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Witness claims U.S. lawyer used inflated estimate in Chevron case

A Chevron gas station sign is seen in Del Mar, California, April 25, 2013. REUTERS/Mike Blake
A Chevron gas station sign is seen in Del Mar, California, April 25, 2013. REUTERS/Mike Blake

By Joseph Ax

NEW YORK (Reuters) - A U.S. lawyer used inflated estimates to pursue what eventually became an $18 billion pollution judgment against Chevron Corp in Ecuador, despite warnings that the numbers were "wildly inaccurate," his former consultant said on Thursday.

The consultant was called as a witness in federal court in New York by Chevron, which claims that lawyer Steven Donziger used fraud to obtain the judgment from an Ecuadorean court in 2011 on behalf of a group of villagers.

David Russell said Donziger asked him in 2003 to assess what Donziger said was widespread pollution at an Ecuadorean oil field that had been operated by Texaco. Texaco was acquired by Chevron in 2001.

Russell said that his initial estimate of more than $6 billion was based in part on assumptions given to him by Donziger about the extent of the damage and on Donziger's desire for a figure that could be used to put pressure on Chevron.

By late 2005, however, he said he had become "thoroughly disillusioned" with his estimate, after testing that showed contamination was less severe. He claimed he repeatedly asked Donziger to stop referring to it in press releases and other statements, a request he said Donziger ignored.

The non-jury trial, which is being heard by U.S. District Judge Lewis Kaplan, comes after years of litigation over environmental contamination in Ecuador between 1964 and 1992.

Chevron, which asserts that Texaco cleaned up before ceding control of the field to a state-owned oil company, is seeking to prevent Donziger and the residents of the village of Lago Agrio from using U.S. courts to enforce the $18 billion judgment.

Donziger has denied using fraud.

INACCURATE ESTIMATE

At one point, Russell said, Donziger and the other plaintiff lawyers in the case decided to stop doing certain testing because the results suggested that some contamination was due to the state-owned company, not Texaco.

The relationship between Russell and Donziger deteriorated to the point that Russell filed a lawsuit when he was not paid for his work, he said.

During cross-examination from Donziger's lawyer, Zoe Littlepage, Russell acknowledged sending an email to a Chevron scientist with an early draft of his cost estimate after he stopped working for Donziger.

When asked why he sent a draft of his work for Donziger's team to a Chevron employee, Russell said he did so for "informational purposes." He also said he had sent the same scientist a report from a cleanup company suggesting that the cost of remediation could be substantially lower.

The scientist, Sara McMillen, was scheduled to testify after Russell.

Chevron also planned to call a forensic linguist to testify that the Ecuadorean judgment contained numerous instances of language taken directly from Donziger's own legal documents that were never filed with the court.

As he did on Wednesday, the judge scolded lawyers, particularly on Donziger's team, when they asked questions he felt were unnecessary. But there were still moments of levity.

At one point, Littlepage asked Russell what he meant by using the acronym "CYA" in an email.

"CYA is a term of art that means Cover Your Ass," Russell replied.

"Which is a high art form in our society," Kaplan said, without missing a beat.

The case is Chevron Corp v. Steven Donziger et al, U.S. District Court for the Southern District of New York, No. 11-0691.

(Reporting by Joseph Ax; Editing by Eddie Evans and Tim Dobbyn)

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