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Shaky Chevron Witness Assailed in New Brief

MANHATTAN (CN) - A lawyer whom Chevron has labeled a racketeer asked the Second Circuit today to consider revelations from an international tribunal in which the oil giant's key witness admits to giving false testimony in U.S. federal court.

New York-based attorney Steven Donziger has spent more than a year saddled with a federal judge's findings that he defrauded Chevron in the Ecuadorean rainforest city of Lago Agrio that ended with a $9.5 billion environmental verdict.

More than six months after his appeal, the Second Circuit has not ruled, and counsel for Donziger told the appellate court today that breaking developments "exonerate" their client.

"At the outset, we acknowledge that this motion is a good bit longer and more thorough than the typical judicial-notice motion," Donziger's attorney Deepak Gupta wrote. "But this is an extraordinary case, and these are extraordinary developments. They not only bear on the legal issues in this appeal; they also exonerate Steven Donziger of the allegations of wrongdoing that Chevron has levied against him."

Recent news casts "grave doubt" over U.S. District Judge Lewis Kaplan's findings that Donziger and his colleagues obtained their award "by corrupt means," Gupta said.

Kaplan's ruling hinged largely upon the testimony of Alberto Guerra, a Lago Agrio judge who testified for Chevron in New York that he ghostwrote the Ecuadorean judgment against it in exchange for bribes.

This past April, Guerra appeared on the stand in a different component of Chevron's multipronged attack against the Ecuadorean ruling - namely, arbitration proceedings that seek to make Ecuador's government foot the bill.

Newly public transcripts of those proceedings at the Washington offices of the World Bank show Guerra changed his story.

Donziger says Guerra's admissions provide one more reason for the Second Circuit to void Kaplan's ruling.

"Guerra's two-day testimony in the [trade] arbitration is littered with explicit admissions of dishonesty, including admissions that he lied while on the stand in New York and in his witness statement," his lawyer Gupta wrote in a 19-page brief.

Long before these revelations, Guerra's credibility was already under scrutiny. Chevron was up front that it paid the judge to testify - $326,000 as of early 2013 - and Judge Kaplan noted various ways Guerra's story shifted over the years.

"Guerra on many occasions has acted deceitfully and broken the law," Kaplan wrote last year. "Some details of his story of what transpired in the [Chevron] case have changed. But that does not necessarily mean that it should be disregarded wholesale."

A year before Chevron added him to its payroll, Guerra had little more than $100 in his bank account, owed tens of thousands of dollars in debt, and could not afford to visit his children and grandchildren living in the United States.

Kaplan found that Chevron's corroborating evidence outweighed Guerra's credibility problems, but Donziger wants the Second Circuit to consider Guerra's recent admission to the contrary.

"Guerra also conceded in his arbitral testimony that there is no evidence (aside from the so-called Memory Aid) corroborating his allegation that the Ecuadorian plaintiffs' lawyers bribed Zambrano and ghostwrote the judgment," the new motion states. The "memory aid" refers to a document Guerra says Donziger's co-counsel Pablo Fajardo provided to help him ghostwrite the judgment.

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Enumerating Guerra's inconsistencies, the new brief points the panel to the judge's sworn testimony that Nicolas Zambrano, a colleague of Guerra's in Ecuador who signed off on the judgment against Chevron, promised Guerra 20 percent of a $500,000 bribe.

When testifying before the arbitrators, however, Guerra insisted that Zambrano promised to "share" but admitted that he, Guerra, "mentioned 20 percent when it wasn't true."

Guerra also contradicted his sworn witness statement in New York about the reasons for his travel to Lago Agrio.

The judge's secret testimony to the arbitrators coincided roughly with the Second Circuit's hearing on Kaplan's verdict in April.

At the appellate court hearing, Judge Richard Wesley expressed concern about what would happen if Kaplan and the tribunal reached "inconsistent results," a remark the brief describes as prescient.

"That risk is all the more real now," Gupta wrote.

Chevron waved off concerns about Guerra's testimony when the transcripts became public last week and said Thursday that its latest motion will prove futile.

"Steven Donziger and his team were found to have violated federal racketeering laws, including extortion, money laundering, wire fraud, witness tampering and obstruction of justice in obtaining the Ecuadorian judgment against Chevron," Chevron spokesman Morgan Crinklaw said in an email. "The 500-page district court ruling details the extensive evidence of misconduct, including Donziger's team's own internal documents and emails, video outtakes and testimony from former allies and insiders. This is yet another attempt to distract attention from his misconduct and distort the record."

Gupta meanwhile noted that the arbitration tribunal took more into consideration than "fresh evidence of Guerra's admitted lies" and "new exculpatory evidence."

"After weeks of hearings and witness testimony, the panel members took the extraordinary step of traveling to four former Chevron (TexPet) sites in Ecuador to witness evidence of oil pollution and to document that pollution's effects on the environment and nearby communities," the brief says.

Transcripts of those hearings show that the arbitrators toured the Ecuadorean Amazon near residential farmlands where villagers grow corn, papaya, cacao and other produce - sprouting up either from or near pools of petroleum.

"These admissions and new evidence make it likely that fair-minded factfinders elsewhere will conclude that they have no choice but to reject Judge Kaplan's findings," the brief says.

Attorneys for the Ecuadorean villagers have tried before to have the Second Circuit consider evidence from the tribunal.

A submission from the Ecuadoreans earlier this year involved forensic evidence that appears to undermine Chevron's ghostwriting claims. Computer analysis shows that Zambrano's hard drives had a running draft of the judgment saved hundreds of times over a period of four months.

Chevron fought the admission of the evidence at the time, arguing that the New York trial record is now closed.

When Gupta tried to mention this evidence in court months ago, Judge Wesley interrupted: "We have a dispute as to whether we can consider that or not."

If permitted, the Second Circuit will grant the new documents only "judicial notice," rather than evidentiary weight.

Under this standard, the Ecuadoreans plan to argue that the evidence presented to the tribunal highlights the dangers of a New York court sitting in judgment of other judiciaries.

The Second Circuit voided an earlier version of Chevron's case on the grounds that the principle of international comity does not allow a U.S. court to set "itself up as the definitive international arbiter of the fairness and integrity of the world's legal systems."

Demonstrating the diplomatic minefield of the case, litigation has now spread itself across three continents, and the Ecuadoreans have turned to three countries to collect Chevron's assets.

The Supreme Court of Canada recently allowed one collections action to move forward, and Chevron subsequently told a Toronto court should be "bound by the factual findings" of the U.S. court.

Gupta's new brief for Donziger says "that argument exposes Chevron's true agenda in this case - not an injunction that actually redresses any concrete injury, but a set of findings it hopes will short-circuit enforcement efforts abroad."

Gupta said Chevron does not need a New York court's intervention for this purpose.

"Chevron can defend itself in enforcement proceedings," the brief concludes.

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