Mike Blake

NEW YORK (Reuters) - A U.S. lawyer used fraud to win a historic $18 billion judgment against Chevron Corp (CVX.N) for polluting the Ecuadorean jungle, witnesses said at a trial in New York on Wednesday.

The witnesses were testifying in federal court on behalf of Chevron, which is seeking to prevent lawyer Steven Donziger from profiting from the award, which he won for a group of Ecuadorean villagers in 2011.

Christopher Bogart, the head of a firm that helped finance Donziger's case in Ecuador, said he ended his investment in the case after mounting concerns of misconduct by Donziger.

"There was quite a lot of disturbing information coming out," said Bogart, who is the chief executive of litigation financing firm Burford Capital.

In a sworn statement in April, which became part of the Wednesday's proceeding, Bogart said he learned from emails that plaintiffs' lawyers knew they were engaging in misconduct.

The high-profile trial, which began this week, is the latest chapter in a dispute over environmental contamination between 1964 and 1992 at an oil field in northeastern Ecuador operated by Texaco, which Chevron bought in 2001.

Chevron says Texaco cleaned up its share of waste before turning the field over to state-owned Petroecuador. An Ecuadorean court disagreed and in 2011 awarded $18 billion to people from the village of Lago Agrio, which was affected by the pollution. The court subsequently increased the award to $19 billion to cover fees.

Burford provided $4 million in financing to Patton Boggs, a prominent Washington firm working with the Ecuadoreans on their environmental lawsuit. But Bogart said in his statement that Burford terminated the funding agreement in 2011 over concerns about actions by lawyers for the Ecuadoreans.

Earlier on Wednesday, Ricardo Reis Veiga, a lawyer in Texaco's and now Chevron's legal department, said Donziger and his legal team had pressured Ecuadorean officials to bring bogus criminal charges against him.

In cross-examining Bogart, Julio Gomez of Donziger's team of lawyers presented a series of Bogart's emails in an attempt to show that his firm had long been trying to pass on the case to other investors.

Gomez also said Burford signed a settlement agreement with Chevron that included the promise to testify in the oil company's case.

But Bogart said any allegation he was coerced by Chevron into giving testimony was "flatly untrue."

After Bogart testified, Chevron called David Russell, an engineer from an environmental consulting firm that worked for Donziger, who said he was pressured to provide an exaggerated cost estimate for the oil clean-up in the Amazon.

Chevron's lawyers raised a flurry of objections to Donziger's legal team, which U.S. District Judge Lewis Kaplan largely upheld. Kaplan at times also scolded Donziger's team for meandering off topic.

"I understand that both sides are playing to an audience outside this courtroom, but this is not the forum for that," Kaplan said in an exchange with Donziger's lawyers.

Donziger has denied fraud and says he is fighting an unfair battle against Chevron, which had many more lawyers than Donziger in court on Wednesday. He has also accused Kaplan of bias.

In a court filing, lawyers for Donziger and the Ecuadorean plaintiffs wrote that Kaplan's "contempt" for Ecuador, "its courts, and its laws has only grown more prominent over time." The 2nd U.S. Circuit Court of Appeals on September 26 rejected their request to remove Kaplan from the case.

The case is Chevron Corp v. Steven Donziger et al, U.S. District Court for the Southern District of New York, No. 11-0691.

(Reporting by Mica Rosenberg; Editing by Eddie Evans and Andre Grenon)

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