Citgo sues Miami firm over millions lost in Venezuela fraud
When the U.S. recognized Venezuelan opposition leader Juan
Guaidó as the nation’s rightful leader last year it did more than just trigger
a bitter feud with socialist leader Nicolás Maduro. Increasingly, it’s also
unleashing a torrent of lawsuits.
The latest came Tuesday, when the Guaidó-appointed board of
Citgo, the U.S. subsidiary of Venezuela’s state oil company, filed a lawsuit in
federal court in Houston against a former contractor seeking to recover
millions of dollars in damages.
The lawsuit accuses José Manuel González and his Miami-based
Petroleum Logistics Service Corp. of providing gifts including cash, jewelry,
private artwork, chartered flights and even a handpicked Houston apartment to
senior executives at Citgo. In exchange, officials paid González $20 million
between 2014 and 2018 to provide goods and services to Citgo’s parent company,
PDVSA, at inflated prices.
“Citgo lost millions of dollars as a result,” the lawsuit
alleges.
The lawsuit follows a similar complaint filed by Citgo two
weeks ago against former Miami congressman David Rivera for allegedly breaking
a $50 million consulting contract with PDVSA. The company has also sought a
U.S. court order blocking bondholders from exercising collateral rights over
the state-owned refiner and invalidating $1.7 billion in debt.
Both lawsuits highlight the increasingly tight relationship
between Guaidó and the U.S. Justice Department. As attorneys for the new Citgo
board, under subpoena, sift through internal documents trying to get a handle
on the company’s legal vulnerabilities it’s found common cause with prosecutors
targeting vast corruption in Venezuela’s bankrupt petroleum industry. To date,
28 individuals have been charged as part of the ongoing probe by prosecutors in
Houston, Miami and Washington.
Among the many who have pleaded guilty is González, who was
arrested arriving to Miami International Airport in 2018 on charges of paying
$629,000 in bribes to the former general manager of Bariven, PDVSA’s
procurement subsidiary. In pleading guilty to one count of conspiring to
violate the Foreign Corrupt Practices Act, González also admitted to funneling
kickbacks to officials at PDVSA and Citgo.
The latest lawsuit, reflecting the evidence presented in the
criminal complaint against González, does not name the five Citgo officials who
allegedly took bribes. But all of them were members of a special department
charged with procurement efforts on behalf of PDVSA.
Official E, who according to the indictment was a senior
executive from 2013 through November 2017 and whose duties included “overseeing
all of Citgo’s operations,” appears to have benefited the most, receiving from
González original artwork, a flight on a private jet and an apartment to his
liking in the Houston area after expressing displeasure with his corporate
lodging.
Official E is José Pereira, the former acting president of
Citgo, according to two people familiar with the federal investigation on the
condition of anonymity to discuss the ongoing proceedings.
Pereira is one of the so-called “Citgo 6” who have been
detained by Maduro’s government since traveling together to Caracas around
Thanksgiving 2017 for a meeting called by Pereira’s predecessor, then Oil
Minister Nelson Martinez, that ended up being a trap. They’ve since been
charged in Venezuela with corruption stemming from a never executed plan to
refinance some $4 billion in Citgo bonds by offering a 50% stake in the company
as collateral.
“It’s unfair to accuse someone of corruption when they are
unlawfully jailed and unable to even defend themselves,” Pereira’s wife and two
sons said in a statement. They questioned the motives for accusing Pereira of
wrongdoing and added that he never lived in an apartment since moving to the
U.S. in October 2013 and didn’t own any expensive artwork.
All of the men were U.S. citizens except Pereira, who was a
permanent resident. There’s no indication that any of the other detained men
were involved in the alleged acts of corruption described in the lawsuit or
indictment against González. Martinez, who was also imprisoned, died in state
custody in 2018.
Venezuela has owned Citgo since the 1980s. It has three
refineries in Louisiana, Texas and Illinois in addition to a network of
pipelines crisscrossing 23 states that provides around 5% of U.S. gasoline.
Guaidó and his allies took over Citgo’s boardroom shortly
after the Trump administration recognized him as Venezuela’s president in
January 2019 and tightened sanctions on PDVSA and Maduro, barring Americans
from doing business with either.
The takeover of the U.S.′ fifth-largest oil refiner was
heralded as a major boost in the opposition’s bid to remove Maduro. But it also
made it potentially responsible for paying the company’s — and Venezuela’s —
mounting pile of unpaid debts.
This month, the U.S. Supreme Court rejected an appeal by
Guaido’s attorneys to protect the refinery from seizure by a Canadian gold
firm, Crystallex International Corp., which is trying to collect a $1.4 billion
arbitration award stemming from Hugo Chavez’s nationalization of its assets a
decade earlier.
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