WASHINGTON DC - 

A bankrupt mining company could keep part of the assets of CITGO, a subsidiary of Petróleos de Venezuela (PDVSA) and the sixth largest refinery in the United States.

In the face of the non-payment of a $ 1.4 billion debt to Crystallex, a judge in the state of Delaware decided last year that the Canadian company could annex CITGO assets. The ruling was challenged by PDVSA in an appeals court in Philadelphia.

In the judicial battle, which also involved investors of the Venezuelan state oil company, came the government of the interim president of Venezuela, Juan Guaidó, who since its inception has had his eyes on getting control of CITGO.

Where did the debt with Crystallex come from?

The legal dispute between the bankrupt company and the South American country dates back to 2008, during the presidency of Hugo Chávez, who expropriated Las Cristinas, a gold mine in the southeast of the country, in Bolívar state, whose exploitation was handled by Crystallex.

The case reached the arbitration court of the World Bank, the ICSID, which in 2016 granted an arbitration award of 1.2 billion dollars to Crystallex and which was to be paid by Venezuela in compensation for Las Cristinas.

The government of incumbent president Nicolás Maduro did not meet that debt and in 2018 Crystallex took the case to a civil court in Delaware (PDV Holding Inc, CITGO's parent company, is incorporated in this state). The ruling determined that PDVSA operated as an "alter ego of the Venezuelan government" and, by extension, Crystallex could annex the assets of its subsidiary in the United States. -CITGO- to satisfy the debt.

PDVSA took this ruling to the Philadelphia appellate court in August 2018.

A few months into the game came two US investment funds (BlackRock Financial Management and Contrarian Capital Management) asked to intervene in the trial in favor of PDVSA because they are holders of the bonds known as PDVSA 2020. The oil company also owes a debt of almost eight billion dollars with investors.

As a guarantee of this debt, PDVSA placed half of CITGO's shares. The holders argued before the Philadelphia court that allowing Venezuela's creditors to obtain access to PDVSA's assets would "hurt everyone" the debtors of the Venezuelan state oil company.

In short, the companies to which Maduro owes money are fighting to see who is left with CITGO , one of Venezuela's most important assets abroad.

And why did the government of Guaidó intervene?

The interim president has counted from the first moment with the support of the United States, who was the first country to recognize him as the legitimate leader of Venezuela. Relying on his diplomatic corps in the country, headed by Ambassador Carlos Vecchio, Guaidó has been in charge of collecting support in the US. and exert pressure to take measures that drown Maduro.

Also, shortly after beginning his interim mandate, on February 13 , Guaidó appointed a new board of directors for the company , which has since taken over the de facto control of the oil company.

Representatives of the interim government filed a motion on March 1 asking the Court of Appeals for the Third Circuit to postpone the case until July 1. The judge accepted that the legal team of Guaidó in the United States will present its arguments in an oral trial that will take place on April 16.

"A 120-day suspension [of procedures] is necessary to allow the newly installed government [to have] enough time to evaluate its position," argued the Guaidó government in the motion presented to the court.

The case, he alleges, has to do with the "control of strategic assets and threatens judicial interference" with the "foreign policy objectives" of President Donald Trump. According to the lawyers, the decision taken by the court could "negatively affect President Guaidó's ability to complete the democratic transition in Venezuela.

The attorneys representing the interim government in this case and members of the CITGO board of directors declined requests for interviews by the Voice of America for this report.

What does Crystallex argue?

The company objected to the government of Guaidó intervening in the legal process. In a document presented to the court, they affirm that the fact that the country is going through "a change of leadership does not free the debtor from his obligations to the creditors." The company states that it is "indisputable" that the arbitration award that ICSID issued in favor of Crystallex is "valid and enforceable".

They also refute the argument that the interim government needs time to evaluate its position since, José Ignacio Hernández, the attorney general of Venezuela appointed by Guaidó, provided his testimony as an expert backing Crystallex's arguments when the case was in Delaware court in 2017

A source with knowledge of the matter told the Voice of America that the representatives of the government of Guaidó in the USA. they have rejected Crystallex's attempts to enter into conversations with them.

This article is part of a series of the Voice of America that explores the dispute over CITGO and what it means for the future of Venezuela.