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U.S. attorney grilled over role in Chevron-Ecuador judgment

Attorney Steven Donziger shows pictures of a pool of oil which has seeped out from an oil waste pit left behind by Texaco at an oil pump site near the Amazonian jungle in Quito, Ecuador, October 30, 2003. REUTERS/Franklin Jacome

By Joseph Ax

NEW YORK (Reuters) - Steven Donziger, the U.S. attorney accused of using bribery to secure a multibillion-dollar pollution judgment against Chevron Corp (CVX) in Ecuador, took the witness stand for the first time on Monday and was immediately challenged on his claim that he was not in charge of the Ecuadorean case.

In a series of pointed questions, Chevron attorney Randy Mastro sought to undermine Donziger's claim that he did not lead the legal team in Ecuador but merely offered his advice.

"Isn't it a fact that you've described yourself as the lead lawyer?" Mastro asked.

"At times I have, yes," Donziger said.

Chevron filed a lawsuit in Manhattan federal court in 2011 claiming that Donziger used fraud to obtain an $18 billion judgment - later increased to $19 billion - for a group of villagers over the contamination of an oil field in northeastern Ecuador.

Last week, Ecuador's highest court cut the amount to $9.5 billion. Donziger has denied the bribery allegations.

The start of Donziger's testimony marked the most anticipated moment since the trial began last month, with more than 70 people in a packed courtroom looking on - including the musician Sting, who with his wife, Trudie Styler, has offered support for the villagers.

As part of his defense, Donziger has downplayed his role in leading the Ecuadorean litigation. In a witness statement filed with the court, Donziger emphasized that another lawyer in Ecuador, Pablo Ferjado, was the lead attorney and that Donziger served at the pleasure of the plaintiffs.

"I work for them; they do not work for me," Donziger testified.

During 90 minutes of questioning, Mastro sought to undermine that claim, focusing on the fees Donziger stands to collect if the judgment is enforced.

He asked Donziger about invoices that showed he was earning approximately $150,000 a year, while Ferjado was paid closer to $24,000.

"But you say you work for him," Mastro said. "He doesn't work for you?"

"Yes," Donziger said.

"He must be a very generous boss," Mastro said sarcastically, earning a rebuke from the judge.

Mastro also pointed to Donziger's 2011 retainer agreement, which called for him to receive nearly one-third of any contingency fee. Even with the award slashed in half last week, his portion would still be worth $600 million, Mastro said.

He quoted Donziger in various documents referring to himself as the "lead lawyer," saying he had an "integral role" in shaping strategy and giving instructions to the rest of the legal team.

Ferjado himself referred to Donziger as "cabeza," the Spanish word for head, and as "commander," though Donziger insisted the latter was a joke.

The Ecuadorean judgment was based on contamination between 1964 and 1992 at an oil field operated by Texaco, later acquired by Chevron. Chevron claims that Texaco cleaned the site after ceasing operations and handing control of the field over to state-controlled Petroecuador.

Since 2011, the villagers have sought to enforce the judgment against Chevron entities in Canada, Brazil and Argentina, since Chevron no longer holds any assets in Ecuador. The company hopes a victory before Kaplan would give it ammunition to fight such efforts in foreign courts.

A former Ecuadorean judge testified during the trial that he was paid to ghost-write orders for the judge who issued the judgment and that Donziger was aware of the scheme. The judge who released the decision, Nicolas Zambrano, denied taking bribes in his testimony.

Donziger is expected to continue testifying on Tuesday. Chevron previously asked Kaplan to strike large portions of Donziger's witness statement as irrelevant, a decision Kaplan has not yet made.

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

(Reporting by Joseph Ax; Editing by Eric Effron and Richard Chang)