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The ‘Fraud Of The Century’ Finally Reaches The End Of The Line

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After clogging up the Canadian court system for seven years, an utterly corrupt multibillion-dollar lawsuit against California-based oil company Chevron on behalf of “poor Ecuadorean villagers” was finally dismissed by the Ontario Superior Court of Justice last Friday.

The suit, dubbed “the fraud of the century” by The Wall Street Journal, related to pollution caused by Texaco — a company that Chevron acquired in 2001 — when Texaco had been operating in Ecuador before 1992.

In fact, Texaco had paid for — and the Ecuadorean government had agreed to — remediation payments, but then a buccaneering American lawyer named Steve Donziger got into the act.

A classmate of Barack Obama, Donziger engineered a US$9.5-billion judgment against Chevron in Ecuador.

He had no trouble recruiting then-Ecuadorean president Rafael Correa to the cause. Correa, a typical leftist caudillo, was already well acquainted with environmental blackmail.

In 2010, his government, with the backing of the United Nations, suggested that unless the international community paid Ecuador US$3.6 billion, it would have no alternative but to bulldoze its own rainforest. The international community demurred.

Donziger recruited a raft of B-list celebrities — including Danny Glover, Mia Farrow and Trudie Styler (Mrs. Sting) — to be escorted to the alleged “Chernobyl of the Amazon” and express requisite outrage.

Donziger knew that big corporations, faced with complex lawsuits and a media circus, often simply pay up rather than risk brand damage. Chevron, by contrast, and commendably, said it would fight Donziger until hell froze over, then continue fighting on the ice.

The company brought a civil suit against Donziger in the U.S. and in March 2014, the District Court for the Southern District of New York found that Donziger had obtained the Ecuadorean judgment via extortion, money laundering, wire fraud, Foreign Corrupt Practices Act violations, witness tampering and obstruction of justice.

Donziger appealed but the damning judgment was upheld. Southern District Judge Lewis Kaplan stated that: “The wrongful actions of Donziger and his Ecuadorean legal team would be offensive to the laws of any nation that aspires to the rule of law.”

He was perhaps looking north, where the case was meandering through the Canadian system.

Donziger had secured the services of a reputable Toronto lawyer, Alan J. Lenczner, who proceeded to take the ritual tour of Ecuadorean oil pollution and return with claims that he had “seen the devastation.”

However, any devastation had been caused by state oil company Petroecuador, which had been operating in the area since Texaco’s departure and had been responsible for some 1,200 oil spills.

Perhaps Lenczner’s most bizarre suggestion was that Chevron was a very rich company, so why not just pay up?

Donziger had had no shortage of local Canadian support. Pink Floyd’s Roger Waters was flown in to provide low-wattage celebrity.

Solidarity was rapidly established with Indigenous anti-pipeline groups. Greenpeace and Unifor piled on. The plaintiffs had no trouble attracting the sympathies of the Toronto Star.

Canadian Aboriginal leader Phil Fontaine was signed on for his consultation services. Fontaine’s partner, University of Calgary law professor and “human rights activist” Kathleen Mahoney organized a conference in Banff to put “pressure to bear on Chevron to come to the table.”

Truth and justice be damned. There was anti-corporate, pro-Aboriginal, pro-Banana Republic posturing to be done. Meanwhile, the wheels of Canadian justice continued to turn, at times imperceptibly.

In 2013, Ontario Justice David Brown had ruled that the case had no place in Canada, not because the suit was corrupt, but because even if it was valid, Chevron’s Canadian assets were not, under Canadian law, available to be pillaged.

Justice Brown’s decision was overturned on appeal. Chevron took the appeal to the Supreme Court. The Supreme Court allowed the case to go back to Ontario on the basis of adopting “a generous and liberal approach to the recognition and enforcement of foreign judgments.”

Even, apparently, if those judgments stunk to high heaven and had no hope of success. The Supremes’ liberal generosity towards Ecuador stood in distinct contrast to a decision last August by the international court in the Hague that Ecuador had violated its obligations under international law.

After bouncing around through several more rounds in Canada, the case has now been abandoned for good, with Chevron to receive costs. Attempts to pursue the case in Brazil, Argentina and Gibraltar have also been thrown out.

Donziger, meanwhile, having been disbarred and having persistently refused to comply with U.S. court orders to stop raising money for his assault on Chevron, provide details of his backers, or surrender his passport, may now — at long last — be facing jail time.

As for those poor Ecuadorean natives, they may be worse off than ever, but we should remember why they were poor: because they have lived under a corrupt socialist regime where the rule of law is too often whatever caters to political power, public prejudice or judicial activism.

Canada isn’t quite there yet, but the lesson here isn’t just that justice rides a slow horse, it is that the most baseless of cases — especially if they involve the words “Indigenous” and “environment” — can tie up business for years. Canadian pipeline companies already know that.

The courts have become not so much remedies against extortion as conduits for it.

Read more at Financial Post


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