Judge: Canadian Firm Can Go After Venezuela's US Refineries



In this Feb. 24, 2012 file photo, gas prices are posted at the Citgo gas station in Philadelphia. A Canadian gold mining company on Thursday, Aug. 9, 2018 won the right to go after Venezuela's prized U.S.-based oil refineries and collect $1.4 billion it lost in a decade-old take-over by the late socialist President Hugo Chavez.

AP Photo/Alex Brandon

 

CARACAS, Venezuela (AP) — A Canadian gold mining company on Thursday won the right to go after Venezuela's prized U.S.-based oil refineries and collect $1.4 billion it lost in a decade-old take-over by the late socialist President Hugo Chavez.

Chief Judge Leonard P. Stark of the U.S. Federal District Court in Delaware made the ruling in favor of Crystallex, striking a blow to crisis-wracked Venezuela, which stands to lose its most valuable asset outside of the country — Citgo.

Chavez took over the gold mining firm and many other international companies as part of his Bolivarian revolution that's left the country spiraling into deepening economic and political turmoil.

Venezuelans struggle to afford scarce food and medicine as masses flee across the border. In a sign of rising political tensions, current President Nicolas Maduro threw an opposition lawmaker in jail this week, charged in a failed assassination plot using two drones loaded with explosives.

The latest order by the U.S. judge could set off a scramble by a long list of creditors owed $65 billion from bonds that cash-strapped Venezuela has stopped paying within the last year, said Russ Dallen, a Miami-based partner at the brokerage firm Caracas Capital Markets.

"This was the most vulnerable low hanging fruit for debtholders to go after," Dallen said. "It looks like Crystallex is the lucky lottery winner because they got there first."

Chavez in early 2009 announced Venezuela's take-over of the Canadian mining operations in Bolivar state, a mineral rich region with one of the continent's largest gold deposits. He accused mining companies of damaging the environment and violating workers' rights.

Crystallex spent years trying to negotiate a deal with Venezuela before making its case in 2011 to a World Bank arbitration panel, which sided with the Canadian firm, despite Venezuela's vigorous fight.

U.S.-based Citgo, part of the state-run oil company PDVSA, has three refineries in Louisiana, Texas and Illinois in addition to a network of pipelines. If the order is carried out, Crystallex won't get all of Citgo — valued at $8 billion — but Venezuela could be forced to liquidate it to make good on the court order.

Today, the gold mining region once operated by Crystallex is largely lawless and dangerous, run by rogue miners who blast the earth with water and mercury to expose gold nuggets and sell them to government forces, often leading to deadly conflicts.

The judge's ruling is unique, because government assets, like PDVSA, are normally protected from lawsuits against a sovereign nation. But the judge found that Crystallex can attach Citgo's parent because Venezuela has erased the lines between the government and its oil firm, now run by a military general.

Upon issuing the order, the judge delayed enforcing it for a week, which Dallen said could be a move to give Crystallex and Venezuela time to reach an agreement, such as returning to payment terms of an earlier resolution, Dallen said.

"This gives Venezuela the chance to honor its settlement agreement," Dallen said. "Or they'll lose Citgo."

- by Scott Smith, AP reporter

Add your comment:
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags

Calendar

  • COOLinary

    2018.08.01

    During the month of August, experience cuisine that delights your palate and is an integral part of the history and culture of New Orleans. This...

  • 2018 Regional Infrastructure Conference Construction Management Association of America (CMAA) Gulf Coast Chapter (GCC)

    2018.08.16

    Join the Construction Management Association of America – Gulf Coast Chapter (CMAA GCC) for the 2018 Regional Infrastructure Conference being...

  • Upcoming Auditions Near New Orleans, LA

    2018.08.20

    To schedule an audition, please visit the website provided, https://ait.careers. Any questions about current or upcoming auditions should be...

  • Biz Night at Galatoire's 33

    2018.08.22

    Looking to promote your business and network with local professionals? Register today for Biz New Orleans' Strictly Biz Night. Join us this month...

  • The Boys & Girls Clubs of Southeast Louisiana’s “Blue Door Blues” Gala

    2018.08.23

    The Boys & Girls Clubs of Southeast Louisiana is proud to announce its annual fundraiser, “Blue Door Blues.” The gala, scheduled for Thursday,...

  • Fund 17 Summer Happy Hour

    2018.08.24

    This fall, Fund 17 will open a new resource center for entrepreneurs. Join us for a networking happy hour and exclusive look at the plans for this...

  • Networking Happy Hour

    2018.09.05

    Join us for the next installment in our quarterly New Orleans networking event series! We’re opening our doors and inviting the regional bio,...

  • Jefferson Chamber Golf Classic

    2018.09.20

    Enjoy a day on the links with business friends, clients or prospects, and network with Jefferson Chamber leadership, board members and key decision...

  • Spice of Life Women's Expo Northshore

    2018.09.22

    Bring your friends to shop, socialize and learn at this fun-filled, energetic Ladies Day Out. Exciting Speakers Presenting Interesting and Relevant...

  • You Are Not Alone

    2018.09.25

    The Counseling Solutions program of Catholic Charities Archdiocese of New Orleans is collaborating with the Substance Addiction Ministry of the...

  • Biz Night at Royal Sonesta

    2018.11.14

    Looking to promote your business and network with local professionals? Register today for Biz New Orleans' Strictly Biz Night. Join us this...


Show More...