The celebrated Ecuadorian attorney who collected a CNN Hero award in 2007, a Goldman Environmental Prize in 2008, and a hagiographic 13,000-word profile in Vanity Fair that same year, was “suspended” by his key client Friday, which also threatened to sue him for up to $112 million.
The attorney in question is Pablo Fajardo, and the client is the Amazon Defense Front (ADF). Working side-by-side with controversial New York lawyer and strategist Steven Donziger, Fajardo won an epic $18.2 billion environmental judgment against Chevron in a Ecuadorian court in 2011—later reduced to $9.5 billion.
The award—to be administered by the ADF—was for environmental damage sustained in the Amazon rainforest near Lago Agrio, Ecuador, allegedly from oil drilling between the 1960s and 1991 by Texaco—which Chevron later acquired.
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Not a dime has yet been paid on the judgment, however. Chevron has no assets in Ecuador and, in March 2014, the oil giant won a ruling from a Manhattan federal judge barring the Ecuadorians from going after its U.S. assets on the grounds that Donziger and Fajardo had won the judgment through fraud and bribery—even going so far as ghost-writing the Ecuadorian trial judge’s purported ruling. (Fajardo refused to appear in the U.S. court, so a default judgment was entered against him.) Donziger, who denies wrongdoing, has appealed the ruling against him. His case was argued in April 2015, but the appellate court has yet to issue a decision.
Though neither Fajardo nor Donziger are formally executive officers of the ADF, they have long been believed—together with ADF founder Luis Yanza—to be its effective leaders, as Judge Lewis Kaplan concluded that they were in his March 2014 decision.
But a severe rift at ADF appears to have been ignited a week ago when the Ecuadorian government paid Chevron $112 million to satisfy an arbitration award stemming from an old commercial debt unrelated to the multi-billion-dollar environmental dispute.
The payment was immediately surprising at two levels. First, Ecuadorian President Rafael Correa has frequently railed against the legitimacy of international arbitration tribunals and has vowed not to honor their findings. Second, the ADF had won an “embargo” from an Ecuadorian court against this particular arbitration award, essentially giving the ADF a lien on it.
In other words, if the leftist Correa government—which has long been a strong champion of the ADF’s fight against Chevron—was going to pay the award to anyone, it was supposed to pay it to the ADF to begin to satisfy its $9.5 billion environmental judgment against Chevron. Mysteriously, the Ecuadorian court’s embargo had been lifted just before the government paid the money to Chevron.
The other shoe fell Friday. In a press release the ADF claimed it had been “stunned” to learn that it was Fajardo who had “lifted” the embargo “without [its] permission…apparently…at the behest of individuals in Ecuador’s government.” The group said it had, as a consequence, “suspend[ed] ties” with Fajardo and hired Ecuadorian attorney Patricio Salazar to lead an investigation.
“Mr. Fajardo himself is potentially liable personally to his own clients for damages caused, including the amount of funds that were lost,” the release said, quoting an ADF official.
Fajardo could not be reached for comment. The ADF’s U.S. press representative, Karen Hinton, said she’d let the release “speak for itself.” (Neither her name nor that of any other press representative appears on the release, which is unusual for ADF releases.)
Hinton said that Donziger remains the ADF’s U.S. legal adviser. Donziger did not respond to emails seeking comment.
Born dirt-poor, Fajardo began work on the case as a paralegal, but in 2005, after putting himself through law school, became the lead Ecuadorian attorney on the case.
Observers have speculated that Ecuador’s decision to pay its $112 million arbitration debt to Chevron reflects its desire to attract Western investment, which could help pull it out of recession. The country has been hard hit by low oil prices, as well as by a devastating earthquake along its coast in April. The country also paid a $980 million arbitration judgment to Occidental Petroleum earlier this year.
Chevron greeted the $112 million payment with a single sentence acknowledgment: “Chevron is pleased that the Republic of Ecuador has met its international obligation by paying this award.”
The terseness of the statement may reflect its skepticism about Ecuador’s willingness to abide by a much more momentous arbitration case that was argued in April 2015, and where a decision could be handed down any day. In that case, Chevron has asked a panel of international arbitrators to rule that the ADF’s suit was barred all along by releases Ecuador signed in the 1990s, that the $9.5 billion judgment achieved in it was procured by fraud and denial of due process, and that Ecuador’s existing environmental problems are its own responsibility.