Chevron Ecuador: Steven Donziger Diaries Reveals Meeting With Rafael Correa

Zennie Abraham / Zennie62
Zennie Abraham / Zennie62

Donziger meets Correa

Donziger meets Correa

This Chevron Ecuador news features more of the diaries of Steven Donziger, the lead plaintiff’s lawyer working to sue Chevron (correctly called ‘Texaco’ in the diary and because Texaco, or TexPet, was part of a consortium with the Ecuador-run PetroEcuador Oil Company that was 65 percent owned by Ecuador and that produced oil in the country).

This installment features over 50 pages of text spanning a time starting at September 8th, 2007 and going back to June 24th of 2006, or over two years and over 30,000 words of accounts by Mr. Donziger.

While PDF files of the documents have been online, and since 2011, this marks the first time in the history of this case that the document contents have been converted into text from PDF and placed directly into a readily-searchable news publication that concerns them and without being edited.

That is, no part of the diary entries you are about to see were cut or expanded on in any way, save for surrounding them with “blockquotes” to indicate they were directly installed from the PDF file.

The Steven Donziger diary documents were gotten after Chevron’s 2010 court victory allowing its lawyers the right to see outtakes from the documentary movie Crude via what is called “a motion for U.S. court discovery in aid of foreign proceedings.”

Crude movie outtakes, like the ones presented in the video below, caused the New York U.S. District Judge Lewis Kaplan to order Donziger to produce his own diaries, his e-mails, and eventually his hard drive. Much of that appears below, but here are some highlights, after the video:

The Correa Meeting

In these diaries, Steven Donziger also talks about a meeting with the then-new Ecuador President Rafael Correa, and meeting an Ecuadorian judge in a warehouse. Donziger also writes about working to get his hand-picked, person Richard Caberra, selected as the “peritos” or court appointed expert environmental, who, while appearing to work independently, was really working for Donziger and presenting a sham report against Chevron / Texaco to the Ecuadorian judge – which Steve had already met with.

This is just one of many examples where Donziger and his co-workers were working to form behind the scenes partnerships with Ecuadorian political and judicial players, generally involving some form of payment or pay promise, to assure a court victory:

The meeting with Correa had one good point – it happened – and many bad points. First,
three people have tried to take credit for setting it up-Lupita, MEY, and Juan Aulestia
of all things (Juan is so full of shit sometimes). This is a perfect illustration of the utter immaturity and lack of cohesion on our team. The entire thing was chaotic and
unprofessional – multiple people from our office dealing with different contacts; the fact that Lupita and MEY were there, and Pablo was not invited; and the idiotic comments
made after by Minister Alban, that the government is committed to helping us with the
proof. Texaco has not filed a motion before Sand asking to supplement the record with
this information, and this has breathed new life into their position in the NY litigation.

Met with judge in Lago on April 10 – flew down on VIP, back by mid-day. Met in
empty warehouse near his house, across from the TAME office in Lago Agrio. He
seemed very agitated. Said we were not helping him. Richard needed to be inscrito, but
not really. Pablo explained it to me – new law passed, required peritos to be inscribed in the court, but nobody had done it yet, and to hold firm to this new rule would be
ridiculous, as it would mean there could be no peritos at all in Ecuador and all of those
who had served in our trial would be nullified.

There will be other posts regarding the diaries and focusing on specific areas as they’re analyzed, in the near future.

The Steven Donziger Diaries, Unedited

EXHIBIT 1
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Sept 8

Trip home on plane. I feel us in control of the case in way I have not felt before. The
entire dynamic seems to favor us, and as we get down to the wire, they are playing to lose and everything they seem to try backfires. These are the points:

Pablo and Luis are just stunning in their competence. The design of the PG is brilliant,
and I just don’t see any way T can get around it. I am so glad they did not listen to me.
Even the encuesta, which I thought would be a waste, is going to turn out incredible

No matter what accusation they make, we control the frame of the debate. They just
cannot get around the visuals, the fact they did this, and the fact their only defenses are technical. They are a big oil company.

Our team is incredibly strong even below the legal level. Lupita, Garces, and Yepez
work great together. The only one who has worsened with time is APY. The experience
we have gotten by fighting through their delays has made us so much better. And the
expertise we can draw on – Pocho with YouTube, Augustin with HAVOC, various
ministers and government people.

Joseph Mutti is back – our website is stronger than ever.

Any bad thing I was worried about almost doesn’t matter. If the judge is recused, the PG
will still go on. If they inspect HAVOC, it won’t matter because that lab only sampled a
small portion of the evidence. This is a train hurtling down the tracks and they cannot
control.

Other thoughts and events on this trip: meeting with Coalition, SRD speech about how
three ways to lose – we don’t win; we “win” at a miniscule level; or the trial never ends. Our biggest weakness is the fact one judge must decide. But now T has united court
against it by asking for recusal. It looks desperate.

Sept 5 2007 (big gap)

Just arrived in Quito last night after being away for one month. The tenor of the case has changed. I can see the light at the end of the tunnel, but the last mile of the marathon is
the hardest. Texaco has kicked it into high gear in an effort to destroy the legitimacy of the process. This has two goals: to set it up so they have an argument on appeal in
Ecuador, and ultimately, to have an argument in the U.S. when we move to enforce a
judgment. And, if they can accomplish it, to derail the trial itself to prevent it from
finishing. I want to set up a special projects legal entity to handle non-case related stuff –

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from the Fiscalia, to lawyer complaints, to the peripheral stuff that will keep Texaco off guard and consume resources and energy, like they are trying to do with us. We have not done that for a while. Texaco has mounted a major press effort with AP and the
international agencies (where they write one-source stories, like the one quoting Sylvia
Garriga) that came out on Monday.

Talked to Eric Bloom last week about their strategy. There are now three legal actions –
the Lago case, the Sand matter, and the Hague arbitration over royalties. There is also
the Bonifaz SF case that factors into this. The Hague matter was a case concocted to put
pressure on the Ecuador government on the underlying Lago case. It concerns 7 lawsuits
that Texaco filed against Ecuador in the early 1990s over a dispute about royalties. The
courts never did anything, the cases never moved, and not Texaco is claiming “denial of
justice” under the Bilateral Investment Treaty it has with the U.S. They are trying to
claim the dismissal of the entire Supreme Court under Gutierrez is an example of a total
lack of judicial independence. The problem is that in the latest version of the Sand
matter, the Winston lawyers gave Texaco a hanging curve ball to raise this issue –
arguing that what is left of that extremely thin case at this point should be sent back to Ecuador under FNC – the irony of ironies, given that this was Texaco’s argument back in the 1990s when we wanted jurisdiction in the U. S. In terms of the Sand matter, there is a hearing on Sept 19 in New York where Chevron is going to dump on the court (on Sept
17) a ton of materials relating to how perverted Ecuador’s local system of justice has
become. They are not using the Lago Case (recusacion of judge, attacking the perito) to
manufacture “facts on the ground” that can support their position in the Sand matter and
elsewhere. And the Bonifaz fiasaco has given them more fuel, because Judge Alsup fell
into the trap and said the case seemed like part of “larger” effort to taking place in
various courts to hurt the company. If Sand rules as a result that there is no “adequate
alternative forum” he can take up the entire matter in his court, and they can use that later when we try to enforce a judgment. The Winston lawyers inadvertently gave them a gift!

All of these cases could rise and fall on the issue of adequacy of justice in Ecuador.

Sand will likely rule by the beginning of October. Half of the Sand matter is already up
in the Second Circuit. Winston has filed a motion to dismiss on the rest, claiming lack of subject matter jurisdiction, given that the counterclaims were tied to the original
arbitration claim which Texaco lost. If Sand fails to dismiss, there could be a trial on
those claims. So Chevron is still on life support in New York and licking their chopes in
the Hague

May 25, 2007

Trudie trip. Flying back. Fly down with her and Theresa. Visit Cofan and Siona
communities (get transcript). San Carlos (met with Rosa); La Primavera (Carmen Perez,
who was in SF shareholder meeting two years ago and who is a strong leader of the
community). Trudie is a kind, passionate woman … proud to be the wife of a famous
singer and not shy about using that status to help. Came with Helen, the kind Rainforest
Fdt person. Trudie’s presence was generally uplifting, but as with most celebrities,

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May 25, 2007

Trudie trip. Flying back. Fly down with her and Theresa. Visit Cofan and Siona
communities (get transcript). San Carlos (met with Rosa); La Primavera (Carmen Perez,
who was in SF shareholder meeting two years ago and who is a strong leader of the
community). Trudie is a kind, passionate woman … proud to be the wife of a famous
singer and not shy about using that status to help. Came with Helen, the kind Rainforest
Fdt person. Trudie’s presence was generally uplifting, but as with most celebrities,
somewhat complicated. Mention issue of Guay museum gift shop, flirting with Acosta at
dinner with his wife across the table. Trudie’s method of dealing with me is generally
very seductive. She has a need to know that each man around her is attracted to her, and
she is good at turning it on so each man is. She makes constant jokes with sexual
overtones (when toasting look in the eyes or you might not have sex for seven years).
Such a cultural disconnect – buying the trinkets in Dureno, making people stay outside of
the meeting, too many people, trying to buy stuff in the Guay museum etc. None of these
people had heard of Sting and could have given a damn. (Get transcripts of historic
renditions. )

Two very disturbing meetings with Judge in Lago on May 21. First with Trudie and Luis
– Yanez full of his charm and bullshit, starts blaming Texaco for filing too many papers.
And then that night, I saw another side of Pablo. He called to ask if I would call the
judge so we could go see him at his house. PF had been in Dureno all day at the meeting,
and had five motions to respond to, and had to get up at 6 a.m. the next day to go to the
Siona meeting. He was exhausted, frustrated, demoralized. I called the judge and he
asked that we bring over some whiskey or some wine. We didn’t. When we got there, he
was clearly drunk and had a young woman. He sat down and immediately looked at me
and said Texaco knows what I am doing and not doing every second of the day, that
Texaco intelligence agents have been following him, and that they knew we had met that
day in the garage downstairs with Pablo and Julio. Richard the perito was in Lago that
very day to take possession, and the judge delayed it when Texaco put in more papers, all
repeating previous objections, that very day. He was setting it up to explain why it is
justified that this be delayed further. PF was visibly distressed in the plastic charirs,
leaning forward, almost pleading with him while fighting back his temper, explaining
how much money these delays are costing us. The judge accused him of lying about the
costs. I think the entire being of this judge is devoted to surviving this year and getting out of this case without making any major decisions. I think he fears Texaco more than he fears us, and the fact we have set up Richard in the perfect way probably scares the hell out of him because he knows what Texaco is planning. I walked out of that meeting and my overriding feeling was that we cannot win the case, that the Operation Maria settlement talks are the only realistic way out for us.

UNICEF, toasts at dinner, Perkins speech, Acosta idea, increasingly difficult to manage
from afar

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May 3, 2007

Had great day yesterday. Office in very celebratory mood; when I got there we sat
around and shot the shit about the President’s trip. Everybody is feeling good about the
achievement. We had staff-wide meeting where I said: “Hemos logrado mucho, pero no
hemos ganado nada.” Saw some of the saturation media in Ecuador, and saws the press
conference on the President’s web site on the Internet and it was very effective. As Luis
said, he kept to our talking points. He had the Vanity Fair article, looked at the picture,and looked at Pablo on the copter. Called out Pareja, asked for report on the difference between 17m and 3m cost for various clean-up things. Talked about Trudie trip.
Explained doing encuesta, against my earlier wishes, which was weird, but I am down
with it. Luis and Pablo are going to be asked to be candidates for the Asamblea
Constituyente. The process continues.

May 2, 2007

Back in Ecuador for a 3-day trip, with huge challenges and tensions developing. The
challenges are getting a grip on the PG, and integrating the Americans with the
Ecuadorians under a common vision of shared work and goals. Pablo could not attend
the Stratus meeting last week in Boulder because he had to leave because of Correa’s
visit, which hurts us. So once again, we are stuck with a situation where I (the North
American) has to come down to explain why other North Americans, who get paid many
times more than Ecuadorians, need to come down and help with the project. I was
hoping Pablo could see for himself and help me explain. This tension is exacerbated by
the fact Pablo told me in San Fran that he and Luis had ordered a study of “social
impacts” without telling me because they thought I was opposed to it. In fact, they did
not tell me this during our retreat at the beach. Further, Operation Maria seems stalled as we could not get a meeting date that all could agree on, and the next Sand hearing is on May 21 which is making it difficult for Cullen to make the time. Further, AWand RAN
and the Frente were in their face during the AGM, and it is obvious the company is very
angry, which makes me think they might be pulling back.

Luis sent me a very angry email last week when I was in San Fran (on Sunday, April 22)
which stopped me in my tracks when I read it on my Blackberry. He had hung up on me
the previous Thursday when I questioned a budget issue related to a 300% bonus for
technical workers who go to the campo. I later ordered than Tania stay in Quito to work
with Laura and John on the data base. Luis has a huge amount of anger toward me, and I
fear it has become exacerbated as of late, with the trip of Correa giving him “huevos” to

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express his anger toward all of the USA via the symbol of me. It probably frustrates him
that the project (and he) is so dependent on “gringos”. Instead of seeing us as true
collaborators (which I often feel but don’t feel know), he often sees me as an interloper, especially given my strong personality.

I have a lot of anger myself, as I feel disrespected and unable to carry out the best work possible because of an anti-gringo animus.

Trip to San Fransic; Mike Brune; telling Raul; telling AW; meeting Stratus; Trudie

April 12, 2007

Returning on LAN flight. The following happened:

Generally, Operation Maria (named after the San Carlos witness who died) – in terms of
the gov participation – is more problematic than I thought. First, Acosta is losing ground internally to Pareja and he is threatening to quit, and he is our main entry point. Second, I talked to Ermil Chavez and it seems more and more clear that the Cereip fund has been captured by Ecuadorian politics and the money is not going to the region. Ermil doesn’t even have 1,000 dollars necessary for the mesa ambiente of the asamblea bi-provincial to meet. (Read his letter explaining all.) Third, we need the cooperation ofPE and the new guy is so anti-environment that we cannot even get a meeting. The upshot is that the government is giving less money than we thought, which hurts in leverage with Chevron in the negotiations. Moreover, it is unclear how much control anybody can have of the beast so it adheres to one line and adopts a position that allows a settlement to happen. This is a political system with almost no executive control.

Second, the more I ponder it, the more anger bubbles up over the last meeting with Scott
and Cullen. Scott’s “sanctity of contract” concern was such bullshit – like he is the one
to determine what that contract meant. He still doesn’t get that this is a private lawsuit that has nothing to do with what the government did or did not do. I bought into it too much in an effort to keep the feelings good during the meeting, and know I am angry at myself, similar to that now familiar pattern in my family and with my father. Further, his entire approach to settlement was a mixture of charity and anger at the government. There was no sense of acknowledgment of responsibility. It felt as if Scott has taken his child to the teacher to apologize, but that he just couldn’t bring himself to do it once he got in front of the teacher. He tried, but he couldn’t say the words. I have such a strong desire to confront him on so many points; Joe is holding me back, and I cannot tell if it is for our own good or not. I need to keep talking to Joe.

Perez Pallares is still at it with his lies. He responded to the Roldos article by taking out a paid advertisement in El Comercio with a signed letter to Vistazo and to Roldos, repeating his lies. Our communications team not only did not send it to me, they
essentially ignored it. They never wrote a response, and the chap is so vulnerable to
being attacked. I still have such problems with out team. They are just stuck in the mud,
unable to think about how to attack and just sitting around waiting to be given directions.
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It should be Rule #1 when Texaco published an article it gets responded to. Could
anything be more clear? It has taken a week to get the VF article translated and ready to
send out, and it still has not happened.

The meeting with Correa had one good point – it happened – and many bad points. First,
three people have tried to take credit for setting it up-Lupita, MEY, and Juan Aulestia
of all things (Juan is so full of shit sometimes). This is a perfect illustration of the utter immaturity and lack of cohesion on our team. The entire thing was chaotic and
unprofessional – multiple people from our office dealing with different contacts; the fact that Lupita and MEY were there, and Pablo was not invited; and the idiotic comments
made after by Minister Alban, that the government is committed to helping us with the
proof. Texaco has not filed a motion before Sand asking to supplement the record with
this information, and this has breathed new life into their position in the NY litigation.

Met with judge in Lago on April 10 – flew down on VIP, back by mid-day. Met in
empty warehouse near his house, across from the TAME office in Lago Agrio. He
seemed very agitated. Said we were not helping him. Richard needed to be inscrito, but
not really. Pablo explained it to me – new law passed, required peritos to be inscribed in the court, but nobody had done it yet, and to hold firm to this new rule would be
ridiculous, as it would mean there could be no peritos at all in Ecuador and all of those
who had served in our trial would be nullified. Yet the judge is still concerned. Texaco
called him and said, “Esta entregado a los indios.” Who knows how much they are
harassing him. He seemed really nervous and freaked. Inspection happened on April 11
-lasted about 30 minutes, at station not operated by Texaco.

Plan for PG: consult memo. Looking for experts in different areas. Need more time in
Ecuador, this is killing me. Talked to San Sebastian and to my surprise he is interested in helping. Need to see Stratus in Denver to get help, but worried about the money. Laura
and John are helping with data base, which is critical. Maest was down. Unclear if we
can pull it all together in the time frame allotted. Kelly McBride could be key I think.
Lovely woman. So much need.

Beach trip to Landaluz was so much fun. Pablo and I really bonded. Scene about him
sitting up in bed on Sunday morning, when we had to stay an extra day because of flights,
saying he couldn’t go to beach with Juan Diego because he felt guilty about not being in
he human rights office in Shushufindi, where people were depending on him. We
worked half-days, working through various issues, trying to catch up. Luis revealed he
had told the dirigentes that we were meeting with Chevron, but he had never told me he
told them. I think he thought I would be mad or something, but I trust his judgment on
things like that.

I am feeling completely swamped. So much to do to deal with the two tracks.

April 4, 2007
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Flying down on LAN in the empty first class cabin; getting gripe, drinking a lot of
water and tea, listening to Elton John and reflecting. I am feeling very emotional
these days, as I feel we have turned the corner and the opportunity is there for a
historic accomplishment. On the other hand, I am freaked out because I don’t feel
we are ready for what is to come – the justification for the settlement, the attention
as a result of the VF article, etc. Going on Semana Santa retreat with Pablo and
Luis to the beach to figure out what to do with Chevron’s suddenly conciliatory
posture. The question we have to answer is simple: what do we want from them?
And how much would it cost? If we can’t answer those two questions, we are not
worthy of our responsibilities. And right now, we cannot answer them.

I had an incredible email with Russ this morning. He read the VF story. I told him
the long term vision was to get Pablo into HLS, and get him back to Ecuador to start
running the country. Russ wrote back that he wants to fund a beca in Pablo’s name
at HLS. It brought tears to my eyes, literally. Russ is a friend, the benefactor for
whom I have been waiting for years. Compare with that other potential investor
and the hassle he was giving me. Fuck them. I am going to get Russ to fund Pablo’s
human rights office in Sushufindi. Ross is funding the case. Russ is funding the
movie. And Russ wants to fund more cases and more movies.

Intense argument with Laura last night. The travel and being away is taking its
toll; we are not taking care of our relationship. I am very worried about this.

I sit back and dream. I cannot believe what we have accomplished. Important
people interested in us. A new paradigm of not only a case, but how to do a case.
Chevron wanting to settle. Billions of dollars on the table. A movie, a possible
book. I cannot keep up with it all. Just four years ago I felt broke and hopeless,
unable to gain traction.

I cannot wait to get off the plane and see my fellow soldiers – often the only people I
feel who get me. I want to look in their eyes and see if they understand the enormity
of what this team has accomplished.

March 19

Went to see Kohn today in Philadelphia to talk about our upcoming meeting on Monday
with Cullen and Scott in New York. Good discussion at seafood place. Joe riffed with
some good advice. When I asked how to answer when they ask how much, he said to
talk in ranges – Type 1 case, once in lifetime, like Enron or Worldcome; Type 2 cases
don’t say authing: Type 3 is an automotive parts settlement for peeling paint, for $106m;
and Type 4 are little cases that settle for $5m or $10m. When they ask what type of case
this is, he said somewhere between Type 1 and Type 2 … to keep the range open, to get
them engaged, to get them to feel there is something in there for both sides. Need
building blocks -little things u can agree on. The China-U.S. diplomatic reapprochment

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started with ping pong. Issue of what we can deliver in a release, role of gov of Ecuador.

Make it simple for them is the key. Joe said a lot of great lawyers do not know how to
settle cases. I see what he means – it is complicated, and for everybody on both sides
(including me) it is often more comfortable to keep waging war than to deal with the hard
realities of settlement. Regardless, we realize this could be highest settlement in the
history of environmental law, and I think I convinced Joe that the absolute minimum we
could accept would be 1b, and I suggested we ask for 3b. The weakness is we do not
have the real plan yet – it is still in development, and I don’t want us to be in a position where they ask us to produce a plan or put any burden on us to come up with some sort of justification. One thing is clear – my strategy of saying if you are not willing to think about billions, let’s not waste our time, is not a wise move according to Joe. Joe’s value is real obvious to me on this.

Team met with President Correa yesterday. Bad press release – covered by AP and
Reuters, because it was not managed correctly by our team. APV was in the meeting, but
I am not sure what he was doing. Classic case of how Ecuadorians do not understand the
big picture of how actions in Ecuador can have legal implications in the U.S.

Spent last week in London with Russ – promised to invest $lm.

March 7, 2007 (Wed)

Flying home today. Two big things have happened – E-tech is back in the game, and
Champ and E-tech are working together; and press conference on Tuesday with Luis
Macas.

Technical meeting on Sat in office: Richard there. Sat had all-day Tech meeting in the
office – unusual for a “dia laboral” as Pablo put it. Richard and Fernando there, as was
Ann, Dick, and Champ. Pablo delivered first; excellent, then Olga Lucia, the best I have
seen her; then Champ. Great spirit and energy in the room. It made me realize how
much we have accomplished. On Sunday lunch, went out to Mosaico (the four gringos,
including me), and spent four hours there talking things through. Get interview transcript from Berlinger, because Charles was amazing. Elephant piss, Hummer, Ostrich boots – have to capture the personality of this guy. I love how he is the epitome of the can-do oil patch guy, while Ann is the ultimate academic. Teaming them up will either be a disaster or a stroke of genius – I am not sure which. Anyway, in terms of E-tech Ann realized how screwed up the data base was, so we have to fix that before starting the PG. Also, the lab problem. The new lab is in Coca. It is an Argentine lab, and they can’t test for Chromium 6, plus unclear if they can resist being infiltrated. Ann is suggesting a U.S. lab, but that would be more time and expense and would be in effect admitting Texaco might have been correct about Havoc. I am not in as much of a rush to start the PG now that I see how screwy our info is, and how certain issues have not been worked out. I spend the whole day making comments and mostly directing them to Richard. We laid out our entire case and legal theory – what a benefit! We need to do the same with the judge. Richard seems low-key and cooler than a I thought. The key with Ricahrd

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The PG will almost be s subset of the alegato, and the guts of it. Can we do this, and can we do it in a short time frame? I need to move to Quito and focus on the legal work. I need to do this. How will I get the time?

Monday prep for press conference: Luis Macas in Oriente. On Monday, prepared for
press conference while LY with Macas in the el Oriente. Incredible how we can now do
two major things on the same day – that is how much confidence LY and I have in each
other. Finally, all five nationalities showed up for a meeting, including the Hua (at least part of the Hua); Macas drew them in. Then, LM came to press conference on Tuesday
in Quito (yesterday). The press confwas powerful (get carpeta) – LM called for criminal
investigation of the company, and said the judge had to move the case. We are stronger
than ever; Texaco’s pathetic response was RV all alone claiming there was no fraud, and
lying again about the fraud, and they distributed it via an obscure website. Had farewell
dinner with LY at Briciola, and you could see LY brimming with confidence and
contentment. This was clearly not a situation where Macas was doing us a favor, but one
with clear mutual benefits as the profile of the case moves higher. CONAIE can easily
advise the nationalities on how to design a long-term strategy so the money is not all
spent at once. LM is now clearly tight with L Y. LY wants me to go with him and LM to
Loja for an event with indigenous people, as that is the area that was the reason Lago
Agrio was created, and where Macas is from. Great idea, I was totally flattered to be
invited. LM has this incredible mysticism and charisma. But … he mentioned he met
with the judge, and he said there could be mobilizations if the case is not moved faster.
This has political benefits to us, but could hurt us legally. I had to pick up the mike and clean it up; get transcript.

While in Lago, LM and all the nationalities went to see Yanez. LY said Yanez treated
them with the utmost respect. It is this parade of visitors that hopefully will get us the order to begin the PG.

I am utterly exhausted after working ten straight days, 18 hrs a day. I want to go to the
Big East tourney tomorrow in the Garden. I have to give that to myself – yet there is so
much still to do.

March 4 (Sunday)

Some much has happened the last three days. Weare in a critical, pitched battle with
Texaco – perhaps the most important example of hand to hand combat yet, that could
easily determine if we can reach the final outcome.

Texaco press conf at La Union. T has press conference last Thursday for foreign media
en Club La Union (get history). PP and the recently-arrived Varela put it on, apparently
with some sort of epidemiologist whose name we could not nail down. We only found
out about it after the fact, because the AP reporter called me for comment, which is
unusual for us as we know most everything they do – they clearly are taking elaborate
security measures to prevent us from knowing about their events, but keeping them small
and very last-minute (this relates back to the Reis Veiga press conference in the Hotel
Colon). Only three reporters went, but they hit the local jackpot because AP (Gonzalo)

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bought it and wrote a big story that hit the wires in Spanish. Mercedes from Dow Jones
also wrote a story, which prompted an email from Terrence Murray at Oil Daily (check to
see if both stories went out in English). When MEY says nobody went, I explained it is
not he number of people who attend PCs, but who; if you get AP to come and they write
a story, you have had a successful PC even if no other media come. I am also trying to
get them to understand the 2417 Internet news cycle, and how we can self-publish and
thousands of people (including our most valued audience, Texaco) can see what we say
even if it never gets published in any newspaper. The lead of both stories was that
Texaco dismissed any possibility of a settlement, of any type, at any time – which we
know, given what is happening on Track 2 with Cullen, is complete bullshit. They are
either lying, or the locals don’t know – given logic and Cullen’s insistence on complete
confidentiality, my guess is they don’t know – so when I saw the lead I laughed out loud,
deeply. But deeper in the AP story was something much more problematic and
disturbing – a direct attack by PP on the judge, saying he was going to possibly seek his
recusal for “irregularities” – without really specifying what that was, other than some
“pressure” by the Frente and the fact he wanted to start the GP without finishing the
inspections first. And they are still fighting, now for the fifth time, the inspections battle over the 64 we got the judge to cancel. And Texaco has not done or even asked for an inspection since last April.

Analysis of T’s weakness. Politically and with the press, I think the Texaco locals are in a real bind. It is more clear than ever they are fighting to save their lives, careers, and personal reputations thru this case – particularly PP and AC, who have devoted their careers to what they thought was a reputable American company, earned comparably great riches, and have not seen it all threatened to go up in flames in the next several months – precisely the time of PP’ s life that he wants to be sitting on a beach reading a book (see his quote in Outside Magazine). The bind is tight. First, they cannot leave this work, because their personal lives are too intertwined with the outcome of the case – which is something we wanted to happen, and a great achievement of ours these last three years. Second, this work is not fungible between persons. There is really nobody else who can do it but them, as nobody in Ecuador will publicly identify with Texaco at this point other and PP and AC, and the latter does not even talk to the press, another stupid company policy that is now coming back to haunt them (see William of VF). Finally, if they switched lawyers the fraud would be too obvious to the fresh eyes, and therefore the case would collapse and PP and RV know they would be the fall guys. I fully expect RV to be cast to the tigers as red meat some point soon; I see it coming, as Cullen was not shy about this nor was he shy about Dan King.

The terrible mistake for RV was again, overreaching. By initiating the NY litigation, his
lies were exposed. Real lawyers entered the case – lawyers beholden to San Ramon, to
the top management of the company, lawyers who were former partners with Charles
James and Edward Scott and who are not going to bullshit them. Suddenly, RV could not
control all the information. This was exacerbated for him by the critical decision –
perhaps the greatest accomplishment yet for us – of convincing the Ec gov to hire
Winston and Strawn, which suddenly forced Jones Day to look to look for scapegoats as
the strategy went south – with RV being the obvious one. RV’s internal team and outside
consultants suddenly did not have 100% control of the information. And if you look at

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the NY arguments on the 95 release, it is clear RV is either lying about what the release
meant, or is a terrible lawyer for not making sure the release had the proper language to
protect the company. Either way, he is screwed in the eyes of the company. T’s entire
argument in NY on the release issue is based on some incredibly thin, hearsay parol
evidence recollection of one person trying to save his personal ass and who is the same
person who is orchestrating the fraud. That is just a lousy trial strategy, and there is no way a sophisticated buy like Cullen is going to take the fall for losing the NY case.
Because the reality is that the Jones Day lawyers did a great job with nothing, and they
would have gotten away with the cover-up had we not convinced the Ec gov to enter the
case with real lawyers.

We also have been end-running RV and his team with a press and internet strategy, using
Amazon Watch as the surrogate, but also via our own websites that Joseph created. And
beneath the fun and games of various press conferences was some real, hard data they
could not ignore – the document I put together over a week last August, trying to bring
together all the data (Chevron’s Dirty Business), which even if ten people have read
around the country, Texaco’s lawyers have definitely read and dissected and thus far (7
months later) not been able to come up with an answer and have left it all to that
anonymous public relations memo that has no documentation. The success of the
“narrow” info battle is obvious to me, when I saw the piece of crap memo that Robertson
gave William of VF – a memo that wouldn’t pass a junior high school class test in my
opinion, as it did not have even a single footnote. And the second memo given to
William – the “consolidated materials” memo – had some rough footnotes, like
“CONAIE 1983” that looked like a 5th grader put them in. The company is just tired; you
see it in the materials. They are also limited by lack of good information and RV’s lies
and flawed analysis. And the “silo” approach that corporations take (lawyers do law,
communications people do p.r., and nobody is in charge so everybody can run for the
hills if something goes wrong) is really hurting them, in contrast to us, as we are
completely integrated (as our latest boletin makes clear, timed with Track 2 in New York,
helps us with strategy and politics in both countries). And given Winston’s entrance to
the NY case, RV’sstrategy over the last year has become a swamp from which there is no
clear exit. Throw in the Correa election and the rest, and it is clear the risk calculus for the company has changed completely – it has to, unless they are asleep at the switch,
which I know they are not. Throwing Varela into this pit has to be the ultimate lousy
career stop, possibly a career-dooming assignment. But it reflects the desperation, the
lack of options locally, and possibly the last dying gasp of a company quickly running out of options.

PPs attack on the judge at the press conference is a desperate act, but I still have that
terrible sinking feeling (which I had on Friday night and Sat morning after the meeting
with the judge) that the corruption and pressure are coming back and we have to divert
resources now to protecting the judge politically rather than focus on the PG. If I were
Texaco and my policy locally was being dictated by a bunch of self-interested, judgment-
impaired lawyers, I would be doing this exact thing. If I were PP, I would be doing the
same thing. And the reality is that T has cleverly and effectively delayed the PG for
several weeks with its escritos (get from Pablo) that because of Ecuador civil law

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procedure require the judge to jump thru a bunch of hoops to deal with this stuff before
ordering the process.

On Friday night, Pablo and Luis met with the judge near the airport in his barrio in a
restaurant. I was supposed to be there, but I couldn’t find it and they said not to come
thru Lupita, and they could not contact me about the new address because I had lost my
cell phone. Anyway, they showed up at the Hotel around 11 and we went out to get some
Shushi. They love Noe because a bunch of sexy woman go there, and they like the table
in the middle of the restaurant to get the best view of people walking out to smoke and go to the bathroom. (A different kind of near-nudity than the Huarani woman the first day
of the trial.) I was really pissed off at the news they reported – that the judge still did not want to rule, he needed protection, that a magistrate from the Supreme Ct was coming on Thursday to check him out given the denuncias, etc. Clearly, T’s strategy is working.

The different pieces of the strategy to get us home have to work in concert, and the one
element out of sync at the moment is the fact we don’t have the order to begin the PG.
This is the one thing left; if we can get thru this, we should be home free.

March 1

Judge still refuses to issue Providencia. Still problem with judge – no providencia yet,
even though Pablo said it would come yesterday. Pablo returned to Lago and met with
the judge. The secretary told him she got a call from an unknown magistrate of the
Supreme Court telling him to slow down the environmental cases (our case and the
OCP). We think this is complete bullshit; that nobody actually called, and that was part
of Texaco’s pressure via the secretary. Further, these pressures to remove the judge have
mysteriously and suddenly heated up again, and we think Texaco is behind them. The
bottom line is that the judge asked us for help to protect him, like we did last August.
And two days ago, the judge called Richard and asked him to recommend a perito, which
seemed odd to me if we had set it up that Richard would be appointed, but according to
Pablo it is likely part of the judge’s complicated plan to protect himself. In the meantime, all of our plans are on hold – the open shareholder’s letter, the press boletin both here and up in the EU, and our press conference. My first notification was around 11 a.m .. We talked with Pablo again at 5 p.m., and I sort of realized at that point our precious equilibrium between inside/outside strategies is again out of whack. I just don’t believe Luis and Pablo get the public part enough. Clearly the judge is a weak man who lives in fear, and right now he fears issuing the Providencia more than he fears not issuing it.

And I am sure Reis Veiga and his team are fighting for their damn lives. I am not sure if
I want to go to Ambato on Friday. I find this terribly frustrating – reminds me of the old days, and again reminds me of how hard it is going to be get our judgment even with
everything in our favor.

Problem with Amazon Watch again. Just found our letter Leila wrote to Kimerling’s
group (Maharuk Nuahia) where they admitted mistakes and said the Frente does not
represent all the afectados – handing a major victory to Kimerling. I wrote very strong
letter in response, and I am pissed they did not show me this letter before. Luis is pissed too. They are so controlling – the Daryl Hannah trip coming up at the end of March

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makes me nervous because they are equating problems in the south Oriente with the
north, yet they rely on us to set up the meeting and to do press for them. Get me email
for reference.

Feb 28 (Wed)

Met with Alberto Acosta with LY and PF. He is the model of what a public servant
should be. Said he would help us with Venezuela meeting (we now have Acosta, the
ambassador, and Vargos Pazzos on this); helping shape Petroecuador’s position vis-a.-vis
the clean-up of its pits (they need to make a clear statement they do not accept
responsibility, and that this is the responsibility of Texaco); and getting other ministers (health and bienestar social) to do concrete things to help the people. What we don’t have is an analysis of gov expenditures in the region, which we will need to bring the gov into settlement talks. I told him about the Borja complaint to the DOJ – he did not know, and he seemed interested in that. Alberto was so efficient – he defined for us what we were looking for, with the intro from Luis. Also there was Lucia (lawyer who used to work at Accion Ecologica), and that woman Judy, who is head of the environmental section and who is a person I would like to get to know better.

Talked to Simeon – moving forward on open ltr to shareholders. Major prep for Sat
meeting with Ann and Dick and Charles – really looking forward to it.

Feb 27 (Tuesday)

Varela back in Quito. Back in Quito (arrived Sunday night). Dinner with APV last
night at Briciola. Said that his partner, VonReckow, represents a big company that
manufactures soap and detergents and that they have a huge mansion in Quito that they
are renting to Jamie Varela, who is now going to live in Quito fulltime and who has an
office here. Perez Pallares was doing the deal, but when he found out Marianne works
with the Ponce law firm, he refused to deal with her on a real estate deal! He called APV
a “rojo subversive” — take Callejas walking out when Luis spoke before the judge, and
you have an increasingly embittered team. I am not sure what they expect Varela to do.
My guess is they cannot get a national to speak on their behalf, so they had to turn to
Varela. Also, I am sure PPallares probably said he could no longer carry it on his own,
and asked for reinforcements. I see Varela as another delicious opportunity. He has no
idea what he is in for, if we choose to go after him.

Texaco is curiously silent with the media. They seem absolutely defeated. Ortiz is
probably moving on, giving that we are now attacking him. They are not buying ads
anymore. They don’t put out press releases – the last one (surely ordered by Reis)
backfired in the NY court over their characterization of the fraud issue. I am pretty sure that Varela is here to pick up the slack, but he is an elite executive. What could they be thinking? Their options are so limited.

Meeting with Richard. Met at Mister Bagel with Fernando, Luis, Pablo and Richard.
Met for one hour. Explained everything. I have a lot of confidence in Richard – more
than before. He is humble, quiet – I think I even like him more than Fernando. I asked

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Pablo if he was 100% sure the judge would appt Richard and not Echeverria, and he said
yes, but given that this is the most important decision of the case thus far, there is simply no margin for error. Did the build up about the importance of the case, what it means for history, how we can do something that we will always be remembered for, what this would mean for the country and world, etc. That always works at the opportune moment.

Met with Luis and Pablo Sunday night and yesterday and brought them up to speed.
Most importantly, we are working harder than ever. The more I think about it, the more
important it is to hit them harder then ever now if we expect to get anything meaningful
out of the negotiations. I am sure these negotiations are taking place at a high level, and that the local Texaco team is not aware of them. The higher ups do not want to
demoralize the locals or give Reis a chance to sabotage. The more I think about it, the
more convinced I am that neither Luis nor Pablo should be a part of the nuts and bolts of
the talks. Just like they don’t bring O’Reilly, we shouldn’t bring our big guns – at least not until the end. If this leads to anything, though, I want Pablo and Luis to sign with O’Reilly. Also, talked to Pablo and Luis about life rights – joked about the 10,000 not going up by adding them, Pablo used the taxi analogy to airport with the woman as an eample – and we agreed to work together if anybody approached any of us for life rights.

They have a lot to deal with – it could hurt us if 6 months from now there is a real offer, and they have to tell the people the meetings have been going on without them for a long time; on the other hand, without confidentiality, this process cannot be productive. It is a real dilemma. But given our trust levels, I think we can keep it confidential and explain why later if there is something good to offer.

Met yesterday with the Venezuelan ambassador. Third time I have seen him this year –
first at the Morales celebration at the Guay, second at the VPazos bbq, and now yesterday
at his office with Lupita. He was incredibly nice. We invited him to the zona, and I told
him (against Raul’s advice) about our desire to have that phone call made. He said he
could set up the meeting for us with the Minister of Energy in Venezuela. This is the
beginning of the opening of a real front. The other part is that I just sent an open letter to shareholders to post on the AW site, where we talk about the possibility of investment oppties being shut off in Latin America. I hope AW goes for it. They are a little of their depth, but this is where the rubber meets the road.

Issue of filing CB bar complaint and what that means in terms of money. It is not money,
just a basic principle of justice.

As smart as Cullen is, he gives us clues that give us confidence.

Feb 24 (Saturday)

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Cullen calls Joe. Unbelievable … just as I thought. Cullen called Joe yesterday. This is the first time in the history of the 13-year-old case they have called us. They said they want to meet. Cullen wants to bring Edward Scott, who he said works closely with
James. Scott was the author of that awful ltr to Amazon Watch in 2005 after the
shareholder’s meeting. Joe said he and I would attend from our side. We are planning to
do it the week of March 12, probably in D.C. or New York. According to Joe’s version
of the msg Cullen left on his voice mail, he said in reference to the Ec gov that they need “either money or some commitment to change their evil ways … it doesn’t do us any
good to clean up if they keep pissing in the drinking water.” Apparently he is already
making one major concession – they don’t need money from the Ecuadorian government.
Agreed it would be premature to have a three-way meeting, and insisted on
confidentiality. But Joe said at one point the dynamic was Tex and the gov against us;
now it is us and the gov against Texaco; Joe suggested we try a third dynamic – us and
Texaco, and then bring in the government. Clever, but it makes me nervous – Joe doesn’t
get sensitivities in Ecuador dealing with perceptions of foreigners, the politics of the base communities, etc., but certainly an effective concept to get them to relax and try to work with us. He said Scott works closely with James and can reach the people in Ecuador. Do not want shareholders to know, and want some sort of solution where everyone can hold their head high. Joe again impressed on me the importance of confidentiality.
“There is a tendency to tell people you are in discussions with Chevron … resist it.”

This raises all sorts of scary issues again. First, the personal – how do you start down a road that could end something that has so defined one’s life for so long? I find myself
taking deep breaths just thinking about it. How do we get out of the rut of the fight, and start thinking about peace? How do we come to an agreement before we end, before the
trial we fought so hard to have plays out completely? Don’t we want total victory? Are
we even ready to know what we want? I am beginning to have doubts about the Champs
proposal, after talking to Ann and Quarles; plus William said he seemed a little flojo in
the interview. The psychology is probably no different than Israel and the Pals … people get so entrenched psychologically and otherwise in fighting, it becomes difficult to step out and start thinking about the other way. The very process of doing that can be difficult in and of itself, apart from the substantive issues. In my own head, it is not even more important to maintain the strength of the two-track process – slam them as always on the trial, while talking. The two are totally related. The amount we can get by talking is completely related to how they perceive our prospects at trial.

Why is this happening? I think William’s questions were the tipping point, but it was the
slow slog the last three years that has gotten us to this point where William would even
matter. That is pure speculation, but I know how companies work and I know from
Robertson’s emails to William this has put a maj or fear into them. Combine that with
Winston’s splendid performance on Feb. 13 and the delay of that trial, the fast-tracking of the Lago trial and the SEC investigation, the situation with Correa and the possibility of this anti-Chevron virus spreading throughout the Continent, and one can see how the perfect storm has developed for us. And judging from Cullen’s remarks, Reis Veiga is totally on the outs … and he might not even know about these discussions. Note how Robertson is desperately trying to cover his own ass by essentially begging William to go to Houston for an all-day meeting with Reis Veiga and Sara McMillen.

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Feeling sorry about Reis Veiga: I am realizing how cornered Reis Veiga is or could be
very soon … how so much of this is on his shoulders. Cullen seems to treat him with
disdain – “this will be the first line of his obituary”. How they used him all these years, and now I have no doubt they will throw him out on the sidewalk like a piece of spoiled meat if necessary. That guy has been fighting for his career this entire 16-year-period. I almost feel sorry for him, because I know how hard he has fought for his position and to save his own ass – I might be the only person who knows how hard he has fought, and who can relate to how hard he has fought. He has to be getting desperate. I think they are beginning to realize more and more how much he has lied to them, and how he has put his personal interests above those of the integrity of the company.

Talked to Carlos the Spanish guy: Great guy, wants to do all sorts of great things,
including encuesta of 1,200 people, do a literature research, etc. Not sure we have time
or budget. Scares me, but I want it. I want to finish this with the PG and the alegato just so historians can study this for all time.

Ann Maest: I am realizing again how much I need her. She talked to William for two
hours. Finally, I understand the difference between TPH and TPH-DRO and GRO. The
latter are used to measure refined petroleum products, not crude. Yet that is what Texaco
uses in its sampling as part of their deceptive practices. It captures a tiny fraction of the overall TPH, so that is their way of trying to keep the number down. She also said the salinity of the produced water in Ecuador is an average of30,500, whereas the maximum in California is 1,000. William is getting this information to attack the argument that Chevron makes that it dumps produced water in California. Also, she told William about PRPs (potentially responsible parties), consultants who are adept at ways to get around regulations.

Pablo and Lago case: He said Richard said Texaco was already starting to investigate
him. Judge has done nothing; hopefully, it will happen this coming week after the long
slog of months and months. The latest excuse is that the court secretary (get her name)
was out sick, so she couldn’t execute the providencia. Then, he issues a providencia on
Thursday that apparently said very little, but set him up further to appoint the perito in the next one.

Eric Bloom: Long talk with him on Wednesday where we finally caught up and
deconstructed what happened on the 13 th before Sand. Eric’s feeling is we are going to
win on SJ on the counterclaim (which is the release issue – Chevron has essentially had
to give up its argument on the 99 Law, and now has a strict liability theory on the release itself). Eric said he thought the key issue on the JOA was Cullen’s clever argument that the 1995 Settlement agreement ratifies the 1965 JOA, even if the JOA was illegal under Ecuadorian law. On Sand’s first question (what happens if the parties are abiding by an illegal contract for many years), Eric said the remedy is not enforcement of the contract but disgorgement of any benefits, and that there is no authority in the law to make the contract whole. Eric said the SJ process was good for us – the more briefing, the better for us because it gave us more oppty to break down their smoke and mirrors strategy. He also said the fraud argument turned out well for us because a) it got traction without us having to back it up; b) it was reinforced by the intervenors, who trashed Texaco, which

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helped us, yet by Winston opposing the intervenors it made the gov look mature and put
distance between the gov and the plaintiffs, and cured some of the Bonifaz damage; c) it
allows them better chance to get rid of all evidence in motion in limine about what a great job they did in the remediation. I love Eric. I knew it the day I met him – that he would be a key linchpin in our strategy on this front. The entire Winston team did an incredible job. The bottom line is, they put quicksand under Chevron. There is now no clear exit.

It is one more door shut.

Long talk with local team. I sent email on what each minister should do under plan.
They are moving forward. Chang wants to take lead. We have a lot of work to do.

David Sherman talk/investors: He thought initial terms good. I am worried word will get
out, because this plays into Chevron’s hands that we are business interested in money

Feb 20

Excitement over reading William’s email to Chevron. I think the chances of Cullen
calling us back just went up. However, I don’t think Chevron will call that quickly …
there is too much entrenched inertia against us, and I am convinced it will take more time to turn around.

I am worried about the court. We still have not gotten the order from the judge. Pablo
sent the escrito to the court last week and spoke to the judge. He thinks it will come
tomorrow (Wed) after the two-day Ecuador holiday. Said delayed a week because judge
had to report to the Judicatura to respond to some attempt to remove him, which Pablo
insists does not come from Texaco. Said he saw judge a little wasted in Lago with a
woman, and they talked. Pablo is impugning all dirimentes, hoping to get Fernando. He
is worried Texaco will impugn the studio … worried? Of course they will impugn it. If
they don’t, it means we lose because it won’t say anything.

Feb 15.07 (Thursday)

Critical week … perhaps a breakthrough week. Here we go:

Got home Monday night. Went to Sand hearing Tuesday afternoon. Get transcript. Neil
was awful, lining of his jacket hanging out, couldn’t answer fundamental questions,
completely technical without any storyline. Bunch of white lawyers, no mention of
humans, as Cullen said, this is not about dirt in Ecuador, it is about a contract and how to interpret it. Four for Winston (Neil, Eric, Raul, Manny) at counsel table, and then three for Chevron, then three Chevron lawyers in the Gallery, plus me and Kohn in the very back, plus the two NYU students, Joe and Richard, and a woman and another buy who were getting water for the Chevron troops, etc. Get Chevron “book” from Neil and Eric. Tons of 3-spiral notebooks, Fisher and Kolis sitting next to Cullen. Texaco General
Counsel in front row (black guy). Neil started, no narrative … recounts various contracts. Nothing about people, about humanity in Ecuador, about what Texaco is doing is just another step in this grotesque narrative. Neil did not know answer to Sand question;

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Sand question reflect buy-in to Texaco philosophy. Neil’s position is that the JOA
terminated by law in 1973. U sed “lurk in weeds” and “assumption by ambush”. Sand
looked like a dying Jesus Christ up there – slow, hard of hearing, hunched over when he
left the court, impatiently telling everybody to sit when they stood when he entered the
court.

Cullen argument was awesome, folksy, conversational, with a narrative, cited Otter at
Animal House. Relied heavily on the Teran letter. This is the linchpin of Reis Veiga’s
fraud at that time. Cannot help but notice the little Poland Spring water bottles. Sand
did not ask one hard question of Cullen. Eric finished and made a good comeback. The
best victory was further delay of the trial, now until May at the earliest. This will allow us time to finish Lago first. Went to City Hall bar after and talked it through; Joe had written an outline for the meeting with Cullen.

Next day (Feb 14) a huge Valentine winter storm roiled New York. I was up at 5 a.m. to
prepare for the Cullen meeting. After listening to Joe’s outline yesterday (he spoke for
only 5 minutes before the Winston lawyers showed up), I was really nervous he would
sell us short in his desperation to entice them into a deal. So I prepared an entire
presentation. Lehane had told me Lerach has no ptoblem putting a multi-billion dollar
number out, and that we should not either. I had the whole dynamic worked out in my
head. I was just worried I could not get Joe to go along, and or that Joe would undermine
the approach in the meeting. Met Joe at 7:30 at the Lowell Hotel for breakfast. Elegant-
bagel, two orange juices, and a tea cost 43.08 before tip. Another example of the range
of wacky environments I have to function in. We had an hour to get on the same page.
Joe started as a friend and uncle, quoting his Dad: he said I seemed a little torqued, that I needed to be really cool, because in these meetings once you say something you cannot take it back. If u remember, in that phone call in Quito a few weeks back he acted like the gov could put in 600m if they were doing it already, and chevron could put in 200m and would have our deal- and I responded in an email that I didn’t think we needed the gov to be involved at all, or if they were, at most 10 or 20% max of the total. Not only would anything more be unfair, but the reality is it would never fly in Ecuador. I emphasized to Joe that the real bottom line number was 3.5 to 4 billion, and if a number comes up, that should be the number we mention. To do anything else, given that we have worked with Russell’s number all of these years, would make us look like fools.

But the time we finished the breakfast, we were comfortable and I was more ready to sit
back and watch the show rather than lead (talk here about leading v. secondary role in
history of thecase).

Got to Jones Day in blinding snowstorm. On 40th St between 2nd and 3rd . Cullen met us
– he was the warm guy I remembered from court the day before, with navy blue suit,
light blue shirt, solid blue tie. We went into a small conference room with no set up –
not a good sign. Went into some little kitchen, and opened the fridge – all there was was
a case of beer and some like milk things for coffee. Joe made a reference to Animal
House, and said he felt like the fridge looked like a college dorm kitchen. We all
laughed.

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In meeting, Joe opened and said the magic words: we believe we will get a multi-billion
judgment within one year. “We are looking for a partner in peace” Ok, that was all we
needed to set the right tone. Cullen indicated this was going on a long time by making a
joke that we don’t want our children or grandchildren to be litigating it. He made some
surprising admissions: that AW really bothered them, that he got calls all the time from
Chevron when AW was doing street theatre out front, and he told them to just chill out,
you will never satisfy these groups, don’t even bother chasing them or trying to win their approval. Talked about working groups, structure; he made it clear they could not just write a check, that they would have have assurances the money would be spent wisely, as whether they liked it or not, the work would be identified with Chevron. Dissed Reis Veiga: said the first line of his obituary would be this, and said he could not be able to get near any discussions if they were to be successful, but he also said I would not be able to be there either, perhaps – so I made a joke about it, and we laughed. RV is isolated, and he had no problem letting me know that. He called Dan King a moron. I also made another joke, and he laughed his ass off – I said I swear I have not met with anybody from the government (in the context of explaining that the new gov is favorable to us). He said, “As I tell my kids, if you’re going to lie, lie big.” He left it that he would get back to that guy James, the black guy in the front row (from upper management and apparently above Edward Scott) in court, whom he described as “dispassionate”. He said he had to leave around 10:20 to catch the Acela back to D.C. The meeting was short, to the point, warm, and I think productive. It accomplished our main goal: he could see we were not freaks, we were people who could compromise. When I explained the fraud on the remediation he admitted it bothered them.

So what is the upshot? Joe thinks there is an 85% chance they won’t get back to us. I’m
not so sure. This is a dynamic, fluid process; the key is, there is not a line of
communication with a real human being, somebody who seems like he has some
distance. Thus, whenever they are ready, they now know it can happen. Those who said
we cannot be dealt with at all, thus justifying never talking, are going to be more isolated in the company. This is what I call significant progress, even if we don’t get a call from them anytime soon. I wonder how my portrayal in the Outside mag article will factor into it.

Interesting the relationship b/w Lago and New York. The biggest victory was the delay
of the trial date – something Cullen asked for, as did Neil. This leads me to conclude that Reis Veiga is still running the Lago trial team for Chevron, driving them hard, thinking the March 1 date will be their magic bullet. The fact that Cullen did not seem in any hurry up in New York tells me that Reis Veiga is operating independently of him, and the trial strategies in Lago and New York are not as closely intertwined as I had thought.

Feb 12. 07 (Monday)

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Flying home on LAN. Pins and Needles with Sand hearing tomorrow and then meeting
with Cullen on Wednesday. Went over Texaco document with William in the airport
restaurant. That shit makes me sick. However, I still think we have problems with our
lab and that concerns me.

Flew down to Lago on Friday after a terrible night’s sleep. We were in Guay last
Thursday, and calling out the terrible threesome made me nervous throughout the night. I
realize I had been holding back re: Ortiz, perhaps because of Carmen, perhaps because of
my initial meeting with him at the first inspection, but I have been holding back too long.

Key legal issue on Friday: who will be the perito? According to Pablo, 22 people could
be it. Judge eliminated 15 from both sides; that leaves 7. Eliminate the first 5 of the
seven (the corrupt freaks), and that leaves Echeverria and Richard. Richard served in the
last inspection, and he was found by Fernando Reyes, who has turned out to be a good
friend of the case. Richard showed some surprising independence, telling the judge
quietly that Texaco’s sampling was bullshit. The question is, do we push for Reyes
himself or Richard? At first, I thought the idea Reyes would not be the perito was a case
killer. I simply am loathe to spend much more money on the case not knowing if we can
get a damage claim before the court, which essentially would prevent us from winning
the case before a decision can even be made. I trust Reyes; I don’t know Richard, even
though he looks promising. So I met Richard with Reyes on Sat afternoon in the Hotel
Quito, one of my endless series of meetings. He was a humble man, not very
sophisticated, but he seemed smart and under-stated – maybe the perfect foil for Chevron,
but there is no way to know for sure so there is risk. Reyes things we should go with
Richard, and he can help him. The problem is that Wray made some dumb-fuck
agreement with Callejas at the first inspection where they agreed the perito for the GP
would come from somebody who had actuado en the trial. I have no idea what the reason
was for this limitation, perhaps it just seemed logical at the time before we knew how
useless the peritos and the dirimentes would be. To get out of this agreement the judge
would have to impugn all peritos from both sides plus the 7 dirimentes. Actually, the
only two dirimentes who have not been impugned at the final two. So we would have to
impugn them to have any chance of getting Reyes, which might help anyway. The entire
process is so ass-backwards.

Still big issue on social component. Two issues: Padre who knows Pablo (we write or he
writes), and the Spanish guy. I am so not on top of this. Talking about enuesta of 1,000
homes. I am not keen on this, but Esperanza is pushing it.

Pablo: 8 asasinos in 15 days in Sushi; William says he is being prosecuted for terrorism;
LY did not even know about it, we are so busy and it so much a part of the bullshit
culture. We must talk to Petroecuador about it. His brother has a death threat. Relates to Pablo’s work about PetroEcuador laying tubes and getting people to stand up for their
rights. Caller ID in Shushu h.r. office was from intelligencia military. Pablo did some
sort of denuncia.

We talked about upcoming settlement discussion … decided purpose of meeting to see if it would be worth to have a real meeting. Must have reps in real meeting.

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I have never felt so overwhelmed in the entire history of this case. So much to do, plus
the legal work. How are we going to do and write the Global in 120 days? The alegato?
Keep everybody alive? I told Berlinger the other day that I think this case is going to end favorably, but in a way nobody can possibly forsee – like through a tragedy forcing them to settle.

Feb 8 (Thursday)

We got the judge’s providencia. Not as bad as we thought, as usual. Denied Chevron on
everything, said he would appoint perito or peritos from group that had served. But one
scenario is that he wants to be attacked by both sides to protect himself, and then he will revert to original Fernando plan. Plan B, Richard, is not so bad and might even graduate to Plan A. I am much more calm about it, but we are not out of woods yet on what is probably the most imp legal decision to date.

Saw William last night. Ken Robertson, Chevron’s VP, flew down and had lunch with
him and McMillen. Robertson called Pablo an “over-wrought extremist”; McMillen said
the remediation was perfect.

I called Pablo today and said his security threat has increased, to tener cuidado. William telling them he was doing a profile on Pablo was reckless – who knows what they will know do to dig up shit on Pablo to discredit him or have one of their local goons take action. But I cannot blame William that is no his problem and the VF publicity will likely offer Pablo a level of protection that he did not have before. The first thing they did was explain about Outside, trying to scare him off the story. The problem again is the local crew who can act outside the scope of their authority so easily and hurt somebody.

Talked to Luis about security tonite on walk home from Noe. He admits he will be a
kidnapping threat if we win, people will think he is rich. We need bodyguards. It is
almost a prestige thing in Ecuador – saw Carlos Vera with bodyguard in Hotel Quito,
corner table, ya sub-teniente, which is very high rank. For us, it is politically unpalatable to have a bodyguard, but hugely risky not to have anything. I told LY that 30,000 people were counting on him and Pablo, so it was not really a personal decision, but also a decision of the lucha. And I told him I was worried for myself, especially with a wife and a kid now. He said was it machista (their attitude), or valiente?

Went to Guayas today to do saturation interviews with LY and Juampa and MEY. On
Radio Cristal, louted Ortiz for the first time. The folleto was perfect, the radio hosts
were reading from it. Doing radio is like therapy for all us – we get real high when we do it, and Guay offers us more political space. Tex has no voice there and no capacity to
cover any territory other than Quito. I met also with Santiago Roldos and Carlos
Gutierrez – two of my favorite journalists in country. To Gutierrez I pitched the the hot
docs, the trial before Sand as a thought piece on what arbitration means for Ecuador, and
an update on the trial and following Ann Maest through the jungle as she begins the PG.
Santiago is the most sensitive, touching guy. He teaches acting and has a theater group.
His columns are so intelligent. He talked about his parents. He lost them when he was 7.

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It is like JFK, everybody remembers where they were – LY says he cried, he was
studying when he heard the news about 8 p.rn. He lost both his parents. He wanted help
with the National Archives and doing a documentary. He said he does not know to this
day if it was an accident, or if they were killed. There was never an investigation – just a 9-day explanation, and the engine has disappeared. I think we should do something. We want to help, and he wants to meet Joe Berlinger.

I have never been so busy or excited. The team is incredibly stronger with MEYI and
MEY2, and we are going to bringin a third person andprobably get rid of Sylvia. Correa
has a radio show and cabinet meeting from Tena, so we are trying to get him to talk about
the theme. Lupita saw Monica Chuji today.

Issue of ICJ case against Columbia and Raul, competition with Reichler, me wanting to
get APV to make his own proposal. The entire issue is instructive of how Ecuador
always looks to gringos to solve problems when APV could do it for 10% of the cost.

The Outside article is hurting me … Joe said it was not fair to me. Lehane says welcome
to the bad-ass club. I don’t mind being a bad-ass, but I do mind that Masss was
dishonest. I have to do something. Do I have the stomach for this?

Feb 7 (Wed)

This week has turned into a real pressure cooker. I was nervous that everything
was going too well, and now I realize for good reason. There is always some
problem hiding under the nearest rock, ready to activate and harass us at any
moment. The latest is the judge feels bound by an agreement Wray made with
Callejas in the first inspection to use peritos already appointed by the court. I
thought we had worked this out with the judge, and that Fernando Reyes would be
appointed the perito. We have been working with him in preparation. Now, the
judge feels he cannot do that. This is a function of T’s pressure campaign – Callejas
submitted 30-pages of crap yesterday morning. The judge told William of VF that
Pablo made a mistake, did not arrive with his full team. It was a critical meeting
yesterday with the judge – Callejas walked out when Yanza spoke, then came back
in. Pathetic. I should have been there. Julio should have been there on time, and
flown down on Sunday. The VIP flight full so had to go to Coca, and did not get to
meeting until 10:45. Callejas and Pelusa stayed all day, left Tuesday morning.
What were they doing? APV and I both talked to judge by phone – he had no space
to hear us. I was really angry at Julio – he said we had won nine out of ten steps,
this is not bad. He is naive – he doesn’t get how power works. How can APV not
show up at the critical meeting?

To deal with this, we were using Veronica’s cell phone for security reasons. I am
worried for Pablo’s security. William of VF is taking all his notes – he gave his care
to Texaco yesterday after the judge’s meeting and they sent security to look for him.
Sara McMillen is in town and is meeting him for lunch. I am sure they are having
corporate meetings over how to deal with VF. Saw William again last night after 9
days. He is a little nervous, talked about fear of getting sued for libel and getting the

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article past his lawyers. I need to take him through the science and I am still
worried I don’t completely have it together. Fausto Penafiel is nowhere to be found.

The fundamental problem is that we will not be able to get out damage claim before
the court, and Texaco will have an equal right to pressure and manipulate the
perito. The legal argument against it: all peritos have been impugnado, and the
derimentes were appointed illegally. That is the legal argument. Again, shows
institutional weakness of court and personal weakness of judge. He is going back on
his agreement with us. He is weak, and he is scared. It is amazing how this entire
effort can be spoiled or threatened by one decision.

Met with President of Supreme Court yesterday (get name). Describe phone call to
Yanez – said hurry up, set a 45-day plazo. Amazing performance – 5 minutes total,
bravura performance, absolute example of how politics works in Ecuador. It might
have actually hurt us, even though it did not appear to at the time, by forcing Yanez
to hurry up and make the wrong decision, rather than wait and try to make the
right decision after we explain it to him.

Met with Chang, the health minister. Crappy building, cannot even find a
bathroom – reflects how little money government has given historically to health
care. Was not aware of cancer issue or problems, but was very interested and
responsive. She said she would present the issue to the Cabinet on Friday in their
meeting in Tena (Correa is having cabinet meetings in the provinces). Her assistant,
Beatrice, indicated that the Min of Health historically did not deal with petroleum
issues. Suggested inter-institutional cooperation among ministries. We have new
folleto – we need to bring her materials today.

Kohn left msg – Collingsworth called him, and asked if there was a mediation. CB
and Terry are fishing around. Maybe they want out of their case in SF, maybe they
want to fuck with us and blast us in front of our clients, but this is definitely a CB
plot to do something. Remember, CB just took me on in Outside magazine.

Raul’s two-hour meeting with Correa. Correa hired him for three matters –
Colombia fumigation, Oxy, and Texaco. He said Correa is serious and wants a
legacy. Wants to see list of lawyers who are hurting the country. Issue with
Reichler and Lehane lobbying.

Feb 4 (Sunday – returning to Ecuador)

Emotions smung wildly last week. On Friday, Kohn called and said Cullen called him
back to set up a meeting for Feb. 14 at 9 a. m. Sort of feel like it is all coming together,
but risks are still great because of Sand. The key is this week – getting the PG ordered

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with a date certain for passage. That, combined with the pressure of the Sand matter
coming to head, is probably enough to scare the shit out of Chevron. If VF lets is be
known they are down there, plus Berlinger film, all the better.

Outside magazine article comes in mail via Lou. Made me look like a rabble rousing
jerk; Peter Maas used me. Chevron will be able to use that article against us down the
road. He even quotes Cristobal against me. How much longer can I go holding fire
against Cristobal? I realize cooperating with Peter was a tactical mistake. He is a cynical journalist; I am much better off behind the scenes for many reasons. Now I have to worry about William, the VF reporter. Emotionally, I feel golpeado – the shadow editor
thing all over again. It was mildly complimentary – after watching me, he feels sorry for
Chevron. I am trying to be cool and go on, but I am really bothered by it. I am such an
easy target – I need to lay low. One thing that does come clear is that we are really under their skin.

Worked extensively with Winston on the documents for the Reply brief. The papers they
filed on Tuesday were weak (see my long email to them), and I really feel they are still
playing catch-up but not carving out the space to make their arguments. Everything is on
the defensive. They are weak, weak, weak. But they are smart, smart, smart. Got them a
bunch of stuff. It could be so much worse. Chevron is pounding them as if they are us
(the collusion), while they are not pounding back as if they were us. The pathetic Cullen
wrote a letter to Eric threatening him about Fact #89 on the issue of whether a
remediation actually took place. We are really under their skin.

Met with Heather and Shawn, with Berlinger filming. Sometimes I feel I am letting
Berlinger in too much as well. I am starting to get paranoid as a result of the Maas story.

Hanna quit – MEY starts saying I don’t adequately appreciate the work of the people in
the office. I am sure Lupita behind, with her manipulations. Must get there tonite to
bank out impuestos press release.

Jan 26 (Friday)

Death of Ministra – really learning about Ecuadorian politics, and really
understanding the need to learn about it. Touched me greatly.

Must meet Galo Chiriboga. Do CIADI thing.

Long meeting about strategy – agua potable and stop contaminating.

Made pamphlet.

Great trip to Gquil cancelted

Talked to APV: FC, Banks, Germans, Bankers

Jan 23/Quito (Tuesday)

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Guayisamin party for Evo’s 1st anniversary: Monday was incredible – went to
foundation ceremony in morning (what Pablo had asked that I stay for) and met
ambassadors of Bolivia, Venezuela, and Cuba – Alexis and Paco Velasco were there too.
Lupita said I should not wear a suit and a tie – that the proper outfit if you are “of the people” is not that. I am not so sure but I know what she means to say. Especially since Evo never wears a tie, and Correa did not wear a tie to his inauguration. Not even Obama is wearing a tie these days. At night party was so colorful and interesting. Talked
extensively to Cuban ambassador. He served in Afghanistan under Najibullah, then in
Prague for several years. A really smart, career diplomat. He said diplomats from both
his country and mine were under orders not speak or interact with one another. Also met
the PC chief at the embassy whom I remember from years ago Pablo could not have
been nicer – met the dentist, the dance guy, the architect for the Capilla, Luis Macas,
Richard – it is the only place where indigenous leaders and the burgesa easily mix. Pablo
is obviously single-handedly providing the glue to hold much of the left together. Still
introduces me as the “cabeza” of the lawsuit which I don’t like but that is fixable. And it is obvious that the left in Ecuador is getting huge encouragement from the Cuban and
Venezuelan governments.

Raul advised not to go thru ambassador because he said many in PDVSA at lowest level
would try to stop us from them putting pressure on Chevron. Good advice. PDVSA is a
commercial company and we cannot forget that.

The idea is to somehow close the doors of Latin America to Chevron so that the cost of
not cleaning up Ecuador becomes higher than cleaning it up. Then we win – assuming
they can get over their psychological hurdles.

Correa image is already suffering. His impetuousness is getting on the nerves of people,
and there is talk (in typical negative Ecuadorian fashion) of his government collapsing in 6 months to a year. Lucio made a “pacto” with Noboa and Febres Cordero. He is dealing
the political parties, and there is near-unanimous opinion that some of his cabinet
ministers are not up to snuff – particularly the foreign minister, and I already saw what a total idiot the Minister of the Environment is.

Bonifaz: contacted SF law firm to work out global settlement – the guy won’t go away. I
told Raul to be straight with them. The firm called Neil and now they are going to call
Raul. CB was be telling them he has power to settle all cases even though he has no
authority to speak for Lago plaintiffs – just like the Jeff Frazier issue.

VF coming – I have to stay longer, will be my third weekend I here for first time.

MEY s started and planning trip to Guayas for Thursday.

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Jan 211Quito (Sunday)

Things lining up for us: New York, 90 day plazo for PG, MEY coming back to work
for us, desperation as reflected in Texaco’s papers, Correa election, unity of team,
Berlinger film, possible Vanity Fair.

Pablo Guay trip to jungle: On Friday (Jan 19), went to jungle with Pablo Guay and
Kelly McBride, Pablo, Luis, Lupita, and the film crew. Kelly gasped when she saw the
Guanta pit. Pablo talked about need for a film, he can distribute – talked to Joe about it.

He invited me to come to an event Monday night at the Museo to honor Evo’s first
inauguration where I could meet cabinet ministers, ambassadors, etc. He explained how
hard it was to come and go, that when you come back you are back to “nada” – and he
encouraged me to stay. Said he could help with Venezuela and every country in Latin
America. We talked extensively about Ortega, Tomas Borge, and other Sandinistas. I
couldn’t turn him down as much as I was looking forward to going home on Sat to Laura
and Mateo. When I told Laura I was staying we had a series of very negative
conversations where she accused me of choosing work over family. It was really
unpleasant, but I have made the right decision. There are three things I have yet to
complete: the materials for the Cullen meeting, the communications plan and the MEY
personnel change, and following up with Pablo Guay. I realize now that I am probably
going to need to spend two weeks per month here to take advantage of the new
coyuntura.

Visit Guanta again, meeting a bust in San Carlos: Visited Lago 1, Lago 24 (where Tex
remediated and Donald showed it was bull shit ), and Guanta. I have noticed it is
increasingly difficult to find open air waste pits. The pit at Guanta – the disgusting one – has gone down a bit given that PE is not longer using the pit to dump water of formation as they are reinjecting at the site. And there were no open air pits easily accessible between Lago and San Carlos. When we got to San Carlos (after the battery died and we had to push the van to jump start) the people who had been convoked did not show up. It was more than a little embarrassing. This was when we were supposed to present the results of the San Carlos inspection to the town and nobody came! As I told Joe Berlinger, why would you want to come hear the scientific results of a situation

Luis freaking out about money: LY emails – he is completely nervous about lack of
money. Our phone and electricity will be cut off this week. We have received no money
since November. LY feels the brunt of the pressure from creditors, the brunt of the
pressure from the base communities, and the brunt of the pressure from staff who have
not gotten paid. God, what I could do with 1 million. Swiller went silent, Russ I have
not hid up yet. Joe K went on vacation without sending money, as he said he would. I

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really wonder if the money is not in the bank or if he just has this problem about signing checks.

Frente leadership crisis: Luis is also worried about leadership crisis in Frente – he came up today on overnight bus from Coca, we took hike and met with MEY, and then LY
going back on 5 p.m. bus for morning meeting with Pablo and Frente leadership.

Jubilation over Winston papers: I started reading the Winston papers on the way back
on the plane from Coca to Quito. I got up to page 22. Later that night, I went out to
dinner with Andres, Steph, etc., for Steph’s 40th birthday… and stayed up real late. I
couldn’t wait to finish it. I think it is a masterpiece – a Rembrandt, really, particularly on the JOA/arbitration issue. All of Eric’s technical arguments about the Anti-deficiency Act suddenly came alive like the most beautiful flowering sprouting in a place where you would least expect it. This totally changes the calculus of the Cullen meeting and everything else we are going.

Possible Cullen meeting: Before Joe K went on vacation the week of Jan 8, he called
Cullen and Cullen agreed to set up a meeting when Kohn got back – probably at the
beginning of Feb. When Pablo came, I discussed with legal team here and they agreed I
should go forward despite the risks of being slammed afterwards by our enemies, such as
Kimerling, Cristobal, etc. Anyway, JK said that Cullen gave his song and dance, saying
the number would have to be less than 100m and they were worried about finality.
Blatant conflict of interest between lawyers and clients. Said he already spoke to Bonifaz about a medical fund. I am worried about Kohn undermining me in negotiations.

Bonifaz case update: Worried about his case – could still get in way of settlement, ifTex
smart they settle with him for a small amount, he comes down and acts like hero and we
are cut out on the big amount, plus it could divide the communities. We are trying to find out what days his clients are planning on traveling to the USA.

Jan 19/07 (Quito)

Yesterday was one of those utterly incredible days that make me feel so appreciative
that I am doing this. Key things:

Got the papers on summary judgment on both sides and was really depressed the
day before (Wed). I had that same sinking feeling that I had on the plane ride with
Abady to Ecuador in January of 1994. They are just do good at what they do, but
they are so slick about it. They distort so many facts without technically lying.

On phone call I pointed out the main point: that they are completely distorting the
Lago case by trying to make it appear different than the Aguinda case filed in 1993.

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This is key point on their 99 law theory – explain details by looking at papers. This
is a real lie. They also blasted us for “intimidating” their employees, “wooing”
dissident shareholders, “bullying” the company. Get Neil’s email: he raises a
critical question – how did George Branch in 2002 before Rakoff stipulate that the
same case with the same claims could go to Ecuador, AFTER they had passed the 99
law, and now they complain about it?

Met with judge last night in house. Humble house, furniture. Made tea. I really like
the guy. Remember last August I wanted to ride the wave and get him off case?
This was an example of Pablo’s total intelligence. We saved him, and now we are
reaping the benefits. Explain politics around plot to remove Yanez to get rid of the
Perfecto and control the money. Pablo under severe pressure. They tried to use our
case, enlist our support, because they knew we were upset with him. Texaco
watching from sidelines, trying to provoke us. Instead, the Comite passed a
resolution that he was able to use before the Judicatura to save his job. He hates
Guerra, because Guerra was part of the plot. Guerra will be the judge to decide the
case. We have to start lobbying him, working with him.

Pablo is so fucking amazing. He gets along with everybody in the court. He has this
brilliant long-term strategy of not getting sucked into the petty politics. Even with
Ileana, the secretary, who is still fucking us and has not learned her lesson, he gets
along well with her and it never gets personal.

Pitched the writer at Vanity Fair… on Pablo. Turned him around by explaining
details of Pablo’s life. This would be a huge coup.

Met interim AG with Luis, APV, Raul. “The door is always open” he said to Luis –
a far cry from the days of the protests, fighting our way into the halls of power.
Think of what has happened in ten years – how we have gone from fighting on the
outside of power, to being on the inside.

Lunch with Kelly McBride. Invited her down to San Carlos today.

Wooing meeting with MEY.

Jan 17/07 (Quito)

Went to Correa inauguration two days ago. Great hope – saw Daniel Ortega, Alan
Garcia, Lula, Evo, Chavez, Bachalet – really, awesome display of Latin American power
although Kirchner stayed away as a result of the President of Iran showing up. Got in
with press pass. Palacio was very dignified. APV told me first time since 1984 that a
President of Ec gave the presidential sach to the next President. First time in history of

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Ecuador that the old President and his family walked out with the new President and his
family. All the Presidents got stuck on red carpet leading out – cars were not ready,
horse shit on the streets, Ortega rushing into the crowd, journalists swarming about each
of the heads of state. Get copy of speech. Highlight seeing MEY and re-connecting.

At Mitad del Mundo, great ceremony – I got in stage. Young people – Min of
Environment is 37, Cancillera so young, very informal, few are wearing ties, the Min of
Agriculture on TV wearing jeans. The three ministers “ratified” from the previous
government were all booed – said “fuera” “nueva gente”. Chavez was at Correa’s side
the entire time. Correa impulsive – when booing, said the people must be “infiltrados”.
Look at mural behind Congress – painting with the CIA.

Worried about Raul and multi-million dollar factura. Raul was at reception for PDVSA
yesterday with WS promotional materials. This is his big break but I am concerned the
Correa gov will get his bill and then we will look bad because we have been making
introductions for him. We need to figure this out with two steps – one, that Raul
significantly discount his bill out of the gate, and then discount it again before paying – and that we have conversations with key people putting distance between ourselves and Winston. The problem is that this gov is totally against international arbitration, and they don’t necessarily distinguish between different litigations and they don’t have a clear plan about how to protect their interest against a global legal and financial system that appears to be gamed against them. I need to talk to Raul about it today.

Met with MEY yesterday. We have such a connection. We need to bring her in and
reform our team and take advantage of the new coyuntera. Luis is tied up with CEDES
issues (Juana is leaving).

Pablo told me the Texaco people saw me at the inauguration on TV and within minutes
Pelusa had called the court in Lago to find out if I had been there.

Dec 16

Back on plane to U.S. Continental, got upgraded to first class. Here is the deal:

New Correa gov offers great hope after fear of Noboa. We were depressed before,
euphoric now. Met with Alberto Acosta (future minister of energy), and Vargos Pazos.
The meeting with Correa did not come thru – he was traveling to various South American
countries. We are Raul got meeting with Acosta. Explained case to Acosta. I was struck
by his level of honesty, his stature, his intelligence – this is an entirely new thing, the first signs of which I really saw in the earlier meeting with Galo Chiriboga. There are some

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incredible, dedicated, honest people in Ecuador. I always thought Mauricio was in the
minority, but the reality is that there is probably a whole generation of people waiting to step up if given the opportunity. Acosta said: “Our economy will exist in the service of humanity, not humanity in service of the economy.” I talked for a good five minutes and I was proud of myself. Raul explained case. Said only thing they couldn’t control was
naming of Procurador, and he said they did not have one name to submit to Congress yet
of the three required. People were either too old, too young, too this, too that. (He told APV he was too young – very flattering, he would make an excellent PGE.) Acosta said
Correa took decision not to take part in Oxy arb – said it was a political decision, wants to discourage other companies from pursuing. This is totally misguided – Raul tried to explain, but did not want to hear. Idea: paises emergentes (bad term used by Raul) form bloque to renegotiated BIT. Acosta seemed to like idea; will try to pursue. APV explained case, as did I. APV also explained mining case: AA said he would be open to
dialogue, that the people went work, etc., that it is a little more complicated. In all,
meeting gave me a high: I love AA. He greeted me warmly – we had taken part in a
press conference together at Accion way back, where no journalists showed up except La
Hora (wrote a big story) on issue of arbitration or something (don’t remember). We were
all very jacked after the meeting – felt hope, like another element had fallen in place for us.

The integration and closeness of LY, Pablo and myself is muy impresionante. I feel
like we are brothers, and that we are fighting side by side in war, and that we are
incredibly loyal and committed to each other. The jokes – Pablo was out with that
woman, and I call to offer condoms, and he starts laughing. He has such a great sense of
humor, I have such high hopes for him, want to get LLM in EU and become AG of
country. But at times he seems very immature and unsophisticated – but the only think
holding him back is lack of experience.

Breakfast with VP, Alexandra, and Lupita (and friend who will be Pres of Central
Bank): Happened Friday at Hotel Quito. What utter contrast to last breakfast, when we
were all down with Noboa’s first-round victory I love VP and daughter. She was
instrumental in defeating Correa on the banana front. She made it happen. Want to bring
her in to our team as spokesperson. Want to bring VP in as consultant to make vision
thing get traction. He said the rumor is that the embassy told Correa anybody but VP
would be acceptable as defense minister. In paper today it said Correa said he wanted a
woman in the position to balance his cabinet. The guy sort of reminds me of Clinton in
this respect. VP introduced me to friend as a “good gringo” and we had a lot of laughs
talking about how I could be the U.S. ambassador under an Obama administration. Says
wants me to meet prima of Correa.

Strategy: Need to finalize Venezuela – that is only element still missing to force them to the table.

Good thing Alberto did: waited until 6 p.m.on final day of proof period to submit
request for global peritaje. (They pulled the same time stunt on us during Guanta.)

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Russ coming in January – now have contact with two billionaires, Bing and Russ.
Andres told me Russ travels under a Bulgarian passport and is vacationing in Mexico.
Need budget, need to design trip.

Negotiating: It dawned on me for first time during lunch meeting on Wed – LY and PF
should not be at negotiation so they can be protected politically and they can criticize the offer on an equal footing with the rest of the people, to maintain their credibility. I see me, Joe, Robinson and Humberto (to protect the Judy flank), and a colona woman, such as Mariana. Plus the support committee. Fine line between getting ready and tipping our hand to Texaco. I am worried if they are there they will bear brunt of inevitable criticism.

Bonifaz and old tricks/SF Case/Jeff Frazier: Amazing. We got word from the “CIS”
that Frazier coming to San Pablo to sign up clients. LY went Friday to town to explain
and close doors. Frazier met with Esperanza on Monday and she expressed sentiment
that he was stepping on our toes. In meantime, got word his contract was 40% plus 5%
on appeal – pigs, to say the least. After talking to Esperanza, he wanted to meet with LY.

We set up meeting for Wed with LY, APV, and PF – plus Frazier and his punk Ecuadorian assistant David. They completely backed off after hearing the situation about
CB. Frazier said CB told him it was a completely different case, that the nine clients
were not a part of our case, which is a lie. He said CB and Terry don’t know how to run
a case, and they had called him to join in and help finance it after seeing that it would get legs. He is working on Oxy case plus fumigations case with Alfredo, and I don’t think he wanted to jeopardize that. Next, we hear CB has contacted a lawyer, Alberto Racines Martinez, to continue his fruitless pursuit of clients after Frazier probably called him with the bad news. One thing you can say, the man is indefatigable. This lawyer is related to Pelusa, who is a member of Texaco’s legal team. This is getting too close for comfort. Manuel Pallares called LY with this info because Poritz told him he wanted to come down on Dec 25 at CB’s behest to deliver $100,000 worth of medical equipment and arrange the visas for the nine to come up to get examined for depositions, etc. I see it: CB is using the punk Poritz and his high school project to open doors with clients – the same model as the oil companies and missionaries. Had lunch yesterday (Friday) with APV, PF, and L Y at the Cangrejo Rojo and we decided to embark on a two-step plan: 1) visit the community where the nine people are, and get a feel for what the plan is, if they were deceived, etc., using someone from the Frente, like Donald, with LY there (according to LY, the dirigente of the community already said they did not know that what they signed is for a lawsuit); and 2) decide what to do.

The reality is we could probably kill the CB lawsuit by convincing his clients to fire him once we explain the situation and apply political pressure, but this entails certain risks for us that include him charging us with interfering with his clients and also removing a point of leverage against the company that can potentially work in our favor.

I talked to Joeand he said it might be best to contain it to nine clients, but let it keep going – it is pressure on the company, a case we could ultimately control by signing up more clients, it keeps CB busy and not focused on us, and it provides an escape mechanism should we lose our case – another bite of the apple so to speak. So our interests might overlap a bit

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now with Bonifaz. Sort of same reason I did not terribly mind Kimerling’s attempt to
intervene in New York – as long as it does not go too far.

Legal issues at this point in case from legal meeting: First, peritaje global. First issue is who is the perito. We are down to Reyes. The woman from USF is clearly not up to
task. Other ideas: guy from Spain recommended by Esperanza not realistic. Choose
from 3 options: do nothing more other than Champs study; full-blown at every site; some
sort of partial. When we opened it up, Fausto said don’t do anything more – that we have
a statistically sig sample. I lean to doing it all for legal and political reasons, to make it easier for us to prove out claims and easier for the judge to find damages across the entire ecosystem. FP is drawing up budget. A Wray said same – no need, but if we did it would help us. Thus two people said no need. Budget will probably be 500 to 700; clear Havoc no longer wants to work with us, so we need to look for foreign lab. Other issue is Alegato.

Fernando Reyes and global: I had one-hour interview with him Friday to do a hard vet.
I asked how T could attack him, and he pointed out: worked for DINAP A and DNH;
worked for Fugro McClellan as fiscalizador for three months; wrote in book that gov
shares some of the responsibility. He also worked for Maxus as an environmental auditor
in the famous Block 16 which had caused so much controversy. I told him pointblank
that if he did this he likely would never work in the oil industry again in Ecuador, at least for an American company, but that he could be a national hero and have a job the rest of his life being involved in the clean-up. There is a certain level of “desconfianza” in him for these past jobs, for our previous arrangement as veeduria, for the tepid draft report he wrote, etc. I asked if he could be comfortable slamming them with a lOb judgment. He answered yes to tall, but I don’t know if he has the internal timber to pull it off but at this point I don’t see a Plan B. Bottom line is that he is an “insider”. I see using E-tech to give him cover, but he has to totally play ball with us and let us take the lead while projecting the image that he is working for the court. I think he knows how to do this; I worry that he will use it like Camino to try to get as much money out of us as he can. Remember, he asked Alberto for 30,000 to get all those papers out of PetroEcuador when we were starting the case. And he is still bugging me about the 1,000 he claims we owe him for work he never ended up doing as we cut off that veedura project early. Seems petty-minded when we need a big thinker, like Charles or Russell. Will a big thinker in Ecuador please stand up?

Alberto Wray: We also met with him on Friday to get his opinion on the global, among
other matters, in the conference room of his office overlooking the park with competition
at bicycle jump place. I always love seeing Alberto … I can’t explain why, but it is
soothing. I just feel like his interest and his involvement makes this real. At the
beginning of the case I just couldn’t get comfortable around him, but as I have
acculturated I just feel like we are friends. We had a great dinner on Monday night with
Raul at Zasu and talked up a story for 3-4 hours, getting into some personal shit about
racism against Latino’s at Raul’s law firm. Alberto seems vulnerable to me. Maybe
because he has suffered tremendous attacks from Paco Velasco, Tandazo, and the anti-
arbitration crowd and he doesn’t know how to defend himself. He said the purpose of the
global was to prove that the present contamination was a function of the “sistema

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operative” de Texaco, and to determine the overall impacted area, whether or not it is
remediable, and if so, how much it would cost. He said it was never the idea to do a lot
of field work. He said from a juridico pt of view, the more datos the better. Mor e
troublesome was the damages: I started to go through categories, such as degraded
habitat, and he rejected them (I don’t trust his opinion – he is very cuadrado on Ec law). He said judge can order Tex to pay; for the Frente to do a clean-up (key, so Frente can control money); to do it in tal manera; and 10% additional for the organization.

Wray affidavit for Winston case: Ended up APV having to sign because of ’94 Wray
affidavit where he said opposite – that case could not be brought in Ecuador. For Sand
matter, trying to show it could have been brought in Ecuador before the ’99 law.

Lauren: Blow up when she challenged my authority while questioning Sylvia.
Difference between expectations and demands of Americans compared to Ecuadorians –
interesting.

Raul dinner/Cullen problem: Stayed up to 2:30 a.m. at the Marriott. Lie of Kolis
regarding Gulfwitness and possible bar complaint.

Cristobal nephew/clean-up for 45 pits: We met at Saute on Wed night at bar. Talked
about CB tying death of father in 1978 of brain cancer to contamination caused by
Texaco – joke in family. Said he had contract with Texaco for clean-up – 5Am for 45
pits. Need to get more.

Meeting with Secoya: Came in to Lago on Monday to sign papers about withdrawal of
inspections and CB representation. The group has changed so much since 1993. Mobil
shit, Aditas shirt, Reebok sox for elderly man in traditional dress. Elias and Humberto
spoke in own language, and translated. Went to court. Secretary who bothered us before
(like during Guanta) seemed very taken aback and warm and was flirting with Pablo, who
later explained our golpe toward her forced her to step back and change her behavior.
Whenever I see the Indians in court it just reminds me what this is all about — the
historic nature of it. It is touching.

Dec 11

On plane from Quito to Lago for meeting with Secoya. Had meeting Friday with
Asamblea – only 14 of28 communities showed up. We explained negotiation, issue with
politics in Ecuador, how to do negotiation. Nobody wanted to name names. I suggested
that they set up a committee of respaldo so people can feel involved. Promised to take it
up in next meeting.

The tension between a “professional” negotiation as is done in class actions in the U.S.,
compared to what this might be, is becoming increasingly apparent. One needs to
balance community involvement with the need to have confidentiality among a small
group of negotiators so they can have the confidence they need to exchange their views
honestly. I think this might blow up in our face if we are not careful. Once we come
back with an offer, we will have a lot of enemies: JK and CB for starters, self-interested people in the communities such as they colono President of the Cofan; other lawyers;

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people who want some of the money. I could see a situation where everybody who
negotiated will be on the heat seat, and they might fire us if we don’t handle it well. One thing I am sure of: no matter how many precautionary measures we take, it will be messy – just how messy is the question. They will attack us for selling out, for the lawyers taking too much money, etc.

On Sat, went with film crew: shot the parade in Lago to protect the environment, where
mestizo woman dressed up as Indians, plus half-nude woman. Plus we shot two
derrames. The first because an 18-wheeler smashed into the pipeline at a curve; the
second was sabotage on an African Palm plantation. Good interview with engineer at
first derrame – admitted their clean-up methods were inadequate, and said that it
happened in April 2005, but they did not get the clean-up contract until June of2006.

We got word thru the “CIS” (Centro de Inteligencia de la Selva) that Jeff Frazier coming
to San Carlos to sign up more clients for CB case. L Y went to community Friday
morning to put the freeze on that, but you never know what these guys are going to do.
Chasing around communities to try to get them to not deal with these people IS a
monumental expenditure of energy. We need to file the bar complaint.

Things to do this week: finalize PG plan, PG expert; go over Champs settlement
proposal; Health action plan; meet with Correa and gov ministers with Raul. Lots to do.

Dec 7

On plane to Quito from LA for AW fundraiser. One-day trip: great speech at fundraiser
(Joe filmed); saw Lily and Achuar from Peru, fresh off great victory (need to find out
more about it); met with Ari Swiller, one step away from Bing, asked for 1m and felt like
too little, he asked for budget; Berlinger covered it, got some great materials and it gave
us a chance to catch up; Russ told Berlinger he wants to come to Ecuador in January. Get
Lily demands in Peru: 5% of royalties to communities. How to tie to indigenous
communities – one-up Judy.

Problem: email from Pablo saying Jeff Frazier coming to San Carlos to sign up more
clients for Bonifaz case. We must deal with this. L Y and I are going to talk about it
tonite.

Dec 4 (summarize week of Nov 25)

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Getting stronger: Situation:

Signs that we are winning, getting stronger, are everywhere. Mother Jones web article indicates Chevron is scared to dismiss Bonifaz case because they are nervous they will lose in Ecuador. Correa won; Vargos Pazos to be Min of Defense, Alberto Acosta Min of Energy, sympathetic people and those we know personally in several key posts directly related to what we are going. Key is to write settlement vision document. That is next step: to sell everybody, the team, the Ec gov, and Chevron, on how we can all win from this. Joe meeting Cullen today – I hope we can just do a basic conversation. RH says AG (Borja) will file formal complaint with U.S. DOJ over. We are getting meetings with people who never used to take our phone
calls. Key is to continue to build national political support for a solution that will survive any change of administration in Ecuador, but we have to define the solution to build the support.

Sand case: Depositions coming in good – our side is much stronger on both issues.
When first started, I thought Bonifaz mistake would kill us on the release. Now, it
appears we have turned the tide. On JOA, clear form all witnesses it is not binding
although still problems with accepting benefits. Dispositive motions getting ready –
Alberto Wray affidavit, drafted by Aaron, excellent – will really help us.

Conf call with Winston: Had conference call on Monday (Nov 25) with Neil, Eric, RH,
and JK. Neil reiterated that in May/June of 04, Texaco became very close to getting the
AG to issue an officio saying he agreed with their interpretation of the ’95 release –
basically handing them over even more riches. Borja suggested the Pres of PE do it, but
Texaco worried it would be unenforceable if it came from him. They insisted and Borja
got mad at them. All they wanted was assurance local judge would treat them fairly, and
protection from the armed forced (later to haunt them in Guanta). In terms of
depositions, he said Texaco never thought 95 JOA was binding … both sides used
portions of it as referential material only. There are three documents calling it a
referential document. But under federal common law, intent is not necessary – could hurt
us bad. If the state knowingly took advantaged of the benefits, it could still be bound by arb clause. Neil says Sand appears to have a simplistic view. Has made remarks on
various occasions about whether to send parties to arbitration. Our best argument is that
we dispute that benfits were accepted, and combine it with provisions of Ec law and NY
const law clearly limiting what the state can be bound by absent express provisions.
Also, requirement of substantiality – were substantial benefits accepted under the
agreement.

Eric’s view: “If! were the judge, I would dismiss it as a matter oflaw. Both parties used
it to their advantage when they wanted and did not when they didn’t want to. Combine
that fact with Ec law, and it is not close to being binding. Court would have to
contravene established principles of Ec law that requires it to be in writing (their own
version of the anti-deficiency act).” Note that when I first met Eric and he started talking about the anti-deficiency act, I thought he was a little out there. He always seems right on the law but overconfident because he does not take into account the politics of Sand and the damage Bonfiaz and Collingsworth did to the case. Eric also said the PP deposition, it came out that there were a series of exchanges where Gulf said nothing binding since the 73 decree by the military government. Eric said the 99 law issue is pure

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issue of law, and there should be no trial on that issue. That makes me nervous. He also
said looking back on Sand’s 88-page decision now, it appears he was being cautious,
asking that evidence be heard so as not to take chances. He said Texaco’s best shot is
that Ec law does not really apply. Two key affidavits: one from drafter of 99 law, and
their legal expert. Also mentioned a Bonifaz email to gov saying clean-up would be
30m.

Technical side: Got Champs report – good job, but fanciful at 3.1 b with 50m just to build a production facility. Asked for a Plan B and a Plan C for less money. He resisted when I asked for betting, but he is getting from Katz and his brother. All these tech people don’t want to think practically – always shooting for everything. Had conversation with Ann, Mark, Bill, and Dick – same thing. Mark’s comment about water systems. They want to overprove the case, just like Russell did, just like Camino did with his 53 samples at the one site. Ann makes good point that we have to create a story. She talks about extensive examination of a handful of sites, drawing arrow to show how surface water contaminated, show discharge pathways, and that contamination not localized. Not sure that approach is what we need right now, when we want to finish the case asap.

Other issues: Asking for PG today; working out new contract with clients. VP wants
again to back out on deposition; talked extensively to David DeRothschild.

Nov 20

Flying home – great trip one, of best ever on a number of levels. I feel like we have
reached another level; some much to keep up with. Three inspections South of Coca and
great press coverage combined with silence of Texaco. Two articles in EI Comercio –
one on second day, one on Monday after last day. They also ran the AP story the first
day. On Sunday, they ran an article on Obama that mentioned his involvement in the
case. In addition, we have the ltr to the editor signed by the indigenous communities,
dealing with the dual issues of Tex lies: about our money, and about the division of the
indigenous communities. There are other signs of Tex weakness: we had multiple press
releases this week, starting with the inspections themselves; Texaco’s 11th hour effort to suspend the inspections; the first day of the inspections; PP’s deposition in Washington. Did several radio interviews: Radio Municpio (6:30 a.m. Thursday); CORAPE at 6:30 Monday, then Radio Quito at 7:30 (with Luis) and then Radio Centro at 10 for a tape that will air today. Our interview on Radio Quito was picked up by Ecuador Inmediato. We
also went out on television: Gamavision, Teleamazonas, and I think Ecuavisa. Plus
report on arbitraje, plus local coverage in zona, and HUGE turnout of locals. The Tex
people feel pressure: security guy makes obscene gesture to Joe camera crew, puts hands
over lens, etc. Teaches u how to define media coverage: the big article in EI Comerci 0
was the inspections end, even though Texaco still has ten left. This is a key turning point in the drama. On way to airport, taxi driver said I was much improved. Same guy who
criticized me after my last TV appearance with Andres Carrion, he took us to Radio
Quito and said I had improved significantly. I think my Spanish is really kicking in: we
are hitting them hard on basic themes: 1) we are winning; 2) the trial is coming to an end;

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3) they are lying, trying to rip off the country; 4) this is a huge struggle for all
Ecuadorians against an evil foreign company; 5) that Tex main defense is delay, and their
lawyers are in it for the money. Pending we have Ortiz on Teleamazonas, and Radio
Vision – the media establishment for TV and radio, respectively. We actually have built
up a huge store of credibility and frankly I think it has a ton to do with the personal
integrity of L Y, PF, and myself as well as the other members of our team who do
interviews, such as Juampa and Julio.

Great surprise: Perito dirimente, found thru Reyes, told judge Texaco’s sampling was
bullshit. Luis and Pablo just found him last Thursday and never told me!

Three threats: Kimerling, Bonifaz, and Russell/Camino. Wray sent me email from
Jorge Jurado that was very negative about me, and it forwarded an email from Dave
Russell encouraging him to sue us. I have no doubt Russell is the one who encouraged
Camino to sue us, and he probably found the Philadelphia law firm for him. It was
distasteful and reminded me of the stress and disgust I felt so often during those dark
days when Camino and Monica were on the team. The big question with Bonifaz is
whether to file the bar complaint. And the Kimerling situation is worse: she was at foro
in NY, and it appears – based on Atossa’s email (she spoke there as well) – that
Kimerling’s movement to undermine us is gaining strength. Segun AS, she is close to
getting the F ecunae (the Kichwa group) behind her. She travels to these international
meetings (in this case a U.N. forum) with Moi (made famous by the “Savages” book) and
they hold court as celebs and people just eat out of their hands while we do the hard work in the field. As LY says, anybody who buys Moi a plane ticket to an international
destination will get his backing.

The Hua are problematic for a number of reasons. They smile a lot, are interested in
money and material goods, and love going to the big grocery stores in Quito. Only ones
who have visited NY and asked to stay. As Esperanza says, Kimerling is the patrona:
“nobody consults with you, nobody listens to you, I am the only one who hears you, I am
the only one who cares about you” – with historical origins in feudal agriculture systems
of Ecuador. LY said outside the Foro he talked to the Hua and they appeared to be in
complete agreement with him; Kimerling then called them on a cell phone and ordered
them in to read the letter she had written, where they went in the completely opposite
direction. Joseph said they were drunk outside the forum, making fools of themselves,
and they drove off in a new $60,000 SUv. We MUST go visit them. The Frente has
been so consumed with the inspections they have lost political power with the Hua,
allowing Kimerling the political space to get her “movement” going which put a fancy
indigenous name on – part Hua, part Kichwa. She is trying to peel off two of the give
indigenous groups from our lawsuit – the most glamorous (the Hua), and the largest (the
Kichwa, themselves migrants to the zona). The Kichwa have a base Rumipamba and I
am realizing because we have 19 clients there, and Bonifaz neglected it for so many
years, this also has given a further opening to Kimerling.

Had celebratory dinner (end of inspections) en La Briciola. I saw Carmen Tello kiss
LY goodbye, and I knew the vision of connecting the Quito elite with the jungle was
coming to fruition. LY made the best toast I ever have heard (get tape from Berlinger).

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Had day after staff meeting yesterday. Got lots of suggestions – Joseph on cancer,
human issue – need to put face on cancer issue. People feeling pretty jacked. Lauren
told me in two years she and Julio would get married, that she had never felt that way.
On day of first inspection she quit and blew her top after we wanted to send her back to
Quito. Juan was at dinner. They cost a lot, but the dinners are so worth it in terms of
building animo and unity on the team.

Lupita has made me realize the importance of management, of taking the time with each
person to hear them out, and of setting up structures to people have an opportunity to
express their ideas and participate. Lupita told me her nose job (Juan’s speculation)
actually was Gustavo hitting her; she has been making no money. When I asked what
she would need to live independently of Gustavo, she had no answer. Her value is
increasing – she knows everybody in the press, and everybody loves her, she is totally
loyal, works her ass off, and gets the confianza/movement thing.

Carmen on Ortiz: said he is increasingly disillusioned, does not want to be Tex
spokesman, thinks they are going down. Callejas the same (although not sure I believe
it). She says the more Callejas complains, the more they have to pay him to keep him
going. Alberto Wray and Monica used to play us the same way at the beginning of the
case. The only people who don’t do that are the members of our current legal team.

Met with Esperanza and Manuel: they want the Peritaje Global to be focused on the
human impact, not the science. Suggested we get a sociologist or somebody else to be
the expert, not Fernando Reyes (MP reminded me that he wanted to charge us $30,000
for some PE documents at the beginning of the case – I had forgotten about that). They
had some great ideas, but I am not sure we have time to conduct those studies.

Talked to E-tech: starting up the Global, getting PE to fund re-injection wells, etc.

Meeting with Judge: on Sat night at Lupe’s house. 7 children from six mothers. Had
son. Referred to Marx, Lenin, Heidegger, Montasque, Rosseau. Shot 22 times in car –
about to lock up Colombian drug dealer. Woman in back of car died. Said Guerra is
trying to control the Perfecto de Lago, that Guerra will not be the next president –
Novi1lo will be. A real humanist. Understands Texaco’s sampling is full of shit.

Nov 16

Met with ManuellFrente weak, no want 160,000. Realizing LY is way behind and the
Frente (and therefore the case) risks being left out. Ayer went to Rumipamba and saw
Maria Aguinda. After, I gave an emotional interview to Juan Diego where I basically
said that in 13 years of work, I can’t say we have delivered one tangible benefit to a
single person in the region. The case is sucking the air out of the movement. I had not
seen Manuel for ages, but I realized we are on the same page: the Frente needs to open
up, be less secret, expand its leadership, and reach out to other sectors of Ecuadorian
society. Specifically, Manuel’s fund just gave 1m to SOLCA to start a cancer center in
Lago Agrio; 250,000 to put a water system in Rumipamba; and allocated 160,000 to the
Frente to do the five studies for the case. All of this is happening because of the case, yet

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the Frente takes no credit. First, segun MP, LY did not want the 160 and has resisted it,
not writing the necessary ltr. He does not want the responsibility – this is coming at a
time Kimerling is attacking the Frente for not being transparent about how it will spend
the recovery in the case and L Y does not need an additional problem in this area. To me,
this represents a profound lack of vision and courage – take the money, announce it as a
victory of all the people, and have a meeting with total transparency. The SOLCA thing
really bugs me – the Frente should have a press conference with SOLCA taking credit it
for him, and closing out the political space for Texaco to take advantage of the
government’s sudden munificence. Same with Rumipampa – MP told me they were
getting a water system that cost 250,000 because of the case, yet LY in our meeting at
Rumipamba never mentioned it, took credit for, etc. These are tangible benefits that can
politically strengthen the Frente.

Inspection on Tuesday: Get everything from Acta. Overall, these inspections really
bother Texaco. They pulled a stunt on Monday – tried to get the judge to suspend the
inspection for 60 days on the even of going out to the site. LY got text msg judge was
leaving Lago – we had out own intelligence sources. They did this for Guanta, San
Carlos, and now Yuca – when we mobilize for press, they try to delay. So they came into
the inspection thinking the judge was biased against them. It is incredible how they
present the victimization mode. Racines asked Lupita how much we had to pay the
journalists to come – the turnout was good. We had three TV stations – Gamavision,
Teleamazonas, and a local Lago Station, plus AP, EI Comercio, Universo, Expreso, etc.
That said, Callejas, Larrea, y Racines slammed us in the last part, and our lawyers were
weak. They called me out by name based on the American Lawyer article.

Things I wanted to say during inspection. Wed night, after returning to Quito, I had
trouble sleeping after thinking of so many things to say during the inspection: helping
people, then why carry guns; how much money do you make; give them water to drink;
give them food to drink; making tech arguments on fusion because losing the case, etc.;
oil doesn’t have contaminants.

Culture – Motorcycle accident. Yesterday (Thursday) was a crazy day in the office.
First, a car hit a motorcycle in the street; a man is bleeding in the street, shaking and
about to go into shock, and people are just standing around. The woman who hit him
tried to drive off, but a policeman prevented it. There was a medical office on the corner – some people were just watching from the gate, not helping, not even bringing water. Joseph bent down and was helping him. As Joseph said, in Cuba the first car to come by would have taken him to the hospital; in Ecuador, people just stand around and watch. Then, the lights went out because the lady in the other half of the house did not pay her bill. In Ec, the public utility turns off the electricity five days after not paying the bill.

Some guy came by and just cut it off. Alexandra said she would come, and never showed
up. She drives me crazy; everybody in the office dislikes her. Joseph called on Sunday
about his check, and she said to call back during office hours. Then Lupita called an
electrician – we paid him $10, and he turned on the electricity. Joseph, LUpita and I had
lunch and talked about how utterly passive Ec culture is. How Sylvia, to get press to turn out, says stuff like, “No seas mailto, ven por favor” — this sycophantic begging, but as Joseph said, it works. Ec culture drives Joseph crazy. The question how does this

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cultural trait translate into politcs, and how does it affect or case. And in many respects, the character of Ec as a nation is divided between humility and passivity, between corruption an honesty. And the dichotomy plays out in almost everything we do.

Our leaders as bureaucrats: LY puts judge and tech team in different hotel. Secrecy of
information. Fear of risk. Fear of taking money from Manuel. Fear of putting our
demands front and center in terms of the paros in the Oriente ..

Meeting with Judge in hotel: On Tuesday night in Hotel Auca. With Lupita, late at
night: he said our intelligence is bad; how does Texaco know what we are going to do
before we do it (citing our meeting with him several months ago with APV, PF and LY) –
he said they told him three days before that we were coming. Said Pablo should have
interrupted Texaco, to create an incident, during the pathetic Tuesday inspection. He
asked for help on issue of via for girlfriend to visit New York.

Nov 10

On way to St. Louis, then down to Quito.

Raul still not been paid. I am convinced, as is APV, that the 1MB himself is the one
sabotaging the payment. He does not want the next gov to come in and accuse him of
financial improprieties.

Press conference yesterday in Quito: First time, team did it without me. Really working
well, although noboby showed up because of3-4 competing press conferences.

Did health annex and graficos for inspection. Joe transferred money. Had conflict with
AW about not posting releases.

Nov 7

Election day in US; Bat Mizvah this weekend. American Lawyer article comes out.

Kimerling before Sand: Kimerling in court yesterday before Sand. She was dinged. I
felt proud of her in an odd way. Her colleague Vance did most of the argument – they
came in in the bottom of the ninth inning expecting to hit a grand slam, when they should
have figured out a way to get a single and just get in the game. Her papers were good
and I think her argument helped us sensitize Sand. As I told Neil afterwards, he now has
two guilt things hanging over his head that should help us: his denial of Kimerling, and
his denial of the motion to extend, which eliminated the fraud defense. This backs up my
litigation strategy of filing losing motions to create leverage. Get Judy’s notes I took in
court.

Kohn meets with Cullen: On Nov 1, they had conference on another case. Am Lawyer
article had come out, where Cullen (stupidly from Tex standpoint) talks about how
important the case is. Joe established the contact. Joe said RRV could not be at any
discussion, and Cullen said, “The problem with Ricardo is that he knows everything, and
he doesn’t know when to shut up.” He told Joe that “management would like to put an

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end” to the litigation for a reasonable price. Said he is dealing with a “Scott” two levels about Ricardo. He said a problem is that there is no business unit in Chevron where the money would come out of. .. said we need a business person there. When Joe asked why King & Spaulding had never brought up the arbitration claim, he said they were not too smart. As I told Joe, this is important – we need a voice of reason on their team who can push back against Reis Veiga and advise the company in a clear, sound way. Maybe Cullen, obviously a well-liked man of integrity and former partner of Edward Scott,
could be this person.

Conversation with Atossa: Called me at lunch – had long talk about the Achuar and the
Kimerling threat, and the Frente’s lack of leadership. Said Kimerling was really a threat
and the transparency issue with the Frente and a potential recovery is a problem. I found
the conversation disturbing on a number of levels. We agree she would write an email
outlining need to take over oil fields and deal with Kimerling but still no email.

Oct 27

Heading to Jax today for Fla-Ga game – the ultimate escape and boy do I need it.

Meeting with Alberto: After the Moscoso presentation, I was beginning to feel
resistence from Raul on the possible PE lawsuit. Alberto convinced me otherwise, and
reminded me how brilliant he is. We met in conference rm – me, APV, LY, PF, and JP.
We asked questions, and he pontificated (“al ver”). Said he saw dangers with either
Correa or Noboa – with Correa, he said he would never settle with Chevron for political
reasons, and that Noboa might give up too early for the same reasons. He said Texaco is
surely calculating that a Noboa victory would make it easier for them, so they are
probably going to hold off on doing anything until they can see whether they wiggle out
of this under a Noboa administration. On the other hand, he actually thought Noboa’s
election might help given that Noboa wants to solve these types of “foreign investment”
problems. AW is super-tight with Noboa’s VP, Tayano, and his right-hand person,
Angeltia Alban. Amazing how we can now play ball like Texaco does, because we have
contacts everywhere. These are AW’s main points:

• He said take advantage of the short window we have with PE before the election
is over. We need to get the documents from PE we asked for in the beginning of
the case, that they never provided. We can also get PE docs from the discovery
from the Sand matter authenticated thru PE, rather than Winston.

• He also said to find out from PE what class of technological changes they
introduced when took over concession, such as the raising of the gas flares and
the re-injection equipment. And to get informes quejandose about the
remediation.

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• Moscoso lawsuit, he was thinking out loud: “I see clear advantages” and then runs
thru the various issues: contract, actas, contract not executed by PE because never did remediation, validity of actas final could be attacked. Goes through how they
never really remediated, they just threw dirt over the pits, and that therefore the release has no value; then says the other way, but more difficult, is to attack the
problem thru environmental law principles rather than contract law principles,
that persist contamination in the soil and water, and there is no expiration of the SOL, thus ask for “nulidad absoluta” of the actas which released Texaco. Then
said it would be “poco viable” if PE pursued case along, that the State (through
Borja) would have to do it with him because the State’s hand would immediately
be forced. Then he said he did not think it would be worth the risk, as the new
government would immediately withdraw it, and that would end up causing more
harm than good to our cause.

• Talked about issue of finality on settlement. Alberto said we could use the l-yr
SOL issue after Aguinda was dismissed. Therefore, Chevron could effectively
invoke SOL as defense to any claim. I asked about SF judge ruling in Cristobal
case, and both APV and AW said that was wrong as a matter of Ec law and that
that ruling never would be made by an Ec judge. AW said the gov would never
offer an indemnification of the type I talked about with Raul (see initial draft
settlement proposal), and never indemnify lawsuits against personal damages,
which we did not sue for anyway. This bothers me, because they are going to
want finality and we are going to want funds to provide our clients for health
damages. If Texaco could never get finality on ind claims, we will never be able
to negotiate a fund for health damages and our clients will be left to their own
meager devices plus the vagaries of the Ecuadorian judicial system. In other
words, they would never get a recovery. The idea of the Congress passing a law
to provide finality was met with the rolled eyeballs look. Impossible, like so
much else in Ecuador. AW made it clear he thought gov would never give an
indemnification. While I give deference to that opinion, I find AW analyzes
things as they are – not as they could be after lobbying and political work, which
seems to never enter his calculus. He has no clue of the extensive relations we
have established with PE, for example.

• In terms of gov indemnification, he said contrary to the government providing an
indemnification, they should do the exact opposite – make it clear they would
fight any action. But he did have a good idea: that we take the 10% that under
law was destined to go the Frente, and that the Frente spend that on a health
damages fund. The other fascinating idea he had was to create a fund with
Texaco’s money, but the State would assume the obligation so Texaco would not
have to recognize the rights of the demandantes. Generally, he liked the idea of
the gov putting in.

Noboa – Correa: Saw Noboa on TV – press just transmits these informal press
conferences. First, micro credit with PRIAN on the paper – asks people to fill out. Then
people fill out papers for new houses – promises to build 300,000 per year. Carlos Vera
had expert on to show utterly impossible, but rest of press just reports with no criticism.

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Refuses to debate. Acts like Correa a Commie – shows paper of Communist party
endorsing him, and then asks Carlos Vera why he doesn’t investigate. The man is not a
payado, as LY said – he is highly intelligent, focused, and he knows what he is doing in
playing the populist card. My scenario is he will be the tool of a right-wing, army-led
repression that the CIA has been hungering for given the incorrigible Ecuador populace
that does things like throw out Gutierrez. Correa on TC had 30-minutes interview and I
was transfixed: he is immature, emotional, thin-skinned, and not nearly as radical as his
opponents paint him or as he appears. Using terms like “savage capitalism” do not help.
Dumb questions by periodista, like are you going to cut relations with U.S .. are you a
communist, why don’t u call the F ARC communist. Noboa is radical rightist: wants to
privatize PE, social security, water, extend Manta, join Uribe in fighting the F ARC. He
is a U.S. dream. But given what I know of Ecuador’s politics, he won’t be able to do
these things without provoking massive resistence, which could lead to violence. Will he
be another in a long list of idiot-Presidents? Why can’t Ecuador produce a statesman like
Mauricio or Alejandro?

Meeting with Vargos Pazos and daughter: B’fast at the Hotel Quito. Humbled by
Correa problems, canceled deposition because of campaign (I helped resked it for Dec 1)
and still asked for money. For example, he and Alexandra need $7,500 to broadcast ads
to indigenous peoples, hold press conference with Noboa ex-employees, but they don’t
have it. We did manage to give her a computer. Alexandra, whom I love for some
reason – rough around the edges, but smart and principled – told the story of how Noboa
exploits small banana producers, of which they are one. Sets official price, then forces
you to accept less money if small producer or doesn’t buy from you. Then, he has
number of options – other buyers offer less, and they either represent him or then sell it to him for a higher price, but still lower than what he was obligated to pay; he loans money to get leverage over a small producer, and then goes to court to get their property directly; rejects product for some illegitimate reason, forcing you to sell for less; gives you a 3,000 check, but then forces you to sign a document where you pay back $600 of it for whatever reason (like “legal costs”). Tells story of Japanese producer who was exporting to Japan for $7 a caja. Noboa approached him and said he either had to sell to Noboa, orNorboa was going to flood Japan with Ec bananas, forcing the price down.

Meeting with LY and PF on last day: Talked about settlement and Global Peritaje.
Trying to empower Pablo Fajardo to totally take over inspections – I am simply out of
time, and incapable of doing it from States, plus Pablo did a great job during San Carlos
under a lot of pressure. We talked about key issues with settlement: who would be on
team (thought that maybe LY should not be there to protect him politically). Then PF
said he did not want to be there. While I thought LY not being there was a good idea,
upon reflection I cannot imagine being at those meetings without him. The other issue is
communicating with the bases. PF suggested we get the Asamblea to approve and
authorize the negotiating team, but that should be done NOW. While we have made
tremendous progress in getting our team and position together, they seem to have done
nothing to prepare their part of selling any acuerdo to the communities when people like
“war paint” Kimerling and Bonifaz and others, like Quenama, will be ready to pounce in

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order to hold hostage any acuerdo so they can get a piece of the action. (JK wore Huarani war paint to the Foro last weekend.)

Achuar: Get AW press release. Won acuerdo in Peru to re-inject. In other words, they
accomplished in two weeks what we have not been able to accomplish in 13 years! How
frustrating is that. I ran it by Lupita and she said connected it to the Inca mentality, and the Incas and then Peru and now the U.S. had dominated Ecuador, and the people have a
“sometido” mentality. It just blows my mind that all the protests in the Oriente, and this never became a demand. It shows a complete lack of vision and leadership. When I
brought it up, PF and L Y were useless. PF is worried it will hurt our case, because
Texaco should pay (Oh My God) and Luis said he never thought those types of acuerdos
would ever be complied with. Really, really defeatist. The problem as I told Atossa is
that the case has taken on a life of its own, and become an end of itself. It has
bueurocratized us to a large degree, and has sucked the energy out of the popular
movement. This types of actions mobilize popular movements, and I am worried not
doing this type of thing will really come back to haunt us when our “dirigentes” try to sell any aucerdo to the bases.

Achuar, Vargos Pazos (PE resolution open-ended, Bill Powers

Raul and Borja: Fascinating how Raul has led his client. Borja an idiot – use argument
of APV before the Interamerican Commission as example, or all his twists and turns over
the Oxy issue, or the fact he orders for Raul at restaurants and tells him not meet with
certain people who can help the case for whatever whimsical reason that he thinks they
are “ratones”. One such person was ?, who knows Noboa and is the brother of
somebody. Raul was going to meet with him, but then backed off when Borja called him
a Raton. The famous “twins” are also an example. Not only have they had extensive
plastic surgery, but they get chauffered around in Daddy’s car with his security and when
they got stopped by the police they pulled the “do you know who we are” line. Lauren
was in the car, and she said it was completely obnoxious.

Oct 25

Raul money: Spent a lot of time with Raul. His payment is in the Kafkaesque world of
Ecuadorian finance. Saw Moscoso. The payment finally got to the Min of Finance, but
then they needed to pass a resolution authorizing payment. So the sub-minister of
finance at PE talked to the sub minister there … the bottom line is he still has not gotten paid, yet he claims Friday is the absolute deadline or they will withdraw. He wants me to bring back the signed resolution and get it to him by Friday so he can show it to his managing partner. Yet the way Raul is working it does not sound like he plans to withdraw. Culturally, he just gets it. He approaches every interaction with class,
optimism, and respect. And the bottom line is he is going to get paid a vast sum of
money because of it. He finally got a copy of the famous agreement between the Min of
Finance and PE.

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Raul generally: I marvel at Raul. He got in Sunday night and immediately had dinner
with Ivonne Baki and her crowd. She is angling for a Min of Foreign Affairs post under
a Noboa administration. God, the sliminess blows my mind. The Gutierrez forces and
the Noboa forces are joining together, which means the old Gutierrez crowd will have
some cabinet posts. So Baki sticking with Lucio through thick and thin, going to the
States after he was deposed, is going to payoff perhaps. The important thing is Raul was
working her to protect the Texaco case should Noboa get in. Certainly Chevron will
approach them immediately, and they probably have already. I remember I saw her at the
Hotel Quito pool after Lucio was deposed, and I felt like laying one on her. I am glad I
did not, because now she could be our ally.

Moscoso: Finally got to meet him. At first meeting on Monday, asked if we thought PE
should come in to the Lago case. Issue arose if they should sue Chevron civilly on the
fraud charge. Came back on Tuesday and made presentation. Raul talked to Eric and
Neil and not surprisingly they do not like the idea. We LOVE the idea. This is a historic
oppty, never before presented, to get PE behind us – to finally turn around the dinosaur
beaurocracy that had been Texaco’s ally for decades firmly to our side. Galo, Vargos
Pazzos, Moscoso – our allies are firmly entrenched at the top, and the window is short,
as they will all be replaced in the middle of January. Such a lawsuit, to be politically
viable, would probably have to be filed before the second round of voting on Nov. 26.
Raul is sort of opposed – we set up phone call for Thursday. I am going to get Joe Kohn
and Alejandro on the call, and we are going to do our best. The reality is they have the
power to kill the idea. In legal team meeting ayer, I explained to the team that their
primary interest is the interest of their law firm, not the cause. And that is a difference in our interests and focus. APV says we should do the lawsuit anyway, to force Borja to take a stand in Ecuador that a fraud occurred (the filing in the U.S. has had little impact on the Lago case). Lupita came in with RH because she told me during the Foro over the weekend, where he was a judge in the mock tribunal, he was flirting with her.

Settlement: Went over plan with Raul during lunch on Monday with Luis. I really see
Raul as our ticket. This is complicated. We need RH for the settlement agreement,
which I finally went over with him in detail in trying to stay ahead of the curve.

Working group: They had meeting with Galo last Thursday, all the top officials ofPE,
plus LY, Pablo, and two dirigentes at the community level. They created a GRUPO
Mixto, which came from my memo earlier in the week. This needs to be finalized so it is
up and running before Noboa comes in. This is he seed that will allow us to work
together on a remediation, and allow the government to pitch in. Said Galo actually
visited the pits, and said Texaco did a bullshit remediation. This is awesome! The
respect LY and our team is getting at the highest levels of government is impressive.
Remember, Palacio is the one who finally ordered the Winston bill to be taken care of.

Legal team meeting: Planning November inspections. Bringing priest from Spain to
testify about indigenous destruction. Misdirection to Texaco – saying we have special
witness from government who will testify about fraud during the remediation. Lupita
robbery, me pushing the team to see it as something worthy of speaking out about and
exploiting, but Lupita had not even made the denuncia. Julio did not think the facts were

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worthy. I explained five people lined up and speaking would be very impressive. I said,
what do you want to wait until somebody dies? Harassment by army of people who were
biking at Forum, German guy who had his tires slashed, Mateo was assaulted by well-
dressed guys in camineta, Isabela Figueroa is being followed for her work against the
mining company. TALK TO AND INTERVIEW ISABELA FIGUEROA. I asked APV
if someone might get killed someday – he said he did not think so. “Not at this point –
the case is too well-known.”

Work: Feel overwhelmed. I need another lawyer. I have the annexes, the settlement
issues, the intervention in Sand and SF, the Bar complaint, Miles and the FCPA
complaint, the Fraud memo – we have to get this stuff in.

Oct 23

In Quito. I was feeling pretty good getting in, the trip was smooth, got in early, and
had dinner with Juan, Lupita, and Lauren at the Sushi place where I ran into Steph
and Andres.

Juan’s analysis of the election was really distressing. There was obvious fraud –
votes were taken from Correa and Roldos, and given to Noboa and Gutierrez. The
Brazilian company that did the electronic counting did not count the last 30% of
the vote, and they still haven’t revealed it. Around 11 p.m. Noboa was declared the
winner. He then got on TV and blasted Correa as a Communist, saying Ecuador
did not want Communists, etc. Everybody I know is demoralized… nobody is
protesting, people are focusing on the second round, and everybody thinks it is
inevitable that Noboa will win. Why do feel the hand of the CIA behind this? How
bullshit is this? Calderon, Bush, and now Noboa. They simply will not let a leftist win.
It is a raw power game. The Oxy case will end – they will give the oil field back, try to
settle Chevron, sign the TLC, etc. As Juan said, geopolitically it just became impossible
for Correa to overcome the U.S. They would not allow an ally of Morales and Chavez in
Ecuador. Juan says in Bolivia, the military and death squads are starting to do to Morales what they did to Allende.

Met Glen Goode,the gold miner, on plane. Story he told me about the $7 million fraud,
how business is done in Ecuador. .. need to interview him for book. Talked for three
hours. He explained families behind every pot of wealth. Andinatel, Pacifictel and cell
phone monopoly. Banking scandal. If I nail both of those, I can capture the corruption
and people can understand Ecuador. Also, add in Alexandra Cantu, Ivonne Baki with
Miss Universe, Lucio’s appointment of brother to Corte Andino … how many examples
are there?

The foro was successful, but Judy’s letter and stunt was really depressing. Get more
details.

Lots to do today. Juan says morale in the office is terrible because of the money issues.

Oct 20

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Heading to D.C. to meet with Winston and to get updated on discovery. Don’t know
exactly why I am going, given that we have no staff capacity to absorb and integrate
the thousands of pages of documents that Chevron has turned over. The key is to
find nuggets, catch up on the deposition testimony, and talk to Raul about
settlement terms.

Feeling very dark right now: the fool’s errand problem. Ec still has not paid the
Winston bill. L Y and team were skedded to meet Monday with Min of Finance
Rodas, but he resigned that morning. Raul Moscoso told L Y he had signed the
payment agreement between the Proc and PE before he resigned. Later, Raul found
out he had not signed it, and according to Raul, we are back to Ground Zero in
terms of trying to get the bill paid. Raul has surely lost all credibility with is
partners now; we already have lost the fraud claim, our main leverage. And now
that might withdraw altogether. If that happens, I might be out. This is ridiculous.
People get the country they deserve, and the people who run Ecuador are largely a
bunch of clowns. I sent an “emergency” email about the Winston bill and APV
wrote me back saying he was in D.C. litigating the human rts claims and that Jose
Maria Borja was defending the state, and he did not even care if the the state lost,
that he does not take his work seriously. Nobody in Ecuador understands the
seriousness of the threat (on our team), and nobody who has the authority to pay the
bill in Ecuador cares enough to do so. And can you really blame them – who else
there would want to millions to Raul? The image of Noboa in the Bishop’s outfit
giving out trinkets just makes me feel the entire country is one big joke.

The meeting with Joe early in the week left a bad taste in my mouth … we still have
the same money problems, and nobody has been paid. All the elements are in place,
and there is nothing we can do about it. Charles Champ is going to be the hero, I
feel it. He is the key element. Winston is a key element, but they have been
weakened. On our last call Eric read some of the best documents from discovery
from Chevron’s standpoint and they were bad for us. Their fraud claim is weak. I
need to spend significant time in Ecuador, but I am really feeling the pinch with my
son and the family. The money issue is killing us. Pablo told me the inspections are
now going to finish the week of Nov. 13, which is soon – there is a ton of work to be
done before then.

Saw Barack Obama on Wed night (Oct 18) and it was inspirational. Got his new
book, and we talked.

Oct 17

Joe in Philadelphia: Met with Joe in Phil… still in dire straits. Kathy the money
woman said Joe’s father never would have refiled the case in Ecuador. “When is it going
to end?,” she said. Karen Wilson also had the same querying look. I told Joe at lunch
what Kathy said, and he said his Dad would have said go to Ecuador so they would never
think we would give up. Did not help that Joe had $2 in his wallet, which he left for a tip,
while I paid for lunch for the first time. I presented him memos: debts include 87,000 to
me, 117,000 debts in Ecuador, and an estimated 790,000 to finish the case not including

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my invoices and expenses going forward, which would bring it up to l.2m … assuming it
all works out. Joe said he needed to wait until Nov to get another fee, and just had
another case dropped in his lap that could generate 3m in fees pretty quickly. Contrast
with me sitting with Raul with Ecuador’s AG trying to collect the 3.3 million bill … and dropping the fraud claim over $50,000, and give people on our phone call yesterday to
listen to moi … and setting sites on 10m in fees, based on what Ecuador paid for the
London arbitration. Joe promised to send 10,000 to APV pretty quickly … 10,000 to
Quito … and take care of my expenses. Charlie will have to wait until November,
although we can do his contract now. I emphasized we have all the elements in place,
just that we are waiting to activate when the dollars arrive. Thru it all, I love Joe: in
sandwich show, met DA Lynn Abraham and head of Constitutional Center – and Joe
joked in introducing me that I was working on the case that he used to talk about in his
campaign twelve years ago. Told him I planned to go see Russ in London, so we will see
if that works. I ran by the CB bar complaint and he got nervous because he was on phone
calls and in paper loop during CB’ s representation of the government. Said he did want
to file the affidavit in San Francisco … will try to do thru Miles Ehrlich, whom we are
trying to bring in via the FCP A and SEC stuff.

The Kimerling intervention is delicate. We want Sand to embrace her facts, but deny her
motion. Joe said he hopes Chevron sends her a Rule 11 letter, as they should. On the
other hand, they might want her case here so they could go to Lago where they are losing
and tell the judge the issues are being litigated in New York. The state and us want the
opposite: Sand should not touch the issues because they are being litigated in Lago.
What a legal mess … totally confusing, and only because Sand has no clue because of the
clever presentation by the Chevron lawyers. Joe agrees we should file amicus, signed by
Alejandro and Alberto, in the Sand matter, stating these are our claims.

Feeling a little bad about raising issue of possible future conflict in the Winston call
yesterday … but I wanted to appear completely up front. I am worried I unnecessarily
undermined some of their confidence.

Oct 16

One-hour conf call with Winston: Kimerling doc presents issues – gov cannot slam
her, must embrace her facts … but limit it to intervention as amicus on narrow legal
question of ’99 law. Kimerling put it all in but the kitchen sink… this was her
chance to download ten years of frustration from being excluded. Makes her a
player … the return date is Nov 6. Chevron will definitely slam her. But, how does
she get around RakofPs FNC decision? Her thing is so overbroad … just like
Cristobal’s papers in the arbitration case, which led to the waiver of sovereign
immunity. I explained that her clients are a tiny sliver of the class we represent, and

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that we arguably represent them… They asked why she would do this, and I
explained she was not well. So hard to get people to understand without it seeming
personal and thus diminishing all of us. Obvious also she would never be able to
fund this litigation, even if Sand granted it. She basically wants to re-create the
Lago case before Sand.

Situation with Noboa: it is clear that if we don’t get our act together and insinuate
ourselves with his campaign, there could be a major risk he will order the new AG
to settle the Texaco case in New York and cut us out. I talked to LY today and he is
upset about Noboa, said the people have been deceived by his promises of housing,
gifts, etc. Neil said why would the government ever change its position given the
facts and the legal liability. Neil still doesn’t get that we are in a Funny House … as
he said, why should you count on anybody in Ecuador being rational. Could lead to
conflict between us and Winston.

Work with Winston: help with depositions – Reis Veiga, Perez Palla res upcoming.
They are going to send us outlines. Plus hot docs on remediation – must go to D.C.
and check out, but our staff so thin. Right now dealing with Kohn meeting on
money tomorrow; settlement memo; Bonifaz affidavit for SF; Bonifaz bar
complaint; amicus brief for Sand; get our own affidavit.

David du Roth called-said in touch with Jolie and Pitt and wants to come in Feb.
Wants to create conversation, not point fingers. Yea, get it buddy.

Talked to legal team. Took hour to set up call via Skype bringing in Aaron from
Cairo. Uggh. Frustration – the OCP case is taking precedence over ours, and it
blows my mind that Pablo just takes it up the ass again. On top of email I put:
Atacamos 0 estaremos atacado. They just get into their comfort zone and have no
regard for Joe – their stupidity, they think it will just go on forever.

Oct 15

The context is very uncertain right now. Noboa took first place in the election, with
Correa second. Appears to be fraud. If he wins, we are fucked bigtime.

Kimerling files motion to intervene in Sand. Says Lago plaintiffs do not represent
her clients. Poses a number of dangers to us – if he grants it, she suddenly becomes
lead attorney asserting our claims. Makes me feel we erred in not intervening
ourselves.

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Raul said on the phone Friday that the failure to pay led to the withdrawal of the
fraud claim. I am still smarting from that.

Oct 5

Key legal move: presenting no divergencia memo to judge, which is our first step
toward really convincing the court as to our theory that the parties do not disagree
other than the legal interpretation which is purely the province of the court.

Talk to legal team. Julio thinks Tandazo is paid by the CIA or directly by Oxy. I
just thought he was stupid, although someone with good intentions.

Oct 4

Cristobal: Cristobal has hearing in SF today. Sent letter to Jones Day SF lawyer
dated July 11, begging for settlement and claiming he represents the Lago plaintiffs
still because the Frente had no authority to fire him because they are technically not
the plaintiffs. How infuriating … we were holding off on the bar complaint … Aaron
is working, and I am intent on filing it. The man is nuts. He has nine clients now in
SF. Alsup’s dismissal of the previous complaint has led to his abandonment of the
class action. He is trying to hand on desperately, by a thread, in the event there are
settlement discussions so he can be a part of it. But with his nine clients, he won’t be
a part of it. The more worrisome thing is he is going to use his old contracts as a
way to strengthen his fee claim and challenge the Frente’s authority to negotiate a
settlement on behalf of “his” clients. In response, we are getting letters from each of
the 47 firing him. He was an idiot to put his cards on the table. We will now seal
the issue so he will have no standing. The man is desperate and pathetic.

Winston: They are now staking their entire case on the legal issues, but Aaron has
his doubts and thinks they are overconfident. I agree – remember the conflict of
laws issue. (See Aaron email from today.) I told Neil and team to be ready for a
Rule 11 motion from Chevron over the withdrawal of the fraud claim. Neil says
unlikely; I agree, but I would not put it past them. Had a huge laugh with Raul on
phone this morning about 500 protesters outside JMB’s office. He thought they
were us. I explained we keep it among the dirigentes because it is hard to mobilize
the masses to force the gov to pay a multi-million dollar bill for a U.S. law firm
when they are making $1,000 per year. I told Raul we would not abandon him. He
just got back from Nicaragua, where he was helping with a canal project.

Luis: Just got off phone with LY. The issue with CB is making him physically ill-
he has a headache and feels dizzy. He literally has a physical reaction each time we
deal with Cristobal. It is crazy. This is going to be a tremendous amt of work, and
a great distraction – which is exactly what loco Cristobal wants. L Y explained that
Raul Moscoso is now the Procurador of Petroecuador – that guy in the meeting last
week, Pinos, is out. This is a huge break for us. I took the oppty to launch into a
long talk about the importance of us coming up with settlement plan and lobbying
the government and Chevron it. This will never happen unless we pull it together

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and lead. 1 told Luis la “Guerra” can never be an end in itself, that it must be tied
to political outcomes and that is where we have fallen short. 1 am determined to
solve this problem soon.

Joseph launching English-language Frente Website today.

Oct. 2, 2006

Had huge talk with Neil and Raul last Thursday (Sept 28), day after 1 got back from
Ecuador and day before the move, over fraud claim. 1 was all geared up to talk him
into maintaining it, but 1 sensed 1 was losing ground as the Sept 21 deadline for
authorization for them to hire their expert had passed and the reality was. So, the
combination of the Ec gov’s inaction in failing to pay the WS bill, combined with
WS’s lack of patience as a corporate entity, plus Neils’ fundamental conservatism,
was leading to a terrible result by taking out best argument off the table from the
Sand litigation.

On the phone call, 1 asked Neil to explain his position and shockingly 1 found it
persuasive. He basically said he felt very confident on the contract issue, and felt he
might win in on summary judgment or at least at trial (I think 1 remember the same
level of confidence around the conflict of laws motion which he got slammed on). He
said the hidden pits issue had gone from a potential major positive to a potential
major negative. First, the time issue made him very nervous that he would not be
able to complete the work by Nov 1, and it would piss off Sand and thereby
boomerang back to undermine the one strong law claim they have. Further, he said
that they could not find a witness in Ec to testify as to reliance. He was worried if
they did all the preparation (even without the time issue), without a witness Sand
would really punish them and even sanction them for leading Chevron down this
path knowing they did not have a witness. Given the kookiness in Ec, 1 can
understand it. On the other hand, this was their main weapon over Reis Veiga and
the company, and it had been reported widely in the trade publications and in
Ecuador. But Neil is a very traditional lawyer and does not consider things like
press and negative pUblicity. This could play really bad for us, but we agreed to
ameliorate it by WS sending a ltr to Sand saying it was being withdrawn not
because it was not valid, but for reasons of stringent scheduling set by Sand.

The limitations ofWS are becoming fundamental. We have such different cultures.
Here they bill 3.3 million, and they cannot front their expert $50,000 to cover his
initial retainer while waiting for Ecuador to pay the bill. Raul is very clever – his
main concern is that the bill get paid. He did the fraud thing and billed the fuck out
of the time it took, and now – even though he is going to collect – he is dropping the
claim. Amazingly savvy, but something about it really bothers me and gets me
down. Lauren told me Manny and crew basically ignored her the rest of the week
when she was trying to collect the den uncia document. Why do 1 feel like Raul is
going to screw us in the end of the day via the negotiated settlement issue? His

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reaction by email today to my idea to file the FCPA complaint on the day Sand is
notified of the withdrawal of the fraud claim is just another example of his utter
conservative approach to litigation.

Neil’s worry Sand might sanction them is another example of how utterly wimpy
they are. Chevron mocks the gov of Ecuador, and they won’t fight back! When
Chevron threatens sanctions, they fold. Chevron wants to win at all costs, whereas
the gov of Ecuador simply has no skin in the game. The people making decisions for
the gov do not care. There is no personal price to pay for not acting. For Reis Vegia,
this is his life and his career, and he has billions of dollars to enforce all of his legal rights. There is just a complete asymmetry and I realize Neal does not get it.

Lauren made a series of charts on the divergencia issue for the dirimente reports.
In Lago, this will be Chevron’s next line of attack to delay – to insist on expert
reports for each inspection. This is a key issue, but I feel pretty good about where
things stand.

I often feel, and perhaps now more than ever, that we are being absolutely
overwhelmed with events. Aaron checked in today to inform that Cristobal’s case in
SF is still active, and that he used an email from Luis to blame Callejas for getting in
the way of his attorney-client relations. He is truly crazy, and there is no way
Chevron is going to settle with us as long as he is around. We are going to file the
bar complaint against Cristobal. The money issues are getting terrible – still about
100g in debt in Ecuador, the inspections coming up, needing to pay Champs, file the
FCPA comp, pay E-tech for the Global, pay off HAVOC, pay our regular expenses
in Quito, pay me … the entire thing is an utter disaster. We can’t move the case
without money.

I insisted to Winston that they get 5-10 people to sign the law affidavit.

Sept 27, 2006

Two-day emergency trip to deal with Winston bill and the possibly horrendous
consequences. Facing grave crisis – if bill not paid, Neil making serious noises about
withdrawing the fraud claim, which is the best thing we have going. Expert reports
have to be in to Sand by Nov 1, and now there is hardly anytime to factually develop
the fraud claim despite all the work we have done. The expert is not even hired
because JMB has not authorized a $50,000 payment while they have an outstanding
bill of 3.3 million, 1.1 million of which is gastos. Winston does not want to layout
any more money, and I can’t say I blame them totally although I find their attitude
aggravating as well. I also think Raul is an incredibly stressed position in his firm,
as this bill is the largest receivable. Further, Raul and his team have gone out of
their way to push this fraud claim aggressively, and I admire they way they lead
their client over this terrain, when their client would never now how to navigate it
alone. When I look back, I am still amazed we actually sold Winston on the fraud
claim – and this dates to that pivotal phone call from Quito last April when we
confronted them on the disastrous conflict of laws papers and Sand decision. Of

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course, at that time they had no idea their bill would not be paid, although given my
experience in Ecuador 1 always thought this would be a problem. They had no
experience in Ecuador – they were used to real countries, like Venezuela and
Argentina, that actually paid their bills. 1 always felt RH was a little naive in this
area.

Moving this Friday (Sept 29), so 1 really did not want to go this week. 1 went
because if 1 did not go, and they withdrew the fraud claim, 1 would be kicking
myself for not doing all 1 could do. So 1 went. L Y was preparing over the weekend.
We spoke on Sat, and he was organizing “the dirigentes” to come up to Quito. Like
so many times in the past, we would have to pull one out of our ass, estilo
Ecuatoriano -like the time in the 1990s when the people took over the AG’s office to
force the government to take a more assertive position before Rakoff. 1 took the
overnight flight to Guay, so 1 came in pretty tired when 1 showed up at 8:30 directly
from the airport. Raul had flown in the day before, and we had planned to meet at
my office at 9:00 to coordinate strategies. 1 also called Vargos Pazos over the
weekend to set up a Monday meeting, and he of course was happy to receive us. He
is a good friend of Galo Chiriboga, and his new position as VP of PE put him in a
strategically important position to help us. (VP is, among other things, tight with
the Chavez regime and thus is tasked with a negotiation with Venezuela to build a
new refinery in Ecuador which would have huge geopolitical implications.)

It was clear we had to meet with Galo Chiriboga, JMB, possibly the Minister of
Finanzas, and even the President. Part of the problem was pinpointing where the
power was to sign the check, because RH didn’t seem to be able to figure it out
himself. One theory was that JMB had the money, but he did not want to spend it
without authorization; the other theory was that PE had to spend it, as they were a
defendant and client. Yet others said Rodas, the new (and 4th in two years) Minister
of Finance was the one. And hanging in the shadows was this idea that Jamie
Varela, Chevron’s Latin Ameica chief, was now living in Quito and possibly was a
dark force in PE trying to make sure Winston’s bill was not paid. When 1 first
suggested this to RH weeks ago in an email, 1 felt sort of stupid – like he would think
1 was paranoid. But 1 have never felt Winston adequately comprehends the nature
of hand to hand legal combat with Chevron. Chevron wants to do whatever it takes
to win, regardless of cost, and they are willing to cross the ethical line to do if they
think they can get away with it. And in Ecuador, they clearly think they can make
up the rules and get away with it. But now, RH says he is convinced that this is
what Varela is up to despite their charming exchange of hellos a few weeks ago in a
Quito restaurant.

L Y via a contact (find out who) got us a meeting on Monday at 4:30 with Galo –
kept us waiting for 90 minues, tried to shunt us downstairs to meet with the Proc,
until 1 put my foot down and said we are not leaving, and we stood in front of the
elevators (I had been dozing when we were told to go away). We knew they were
going to a 6 p.m. licitaciones session at FLACSO. When Galo came out, he realized
who we were and much to his credit he brought us into the conference room and we
all sat down. LY, Robinson, the Siuna leader (get name), the woman from

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Shushufindi, Lauren, Julio, Juan Aulestia; Galo had Pinos, his Proc, and a couple of
sycophantic aides. Julio started and laid it on him, and that was not a good idea as
Julio was very aggressive, impressing upon him the interests of the country, etc.
Galo came back and ripped JMB – why should I pay if I did not sign the contract?
Why has he not shown the institutional respect to even explain it to me? I have
debts of 241 million, and I don’t even get my own money. We are not a normal
company, all of our money goes to the Ministry of Finance. El Proc gets 1 % of the
monto of all public contracts, and we sent him 17 million just this year alone based
on contracts we signed.” I was surprised that L Y did not weigh in, I was kicking
him in the leg. I spoke as well, and calmed things down. Julio basically turned up
the heat, and I did not think that was the way to go although I admire his guts. It
just looked bad to have a 25-year-old tell a 55-year-old minister what he should be
doing with that kind of attitude. On the other hand, sometimes I think pushing
people to leave their comfort zone can be productive, but not sure this was one of
those times. Our idea was to get Galo and JMB together to figure out how to split
the pie. The meeting was not good, but it clarified things, and we left with the
opening for him to meet with JMB. It looked like this could happen without Rodas’
involvement.

We then went to Proc office and met with JMB (LY, Julio, and myself – we
downsized the group). I remember the office from a previous meeting years ago –
dark, foreboding furniture, bar code labels still on some of the furniture. Raul was
in meeting. A couple of young aides kept coming in and out, and a bevy of
secretaries and helpers were out in the front room – it looked like a harem almost,
and after meeting JMB, it was clear this was a man who liked to be in charge and
give orders to people, a person who liked to surround himself with “yes” people.
RH even told me when JMB took him out to a restaurant, he insisted on ordering
for RH. Classic Ec b’cratic showdown – JMB said Chiriboga should pay, so they
were at a standoff, but at least they both recognized that they were obligated to pay,
and that it was in the national interest to pay. Julio told him that Galo was
resentido, and JMB listened carefully. Amazingly, JMB stood up without saying
anything, walked back to his desk piled high with papers, and put a call in to Galo.
Galo was not there, but I admired the gumption. JMB is extremely smart and
sophisticated in Ec bur politics. He had just sent a ltr that day to Palacio with a
kind tone but confronting him on that idotic ltr that Palacio sent to the arbitration
tribunal on Sept 1, that had to come from Tandazo. Supposedly, Alberto Wray had
been in the tribunal meeting with them when the letter arrived, and he was
mortified he had not been told. Yesterday (the day after our meeting) it was front-
page news. Anyway, it was clear that JMB was turned on by the fraud claim and
was willing to sign the FCPA complaint. Raul blows my mind – he is the one
leading JMB down this path, and it comports with JMB’s desire to fight the
American company, which works politically in Ecuador and plays to his macho
instincts.

Bottom line is that RH told me later that night – I met him at the Marriott for
dinner – that after we left, Galo called JMB and they worked out a deal where Galo
would pay the expenses and two-thirds of the fees, while JMB would pay one-third

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of the fees. The question is when would the checks arrive, and would Winston have
the guts in light of these promises (which have been made in the past without
fulfillment) to hire the expert and maintain the fraud claim even if the money takes
a few more days to arrive. This is where I am right now – I just fired off a quick
email to Raul and Neil from the Quito airport, telling them to please get going and
to not let the perfect be the enemy of the good. Jesus, putting in a fraud claim that
is 75% factually developed is far better than no fraud claim at all. Just do it! And if
it does not work, withdraw later rather than now so as to keep the hammer over
their head for as long as possible.

On Tuesday, went to see Vargos with Luis, the Siuna guy, the Shushifindi leader,
and Lauren in her jeans, jogging shoes, and navel-revealing T-shirt. We are using
Vargos to pressure Galo, but it is unclear if even Vargos gets the stakes. He took me
aside and again asked me for the camioneta for the close of the campaign. This is
starting to stress me. He also makes passing references to fact no “cumplo” and
cosas asi. It is starting to cross the line from good-natured ribbing to something
more serious, and I’m not really liking it nor do I feel I am handling it well. It is
clear he expects something serious and material in return for the favors. We bought
two meals at Crepes and Waffies for his wife’s raffie yesterday for $60.

Our case: we are asking for inspections today. Ask for 3, not 4, all in same week,
but we still don’t have perito. Woman biologist turned us down. Joe ignoring
money memos, and we could be facing serious problems as a result.

September 13, 2006

Ec culture: none of the bank machines worked, none of the machines near airport
worked, and almost missed plane as a result. Andres told me that to extend visa,
had to pay $10 in cash – but made people go to bank, do direct deposit, and then
show the receipt to get the visa. The government doesn’t trust itself.

Had b’fast and dinner yesterday with Vargos Pazos, who is now a VP of PetroEc
working under his old friend Chiriboga. Convinced him to do deposition asked for
by Chevron, and he agreed after initially rejecting it. Told me about three
tendencies in government re: arbitration: Tandazo (ignore it); Chiriboga, head of
PE (show up to defend, but do not participate); and JMB and Alberto Wray (fully
participate and defend). The Tandazo position might explain why the Winston bill
has not been paid. I need to understand this issue better – how do I know Tandazo
is wrong? VP said he would set up a meeting with Chiriboga and Tandazo.
Tandazo and others have attacked Alberto for being a traitor. We have to see how
this plays out – it certainly is not the image we want when he makes the final
argument. On the other hand, it might allow him an oppty to redeem himself.
Correa seems to be rising in the polls, and VP thinks he might be the defense

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minister if Correa wins. He asked me for a camioneta so he could campaign for
Correa and increase his chances of getting the defense ministry post. Incredible!
The campaigns here seem to be all about caravans of cars going thru the steets,
waving flags and playing music.

PDVSA rep in Ecuador was at dinner meeting – Luis Marquez. Gave him stuff.
Got ball rolling. Really nice, humble guy. Interesting PDVSA has rep in Ec.
Larger vision is that Venezuela builds a huge refinery in Ecuador on the Pacific
Coast, from which it can export to new markets in China and Asia. Love it. If
Correa wins, that kind of thing could really happen.

VP’s daughter there. Told story of how stole 51 head of cattle. Has 3,500 acre farm in
Concordia. Sells African Palm oil, bananas, raises cattle. The guy has wealth even
though always crying poor. Wants to sue Noboa.

Legal case: going well with Yanez decision to cancel inspections. Chevron erupts. Big
blow. Ironically, a function of other complaints about Yanez that we had nothing to do
with, but that her perceives that we are behind. Pablo seemed to really handle it well.
We wrote up a complaint against Yanez, but never filed it, while letting him know we
might file it if he does not adhere to the law and what we need. The worst part is that
after the decision – which was covered in the Ec press and the Oil Daily – he told Luis
that we needed to back him now as he fights for survival on the court. So instead of a
strong judge who sees the viability of our case, we now might have a weak judge who
wants to rule correctly for all the wrong, personal reasons. Need to get going on the
inspections (looking for perito) and peritaje global.

It is obvious Ecuador is a country where stuff gets done based on personal relationships.
As I develop more of them, the more fuerza we will have. But to do that, I really need to
spend more time in Quito – even live in Quito. Then I could know Correa, Maria Paula,
etc. Our team couldn’t be working better right now. Camino lawsuit against me and Joe
in U.S.

Trip last Friday to Coca with Charles Champ. Visited Lago Central and Sacha Central.
Champ’s impressions. Old saying in East Texas: “It has to look good from the road.”
Saw clean -up operation by PE in Sacha Central for 300 plus pits. Encouraging, and
threatening. Need to look into it more.

July 25, 2006

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Coming back from a four-day trip. Had press conference yesterday to announce
coalition. Went really well, excellent posters, Joseph did great, Lupita not talking to
me. Huge breakthrough this week: the government sued Chevron in U.S. court, and
the development hit the papers in Ecuador and Reuters. Lehane is working the
WSJ. Bonifaz case dismissed yesterday. Discussion with Pablo and Luis at lunch
about settlement possibility, and path to get there.

Three potential breakthrough pieces of news: settlement talk with Raul, gov accuses
Chevron of fraud, and Bonifaz SF case dismissed. It is like the fog lifted and blue
sky appears: I see a path to the end for the first time. Not that it will be easy to get
there. But at least one can see how to get there. That is a first.

What Robinson told me about the Bormans showing those films, and then 20
Cofanes were baptized. Pablo shows me that some TPH levels were about 5,000 in
the clean-up as reported by Texaco.

Legal taller – Pablo go teary-eyed when I came down hard about changing the
structure of how we approach the case, instead of just working within the structure.
Luis and Aaron were there – APV on vacation, Julio with broken leg. Our legal
team seems to be getting smaller by the day. The upshot is we still have the same
old problems. It appears the corruption charges against Yanez which came out in
El Comercio two weeks ago have embroiled the entire court in a patricidal war.
Yanez then filed a queja against Guerra, who had filed a queja against Novillo.
According to Pablo, Guerra wants control of our case. He also said there is the
feeling in the court that we are behind the complaints against Yanez and Novillo,
which we are not, even though we have much to complain about, which is sort of
ironic. I asked if this theory in the court hurt us or helped us, and both Pablo and
Luis said it helped us. At which pt I launched into my familiar lecture about how
the only way the court will respect us is if they fear us – and that the only way they
will fear us is if they think we have come control over their careers, their jobs, their
reputations – that is to say, their ability to earn a livelihood. Goes back to what
Mateo said months ago, to my Peru analogy about that petty thief being burned at
the stake. I have never felt Pablo understood this fundamental issue, even though
he is a committed leftist – it’s like he really believes in the law as a vehicle for social change. But it also has to do with something he can’t control, but I suspect that he realizes privately – his lowly social status in a country where privilege is ingrained
and totally tied to power. When Pablo walks into the court, he is one of them, no
different from the secretaries and clerks – a punk kid from the Amazon, with
nothing to back him up, nothing to fear, no strings to pull. When Callejas walks
into the court, he has 500 years of history behind him – plus the awesome power of
an international company, unlimited resources, full-page ads, a villa on a military
base, and utter arrogance that comes from knowing you are the it man. So when
Pablo says he talks to Guerra, or any of the other judges, I just don’t know what
happens behind those doors. I know he does his best, and what he says is likely
excellent. But they don’t fear him, and without fear, we are going to lose no matter
how strong the evidence. In fact, because there is so little fear of us, Texaco is in the
game in a big way despite the fact they are losing overwhelmingly. Luis Alberto was

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supposed to come work for us, and help Pablo in Lago by monitoring the court.
After accepting the job, he turned it down – to take a job as a teacher, so he could
save money to get an LLM in the United States. I don’t understand the thinking – if
he worked for us, he could more easily get a beca or something. But it amazes me
how few Ecuadorian lawyers do not rush to work on this case.

I feel again like the vise we were in in my last trip still exists, despite the flicker of hope when the El Comercio article about Yanez came out. Our issues first and
foremost are whether the judge will accept the renuncia of the inspections. If this
happens – and Pablo thinks it will, but I and Aaron think he is overoptimistic – then
we have to face the prospect of more of the wasteful, time-consuming, and expensive
inspections. If it doesn’t happen, then we are in all-out war with the judge to get
him removed. Hanging in the back is Luis Munoz, who is now a candidate and
according to APV as powerful and corrupt as they come. Texaco now realizes their
best defense is to ask for as many inspections as possible. In a separate case in the
same court, the OCP just asked for 91, while the plaintiffs asked for two. The
amicus brief we submitted addresses precisely this issue.

Assuming the renuncia is granted, we want to do four more inspections; Texaco has
ten. Ideally, we will march right into the inspections after the judicial vacation and
finish our four by the end of August – if Joe puts the money in. But there are still
other unresolved issues that could kill us. First is the dirimente issue. Pablo is
arguing we go along with Yanez and agree to one perito, to get rid of the dirimente
issue. But how can we control this perito? This means putting names before the
court, but we have no names – Fausto Penafiel is gone, and he never came up with
people anyway. Manuel is pretty much AWOL. And there is a very small pool of
technical people who are not “contagiado” (in the words of Luis). So the single
perito theory sounds good, but it is all in the execution. And you just know that
Texaco will have a slew of available candidates, and will probably pay them on the
side to boot, so they can be controlled. So I suggested we stick with two peritos, get
rid of the dirimentes because there is no divergence, and draw a line in the sand to
pressure the court. I always liked two peritos, because at least we could control our
results 100% and then argue the shit out of it at the end. Having one perito
concentrates way too much power in one person appointed by the judge, and given
Ecuadorian politics, I don’t see anyone perito really coming through honestly about
what is happening. But Pablo never wants to draw a line in the sand, and that is
where he got teary. It was probably the stress and loneliness; perhaps his feeling
that he did not have my support, in general. Perhaps my arrogant statement that if
we cannot resolve these issues, Joe will not put more money in – a true statement,
but a veiled threat to a friend, made inelegantly, and no doubt taken by him as a
slap in the face. So, I mellowed and agreed at least for the time being for us to
pursue the one perito solution, and try to shape it to our favor. This seems
implausible with Yanez as judge, but we might just have to eat some problems to
finish the last few inspections. As long as he takes out samples where we want them,
and doesn’t opine on larger issues, we should be fine. But I am not comfortable
with this.

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So then the issue becomes, should we file the complaint against Yanez with the
judicatura, which we were supposed to do on Monday but we held off because the
court situation is so unsettled and we thought Yanez might be forced out anyway.
Another issue is we need another lawyer for Pablo while Julio is out – and we need
another lawyer anyway, somebody to scour the trial record for Texaco’s admissions
– a job that in itself could easily take months. There are no obvious names, but Julio
is looking. In Lago, Pablo and Luis said there is no lawyer available not
“contagiado” by the corrupt system. Just to hire a lawyer is becoming virtually
impossible. Then there are the 8 exhortos which Pablo and APV painstakingly
prepared and had translated – shit Alberto asked for in the first week of the trial to
come from the U.S., but most of which we probably don’t need anymore given how
events have transpired. This could take months of additional work – the exhortos
have to be certified by the Cancilleria in Ecuador and then sent to the U.S. courts
where certified info is sought directly from the judge or the clerk. Alberto also
asked for a deposition of Dan King, for what reason I have no clue. And someone in
the U.S. would likely have to work extensive hours following up, because the
information has to be returned to Ecuador within 90 days. Plus the cost of a
deposition. Sure, Joe is really going to be into this. I asked Pablo if we could
withdraw the exhortos, and he seemed taken aback. Of course we can, and maybe
we will. I need to look at them before we march down this path of further resource
suck. But neither Pablo nor APV even ask the question if we need this stuff – since
it was asked, they just automatically sprung into action. It seems so much of their
litigation philosophy is based on: since this is the way it has always happened, this is
the way it must happen in this case as well. I can’t seem to move them off of this.

I went off on Lupita Sunday night. Once again, she is getting in the way by trying
too hard. She sent out an aviso Sunday night that said Texaco is accusing the state
of fraud, rather than the other way around (actually, the way she wrote it, it could
be read both ways). When Pablo pointed it out, she got all arrogant and acted like it
was not a problem. She has an incredible level of defensiveness when criticized. But
what really pissed me off was not the error, but that she didn’t run it by me before
sending it out even though I was in the next room. Then, she refused to admit she
made a mistake. She said me and Pablo were being too technical as lawyers the
way we were reading it. This follows a serious, serious mistake last week when in a
press release that described what Borja was saying, she put quotes around the
headling even though he didn’t actually say those words. I told her and Joseph after
that that nothing goes out that Lupita writes or edits without me looking at it first.
So I started yelling at her, and Kush was there, and the reality is that I mishandled
it and it made me look bad. She started crying. This also follows me going off on
her Friday morning (my first morning) when, to assess our status with the Monday
press conference, I asked her for the press list and she didn’t have one. She just had
a bunch of loose sheets of names and numbers. And, she couldn’t produce the email
list. The whole thing was not a system – it was Lupita’s way. I had this of both her
and Joseph repeatedly. Frankly, I can’t wait for her to leave. She is using our work
to fill a gaping whole in her life. While this produces enormous dedication, with
positive results, the spillover effect and problems makes it really difficult to deal

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with. And where is Joseph? Not asserting himself. I apologize to Kush, sent Lupita
an email apologizing, but she did not respond.

About three weeks ago (at the end of June), just when Joe was ready to pull out, I
sent to Philadelphia and presented him a plan after having sent him the honesty
memo. It was a holding plan, but in reality we have not been in a holding pattern.
Joe was pretty cool about it, but I basically said we would be crazy to just close shop
given the investment to this point, when so many things (like the Winston case)
could move in our favor in the coming weeks. Joe agreed, but now Carol is gone
and it is unclear how things are going to go administratively. Amazingly, I called
Raul Herrera the week after the 4th and caught him in the Miami airport on his way
to Spain and Morocco for a family vacation. Raul is a real family man, and he is
genuinely happy for me that I have become a father. Anyway, he told me some
shocking news: the Jones Day lawyer approached him about a settlement. The
number $150m came up. I insisted he not leave us behind. He was real cool, said at
this point his client was not interested in a settlement, but we talked about a three-
way. I always felt Raul was the perfect person to broker a three-party agreement.
But this will take a lot of work. We talked about a $lb figure over time. I called
Joe immediately, and we are planning to go to D.C. to meet Raul sometime in
August.

June 24, 2006

Three day trip. Sent Joe a critical memo Friday of last week on prospects for case,
as he had told me he was loaning his law firm money and situation was really grave.
This is first time I felt this from him frontally since the case began, but I knew it had
to be coming at some point – I knew we were testing him limits, but I never knew
how close we were coming. He posed the question of whether we would really get a
recovery, and he said he thought it was no greater than a 10% to 20% chance. I
thought that was low, but not unrealistic. After hearing that, I realized he was
thinking seriously that the case might have to be abandoned. He said he was
loaning his law firm money personally to meet payroll, given that several major fees
they were expecting had yet to come in, including the one on the Marcos case. So I
wrote the long, interesting memo laying out four possible scenarios (see memo). The
reality is we are going to put the case in deep freeze legally for two months until the
situation clarifies itself. That said, the hard economic reality has forced a
rethinking of the strategy. I presented the entire new strategy to the team
yesterday, and everybody bought in. I truly feel this is the best move both because
of economic necessity (we have no choice) and practical reality. We need to stop

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About the Author

Zennie Abraham
Zennie Abraham | Zennie Abraham or "Zennie62" is the founder of Zennie62Media which consists of zennie62blog.com and a multimedia blog news aggregator and video network, and 78-blog network, with social media and content development services and consulting. Zennie is a pioneer video blogger, YouTube Partner, social media practitioner, game developer, and pundit. Note: news aggregator content does not reflect the personal views of Mr. Abraham.

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