press release

Lago Agrio Plaintiffs’ Consultants Concede that $113 Billion Damages Claim Lacks Scientific Basis

SAN RAMON, Calif., Dec. 23, 2010 – Admissions during court-ordered depositions of the plaintiffs’ own consultants confirm there is no scientific basis for the $113 billion damages claim in litigation pending in Lago Agrio, Ecuador.  Over the last two weeks, attorneys for Chevron Corporation (NYSE: CVX) questioned the six consultants credited with the latest damage assessment.  The sixth consultant was deposed yesterday.

In filings this week in Lago Agrio, Chevron submitted deposition transcripts to the Court and called for the damages assessment to be rejected in its entirety.  Among the most obvious flaws with the assessment is the consultants' overwhelming reliance on the discredited "Cabrera Report," a court-ordered "independent" assessment of environmental conditions of the Oriente region of Ecuador.  The report was allegedly authored by Richard Stalin Cabrera, a mining engineer.  In recent months, however, "Cabrera's" report has been shown to be a fraud principally ghostwritten by Stratus Consulting, a Colorado-based environmental firm working directly for the plaintiffs' lawyers.

"These new assessments are an attempt to bring the plaintiffs' lawyers' false evidence back into the Lago Agrio Court under the cover of new names and indefensible numbers," stated R. Hewitt Pate, Chevron vice president and general counsel.  "At this point, the plaintiffs' lawyers have no legitimate evidence to advance their claims, so they've resorted to a shell game."

Under direct questioning from Chevron attorneys, the five plaintiffs' consultants conceded that their work is factually baseless and does not support the plaintiffs' absurd financial claims.  More specifically:

• When asked what the scientific basis was for assuming that an excess risk of cancer existed in Lago Agrio from 1967 to 1987, Dr. Daniel Rourke, who wrote the plaintiffs' $69 billion submission about excess cancer risk, testified, "It's an assumption of the calculations.  There is no scientific basis."  Dr. Rourke said that he was "not offering the opinion that Chevron took any action that actually caused anybody to get cancer."  Rourke explained that he was never even asked to try and estimate any number of excess cancers allegedly caused by Texaco oil operations.
• Consultant Jonathan Shefftz testified under oath that he was "not making any sort of analysis" of alleged "unjust enrichment" in the case, despite the fact that the plaintiffs' lawyers claimed his report assessed up to US$37.86 billion in unjust enrichment.  Rather, Shefftz used "random" numbers for his mathematical calculations because he did not have "any opinion on—on what the true underlying values are."
• Douglas Allen, another of plaintiffs' consultants, refused to say that the alleged $1.86 billion remediation costs in his report reflected actual costs: "I am not telling you these are actual costs, I'm telling you that this is the conceptual and potential range of costs for cleaning up soil in the concession area … based upon the assumptions and the uncertainties and limitations of my valuation."  Mr. Allen repeatedly described his report as merely "conceptual."
• Dr. Lawrence Barnthouse, testified that he reviewed the Cabrera Report but performed no damages assessment of his own.  He admitted that the methodology Cabrera used was "an unreliable indicator," "[s]uboptimal[, and] inadequate," and he "did not conclude anything about the validity" of the Cabrera Report's claim of $1.7 billion in ecosystem damages, other than that the numbers in the Cabrera Report "were uncertain."
• Dr. Emilio Picone admitted that the methodology used in his report, which the plaintiffs lawyers use to claim $1.4 billion in health care costs, was "rudimentary at best," and "doesn't provide you any estimate of the amount of health care costs associated with petroleum exposure."  In fact, Dr. Picone "didn't reach the conclusion that health care needs of the population in the Oriente can be tied to Texaco's operations."  He further conceded, when confronted by the lack of evidence for his opinion, that "for American courts, you truly need to have more data to support whatever you're indicating."

Deposition testimony further revealed that the plaintiffs' lawyers' $113 billion assessment relies extensively on the Cabrera Report.  Allen, for example, testified that the plaintiffs' representatives said that he should use the Cabrera Report as a "starting point."  Shefftz's report likewise depends upon "data and cost figures from the Cabrera report."  Dr. Barnthouse also conceded that much of the information he used was "only available from the Cabrera Report," And, like other consultants, Dr. Barnthouse did nothing to assess the validity of any of the assumptions made in the Cabrera Report, he simply "assume[d] that [Cabrera] was correctly characterizing" relevant environmental standards. Shefftz admitted that he "was not engaging in any exercise to verify [Cabrera's] data series or his cost figures.  I was just using them in my report."   In fact, he confessed that he did not "know one way or the other whether they're correct or not," conceding that his "results depend, in part, on the accuracy of [Cabrera's] data series and [Cabrera's] cost figures."

It is now indisputable that the plaintiffs' lawyers' September 16, 2010 filing with the Lago Agrio Court is an attempt to whitewash their prior, unlawful collusion with the court-appointed "independent" expert.  The new, $113 billion "assessments" are even more extreme and scientifically unreliable than the fraudulent $27.3 billion Cabrera report from which they admittedly are derived.  By ignoring the role of Petroecuador as the majority owner of the consortium during Texaco's time in Ecuador and as the sole owner and operator of the oil fields for the last 20 years, the new reports continue the joint efforts of the plaintiffs and the government of Ecuador to deflect attention from the state-owned oil company that bears sole responsibility for all remaining environmental impacts outside the scope of Texaco's remediation in the 1990’s.  The plaintiffs' consultants conceded under oath that Petroecuador's role in oil production should not have been overlooked and that, had it been considered, it would have affected their reports.

Copies of the Chevron filings and the deposition transcripts can be accessed at http://scr.bi/hWSbi3.

Chevron is one of the world's leading integrated energy companies, with subsidiaries that conduct business worldwide. The company's success is driven by the ingenuity and commitment of its employees and their application of the most innovative technologies in the world. Chevron is involved in virtually every facet of the energy industry. The company explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels. Chevron is based in San Ramon, Calif. More information about Chevron is available at www.chevron.com.

Published: December 2010