Appeal, compensate damages or Trump: the options of the ad hoc board to not lose Citgo

The recent decision of the Court of Appeals for the Third Circuit of Philadelphia (USA) states that the Trump administration could prevent Crystallex from taking over Citgo, if it decides to prevent it via OFAC

Three options are outlined for now for the ad hoc administrative board of Citgo Petroleum to execute and thus try to maintain ownership of the Venezuelan company located in the United States, after it lost the appeal that it introduced in a federal court to avoid a possible embargo by from the Canadian Crystallex.

The Court of Appeals for the Third Circuit of Philadelphia (USA) rejected an appeal from Venezuela to annul an order of the Court II of Delaware that allows the mining company Crystallex to collect compensation from the state firm with a compensation of about 1.2 billion dollars the South American nation owes, for the expropriations of its assets in the country during the government of Hugo Chávez.

In this regard, the ad hoc administrative board of PDVSA, designated by the National Assembly, published a statement in which it undertakes to take legal action. "The ad hoc board will, together with its legal advisors, take all necessary legal measures to challenge that decision."

One of those actions could be the request before the court to reconsider its decision, but it could also seek to appeal to the United States Supreme Court , despite the fact that many legal experts have indicated that on very few occasions the highest court reverses decisions of the Appeal courts

On the other hand, sources close to the company indicated that the legal representatives of the government in charge of Juan Guaidó, recognized by the US and by more than 60 countries, could approach Crystallex executives to agree on a new negotiation in which they are offered to compensate the damages generated by the expropriation.

"One way to prevent Crystallex from losing Citgo is for the people of Guaidó to convince them that they will return their assets that were expropriated in Venezuela (Las Cristinas mines), once a transitional government takes over the country," he said. the source consulted that preferred not to be identified

He argued that the most prudent thing would be to reach an agreement in which, in addition to returning the assets, a part of the resources demanded by the Canadian mining company is canceled. As will be recalled, several representatives of the Guaidó government have indicated that there is an external financing plan for the economic recovery of the country and to meet several of the nation's debts.

"Although there is already a legal decision, there may be an agreement outside the court , we will have to wait," the source said.

But there is a third way. Despite the recent decision of the Third Circuit Court of Philadelphia with which the ad hoc board loses the appeal, the ruling entails an assessment that could help not lose the Venezuelan refinery in the US.

The letter of the decision of the court of appeals states that the Donald Trump government could prevent Crystallex from taking over Citgo, if it decides to prevent it via the OFAC (Office of Foreign Assets Control of the US Department of Treasury)

The US government has already issued several decisions in which it has granted exemptions to US companies so they can continue operating in Venezuela or conduct negotiations with the oil country, including Chevron, which maintains its operations and assets in the local oil sector.

An auction of Citgo shares could move forward as early as September unless the OFAC declares that such transactions are blocked by U.S. sanctions, a senior financial sector executive close to creditors told Argus. from Venezuela.

Representatives of the ad hoc boards of PDVSA and Citgo have not commented on the details of the measures they will carry out, nor has the Attorney General appointed by Guaido.

“This is one of the claims inherited from the governments of Chavez and Maduro. Unfortunately, some trying to fuel what they believe is a fallen tree.We will continue to do everything in our power to defend Venezuela's assets abroad, ”said Alejandro Grisanti, a member of the parallel board of PDVSA on the social network Twitter

With the recent legal decisions, the Citgo refinery is highly committed. The company was put in guarantee by the governments of Hugo Chávez and Nicolás Maduro in operations with different foreign companies and governments such as the Russian, in addition to the support by the PDVSA 2020 Bond of 50.1% of the shares. Currently, the oil company faces several lawsuits due to non-payment of these commitments.