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Ecuadoreans Are Two Steps Closer|Toward $18.2B Chevron Judgment

MANHATTAN (CN) - Chevron suffered two new setbacks in its bid to dodge liability for massive oil contamination in the Amazon, which an Ecuadoran appeals court has just affirmed will cost $18.2 billion to remediate.

Chevron has fought the $18.2 billion judgment ever since it was issued last year by a provincial court in Lago Agrio, Ecuador. Claiming that the 18-year litigation was an extortionate fraud, Chevron filed an appeal in Ecuador's appellate court and a lawsuit in the Southern District of New York under federal anti-racketeering law. It also sought to arbitrate the matter at The Hague.

Last week, an Ecuadorean appeals court upheld the award in the original amount. An official English translation of the ruling has not yet been made available.

Chevron spokesman Kent Robertson blasted the "hasty ruling," which he said the three-judge panel delivered in slightly more than a month after its assignment. Robertson would not reveal whether the company would push the case for further review in Ecuador's highest court.

The oil company's second front of attack also suffered a blow with a New York federal judge refused to let Chevron seize the Ecuadoreans' assets in advance of a trial on the remaining RICO and fraud charges, ruling that the motion is not yet ripe.

"Chevron has put in no proof of any damages in support of its motion for an order of attachment except the fact and the amount of the judgment," wrote U.S. District Judge Lewis Kaplan, whom the Ecuadoreans call "Chevron's greatest ally" for usually siding with the oil giant. "But it has not established that it has paid any part of the judgment. The amount of the judgment therefore is not a measure of any damages that it has suffered to date. In these circumstances, Chevron has not demonstrated a likelihood of recovering any specific amount of damages."

Chevron found a silver lining in the decision, which Robertson said "left the door open" for Chevron in the future.

"The court decided the motion on very narrow grounds and did not question the strength of Chevron's fraud evidence," Robertson said.

Karen Hinton, a spokeswoman for the Ecuadoreans, had a different interpretation.

"It is clear that Chevron's motion had no legal basis and was designed yet again to distract attention from the company's fraudulent misconduct in Ecuador as well as its obligation to clean up its toxic waste in Ecuador's Amazon that threatens the lives of thousands of people," Hinton said.

There is still much to resolve as the New York case proceeds to trial. In a recent brief for the Ecuadoreans, Tyler Doyle with Houston-based Smyser Kaplan & Veselka outlined allegations that Chevron cooked evidence in the Lago Agrio trial by sending toxic soil samples to a secret laboratory.

"Under subpoena, Chevron expert Bjorn Bjorkman disgorged a copy of Chevron's 2006 'Judicial Inspection Playbook,' outlining the company's protocol for soil and water sampling at the many 'judicial site inspections,'" the brief states. "Chevron's Playbook for a given site describes how the company had visited the site prior to the judicial inspection and taken samples to locate clean 'delineation points' within an otherwise contaminated area. A related document, titled 'Summary of Sampling and Testing Program for Judicial Inspection Sites,' instructs Chevron's experts that 'locations for perimeter sampling should be chosen to emphasize clean points around pits when possible.'"

"Bjorkman's documents further reveal that Chevron's experts were also instructed to send 'dirty' samples to a laboratory called 'Newfields,' and not to SevernTrent Labs, which was Chevron's laboratory of record-Chevron only sent 'clean' pre-inspection samples to SevernTrent," the brief states.

Chevron's reply brief insists that it made the appropriate disclosures.

The Ecuadoreans also repeated accusations that Chevron engineered a judicial entrapment scheme by having a convicted drug felon, Wayne Hansen, and Chevron contractor, Diego Borja, tape an ex-parte meeting with Lago Agrio Judge Juan Nunez.

Chevron seized on the video as evidence of a bribery scheme, though a New York Times journalist later summarized the hours of footage by saying, "No bribes were shown on the tapes."

Reiterating its reply brief, Chevron denied wrongdoing, saying the "allegations - of supposed testing irregularities, purported ex parte judicial contacts, and alleged involvement in taping the Lago Agrio judge soliciting bribes - are false."

Another recently filed Chevron brief states that the Ecuadoreans have used the credibility problems of the cameramen as a cudgel against the company.

"In an Aug. 31, 2009 email, [lawyer Julio] Prieto stated that defendants hoped to turn the 'big problem' of Borja's revealing videos into an attack on Chevron, writing, 'from the biggest crisis, we can get the greatest advantage," the brief states.

The government of Ecuador hopes to discover more evidence that links Chevron to the cameramen in hushed proceedings in the Northern District of California.

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