How a Brooklyn PR Firm Roiled Ecuadorian Politics

How a Brooklyn PR Firm Roiled Ecuadorian Politics

Paul M. Barret – Bloomberg Businessweek

In journalism, it’s funny how sometimes you tug on a loose thread and a sweater starts to unravel. That’s what’s happening in the wake of a dispatch I filed in May about a fake protest in Texas against Chevron. The story has morphed and migrated, becoming headline news in Ecuador. President Rafael Correa has taken to his country’s airwaves to deny allegations of financial chicanery allegedly linked back to the faux anti-Chevron demonstration.

First some background. On May 30, I wrote:

“Several dozen demonstrators gathered outside the Permian Basin Petroleum Museum in Midland to condemn Chevron, which held its annual meeting on Wednesday at the historic site in the west Texas oil patch. Humberto Piaguaje, one of the indigenous Ecuadorian leaders involved in a massive lawsuit against the oil company, helped lead the sign-waving, slogan-chanting cohort. To fill out the ranks of the demonstration, a Los Angeles-based production company offered local residents $85 apiece to serve as what the firm described in a recruiting e-mail as “extras/background people.”

As I reported, I contacted Karen Hinton, the public-relations person for Steven Donziger, the lead plaintiffs’ lawyer in the suit against Chevron and the architect of a long-running media crusade against the oil company. Donziger won a $19 billion judgment against Chevron in Ecuador in 2011. In March, a U.S. district in New York ruled that Donziger’s victory was based on fabricated evidence, bribery, and extortion—findings that Donziger has denied and appealed. Of the Midland protest, Hinton told me via e-mail: “We were not involved at all. Call MCSquared. They handled.”

MCSquared, based in Brooklyn, is a tiny PR firm staffed by several Ecuadorian transplants to the U.S. Hinton told me MCSquared worked for the Republic of Ecuador, which has publicly allied itself with Donziger and his clients in attacking Chevron. The Correa administration has been sponsoring protests around the world against Chevron—events promoted by MCSquared. When I spoke to people at the Brooklyn firm, they acknowledged helping to advertise the Midland protest but insisted they hadn’t paid any protesters and further claimed that they didn’t work for the Ecuadorian government.

In filings with the Justice Department in July, however, the PR firm disclosedthat over the previous year it had been paid more than $6.4 million by the government of Ecuador for advocacy aimed at pressuring Chevron to pay up on the multibillion-dollar Ecuadorian judgment. This news set off controversy in Ecuador, as critics of President Correa questioned the payments and what MCSquared actually did with the more than $6 million—a lot of money to put out some press releases and design a website.

Responding to the local questions about the MCSquared contract, Correa lashed out angrily in a speech last weekend. Here’s a description from the Buenos Aires Herald:

Ecuadorean President Rafael Correa said [on August 3] that his administration paid US$6.4 million to a PR agency in the United States to fight back against the “attacks” from oil company Chevron, which has been accused of causing environmental damage to his country’s Amazonian region. “We have a huge fight against this corrupt company based” in the United States, which has spent “more than US$400 million” in lawyers and PR agencies “to annihilate Ecuador,” Correa said on Saturday.

The president said that his administration was forced to hire the services of MCSquared, a PR company based in New York. “We had to hire the firm to defend the country against Chevron’s criminal attacks. (Chevron) has PR agencies, hundreds of lawyers, newspapers and radios because it funds political campaigns,” he said. Correa denied, however, some of the rumors that have circulated in [the] local press that say his administration made payments to a firm in New York to promote the image of the country and that of the president himself. “You have no idea how sensitive this is and who we are facing,” he underlined….”These firms have been hired to defend us from this monster that wants to destroy our homeland.”

Even for Correa, a politician known for flamboyant rhetoric, this seemed hysterical. Ezequiel Vazquez Ger, director of the Center for Investigative Journalism in the Americas, added some worthwhile observations and questions about the affair in this piece on the “Latino Voices” section of the Huffington Post.

I don’t know why Correa appears to be overreacting to challenges about a $6.4 million contract. The situation bears watching, though, especially as the date of Donziger’s appeal of his U.S. civil-racketeering verdict approaches later this year or in early 2015.