'60 Minutes' Promotes $27-Billion Leftist 'Fraud' Efforts Against Chevron

When $27 billion is at stake, some companies would pay big bucks to win a PR battle, but one side of an environmental lawsuit doesn't have to, since CBS is pushing its position for free.

On CBS's May 3 "60 Minutes," correspondent Scott Pelley, who once compared global-warming skepticism to Holocaust denial, gave the plaintiff of a $27-billion frivolous lawsuit against Chevron a public relations victory with his report.

Pelley's report featured a suit filed by the Amazon Defense Coalition, a group described as "eco-radicals," who are trying to squeeze $27 billion from Chevron for environmental cleanup that the nation's government signed off on more than a decade ago. Pelley described ADC as working on behalf of 30,000 villagers, although there are only 48 named plaintiffs, to win funds for so-called environmental damage in Ecuador's rain forest from then-Texaco Petroleum's (Texpet) operation of oil well sites.

Pelley left out everything from huge problems in the Ecuadorian courts to the close ties the lead attorney has with a prominent former U.S. senator - President Barack Obama.

In 1998, the government of Ecuador certified that Texpet, a minority partner in an exploration and production venture with PetroEcuador, Ecuador's state-owned oil company, had met Ecuadorian and international remediation standards and had released Texpet from future claims and obligations. Texpet had cleaned up more than 100 sites in the area as part of that effort, leaving the remainder to PetroEcuador for cleanup.

Nonetheless, a suit led by Steven Donziger, a New York plaintiff's lawyer, Democrat contributor and former Harvard Law School classmate of President Barack Obama, against Texaco, now part of Chevron (NYSE:CVX), is entering its critical stage and could be ruled on by a court in Ecuador very soon. and

Pelley gave a heavily one-sided report and featured six individuals who had a stake in the outcome against Chevron, versus just one spokeswoman for the defendant - Silvia Garrigo, Chevron's manager of global issues and policy.

Misleading Evidence

The "60 Minutes" segment included footage from a native Ecuadoran, Manuel Salinas, who contended that pollution from one of the oil well sites in question made his water undrinkable.

"Manuel Salinas' house is next to one of those pits," Pelley said. "He's one of 30,000 people suing Texaco's owner, Chevron. He says the pollution leaked into his water well."

"We couldn't drink the water," Salinas had said to "60 Minutes."

However, Salinas lives next to a PetroEcuador site and tests from both Chevron and the plaintiff suing Chevron's show Salinas' well (see Table 1, GW-1 Sample) was not contaminated with hydrocarbons, but fecal coliforms (see Table 3A).

That was just part of the flawed evidence Pelley relied on for the "60 Minutes" segment. The entire $27-billion suit centers around the report of Richard Cabrera, who conducted tests for the Ecuadorian government.

"Why $27 billion?" Pelley said. "That astounding figure comes from Richard Cabrera, a geological engineer, appointed by the Ecuadorian court who conducted field inspections to assess the oil damage."

However, as pointed out by Donald Campbell, a representative from Chevron, and ignored by "60 Minutes," there are flaws and conflicts of interest that would put the credibility of Cabrera's report in question:

• Major sections of Cabrera's report are copied directly from plaintiff's lawyers' filings;
• Members of the Amazon Defense Coalition, an environmental activist organization, staffed Cabrera's field team and paid him $200,000 for his report;
• He proposes a fine associated with cancer impacts, despite not identifying a single individual with a cancer diagnosis or medical documentation to support this claim.

Footage Not Texaco Sites, but PetroEcuador sites

Throughout Pelley's account, footage was shown that included at least 13 images of currently polluted pits, none of which were Texaco-remediated sites, but weren't attributed to PetroEcuador either. According to Campbell, the polluted sites Pelley featured were PetroEcuador's Lago Agrio 5 and one of the Shushufindi sites.

"In Texas, for example, pits like this one are supposed to be temporary, isolated from fresh water, and soon after emptied and backfilled," Pelley said, showing a site PetroEcuador had agreed to remediate under their agreement with Texaco. "But in Ecuador this pit has been here for 25 years and we found it's actually designed to overflow into streams."

Only 10 seconds of footage was shown from only one Texaco-remediated site, but Pelley had told Chevron he was too busy to visit a Texaco-remediated site personally.

"If Pelley would have spent 60 minutes at a Texaco-remediated site, he would have had a different story," Campbell said.

That's in part because PetroEcuador has a horrendous environmental record with more than 1,000 oil spills since 2000. In 2006, BusinessWeek said the company had "suffered an oil spill every two days this year."

'60 Minutes' Gives Pass to Ecuadoran Justice System

The case will be heard by Juan Nunez, a judge in Lago Agrio, Ecuador. The ruling could come at anytime and Chevron is doubtful it will get a fair ruling. Pelley's investigation took him to the Ecuadoran court, but he didn't press the judge on the government's poor reputation for fair justice.

"So who is the $27-billion judge? We found Juan Nunez in his court on the third floor of this shopping mall in the Amazon town of Lago Agrio," Pelley said. "Texaco named the town for Sour Lake, Texas where Texaco got its start. Nunez struck us as serious and thoughtful. He's been on the case for a year and he's been out to the waste pits. The verdict will be his decision alone. There is no jury."

Pelley inquired to Nunez if Chevron would get a fair hearing, explaining Chevron felt otherwise.

"That is not the case," Nunez replied through a translator. "I believe that justice has to be given to everyone as they deserve - like a good father of a family, to give a child what a child is entitled to."

However, there is no independent rule of law in Ecuador. The country's judiciary branch is controlled by its leftist, anti-American president, Rafeal Correa, who came to power in January 2007. Correa had actually called those who brought the suit against Chevron "heroes" according to "60 Minutes," showing there's no impartiality by the Ecuadoran government.

A report by the U.S. State Department issued in March 2008 gives the Ecuadoran judiciary very low marks.

"Systematic weakness and susceptibility to political or economic pressures in the rule of law constitute the most important problems faced by U.S. companies investing in or trading with Ecuador," the report states.

It also states "criminal complaints and arrest warrants against foreign company officials have been used to pressure companies involved in commercial disputes" and notes its susceptibility to bribery.

Other criticisms of the country's judiciary have come from the International Bar Association and the United Nations Commission on Human Rights. Yet, Pelley didn't press Nunez on perceived weaknesses of the Ecuadoran courts.

Cancer Claims Neglected

One-third of the award proposed by Cabrera in the suit, $9 billion is slated for cancer claims, even though no cancer claims are made in the suit. That component was glossed over by Pelley but it is the heart of the claims against the firm.

"Cabrera figures $9 billion should go to clean up, plus new health and water systems," Pelley said. "He says another $9 billion should compensate for cancer deaths, even though the lawsuit doesn't make any cancer claims."

However, as Michel Kelsh, a health researcher and professor at UCLA's School of Public Health and Chevron consultant discovered, there's no evidence of this has created a spike in cancer - making Cabrera's $9-billion figure a gross exaggeration.

"We looked at cancer mortality rates in the Amazon region in general, and we compared those rates to Quito, and we found that the Amazon region has much lower cancer rates," Kelsh explained on behalf of Chevron. "We also compared the regions where there were oil activities in the Amazon to regions where there were no oil activities and really found no differences. We actually found slightly lower rates of cancer in these regions."

Cancer awards had been sought from Chevron before and have been knocked down by a federal judge in the United States, a key point omitted by Pelley.

In September 2007, a U.S. district court San Francisco dismissed nine cancer allegations against Chevron and the judge termed the claims "baseless." Their "inquiry," he said, "was so minimal, as to be unreasonable and incompetent."  The lead attorney, Cristobal Bonifaz, a former partner of Donziger was sanctioned and ordered to pay Chevron $45,000.