CORRECTED-More Venezuelan creditors are granted the right to seize Citgo shares in case sanctions change
(Corrects paragraph 5, to point out that Huntington Ingalls Industries Inc is one of these companies and not Northrop Grumman Corp.
Marianna Parraga and Luc Cohen
March 24, (Reuters) – Four companies have been granted the right by a U.S. court to seize shares of Citgo Petroleum Corp’s parent company to collect debts owed to Venezuela. This is in the event that U.S. sanctions against Venezuela are changed.
This decision, taken on Thursday, is the latest setback in Venezuela’s attempts to prevent a disintegration of Citgo. It is controlled by Petroleos de Venezuela, a state-owned oil company.
U.S. District Judge Leonard Stark, Delaware, stated that four companies had shown that PDVSA is the “alter-ego” Venezuela’s government. They could therefore pursue the company’s assets in order to settle expropriation debts.
Stark said that Citgo’s parent Delaware registered PDV Holding cannot be seized by the companies until the U.S. Treasury Department which enforces sanctions allows it.
The four companies form part of O-I Glass Inc. Huntington Ingalls Industries Inc. ACL1 Investments Ltd. and Rusoro mining Ltd.
Crystallex, a Canadian miner, and ConocoPhillips, an American oil company, had previously won Stark rulings that allowed them to potentially profit from any sale of PDV Holding stock once sanctions allow.
Stark stated that Crystallex had shown that PDVSA is Venezuela’s alter-ego in 2018. Conoco claims that PDVSA is not real.
In an effort to overthrow Venezuela’s socialist President Nicolas Maduro (whom it has charged with human rights violations, and rigging his 2018 election), Washington placed oil sanctions on PDVSA in 2019.
Maduro denied the allegations, and said that the U.S. wanted Venezuela’s oil. Venezuela is a member state of OPEC.
The chairman of the opposition-appointed PDVSA Board, Horacio Medina said that Venezuela will appeal.
Citgo spokespersons did not respond immediately to a request for comment.
Jose Ignacio Hernandez, who was previously the chief overseas legal representative of the opposition, stated that “Sooner rather than later, the restrictions as a protective barrier will fall apart and those creditors will have the ability to take away Citgo.” (Reporting by Luc Cohen, New York; Marianna Parraga, Houston; Editing: Cynthia Osterman.