A CITGO gas station in the state of Illinois, US. Photo: Tim Boyle/Getty Images.
Caracas (OrinocoTribune.com)—The Second US Court of Appeals has overturned a ruling that favored collection actions by bondholders of the Venezuelan publicly-owned CITGO Petroleum Corporation. This move would boost the Venezuelan far-right opposition’s hold on CITGO, since the bonds were issued by President Maduro and the government, so this action would further enable the opposition’s theft of this crucial asset belonging to the Venezuelan public.
In 2019, with US support and approval, the Venezuelan far-right opposition—led by Juan Guaidó—took control of CITGO and has since then facilitated a series of legal battles aiming at dispossessing Venezuelans of this strategic asset, valued at over US$15 billion.
In its ruling this Wednesday, July 3, the court rejected the decision of Judge Katherine Polk Failla, who had ruled in 2020 in favor of the bondholders of Petróleos de Venezuela (PDVSA) and authorized the seizure of its subsidiary CITGO, reported Reuters.
The financially complex structure of the PDVSA 2020 bond and its collateral was affected by the 2015 far-right opposition parliamentary victory that created some legal basis for the connection of the bonds with CITGO, and later by the US blockade and its illegal sanction regime against Venezuela that forbade PDVSA to comply with the payment of the bonds’ principals and interests.
The website of the law firm Steptoe, specialized in this special litigations, makes a short background of the financial battle that has been the result of US imperialist actions against Venezuela:
“In late September 2016, the National Assembly passed a second resolution, reciting that the Exchange Offer required PDVSA to offer 50.1% of Citgo stock as collateral, and the Venezuelan Constitution empowered the National Assembly to exercise control over transactions that committed PDVSA’s assets as collateral. In October 2016, the Exchange Offer closed.
In October 2019, the National Assembly passed a third resolution which specifically addressed the Exchange Offer. It recited that “the 2020 Bond indenture is a national public contract that should have been authorized by the National Assembly, in accordance with Article 150 of the Constitution,” and “ratified ‘that the 2020 Bond indenture violated Article 150 of the Constitution of the Bolivarian Republic of Venezuela, since it concerned a national interest public contract, executed with foreign companies, which was not authorized by the National Assembly.’” Petróleos de Venezuela S.A. v. MUFG Union Bank, N.A., 495 F. Supp. 3d 257, 267 (S.D.N.Y. 2020) (PDVSA I).
When the October 2019 principal and interest payments came due a few weeks after the resolution was passed, PDVSA failed to pay, and two days later PDVSA filed a lawsuit in the United States District Court for the Southern District of New York (SDNY). PDVSA’s suit sought a declaration that the 2020 bonds were invalid pursuant to the UCC, which it said required the Court to apply Venezuelan law.”
The court said Judge Failla had not considered Venezuelan law when she issued her ruling to allow the seizure and collection of bonds issued by the Venezuelan government.
The court sent the case back to the judge for further review, but it remains unclear as to whether the decision will affect the sale of CITGO, allowed by a federal court in Delaware as part of another legal battle involving corporations with claims against Venezuela that manage, due to the leniency of the United States and the incapacity of the fake Venezuelan “interim government,” to facilitate the forced sale of shares of the multi-billion dollars Venezuelan asset.
Venezuela Firmly Condemns Theft of CITGO by Washington and Far-Right Opposition (+CITGO 6)
Last May, Judge Leonard Stark cleared the way for the takeover bids to be submitted as part of creditors’ claims for more than $20 billion in defaults and expropriations of the Venezuelan state, most of them on legal disputes and past due payments, a direct consequence of the US financial blockade of Venezuela.
The Chavista leader Diosdado Cabello spoke on this legal battle this Wednesday, stating that Judge Stark decided to postpone the forced sale of CITGO shares to the month of September in order to avoid causing additional trouble for the Venezuelan far-right opposition’s lack of popular support in the upcoming presidential elections, scheduled for July 28.
Cabello explained that the decision is clear evidence of the collusion between the US government and the Venezuelan far-right opposition. It also clearly shows how the US government control the US judiciary, despite constantly talking about the “independence of powers” and its pristine “check & balances” so-called democracy.
CITGO is a network of Venezuelan refineries and retail gas stations, with headquarters in Houston, Texas, owned by PDVSA since 1990. It has long been the nation’s most important set of assets abroad.
Special for Orinoco Tribune by staff
OT/JRE/AU
