As published in The Vanguard, The “robbery of the century” in Venezuela was completed this month following the assignment of the vulture fund Elliott Management as the winner of the auction of Citgo, the Venezuelan state oil company, based in Houston, whose assets are equivalent to no less than 10%. of the Venezuelan GDP. Citgo – a subsidiary of the state oil company Petróleos de Venezuela (PDVSA) – is the most valuable trophy to date for the Wall Street banks and funds that have benefited from the sanctions against Venezuela and the attempts at regime change hatched in Washington, Miami and Madrid.
While the Venezuelan government and opposition were engaged in a destructive war, a group of Wall Street financial funds and energy and mining multinationals, supposedly harmed by Chavismo’s embargoes and nationalizations, seized the most valuable asset of the Venezuelan State in the abroad: a company with three refineries in Texas, Louisiana and Illinois, which produce more than 800,000 barrels of gasoline per day, as well as an important network of gas stations. The price Elliott will pay It is at most half of what Citgo is worth. In 2011, when Chávez attempted to sell the company, it was valued at $13.5 billion. “Citgo is lost for 50% of its value,” said Venezuelan oil analyst Einstein Millán. It is “the handing over of the crown jewel to foreign interests gathered around venture capital, particularly BlackRock, Vanguard and Koch Industries and their offshoots,” he added. Elliott must now deal with the avalanche of compensation demands from around twenty funds, junk bond holders and mining and oil multinationals that had demanded the seizure of Citgo to compensate for their lost investments and assets in Venezuela.
The loss of Citgo represents an extraordinary transfer of wealth from a country devastated by the crisis and the US blockade
The loss of Citgo for the Venezuelan State represents an extraordinary transfer of wealth from a country devastated by a social and economic crisis and a US blockade that have annihilated 30% of the Venezuelan GDP, causing the departure of six million of its citizens. The beneficiaries: the great fortunes of the financial, energy and mining sectors in the US and Canada, among them the founder of Elliott Management, the American billionaire and Republican donor, Paul Singer.
The story of the looting of Citgo is often cited in the media as another example of the chaos in which Venezuela is mired and the incompetence – depending on your point of view – of the government or the opposition. But, according to a new book published in New York, the Citgo debacle is no coincidence. It was the target of the regime change operation designed by a group of Venezuelan opposition leaders in 2019 with the collaboration of Miami Republican hawks in Donald Trump’s administration.
There was “a hidden motivation behind the failed regime change plan,” according to the American journalist. Anya Parampil in her book Corporate coup –corporate coup– (OR Books, 2024). “It was a conspiracy to steal Venezuela’s most coveted international asset.”
Already with the entry of Elliott – specialized in making juicy profits through lawsuits against non-payments from countries such as Argentina, the Democratic Republic of the Congo, Peru or Liberia – the conspiracy may have been perfected. “Was it a collateral effect of the regime change plan or was it an intended consequence of it?” Parampìl asks in his book. Elliott Management is known for its aggressiveness in lawsuits against poor and bankrupt countries. In 2011, he forced the seizure of an Argentine military ship in order to collect $2.6 billion from Cristina Kirchner’s government. The magazine New Yorker called Singer and Elliott Management’s business model “a uniquely competitive and immensely lucrative way of doing business.”
Seven years ago, then-President Trump prohibited the repatriation of Citgo profits, depriving Venezuela of 95% of its foreign currency.
It all started seven years ago when then-President Donald Trump, advised by neoconservative Cuban exile hawks in Florida such as Marco Rubio and Mauricio Claver Carone, prohibited the repatriation of Citgo profits. He immediately announced a total embargo on the sale of Venezuelan oil, which deprived the country of 95% of the foreign currency needed to purchase essential goods. Then, following the advice of some architects of the counterinsurgency in Central America in the 1980s such as Elliott Abrams, as well as the former head of the CIA, Secretary of State Mike Pompeo, Trump proceeded with the coup. After recognizing the young parliamentary leader Juan Guaidó, self-proclaimed president in January 2019, as head of state, Washington handed over all Venezuelan assets in the US – Citgo was the most valuable – to the new “shadow” government of Guaidó.
By taking control of Citgo’s valuable distribution network and refineries in the United States, Guaidó and his collaborators – led by Luisa Palacios, the scion of a Venezuelan oligarch family based in New Jersey and the spouse of a senior executive at JP Morgan on Wall Street – opened the doors to corporate lawsuits, giving a gift to lawyers for multinational oil corporations and global funds that had suffered setbacks during the years of Hugo Chávez’s Caribbean socialism.
In addition to Elliott, these corporations include the multinational oil companies ConocoPhillips – a major donor to the Trump campaign –, Vitol and Koch Industries, whose partners, the Koch brothers of Kansas, are sponsors of the Atlas Network made up of ultra-conservative Latin American groups, among them them, the current Venezuelan opposition (Pedro Urruchurtu, the advisor of María Corina Machado, the de facto candidate in the July presidential elections, is an activist in liberal networks related to Atlas). Large global investment funds are included as well.
Corina Machado was part of the group that conspired with Trump to deliver Venezuelan assets to Guaidó’s team
Although Corina Machado has tried to disassociate herself from the thorny Citgo matter, she was part of the group that conspired with Trump to deliver Venezuelan assets to Guaidó’s team. “María Corina Machado endorsed and so far has not distanced herself from the management of Venezuela’s foreign assets confiscated by the Biden government, including Citgo,” said Gustavo Marquez Marin, Chavez’s former minister, now an opponent, during a conversation. held in July in a cafeteria in Altamira, Caracas.
The mechanism for the looting was a far-fetched legal figure called alter ego. For 20 years, the Chavista governments, with advice from the best corporate lawyers, had created administrative structures to “maintain a safe distance between Citgo, PDVSA and the Venezuelan State,” says Parampil. This “made it difficult to prove, with legal arguments, that Citgo was an instrument of Maduro.” No creditor managed to convince judges in the United States that they had the right to collect their compensation through the Citgo seizure.
But, after the company was handed over to Guaidó’s government team, which appointed new members of the board of directors of PDVSA and Citgo, Judge Leonard Stark of Delaware accepted, for the first time in 2023, the argument that Citgo was a called alter ego of the Venezuelan State.
According to the figure of alter egoany company that considered itself harmed by the actions of the Venezuelan State had the right to request compensation through the seizure of Citgo’s assets. And that’s exactly what happened. Stark ruled in favor of the argument that Guaidó’s team “used PDVSA’s resources for their own purposes, which allowed creditors of the Venezuelan republic (and not just PDVSA) to seize Citgo,” says the Venezuelan economist, settled in the US, Francisco Rodriguez.
Another participant in the vulture frenzy to get a piece of Citgo is the Canadian gold mining company Crystallex, whose concession to extract gold in southern Venezuela was withdrawn by Chavez in 2008. There is also another Canadian miner, Gold Reserve, as well such as the American glass manufacturer Owens-Illinois, which was nationalized by the Chávez government and is trying to pocket almost 450 million dollars. Siemens Energy is another plaintiff. In total, there are about 19 lawsuits, whose claims total about $20 billion, 40% of Venezuela’s GDP, which almost triples what Elliott would pay for Citgo.
The story of Crystallex is key to understanding the grotesque outcome of the Citgo tragedy. Following the decision of the Chávez government to withdraw the concession of its Las Cristinas mine, this Canadian company sued the Venezuelan State in 2016 before the International Center for Settlement of Investment Disputes (ICSID), an arbitration court affiliated with the World Bank and based in Washington, used in the past by vulture funds such as Elliott. As usually happens, this multilateral court ruled in favor of the multinational and ordered the Venezuelan State to pay $1.2 billion in compensation to Crystallex. With the recognition by the Delaware court that Citgo was the “alter ego” from the Venezuelan State, Crystallex got the green light to seek all or part of this compensation through the seizure and sale of Citgo’s assets, although it must now face Elliott.
A legal advisor to Guaidó had been a lawyer for Crystallex and Owens-Illinois when they tried to recover their investments in Venezuela
One piece of information that has raised suspicions that the Guaidó plan was, in fact, a “corporate coup” is that the aforementioned legal advisor to Guaidó’s team, José Ignacio Hernández, had previously been a lawyer for both Crystallex and Owens-Illinois, when They tried to recover their lost investments in Venezuela by embargoing oil assets of the Venezuelan State. Although Hernández did not use the figure of alter ego In the trials against Venezuela, he did emphasize that the Chavista governments had broken the legal independence of PDVSA and therefore, that an embargo would be legal. “He had already said repeatedly that Maduro and Chávez had violated the autonomy of PDVSA, which is obvious, but it is totally false that he argued the thesis of the alter ego”Hernández insisted in an interview.
However, part of the Venezuelan opposition calls for an investigation into the role of Hernández, as well as that of Carlos Vecchio, another lawyer who was appointed chargé d’affaires of the Guaidó government in the US. Vecchio had represented the American oil company Exxon. “The presumption of innocence must be respected, but there may be conflicts of interest and it is enough to warrant an investigation,” Francisco Rodriguez said.
Citgo is not the only asset of the bankrupt Venezuelan state that was expropriated during the Trump years. The factory in Barranquilla (Colombia) of the Venezuelan public fertilizer company Monómeros – another PDVSA subsidiary – was also handed over to the Guaidó government. Following the collapse of the company amid corruption accusations, Gustavo Petro, the Colombian president, returned Monómeros to the Venezuelan state. Likewise, the Venezuelan gold bars that are under the vault of the Bank of England were removed from the control of the Venezuelan State after the Guaidó operation. Lacking legitimacy, and without the support of security forces, the virtual government created by Trump quickly lost credibility. He is now accused of embezzlement and other corruption crimes. Meanwhile, Guaidó has moved to Miami.
#looting #Citgo
