Chevron Witness Pay: Is It Really Hush Money?

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Chevron’s army of lawyers isn’t its only weapon in staving off the demand of Ecuadoran peasants that the company clean up its toxic drilling mess in the Amazon. Chevron is also happy to use deception, secret video and dirty tricksters. The problem with  tricksters, however, is that it can be hard to keep them in the fold, and they can be so darned greedy. Consider the tale of secret videotaper Diego Borja, and the “expense money”of at least $169,000 that Chevron has heaped on him since August 2009.

It was sometime Chevron contractor Borja who delivered a trickster videotape to Chevron that showed the Ecuadoran judge who’s hearing the Chevron case speaking with Borja and an associate, who are posing as oil cleanup contractors.  A politician who seems to agree to take a bribe claims it will be shared with the judge, though the judge isn’t in that meeting.  It sure looked like a sting. And it sure seemed logical that Chevron had the most to gain from setting it up, right down to the pen-cams.

Chevron had admitted earlier that it paid for Borja to relocate to the U.S., near Chevron’s California headquarters. And paid some of his expenses. But the U.S. legal publication Daily Journal recently reported that Chevron and its outside law firm, Day Jones, had actually paid Borjas at least $169,000, including $5,000 a month in cash, $1,600 in rent, $700 a month for his car, his legal expenses and a $45,000 lump sum to pay his taxes. The payments, revealed in a legal filing that was only briefly public, were fuzzy on the issue of another $10,000 a month in direct payment, which would bring the total to $340,000.

Dang, I wish I had the income to pay that much in taxes, which of course are fresh in mind right now. But if the income is really hush money–Borja has reportedly told others of additional dirty work for Chevron–Chevron could be in trouble. Such payments may even threaten the legality of the federal injunction (WSJ subscription barrier) holding up payment of  billions of dollars in damages assessed on Chevron by the Eduador court.

From the Daily Journal (subscription barrier) story:

The [Ecuadorean] plaintiffs claim Borja has information that would benefit their case, pointing to a recorded conversation between Borja and another person in which Borja said, “I have correspondence that talks about things you can’t even imagine, dude … I can’t talk about them here, dude, because I’m afraid, but they’re things that can make the Amazons win this just like that.”

The plaintiffs claim Chevron’s payments to Borja are hush money and proof of the company’s “unclean hands.” They cite case law that says when one party in litigation seeks to enjoin another party because of fraudulent conduct, the party seeking relief cannot also have committed fraud.

Attorneys for the plaintiffs referred questions to their spokeswoman Karen Hinton who said the payments were an effort “to buy [Borja's] silence” on the evidence against Chevron, which the plaintiffs hope to uncover through discovery.

“There is no other way to characterize paying an enormous salary and taxes to someone who is not doing any work and who is a potential witness against Chevron and its lawyers in regard to the company’s grave misconduct in Ecuador,” Hinton said.

Although Chevron maintains Borja’s relocation was necessary because of legitimate threats to his safety, at least one ethics expert questions the propriety of the payments, especially in light of the fact that Borja is a potential witness in ongoing litigation.

“Generally fact witnesses can only be minimally compensated for their time and reasonable expenses in providing testimony,” said Catherine A. Rogers, a professor at The Dickinson School of Law at Pennsylvania State University and an expert in international arbitration and professional ethics. “Rent does not seem to be at all within the boundaries of those parameters.”

Chevron’s argument against the Ecuadorean court is that the trial was a really just a shakedown, Yet it was Chevron that demanded the trial be moved out of U.S. courts to the Ecuadorean court when it looked like U.S. courts might rule against the company. And it’s Chevron that has delayed the proceedings for 18 years.

Ecuadorean courts are surely not perfect, though my hometown of Chicago has proven (repeatedly) that some U.S. judges can be bought with much less money. But the Borja payments show that Chevron may have a better understanding of the word “shakedown” than we thought. It’s just that some shakedowns are better for Chevron than others.

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