Nicolás Zambrano Lozada

No-show judge bolsters Chevron's attack on $19 billion judgment

May 17, 2013: 12:10 PM ET

The Ecuadorian judge who awarded the environment judgment against Chevron was a no-show witness for a deposition in Peru.

By Roger Parloff, senior editor

<> on July 27, 2012 in San Francisco, California.FORTUNE -- The former Ecuadorian judge who signed his name to a $19 billion environmental judgment against Chevron in February 2011 failed to show up to testify about whether he really wrote it on Thursday.

The judge's failure to appear at a deposition, scheduled to occur in Lima, Peru, will likely imperil the judgment's perceived legitimacy in the eyes of U.S. judges and, possibly, those of some other judges around the world.

Based on evidence Chevron (CVX) has introduced in a civil Racketeer Influenced and Corrupt Organizations Act (RICO) case in federal court in Manhattan, U.S. District Judge Lewis Kaplan held in March that there was probable cause to believe that the judgment, which the Amazon Defense Front is currently trying to enforce against the oil giant in the courts of Canada, Argentina, and Brazil, was in fact secretly written by the Front's own lawyers, who were allegedly given that opportunity by the then presiding Ecuadorian judge, Nicolás Zambrano Lozada, in exchange for a promise of $500,000 from the recovery.

Last month, lawyers for the Front filed in Manhattan federal court a six-page written declaration signed by Zambrano asserting that he had, in fact, written the ruling himself and denying acceptance of any proffered bribes. But Zambrano's failure to defend his assertions in person and under cross-examination yesterday make it likely that his declaration will be stricken from the record and accorded no evidentiary weight. (Judge Kaplan ordered that depositions of Ecuadorian witnesses in the Manhattan RICO case be held in Lima, Peru, rather than Ecuador, in the face of evidence that Chevron lawyers would face reprisals and possible criminal prosecution if they set foot in Ecuador.)

"Given the unchallenged evidence proving he let the Ecuadorian plaintiffs write their own $19 billion judgment," says Chevron lawyer Andrea Neuman in an email, "Judge Zambrano's refusal to testify is more predictable than surprising. The other members of the plaintiffs fraud team -- [lead Ecuadorian lawyer] Pablo Fajardo and [community liaison] Luis Yanza -- have likewise refused to testify on behalf of their clients or their 'judgment.'" Neuman is a partner at Gibson Dunn & Crutcher.

A spokesman for the Front, Bill Hamilton of Fenton Communications, says in an email: "It's my understanding that Zambrano ... will not agree to go to Peru because someone he never met in the United States has decided he should do a deposition in Lima instead of the country where he lives and works. I believe he has expressed a willingness to be deposed in Ecuador at a time and place that is of reasonable convenience to him. He is not, of course, obliged to do that, either, since he is not a party to the sideshow underway in New York."

MORE: Chevron seeks to sue Patton Boggs for fraud and deceit

In light of Zambrano's failure to show, Chevron will likely renew a motion for partial summary judgment concerning the judgment's fraudulence and invalidity. (Judge Kaplan has twice denied such motions by Chevron, but said he would revisit the question at the close of discovery in early June.)

Evidence of apparent irregularities in the Ecuadorian judgment arose within days of its issuance by a provincial court in Lago Agrio, Ecuador, in February 2011. Chevron  noticed initially that numerous measurements cited in it concerning alleged contamination were erroneous, and that the mistakes consistently matched errors contained in the Front's internal database, to which the Ecuadorian judge had no legitimate access. In addition, large passages from an internal Front legal memo appeared to have been lifted verbatim into the ruling, though the memo had never been introduced into the court record. (Chevron had obtained the internal Front memo when Judge Kaplan permitted it to mirror the computer hard drives of Steve Donziger, the Front's lead U.S. lawyer and strategist in New York.)

At the time, the Front's then spokesperson, Karen Hinton, told me in an interview that Chevron's accusations of irregularities were "crap" and that all of the references in the judgment were drawn from material properly introduced in evidence, though the Front did not have the resources or manpower to immediately find those sources in the non-digitized 200,000-page record.

In the ensuing months, Chevron found additional verbatim liftings from at least six other internal Front memos in the judgment, appearing on a total of at least 55 of the judgment's 188 pages. Chevron filed statements from forensic experts attesting that the lifted passages appeared nowhere in the entire court record.

Front lawyers then conceded that the memos had never been introduced into the record by the Front, but suggested that Chevron may have somehow given these internal Front documents to Judge Zambrano, perhaps as a setup, hoping he would plagiarize the materials and thereby give Chevron a basis for attacking the judgment if it proved unfavorable to Chevron.

MORE: Why Chevron's win in Canada might be big

Chevron then also found, and introduced in court, emails in which Front lawyers appeared to have discussed the writing of the judgment. In June 2009, for instance, Fajardo wrote Donziger that he was assigning an intern some research "for our legal alegato and the judgment, but without him knowing what he is doing." (An alegato is a party's final briefing to the court.) Subsequent emails made other veiled references to preparation of the judgment, Chevron contends, referring to "the alegato and the other project," the "alegato and the bonus," and "the alegato and ... "

In February 2012, about a year after signing the judgment, Judge Zambrano was thrown off the Ecuadorian bench for allegedly having improperly released an accused drug trafficker on bail, allowing him to abscond. Two months later, Chevron was approached by a different former Ecuadorian judge, Alberto Guerra Bastidas, who said he had important information for them.

In November 2012 Guerra signed an affidavit giving a remarkable inside account of alleged bribery and fraud in connection with the writing of the judgment, and Chevron submitted that affidavit in Manhattan federal court last January, along with copious supporting materials. (Earlier this month Guerra testified at a deposition in the RICO case, submitting to cross-examination by the Front's lawyers.)

Chevron acknowledged at the time it filed Guerra's affidavit that Chevron had paid Guerra $38,000 for the evidence he supplied corroborating his story, including hard drives, flash drives, and laptops, as well as bank, courier, and telephone records. Chevron also committed to paying Guerra's living expenses for two years in the United States, since Guerra and his immediate family would have to flee Ecuador and seek asylum in the United States to make these admissions without facing criminal proceedings and possibly other reprisals in Ecuador.

Guerra had been a presiding judge in the Chevron case at an early stage, but he was thrown off the bench in May 2008, after he was overheard making derogatory comments about the merits of the plaintiffs case against Chevron in social conversation. (The Ecuadorian records surrounding both Guerra's and Zambrano's dismissals have been filed in court by Chevron.)

In August 2008 Zambrano was appointed to the same bench where Guerra had served. Zambrano had been a prosecutor who practiced before Judge Guerra earlier in both of their careers. Because Zambrano was not confident of his command of civil law, Zambrano and he struck an agreement whereby Guerra would secretly write Zambrano's opinions for him in civil cases in exchange for about $1,000 a month, according to Guerra. (The hard drives and flash drives that Guerra supplied to Chevron contain, according to forensic reports Chevron has filed in court, at least 103 court rulings that Guerra ghostwrote for Zambrano in various civil cases at both the trial and appellate level between May 2008 and February 2012, including at least nine rulings in the Chevron case. In each instance, according to the forensic experts, the files had been created on Guerra's drives and had been last saved only a few days before the opinions were formally issued by the Ecuadorian court under Zambrano's name. Chevron has also submitted courier records showing packages from Guerra regularly being delivered to the provincial court where Zambrano sat.)

MORE: Experts for Ecuadorian plaintiffs suing Chevron disavow all their scientific findings in the case

According to Guerra, in around October 2009 Zambrano asked Guerra to approach Chevron seeking a bribe in order to make rulings favorable to it. (They approached Chevron first, according to Guerra, because they knew it had more money than the Front.) Chevron's outside lawyers rebuffed the approach, but made contemporaneous, notarized records of the approach, which Chevron filed in court with the Guerra affidavit.

Guerra writes that he then struck a deal with Fajardo in which he would write rulings favorable to the Front in exchange for $1,000 a month. The payments were made either in cash or through deposits directly into Guerra's account, according to Guerra.

During this period, there are several emails between Donziger and Fajardo that refer to the "puppet" and the "puppeteer" -- which Chevron says are veiled references to Guerra and Zambrano. "The puppeteer won't move his puppet until the audience doesn't pay him something," Fajardo writes in one, for instance, in late October 2009. Two days later, a $1,000 payment is made into Guerra's account, according to Guerra's bank records, which have been filed in court. Chevron has documented several such $1,000 payments made into Guerra's account which it says represent the Front's bribe payments, and on one of these deposit slips the depositor's national identification number -- something like the Ecuadorian version of a Social Security number—allows identification of the depositor as a woman who then worked in the Front's Quito office, according to Chevron. The Front's lawyers have not offered any explanation of these payments in court.)

In his affidavit, Guerra also recounts a meeting with Fajardo, Donziger, and Yanza at a restaurant in Quito where, he writes, "Mr. Donziger thanked me for my work as ghostwriter in this case and for helping steer the case in favor of the Plaintiffs'." (In March, Donziger submitted a terse, five-paragraph affidavit denying that this occurred. "I am unaware that Guerra has ever ghostwritten opinions in the Lago Agrio litigation; I am unaware of any 'help' by Guerra to 'steer' the decision in favor of the plaintiffs . . . ; and I never thanked Guerra for these things."

In August 2010, according to Guerra, as the case was nearing completion, Zambrano and he decided to seek a large bribe for a favorable final judgment. Guerra approached Chevron again, but was rebuffed, and so he then met with Fajardo, Yanza, and Donziger at the same restaurant in Quito. Here, according to Guerra, an agreement was struck whereby Guerra and Zambrano would let the plaintiffs write their own judgment in exchange for a promise of $500,000 from any eventual recovery. (In his own very brief declaration, Donziger acknowledged that this meeting took place, and that Guerra sought a $500,000 bribe there, but he wrote, "I refused Guerra, and told him that neither I nor anyone on the Lago Agrio plaintiffs team would do such a thing." He added, "I have never sought to pay any money in exchange for a favorable verdict in the Lago Agrio litigation, nor have I encouraged or solicited anyone else to discuss or pursue paying money for a favorable verdict.")

After Zambrano was thrown off the bench in February 2012, Guerra writes in his affidavit, Zambrano asked Guerra to approach Chevron about admitting what had happened in exchange for receiving some payment. At some point, however, Zambrano backed out, Guerra wrote.

In April the Front submitted an affidavit from Zambrano stating that he had written the opinion himself. He did not address whether Guerra had ever written any of his opinions in civil cases, and did not offer any explanation for why 103 of Zambrano's court rulings might appear on Guerra's computer drives, or for why Guerra would be meeting with the Front's lawyers during periods when Zambrano was presiding over the Chevron case. Zambrano also alleged in his declaration that "occasionally documents related to the case that were not incorporated into the process were left at the door of my office at the court," and "some folders indicated that they were courtesy of Chevron." Thus, Zambrano seemed to imply, maybe that was how passages from the Front's internal memos wound up in his opinion. He also alleged that an attorney who said he represented Chevron had offered him "a minimum of a million dollars to start, or for me to name the amount, whatever I wanted," to give "a statement in favor of Chevron."

Chevron moved to strike the Zambrano affidavit as inadmissible hearsay. Judge Kaplan denied the motion, but without prejudice to renewal if Zambrano failed to appear for his scheduled deposition.

Yesterday Zambrano failed to appear.

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