Venezuela Opposition Presses US Officials to Halt Citgo Sale

(Bloomberg) -- Venezuela’s opposition is ramping up lobbying efforts in Washington, trying to persuade the Biden administration to intervene in the court-ordered sale of Citgo Petroleum Corp.’s parent company in the US.

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The company is the South American nation’s most important foreign asset and its shares are due to be auctioned by July 15. The opposition fears Nicolas Maduro could blame them for Citgo’s loss ahead of crucial presidential elections set for the end of next month.

So the opposition-appointed, ad-hoc board that represents state oil company Petróleos de Venezuela SA in US courts is seeking congressional support for measures that could safeguard the asset from creditors.

In a letter sent Wednesday to Treasury Secretary Janet Yellen and Attorney General Merrick Garland, a bipartisan group of lawmakers is urging the administration to “bar the continuation of the sale process through its economic powers, revoke its favorable sanctions licensing policy regarding the sale announced in May 2023” and establish an “equitable and orderly” alternate process for resolving claims against Venezuela’s government and PDVSA.

Representatives Debbie Wasserman Schultz and Maria Elvira Salazar, a Florida Democrat and Republican respectively, co-authored the letter. Other signatories include Democratic representatives Joaquin Castro, Robert Menendez, Jared Moskowitz, Darren Soto and Susan Wild, as well as Carlos Gimenez and Michael Waltz from the Republican side of the House.

It’s a last-minute effort to avoid the sale of Citgo’s parent, PDV Holding, which is being targeted by tens of creditors to pay-off over $20 billions in claims against Venezuela. The process, started by a Canadian mining company that had its assets expropriated by late Venezuelan President Hugo Chavez, is being led by District Judge Leonard Stark in Delaware. A final round of bids is set to take place next week.

PDVSA’s ad-hoc board didn’t reply to a request for comment. Two weeks ago, Horacio Medina, the head of the opposition-appointed group, visited the US capital to meet with with members of Congress and rally support as the share sale and Venezuelan election draw near.

“The timing is unbelievably stupid. It is a gift to Maduro,” Elliott Abrams, a former White House special envoy for Venezuela affairs, said in a blog post published Sunday. “The lawsuits have been under way since 2017. Must they end days before Venezuela’s election?”

The signatories of the congressional letter expressed concern about the potential consequences the Citgo sale would have on Venezuela’s transition to democracy. They also said protecting the asset from seizure serves US regional security objectives.

In lieu of the Citgo auction, they called for a Foreign Claims Settlement Commission process to be established, noting it has been used previously in Cuba, Iraq and Sudan. The commission is an independent agency of the Justice Department that adjudicates claims of US nationals against foreign governments.

PDVSA’s ad-hoc board, as well as a political committee in charge of protecting Venezuela’s foreign assets, have been fighting in court without much success to maintain control of Citgo’s parent company, while trying to settle some of the most urgent claims in order to prevent the sale from proceeding. They have even considered filing for bankruptcy under Chapter 11 as a way to delay the loss of the asset.

--With assistance from Jef Feeley and Fabiola Zerpa.

(Updates with FCSC request in 10th paragraph. An earlier version corrected the signatory list in the 5th to include Representative Robert Menendez, not senator.)

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