Court open to new questions on key Venezuela decision

A company seeking compensation for expropriated Venezuelan assets must make new arguments to a US federal court proving national oil company PdV serves as the government's alter ego.

OI European Group (OIEG) cannot rely on a similar finding in 2018 that has allowed former Canadian mining firm Crystallex to pursue shares of US independent refiner Citgo and opened a wave of copycat litigation, the US District Court of the District of Delaware said today. The decision created a rare vulnerability for the Venezuelan subsidiary, piercing its holding companies to leave Citgo potentially liable for more than $150bn in Venezuelan debt.

Judge Leonard Stark accepted at least in part arguments by Venezuela's opposition government that circumstances had changed and would require new arguments from the new plaintiff.

OIEG could not be immediately reached for comment. The company was a majority stakeholder in two Venezuelan glass companies seized by armed guards in 2010.

Attorneys for Venezuelan National Assembly leader Juan Guaido, who the US and other western governments recognize as the interim president of the country, insisted that the court must consider the "seismic political changes" in Venezuela since the Crystallex decision. Guaido took control of Venezuelan assets outside of the country — namely Citgo. And the National Assembly was working to insulate Citgo's PdV-controlled US holding company from the incumbent government.

"There is no reason to believe that the interim government is abusing the corporate form of PdV, has inappropriately misused the assets of PdV or has diverted the republic's assets to PdV to shield them from creditors," Guaido's attorneys said.

Guaido appointed a parallel board controlling Citgo in February, which has cooperated with US bribery investigations and [naming new corporate officers](https://www.argusmedia.com/en/news/1958213-guaido-names-citgo-ceo-debt-committee-correction

). But the interim government has exerted little influence in Venezuela. President Nicolas Maduro remains in control of the country's most important institutions.

OIEG responded that their arbitration award was against Venezuela, not a particular government. It made no difference if the country had changed its behavior since expropriating OIEG assets and leveraging Citgo in the US.

"After the Guaido government was recognized by the US in January, nothing changed for OIEG," attorneys said. "Venezuela continued to fail to pay OIEG's judgment or tender any settlement of the same."

By Elliott Blackburn