ECUADOR: Chevron lawyers indicted in pollution case

Two Chevron Corp. lawyers fighting a landmark pollution lawsuit in Ecuador have been indicted by that country's prosecutor general, a move the company says proves the government is trying to tamper with the suit.



Attorneys Ricardo Reis Veiga and Rodrigo Perez Pallares were charged with criminal fraud, according to Chevron. The prosecutor also indicted five former Ecuadoran officials, including the former head of the state-owned oil company, Petroecuador. The indictments were issued earlier this week, but The Chronicle has not yet obtained a copy.



"We're certainly going to defend Ricardo and Rodrigo," Chevron spokesman Kent Robertson said Friday. "These are good men who have done their jobs honestly."



The charges focus on an agreement at the heart of a long, convoluted and bitter lawsuit that could cost San Ramon's Chevron more than $7 billion.



Texaco, which was bought by Chevron in 2001, pumped oil in a corner of the Amazon rain forest from 1964 to 1992, working in partnership with Petroecuador. As part of its operations there, Texaco dumped a mixture of crude oil and water into open pits near wells.



When Texaco withdrew, it agreed to clean up a portion of the area, while Petroecuador continued to operate the wells. Then in 1998, after the cleanup, Texaco and the Ecuadoran government reached a "release agreement" that the company says absolved it of any future liabilities.



But residents of the area sued Texaco, saying soil and water tainted with petrochemicals were sickening people throughout the oil patch. After Chevron inherited the dispute, Ecuador's government accused the company of duping it into signing the release agreement. The government was forced to drop that accusation in 2006 after its attorney general testified in a court proceeding that he didn't have any evidence of fraud.



This week's indictments revive the fraud allegation. All the people indicted were involved in the release agreement, either on the company's side or the government's.



But Veiga and Pallares also are part of Chevron's defense team in the civil suit, filed by residents of the oil patch. Chevron representatives on Friday said that proves the Ecuadoran government is trying to interfere in the lawsuit and aid the plaintiffs. The company has made that accusation before, noting that Ecuador's current president, Rafael Correa, has publicly stated his support for the villagers suing the oil giant.



"Recent events in Ecuador leave no doubt that there is improper collaboration between the government and the plaintiffs' lawyers," said Chevron general counsel Charles James.



The plaintiffs' attorneys say that's nonsense. The real problems, said attorney Steven Donziger, is the company never adequately cleaned up the area, merely dumping dirt on pits of oil and water rather than removing the pollutants. This week's indictments, he said, shouldn't affect the civil case one way or the other.



"The evidence in the civil case is in, and regardless of whatever happens in any criminal case, the civil case is ready for a decision," Donziger said.



Both sides of the lawsuit have fought hard to sway public opinion and often make statements that directly contradict each other, even concerning simple procedural issues at the trial. Friday brought another such example, with Chevron claiming that Donziger and another of the plaintiffs' lawyers held a July news conference in Ecuador calling for the indictment of Chevron's attorneys. Donziger adamantly denied the company's claim.



"I have never participated in a press conference that called for an indictment, ever," he said.



E-mail David R. Baker at dbaker@sfchronicle.com.

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