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Ecuador Lawsuit Report has Fabricated Evidence, Tainted By Political Pressure

Cabrera Findings Lack Scientific Basis, Was Developed in Collusion with Plaintiffs and Their Attorneys and Helps Government Avoid Its Remediation Responsibilities

SAN RAMON, Calif.--(BUSINESS WIRE)--Sept. 15, 2008--Chevron Corporation (NYSE:CVX) today said that a key report submitted to a court hearing in an environmental lawsuit in Ecuador contains fabricated and erroneous evidence. The document also has exaggerated claims for damages and was developed in collusion with the plaintiffs and their U.S. attorneys. The company has urged the court to reject its findings because the author "produced an advocacy report for the plaintiffs, not a competent or impartial review of evidence."

In filing its response to a report by Richard Cabrera, which was requested by the Superior Court in Nueva Loja, Ecuador, the company said:

  • Cabrera manipulated and altered findings to justify false conclusions, including backdating photos;
  • He presented no evidence of pollution by Texaco Petroleum, erroneously assigning $1.4 billion in remediation costs to pits he did not visit and do not exist;
  • He presented no evidence to support cancer claims -- neither identifying a single individual nor including a single medical report;
  • He did not take a single drinking water sample to establish contamination, yet he assigned $428 million in damages to be paid to improve Ecuador's potable water system;
  • Plaintiffs helped Cabrera compile the report, accompanying and assisting him on field trips, influencing the content of his report by providing him methodological tools such as questionable surveys and pre-written reports to use as report exhibits;

The executive summary to the report can be found at www.chevron.com.

"The findings of the Cabrera report are clearly fraudulent and intended to cause damage to this U.S. company and its shareholders," said Charles James, Chevron's general counsel. "This report would not withstand scrutiny -- be it technical, scientific or legal -- in any responsible, independent court anywhere in the world.

"What's more, plaintiffs ensured his work was conducted in an atmosphere of intense political and presidential pressure to avoid government remediation responsibilities, procure an exorbitant judgment for local residents against a foreign company and enhance the bank accounts of plaintiff lawyers. The pro-plaintiffs bias, the lack of supporting data and scientific rigor, and the political interference are all duly reflected in Mr. Cabrera's report and findings."

The court asked Cabrera to conduct the report after the plaintiffs prematurely aborted a judicial-inspection process of alleged pollution from Texaco Petroleum's operations. Chevron objected to the appointment, arguing he was not qualified and was biased in favor of the plaintiffs.

The judicial-inspection process was demonstrating that remediation conducted by Texaco Petroleum, acquired by Chevron in 2001, was properly conducted at sites in the 1990s. That remediation plan and work was approved by the government of Ecuador and Petroecuador in 1998.

Texaco Petroleum turned over operation of the Ecuador oil operations to Petroecuador in 1990 and complete ownership of the assets to Petroecuador in 1992. Petroecuador has had a woeful track record of spills and has not completed environmental remediation of sites. This is Petroecuador's responsibility not Chevron's.

Chevron has sought to have the case dismissed in Ecuador, citing judicial misconduct, interference in the case by the country's executive branch and denial of a right to fair trial.

Note to Editors

In preparing its legal rebuttal, Chevron used 12 reports by experts in a variety of disciplines, including economists, anthropologists, ecologists, analytical chemists, remediation engineers, epidemiologists and a remote sensing expert. The company's rebuttal also uses two peer-reviewed publications to refute cancer claims and employed the services of experts such as Professor Douglas Southgate of Ohio State University and Dr. Michael Kelsh of the University of California at Los Angeles.

Here are additional details regarding flaws found in the Cabrera report and the unjust claim for damages ranging from $8 billion to $16 billion:

1. Lack of Causation. Cabrera completely ignored his court-ordered mandate to determine causation and chronology of environmental conditions. Instead, he just arbitrarily assigned liability to Texaco for every instance of environmental impact in the former concession areas. By ignoring chronology and causation, Cabrera even makes Texaco Petroleum (Texpet) liable for all environmental impact caused solely by Petroecuador during its 18-plus years of operation of the concession.

2. Failure to Inspect and Falsifying "Evidence." Cabrera ignored court orders that he must inspect every site, visiting only 48 of 316 wells and one of 19 production stations. Instead, Cabrera reviewed aerial photos to identify pits and used those photos incompetently and dishonestly. For example, Cabrera submitted certain aerial photos with his report and declared that various items in the photos -- like trees, tanks and shadows -- were pits. He also submitted photos of pits constructed by Petroecuador after 1990, backdated the photos to the 1970s and declared that the pits were constructed earlier by Texpet. Cabrera, therefore, intentionally grossly overstated the number of pits.

3. Arbitrary Determination of Remediation Scope. With no justification, Cabrera arbitrarily concluded that 80 percent of well pits and 100 percent of production-station pits need to be remediated, regardless of past or current remediation efforts. Cabrera then further fabricated and overstated the magnitude of remediation required for each pit, arbitrarily assuming that each pit needs to be remediated to a depth of 4 meters (13.12 ft) and also that an area around each pit of an additional 50 percent of the pit surface area needs to be remediated.

4. Gross Overstatement of Remediation Cost. Cabrera grossly overstated the cost to remediate pits. Though Petroecuador has been remediating pits to Ecuador standards for approximately $85,000 per pit, Cabrera recommends remediation costs of more than $2.2 million for each of the pits.

5. 90 Percent of Damages Unrelated to Task. Even though Cabrera's recommended remediation cost of $1.7 billion is wildly overstated, that figure is only approximately 10 percent of the total damages he recommends. The remainder of Cabrera's alleged damages and proposed remedies are unrelated to the environmental impact that the court ordered him to assess. For example, well beyond his perceived or imagined expertise, Cabrera recommends millions of dollars in damages based on his undocumented and uninvestigated claim that Texpet's workers committed human rights violations against the local population.

6. Fabricated Cancer Claims. Cabrera's recommendation of $2.9 billion for alleged "excess cancer deaths" is completely fabricated. Cabrera does not identify a single individual, offer a single medical report or provide a single fact to support this conclusion. Cabrera also disregards official Ecuador health statistics showing that the cancer rate in the former concession area is no different from that of other regions. His recommendation is based entirely on biased surveys, conducted in secret by unknown individuals, the results of which he improperly extrapolated over an assumed population.

7. Arbitrary and Excessive Budgets for Medical Facilities. Cabrera's recommendation for $480 million for a healthcare system endowed for 50 years and overseen by an unidentified "assembly" has no basis, and there are no plans or facts justifying any aspects of the cost.

8. No Basis for "Indigenous Population Impacts." Cabrera inexplicably recommends $430 million to repair supposed impacts on indigenous culture, despite that none are related to Texaco Petroleum's operations. This includes buying back land for the indigenous people, even though the government of Ecuador gave this land to settlers for the express purpose of establishing communities and agriculture in the region.

9. Unjustified Assessment to Improve Petroecuador's Infrastructure. Cabrera inexplicably recommends $375 million to improve Petroecuador's infrastructure, despite that Petroecuador conducted an audit and certified that the facilities that Texpet turned over to it were in good condition. Cabrera also ignores Petroecuador's demonstrated and acknowledged record of failing to invest necessary resources to maintain its equipment and facilities.

10. No Basis Whatsoever for Unjust Enrichment. Cabrera completely fabricated a claim for unjust enrichment damages of $8.3 billion. There is no basis for the claim and no foundation for the number, especially considering that the Republic of Ecuador enjoyed 95 percent of the profits from the concession's operations, and that Texpet earned only $490 million in profits over the entire history of the concession.

CONTACT:
Chevron Corporation
Kent Robertson, +925-842-1695 (San Ramon)

SOURCE: Chevron Corporation