Escobar is smart—he's just not smart enough.
He's the police lieutenant in charge of investigating Hollis Mulwray's murder, and a former colleague of Jake's (they worked together in Chinatown). He catches on to some of what's happening—beating Jake to the scene of Ida Sessions' murder for one thing—and realizes that someone was setting Jake and Hollis Mulwray up by having Jake take pictures of Hollis's non-existent adultery.
But Escobar misses the big picture—he thinks Evelyn's guilty of the murder, and he doesn't buy Jake's story about Noah's plot to steal the water supply. He thinks he's doing L.A. a service, but he ends up making sure that the bad guy, Noah Cross, gets away.
For a supposedly good cop, he doesn't even do a better job than Ace Venture, Pet Detective. Escobar's a little overrated, IOHO.