Crude World

by Peter Maass

  “All of the members of the government of Ecuador assumed that the technology employed by Texaco was first-rate technology,” Pazzos stated. “No one in the government thought that this petroleum giant utilized second-rate technology in Ecuador, including the dumping of production waters and other contaminants in the environment. No one ever questioned the practices of Texaco, for the simple reason that during all this time [no one] had the necessary information to question and oppose the practices which were chosen by an American company that presumably operated in an ethical manner around the world.”

  By the 1980s, a gathering disaster had fully gathered. Not only had the land in the Oriente been spoiled; the country’s finances were ruined. The government had taken out billions of dollars of loans, on the assumption that it could pay them off with oil revenues, but when prices began to fall and a series of natural disasters struck the country, there was not enough money to go around. Thanks to oil, Ecuador had drilled itself into more than $10 billion of debt. The honeymoon with Texaco was over. The only good news was that Ecuador had slowly accumulated a moderate level of industrial expertise because some members of the new generation, sent to America for training, had returned home with engineering and other degrees. The state oil firm, a shell at its creation, was now capable of running the wells and pipelines that Texaco built. In 1992, as its joint-venture accord expired, Texaco left the country and handed over its facilities to Petroecuador.

  This was not an entirely happy ending, because Petroecuador was not much better than its American godfather. The company cut corners as much as Texaco had, for the simple reason that the government, deeply in debt, needed every penny it could squeeze from its oil company. Instead of investing in better technology and safer practices, the government used oil revenues to pay off foreign debts and fund usual government operations (though in 1999 and 2000 the government defaulted on debt payments). Although Petroecuador has made some improvements in recent years, in the 1990s natural gas continued to be flared into the air, and polluted produced water continued to be dumped into rivers and leaky waste pits. The Amazon, victimized by a foreign corporation, fared little better at the hands of its state-owned successor.

  Texaco had gotten out of the country but was not off the hook.

  Surrounded by oil, Steve Donziger was fired up.

  He stood beside a waste pit the size of a football field containing a dark liquid that looked like melted chocolate. Toxic rather than sweet, this was drilling’s afterbirth, the hazardous brew of produced water. Because the pit’s bottom was not lined with concrete or plastic, the black goo seeped into the earth and the aquifer that was just ten or twenty feet below. The air was being poisoned too, as an adjacent flare spewed forth its noxious fumes.

  “If you don’t have a headache yet, you will soon,” Donziger shouted, and ten minutes later, after breathing the assorted chemicals and gases around us, I did.

  Donziger is six foot four, handsome and blockheaded at the same time, like a hybrid of George Clooney and an Easter Island statue. With a Harvard law degree and a passion for justice of the anti-corporate variety, he was pursuing the huge lawsuit against Chevron for what environmentalists regard as the oil world’s Chernobyl. The pit we stood beside had been carved into the rain forest by Texaco more than twenty years earlier. A few dozen yards away was another pit, half its size, also leaching poisons into the ground. And about thirty yards away from that, a swamp was filled not with swamp water but with oil sludge, which had leaked out or been dumped there. At the core of the lawsuit was an accusation that Chevron had created nearly a thousand sores like these, part of the shoddy network of wells and pipelines that had ruined the Oriente.

  Donziger’s mood, like the overcast equatorial sky above us, was dark.

  “Companies cannot kill people,” he said. “They cannot harm people. All of the deaths and suffering we’re seeing as a result of this pollution was totally foreseeable by them. That’s why they didn’t do this in the United States. They thought they could get away with it here.”

  Good lawyers are practiced performers, expressing outrage on cue. Donziger possessed these qualities; a former journalist who covered the dirty wars in Central America in the 1980s, he knew the utility of good quotes and the importance of good visuals. That’s why we’d visited this petrowasteland and why he said, “This pit is a gun that is aimed at the lives of people. This is a toxic Three Mile Island.” He was also a true believer. The case began as a class-action suit filed in a Texas court in 1993, and though Donziger was not involved at the very beginning, he soon joined the case and devoted his life to fending off Chevron’s attempts to get the suit dismissed.

  It was a legal suicide mission. If you want to sue oil companies, you need to be patient and fatalistic, because you are unlikely to get to trial; even if you do, after years of pretrial maneuvering, you are likely to lose; and if you happen to win, it will likely require years more to receive court-ordered damages because oil companies can afford to appeal and appeal and appeal. A hundred years ago, when John D. Rockefeller, the founder of Standard Oil, was told that a judge had fined his Indiana subsidiary $29 million, he replied that the judge “will be dead a long time before this fine is paid.” Rockefeller then returned to his game of golf. In 1994, Exxon was on the losing side of an Alaskan jury’s $5 billion verdict for punitive damages in the Exxon Valdez spill. Its appeals delayed payment until 2008, when the Supreme Court ruled that Exxon had to pay about $500 million; by that time, nearly one in five of the plaintiffs affected by the spill had already died.

  Donziger, whether a missionary or a masochist or both, had persevered. In the decade after he received his law degree, he probably earned less money than anyone else in his Harvard class, including his basketball-playing buddy Barack Obama. That wouldn’t surprise his fellow alums, because Donziger had spent his law school years organizing sit-ins of the dean’s office to promote a course in public service law. After graduation, he had eschewed corporate jobs to work as a public defender and had written a book about inequities in the criminal justice system. He’d then taken on the mother of lost causes in writing a report about voting irregularities that had contributed to Al Gore’s defeat in 2000. Since the 1990s, he had shepherded an apparently losing case to its likely demise—until fate, luck, nationalism and globalization intervened to create a huge surprise.

  When a U.S. appeals court dismissed the case in 2002, saying it should be heard in Ecuador, Donziger swiftly refiled the suit in Lago Agrio. Surprisingly, the suit was accepted, and the trial began within months. “Chevron is in a situation they never imagined,” Donziger told me in 2005. “They are a defendant in a court in a rain forest, getting their asses kicked. The trial they worked so hard to avoid is happening.”

  The case would seem easy to prove, with the billions of gallons of waste akin to blood on the still-slippery floor of a vast crime scene. To find proof, all you needed to do was stick a shovel in the earth, taste the tainted water that came out of the ground or inhale a lungful of the polluted air, as I did. You could visit the towns and see babies with deformities and people dying of cancer. It is because of the oil, you would hear. How could Chevron defend itself against a nation of evidence? Even the body politic had been poisoned. Thanks in part to the corrupting and debt-accumulating effects of oil, Ecuador has suffered chronic political instability; the country has gone through leaders like a shopaholic goes through dresses.

  Chevron’s lawyers were not paid to be stupid. They admitted that the Oriente was a disaster zone. But they blamed the mess not on the decades of exploration and extraction by Texaco, which spent $40 million on a belated cleanup program in the mid-1990s, but on Petroecuador, which had been running the show for a much briefer period of time. The pollution I saw, the shoddy pipelines and waste pits, the privations suffered by the people and the environment—Chevron said these were not its responsibility.

  Ludicrous? The disaster certainly continued after Petroecuador took over but, as Donzi
ger was quick to note, that’s a separate issue. He’s suing about the disaster that allegedly occurred on Texaco’s watch. The $40 million remediation Texaco paid for after its departure was not only ineffective, it was a fraud, Donziger argued, noting that Ecuador’s government was investigating whether polluted ground had merely been covered with fresh dirt and whether toxic waste had just been dumped elsewhere. (In 2008, two Chevron lawyers were indicted in Ecuador on charges of fraud for their roles in certifying the cleanup.) I found it hard to imagine how $40 million, even if there was no fraud, could begin to address the environmental mess created before the 1990s.

  There was another twist. How do you prove that contaminants in the soil were left by Texaco before it pulled out in 1992 rather than Petroecuador afterward? Thousands of soil samples had been taken for the trial, but they had not been tested for age. The results showed the amount of pollutants but not how long they’d been in the soil. And the samples—taken by teams working for Chevron, Donziger and the court—were not entirely consistent. The preponderance showed high levels of pollution, but some did not. It was mind-numbing stuff. Scientific and legal documents submitted in the case surpassed 200,000 pages, which is more than the judge, who had just one clerk, could be expected to digest.

  That was why Donziger’s political skills were as crucial as his legal touch.

  “This case has to be won both in and out of the courtroom,” he told me. What he meant—and this was a lesson to other lawyers who might sue extractive companies—was that getting the right judgment and getting a payment would require more than good arguments in court. The political winds needed to blow, or be made to blow, in the right direction.

  On this, Donziger got billion-dollar lucky.

  Justice is rarely blind in Ecuador. It is rarely blind anywhere. Until a few years ago, verdicts in South America did not favor the little guy taking on big corporations that had lucrative ties to the ruling class. But in 2006 Ecuadoreans elected a leftist president, Rafael Correa, who joined Hugo Chávez and other soul mates ruling in Bolivia, Nicaragua, Brazil, Argentina, Peru and Chile. In Venezuela, Chávez famously forced oil companies to rewrite their joint-venture contracts, while Bolivia’s president, Evo Morales, also moved to nationalize his country’s oil and gas industry. Even before Correa was elected in Ecuador, the government had imposed a windfall tax on oil companies and terminated a contract with Occidental Petroleum. Courts and judges, rather than protecting Big Oil, had become weapons against them.

  In 2007, the presiding judge of Donziger’s case asked for a remediation and restitution estimate from an independent expert; the expert’s report put the cost, including payment for cancer deaths, at up to $27 billion. The hammer, in the form of a staggering verdict, seemed ready to come down on Chevron. But a favorable ruling would get Donziger only half the way home. Chevron can appeal in Ecuador and international courts to delay paying a dime until Donziger, who is in his forties, qualifies for Social Security. Remember, fourteen years elapsed between the verdict against Exxon in Alaska and actual payment of punitive damages by the company. How might Donziger—how might any public interest lawyer—get compensation in a timely manner?

  “We could appeal to their conscience,” Donziger said. “We could say, Come on, guys, you can afford this. But they don’t function that way. Companies have a fiduciary duty to shareholders to not pay stuff that they don’t have to pay. At the end of the day, it’s a political struggle to enforce them to pay.”

  It didn’t take long to see what he meant.

  I arrived in Lago Agrio a day before the judge was scheduled to inspect the Guanta processing facility, built by Texaco in the 1970s. The heart of the trial consisted of inspections of toxic sites of this sort, and the inspections had a circus feel. The judge arrived with his experts; Chevron’s lawyers arrived with their experts and a few bodyguards; Donziger’s team showed up with an ensemble that usually included plaintiffs in the class-action suit; and often there was a handful (or more) of journalists. Samples were taken, occasionally with arguments over precisely where the samples should be taken from, because contamination is not evenly distributed at polluted sites. Testimony was heard in the shadow of flares and wells.

  The night before the Guanta inspection, Judge Efraín Novillo abruptly announced a postponement. This was a disappointment to Donziger, because the Frente had brought a busload of journalists to town from Quito. (I was not part of the group.) With no inspection, the journalists would have no anti-Chevron material to write about. Donziger’s father was a businessman and his mother a social activist, so he is an entrepreneur of indignation; he knew to counterattack.

  In the morning, Donziger led a few dozen indigenous Indians and environmental activists to the town hall, a four-story, tinted-glass structure that looked as though it had not been washed since it was built, decades before. It projected neglect. Judge Novillo’s chambers were on an upper floor in a small, book-lined room that had never before been invaded by a posse of lawyers, reporters, students and Indians. A book by Gabriel García Márquez lay on the judge’s desk, and he now faced a real-life version of magical realism as his uninvited guests demanded to know why he’d called off the inspection.

  “Texaco organized this!” shouted a law student from Quito who wore a bandanna around his neck in the imagined style of Che Guevara. His class was on a field trip with their professor, who was a member of Donziger’s legal team.

  Judge Novillo, a quiet man who looked on the tired side of his fifties, reacted calmly.

  “This order is from state security,” he replied, briefly displaying an official-looking piece of paper.

  “Let us see it,” someone urged.

  “I cannot show it,” Novillo said.

  Howls of outrage filled the judge’s chamber. To quiet things, the judge started to read the order, which he said had come from the local special forces base, Rayo-24.

  “‘Military intelligence fears there could be a hostile situation,’” he began.

  Another interruption.

  “You are not showing it!” the law student shouted.

  The judge flashed the letter again, but not for long enough.

  “This is a manipulation from Texaco!” someone yelled.

  “We have been hurt by the pollution,” a short Indian woman wailed.

  I heard a baby cry. With all the bodies packed into the room, the humidity had reached the saturation point. For the judge, there was no escape. He was forced into a sort of data striptease, with information revealed piece by piece to the aroused crowd. Finally, he held out the letter for everyone to read. It seemed right that the letter become public, but the process was not pretty, because the judge had been bullied. It took little imagination to guess what might happen to him if his eventual verdict did not satisfy the plaintiffs.

  Lieutenant Colonel Francisco Narvaez confronts indigenous protesters and journalists outside a military base in Lago Agrio.

  It was time for the next act. The buses of Indians and lawyers and students and journalists rolled across town to a military base. Everyone stood outside the gate in a light drizzle, armed with cheap umbrellas. The base commander, Lieutenant Colonel Francisco Narvaez, soon emerged, wearing fatigues and a burgundy beret.

  “I do not know about the existence of the letter,” Narvaez told the crowd. His statement was met with disbelief, because the letter was signed by his second-in-command. It was unlikely that a letter of that sort would be issued behind his back.

  “I am going to investigate it, and when I find the answer I will meet with you and tell you what is going on,” Narvaez added.

  Donziger, sodden but spirited, decided to try something new.

  “The Texaco staff is staying here,” he told Narvaez. “There is an agreement.”

  This was cast as an accusation.

  “There might be,” Narvaez responded uneasily.

  Donziger had known for months that Chevron had built a villa at the base and had agreed to give it to the military
once the case ended. Donziger hadn’t opposed the deal because Chevron was not popular in Lago Agrio; he’d realized that the company’s lawyers would be safer with military protection. But with more than a dozen news-hungry journalists recording the moment, Donziger suspected that the time was right to accuse the military of being on the payroll of gringo oilmen. He was correct. The accusation made national headlines, and a little more than a month later the Ecuadorean military canceled all military contracts with oil firms and ordered Chevron off the base. The military was also forced to publish the now-discredited contracts, and this was yet another political victory for Donziger, because it showed that Chevron had contaminated the army, too.

  Donziger was winning his battle, but it was about the past. What remained of the Amazon—and there was much in Ecuador that was untouched—was in jeopardy. Oil had become too valuable to be left underground, so foreign oil companies were seeking permission to drill in the southern portion of Ecuador’s Amazon. There, another type of activist stood in the way, armed not with a law degree but with a spear.

  Driving south from Lago Agrio I passed through a fifty-mile stretch of apocalypse—a mutant panorama of oil fields and gas flares in which crude oozed and burned around me. Oil was also in the melting asphalt under my car, and it coursed through the leaky pipes that curved felinely along the road, inches from my fender. I drove through the town of Coca, where an anemic jungle gave way to the offices of Halliburton, its front gate painted in the company’s by now familiar red and white. I continued farther south, the road turning to dirt as it ascended into cloud forests before descending into Puyo, the gateway to Ecuador’s southern Amazon.

  I navigated through Puyo’s narrow streets to a small house on a dirt road in a poor neighborhood where the windows were covered with iron grilles. This was the beyond-modest political office of the people of Sarayaku, an indigenous tribe that lived fifty miles away in the Amazon and was trying to prevent oil drilling on its territory. Inside the house, the tribe’s president, Marlon Santi, was talking on a shortwave transmitter to his friends in the jungle. When he was done, we went out for pizza.