The United States Treasury Department stopped protecting a Citgo auction at the beginning of 2023, after years of preventing any action that involved an auction of the PDVSA subsidiary. Now the Ad-Hoc Administrative Board appointed by the National Assembly elected in 2015 will have to negotiate with creditors in an attempt to avoid the company’s total loss.
The National Assembly elected in 2015, now headed by Dinorah Figuera after dismantling the interim government of Juan Guaidó, “washed its hands” regarding the possible auction of the subsidiary of Petróleos de Venezuela (PDVSA) in the United States, Citgo, by blaming to PDVSA’s Ad-Hoc Administrative Board to negotiate with creditors seeking to collect their debts by auctioning the company.
In a release Disseminated through its social networks, the 2015 National Assembly summarized the chain of events that put Citgo at risk of being auctioned off to pay tens of billions of dollars owed by Venezuela due to decisions by Hugo Chávez and Nicolás Maduro.
«The generalized practices of corruption, massive expropriations and excessive and irresponsible indebtedness of the governments of Hugo Chávez Frías and Nicolás Maduro caused the collapse of the Venezuelan economy, the oil industry and hundreds of lawsuits abroad against PDVSA and its affiliated companies,” recalled the letter.
Among the wrong decisions, the expropriation of assets of the transnational Crystallex International Corporation and ConocoPhillips Company stood out, in addition to national public debt bonds with a guarantee on 50.1% of Citgo shares, which fell into default since 2017. These Three facts supported the main legal proceedings against Citgo in US courts, which also did not have the appropriate defense from Venezuela.
The opposition-controlled Parliament explained in its statement that the unfavorable rulings for Venezuela in these courts are based on the legal argument of the “alter ego”, through which it is argued that the debt with the Venezuelan State can be collected through an entity dependent on the State, although it is not related to the consummated debt, as is the case of Citgo, which would be taken as compensation for Chávez’s expropriations.
Through the interim government of Juan Guaidó, recognized by the United States since 2019, an attempt was made to implement a defense to preserve this asset, but the judicial processes were already advanced and the sentences favored the plaintiffs.
Despite these judicial results, the company was not sold to pay the debts due to a license granted by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury that prevented transactions with Citgo shares.
However, the United States stopped protecting Citgo with that license after four years and after the dismantling of the interim government of Guaidó, so now the courts will be able to order Citgo to be auctioned and pay Venezuela’s debts with the money resulting from the sale.
For this reason, the 2015 National Assembly insists that the Ad-Hoc Administrative Board is responsible for negotiating with creditors to find alternative solutions to auctioning Citgo, which would represent the loss of Venezuela’s most important asset abroad.
«The responsibility of formulating and executing the negotiation strategy with foreign creditors corresponds to the Ad-Hoc Administrative Board of PDVSA. For this reason, the National Assembly summons it to act without delay to preserve the property of Citgo and to seek solutions that do not put at risk the integrity of said asset of the Venezuelan State abroad,” the statement highlights.
In the same way, the deputies call on the United States authorities to maintain the “broad and sufficient” protection that promotes the search for a solution that does not imply losing Citgo.
RELEASE | The National Assembly of the Bolivarian Republic of Venezuela addresses the Venezuelan people to report on the situation of Citgo Petroleum pic.twitter.com/FyJHqAvGYI
— National Assembly (@AsambleaVE) May 6, 2023
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