Why Venezuela Hasn´t Lost Citgo. 12 Fact-Based Reasons

José Ignacio Hernández G. / 27-10-2023

No contemporary authoritarian regime can succeed without writers, intellectuals, pamphleteers…

Anne Applebaum

Nicolás Maduro´s regime and its allies have once again resorted to lies to hide their responsibility for CITGO. With artifice – and employing the same persecution tactics that are now under investigation before the International Criminal Court – it has directly been pointed out that the so-called Interim Government diverted 19,000 million dollars, based on an alleged ruling of the Delaware Court, all within the framework of the narrative according to which Citgo was lost.

12 facts need to be clarified – with solid and verifiable evidence – to explain why Citgo is not lost yet and why the risks that weigh on the company are a consequence of the irresponsible indebtedness promoted by the Chávez and Maduro regimes. 

  1. Citgo Is not Lost. 

I’ll start by stating the obvious: Citgo is not lost. Today, it is still a subsidiary of PDVSA, and its management is more than successful. 

In December 2018, the situation was very different: Citgo was considered a lost cause, in particular, because of the unconstitutional collateral on its shares, in favor of the 2020 Bonds noteholders and Rosneft. 

Despite everything and against everything, PDVSA has been able to preserve Citgo. That has not been the case of other PDVSA assets under Maduro’s control. Thus, among other issues, it is worth mentioning the disappearance of 35%  of the shares in Nynas, the opaque debt swap that led PDVSA to transfer its shares in the Dominican Republic refinery, the expropriation of the shares in the Jamaica refinery whose compensation was seized, the seizure of the shares of Propernyn, PDVSA’s subsidiary in the Netherlands,   the seizure of assets in Bonaire and Curaçao, or the seizure of bank accounts in Novo Banco. 

The real question, then, is why Citgo has not been seized. The answer, as I explain in this book about the Venezuelan public debt (pp. 276 et seq.), is that Citgo has not been lost because of the strategy designed in 2019 by the 2015 National Assembly. 

I will not deny the criticized decisions by the National Assembly and the so-called Interim Government (wrongly dismantled in January 2023). But, with ups and downs, Citgo is still owned by PDVSA thanks to that defense strategy.

2. The auction of PDV Holding, Inc.’s shares is not imminent (and the economic interests behind some criticism about the sanctions).

The auction of PDV Holding, Inc.’s shares is not imminent. This process began on October 23 and is expected to conclude around June 2024. Only after this period can the Delaware Court potentially award the sale of shares to the chosen buyer, contingent on the license issued by OFAC.

There are still several months of legal proceedings and other necessary procedures to be completed before the forced sale of the shares can be executed in the worst-case scenario.

It’s crucial to elucidate the impact of sanctions. Some critics exclusively focus on the negative consequences of sanctions. They call for the “lifting of sanctions,” not to address their humanitarian effects but to promote specific economic interests.

If these sanctions were to be “lifted,” it would benefit only specific interests, not the Venezuelan people. Furthermore, removing these sanctions would compromise the additional protection provided to Citgo.

This supplementary protection derived from sanctions was established by OFAC in December 2019 and supported by the U.S. Government before the Delaware Court, as I explain in my book (pp. 333 et seq.). Unfortunately, earlier this year, the U.S. Government reduced the level of protection, allowing the Delaware Court to issue writs of attachment, creating incentives for creditors to file claims. This explains why Chávez and Maduro’s creditors have rushed to the Delaware Court: it is not because of the “corruption of the National Assembly” but because of the adverse effects of the sanctions easing. 

Fortunately, countering the “lifting sanctions narrative,” General License 5 has been recently renewed, suspending it until January 18, 2024. This renewal prevents the PDVSA 2020 noteholders from foreclosing on Citgo Holding, Inc.’s shares.

3. The value of Citgo (or how the proper governance rules rescued a company on the brink of collapse)

Citgo is today a profitable and successful company since its governance was rescued in February 2019 as a result of the strategy designed in the Transitional Statute approved by the 2015 National Assembly, that  -as the jurist Allan R. Brewer-Carías explains– restored the autonomy of PDVSA and Citgo. 

How is it possible that the so-called Interim Government and the 2015 National Assembly have successfully re-established the governance of Citgo if, according to the version now presented to us, that management is as corrupt and inefficient as the 24-year administration of Chávez and Maduro?

You can’t be and not be at the same time. Unless, of course, the facts are manipulated. 

The first public report presented by PDV Holding, Inc., gives an account of Citgo´s precarious conditions:

“The last four years, since 2015, CITGO had restricted access to the market as CITGO – under the administration of the Maduro regime – borrowed $2.8 billion and accepted financial clauses that compromised CITGO’s future dividends.”

This indebtedness of Citgo, promoted by Maduro, was aimed to facilitate a fraudulent dividend to PDVSA, which disappeared in the voracity of the criminal kleptocracy that has been established in Venezuela. 

Today, Citgo has refinanced that debt bequeathed from Maduro, showing successful management. The risk that weighs on it is not its own, but someone else’s: the external public debt passed down by Chávez and Maduro.

In particular, it should be clarified that Citgo´s most significant risk derives from Maduro’s unconstitutional decision to transfer the shares of Citgo Holding, Inc. in favor of foreign creditors as collateral. The legal defense launched in 2019 has prevented those risks from being activated. 

Thus, the guarantee on the 2020 Bonds is suspended by court order while the Supreme Court of Justice of New York decides on the lawsuit filed in 2019 by PDVSA’s ad-hoc board of directors. And recently, that board managed to recover collateral in favor of Rosneft, significantly reducing the risks to the company.

4. Chavez and Maduro’s irresponsible level of indebtedness put Citgo at risk. 

Chávez and Maduro’s foreign public debt is irresponsible. Not only the debt derived from expropriations and financial defaults but also the debt based on securities, estimated at $60 billion. 

There is, here, a pending issue: to examine the conditions that allowed this irresponsible indebtedness, not only from the destruction of the rule of law but from the international financial markets themselves, which, together with their analysts, turned a blind eye to the debacle in Venezuela, contributing to the complex humanitarian emergency and the systematic violation of human rights. When the debt crisis was evident – around 2014 – some sectors were still encouraging Venezuela to take on more and more debt. The result was nearly $60 billion in bonds that disappeared into the transnational kleptocracy of Chávez and Maduro.

5. It was Maduro who unilaterally declared the moratorium on the debt (sanctions are not to blame)

To wash Maduro’s face, it has been pointed out that he could not renegotiate the debt in 2017 because the United States prohibited him from doing so with an executive order issued in 2017. 

As I explained at the time, it was Maduro who decided not only to default on the debt but also to avoid renegotiation. Any debt restructuring requires the National Assembly´s control. However, Maduro chose to ignore the authority of the Legislative, especially with the illegitimate national constituent assembly appointed in 2017. 

6. The U.S. bank accounts were not transferred to the interim government, preventing Maduro from paying the debt,

It is also false that Maduro was paying the debt until Venezuela’s “bank” accounts in the United States were “transferred” to the so-called Interim Government. This image of Maduro acting as a diligent administrator is simply false. 

In November 2017, Maduro ordered the repayment of the PDVSA 2017 Bonds (the outstanding debt not swapped with the PDVSA 2020 Notes) and unilaterally suspended debt payments, promising a renegotiation he never fulfilled.

Except for the PDVSA 2020 Notes, Maduro only paid the claims that constituted a significant threat, referring to Chávez’s expropriations. But it did not do so through accounts in the U.S. but through accounts in Europe, such as Novo Banco, as can be read in the ruling that recently “unblocked” USD 1,500 million. Investigations to prevent money laundering prevented Maduro from continuing to pay some of PDVSA’s creditors, who then claimed their debt before the Delaware Court. 

7. It is false that the debts that have a seizure measure add up to 23,600 million dollars. 

Nicolas Maduro’s regime claims that the debt went from $3.4 billion under his regime to $23.6 billion under the Interim Government. Since they don’t even bother to explain those figures, it’s hard to understand what Maduro and his allies are referring to. 

In any case, it is good to remember that the external public debt did not increase under the Interim Government. All the legal claims pending before the courts of the United States, including the Delaware Court, existed before 2019, and all are attributable to Chávez and Maduro. 

Furthermore, the claim that the seizure measures issued on the shares of PDV Holding, Inc. total $23.6 billion is false. Let’s explain why.

The Delaware Court has established seven steps for creditors to gain a legal right over shares of PDV Holding, Inc. These steps are as follows: (i) the creditor must prove that Venezuela owes them a debt; (ii) the creditor must hold a judgment from a U.S. court; (iii) the judgment must be registered in the Delaware Court; (iv) the creditor requests a writ of attachment; (v) the Court issues a conditional attachment measure; (vi) once the conditions are met, the Marshals issue the writ; (vii) the Marshals serve the writ, which is then perfected. Only after these seven steps have been completed will a legal right be established. It’s essential to note that the Republic’s creditors must demonstrate that PDVSA is still considered the alter ego.

As the Court recognizes, today, there is only one creditor that complied with those seven steps, and that is Crystallex, with a debt of approximately $987 million. If we had to make the list of creditors with legal rights, this would be the only one. 

Some creditors have reached the fifth step, i.e., conditional attachment, which does not give any legal rights. The approximate amount of these claims is as follows:

ConocoPDVSAExpropriation (21st century socialism)1,331.58
OI GroupRepublicExpropriation (21st century socialism)634.01
Northrop Grumman ShipRepublicBreach of contract (21st century socialism)138.77
ACL1 et al.RepublicDebt default (21st century socialism)118.53
Red Tree InvestmentPDVSABreach of contract (21st century socialism)283.81
RusoroRepublicExpropriation (21st century socialism)1,480.00
ConocoPDVSAExpropriation (21st century socialism)48.14
KochRepublicExpropriation (21st century socialism)456.53
Gold ReserveRepublicExpropriation (21st century socialism)754.33
SiemensPDVSABreach of contract (21st century socialism)191.42

These creditors do not have a legal right. They may be able to accomplish the rest of the steps. Or maybe not. Today, what matters is that they have no rights whatsoever over PDV Holding, Inc. 

The figure of 23,600 million dollars is nothing more than a manipulation that the regime resorts to confuse, as is otherwise standard in populisms that embrace post-truth. 

8. The False Figure of $19 Billion Diverted (and Why the ICSID Award in Favor of Conoco Grants No Rights). 

In the lies sown by the Maduro regime, it is claimed that the so-called Interim Government, according to the Delaware Court, diverted 19,000 million. 

Where does that figure come from?

There is no Delaware Court ruling that says the Interim Government diverted resources. The judgment of March 23, 2023, has been cited,  but that judgment does not speak of any appropriation, nor does it refer to 19,000 million. The decision only granted conditional writs in favor of certain creditors. And the amount of the conditional writ, in any case, does not add up to the absurd figure to which the regime alludes. 

In reality, this is a crude manipulation. That figure represents the total of selected debts in favor of the Republic, from which specific claims could potentially lead to writs issued by the Delaware Court based on the alter ego thesis. However, these writs have not been given, and, in many instances, there hasn’t even been a new conviction based on the alter ego thesis.

One example: Over half of that absurd figure stems from the ICSID award rendered in favor of Conoco for expropriating its assets during the Chávez regime. Not only has Conoco not complied with the seven steps ordered by the Delaware Court to seize PDV Holding, Inc.’s shares, but also that award is not final. This is because the judicial representatives appointed by the Office of the Special Prosecutor of the Republic have been able to file a petition for the annulment of that award, and the proceeding is still pending. 

9. The Delaware Court’s March 2023 decision (and the Court of Appeals) does have much to do with Maduro. 

Using gimmicks, the Maduro regime tries to point out that the so-called Interim Government is responsible for 19,000 million because, due to its negligence, the Delaware Court declared that PDVSA was the alter ego of the Republic. Therefore, creditors of the Republic could seize the shares of PDC Holding, Inc. 

When we read the judgment of March 23, 2023, issued by the Delaware Court, we see how this ruling has been manipulated. 

It is enough to read Title VII on page 27 of the ruling. That Titles explained how Maduro’s unrecognized government continues to control PDVSA in Venezuela.” On page 30, Title VIII concluded that the Maduro regime’s direction and control over PDVSA is similar to the direction and control that the Court declared in August 2018.

That is to say, Maduro does have quite a lot to do with the decision adopted by the Court, declaring that PDVSA is the alter ego of the Republic (the reader interested in better understanding the legal thesis of the alter ego can read pp. 309 et seq. of my book on the debt, and pp. 214 et seq. of my recent book on the de facto privatization of PDVSA). 

Moreover, if we analyze all the evidence considered by the judgment of March 23, 2023, we can verify that most of it is attributable to the Maduro regime. Specifically, 44.94% of the evidence responds to Maduro’s acts (compared to 19.10% attributable to the 2015 Assembly and 15.73% to the president in charge/ad-hoc board). The rest of the evidence is attributable to constitutional and legal norms. 

Of course, the Maduro regime shirks its responsibility and, taking advantage of the confusion created, undertakes a new political persecution

10. Neither the 2015 National Assembly nor the so-called Interim Government has used PDVSA and Citgo for political purposes.

The Delaware Court affirms (pages 17 et seq.) that the Interim Government and the 2015 National Assembly have controlled PDVSA. The Third Circuit Court, in a judgment dated June 1, 2023, confirmed some of this evidence, but not before acknowledging that the Guaidó government has pushed PDVSA’s ad-hoc administrative board to be more independent (p. 30). 

Evidence-based on alleged political control exercised by the National Assembly and the Interim Government is being reviewed before the U.S. Supreme Court. Another important detail that was overlooked is that the sentence is not yet final. 

In any case, in the judgment of March 23, 2023, the Delaware Court violated the precedent of the Bancec case, in which the Supreme Court established the alter ego thesis. In Bancec, theCourt clarified that not every control gives rise to the application of this thesis since it requires day-to-day management with such intensity that the legal personality of the public entity – PDVSA, in this case – becomes a mere façade. 

Thus, for example, the Delaware Court considered that PDVSA is the alter ego of the Republic since the Venezuelan Constitution subjects that company to political controls. But this is not a day-to-day check. Likewise, the Court based the alter ego’s thesis on the constitutional controls that the 2015 National Assembly has exercised over PDVSA´s contracts of national public interest, as is the case of the collateral on Citgo. Nor is this a day-to-day control, but an exceptional control that, as the late Professor Duque Corredor said, applies to the Constitution. 

In any case, and beyond the imprecision, the sentence never states that the so-called Interim Government diverted 19,000 million, nor that it caused patrimonial damage for that amount. Again, that was the figure that Nicolás Maduro’s regime invented to make believe that there are already creditors of the Republic who, due to the faults of the Interim Government, have seizure measures for that amount.

11. The 2019 debt restructuring guidelines never promised to treat PDVSA’s debt equally.

One of the pieces of evidence considered by the Court (in paragraph 85) is based on the guidelines for the renegotiation of the public debt published by the Office of the Special Prosecutor in July 2019. The rationality of these guidelines is challenged because they are believed to equate the Republic and PDVSA debts. The argument goes as far as to claim that these guidelines constitute an act of corruption.

The populist authoritarianism of the 21st century, supported by their intellectuals (as Applebaum explains), constructs a post-truth in which they accuse dissent of betrayal and corruption. This new campaign on Citgo is an example of this. 

The first point to clarify is that it is false to assert that the guidelines ordered similar treatment to the debt of the Republic and PDVSA. Equal treatment was affirmed concerning the debt’s origin to clarify that preferential treatment would not be given to claims based on judgments, as explained in this article. In the 2019 report published by the Office of the Special Prosecutor, equal treatment was described as follows:

“All reconciled claims shall be treated on an equal footing, regardless of the origin of the obligation. This rule will have exceptions consistent with the general principles of Constitutional and International Law that govern the renegotiation of public debt.”

Equality of treatment applies to the origin of the debt, not to the debtor. It should be recalled that the guidelines were prepared by Lee Buchheit, one of the most experienced lawyers in public debt matters. Buchheit’s purpose was to clarify that creditors would not be given preferential treatment with a judgment to discourage further lawsuits. On pp. 323 and 324 of my book on debt, the reader will find a more detailed explanation. 

This principle is so evident that, as the judgment recognizes, the Maduro regime has also proposed to start from the direction of equal treatment.

On the other hand, the guidelines were applied to PDVSA because its legal basis stems from the Organic Law of the Financial Administration of the Public Sector, which governs PDVSA as a state-owned company. It’s important to note that the guidelines were just that – a guideline. They were not a valid and binding decision on debt renegotiation, which could only commence once the political debt crisis was resolved.

12. The recycling of the OI Group case.

The Maduro regime and its allies recycle the reckless accusation they launched in 2019, according to which I was an employee of OI Group, benefiting that company in its litigation on behalf of PDVSA. Although I have already responded to this new defamation, I summarize again the central facts.

The first time the authoritarian regime launched such an accusation was in 2019, with a reckless campaign of Avanzada Progresista.  From then on, the government has undertaken against me a political persecution, even recently. Today, they return to the same lie, demonstrating, moreover, that lacking reasons and arguments, the only thing left for them to do is to recycle the lie, changing the sender if anything.   

In a lengthy interview given in 2019, I clarified this matter. In 2013, I acted as an independent expert in an arbitration promoted by OI Group. My testimony explained objectively why Chavez’s expropriation of Owens Ilinois’ assets violated Venezuelan law. It is false that he was an employee of OI Group or that he defended its interests.  

More than seven years after that testimony and months after I resigned from the position of attorney general, OI Group requested a lien on the shares of PDV Holding, Inc., which was conditionally granted in March 2023, almost three years after my resignation. I did not intervene in this lawsuit simply because I had already resigned from the position.

But the regime and its allies, based on an expert report presented ten years ago, manipulated the facts to launch a wave of political persecution against me. 


We have witnessed, in the weeks, a typical example of modern authoritarianism that relies on post-truth. The method, as Applebaum summarizes, is quite common: intellectual elites fabricate arguments – disguised, even, in an academic debate – that are then used and disseminated by authoritarianism to advance their repressive tactics. This makes these post-truth intellectuals responsible for the gross human rights violations that these regimes commit. 

For this reason, this article aims to provide facts based on evidence so that public opinion – and those who fight to verify information – have elements to form a reasoned opinion. 

To this end, and by way of recapitulation, I summarize three main premises:

  1. Citgo has not been lost, as assets have been seized from the hands of Maduro, such as shares in the Dominican Republic refinery. The risks to Citgo are undoubtedly high, but none are imminent. 
  • It is false that there are claims with legal rights for almost 24,000 million or losses attributable to the Interim Government for 19,000 million. Today (October 27, 2023), only one creditor with a legal right before the Delaware Court, whose claim does not reach 1,000 million. 
  • All the claims and risks that weigh on Citgo are caused by the irresponsible public debt bequeathed by the regimes of Hugo Chávez and Nicolás Maduro, such as the particular case of the unconstitutional collateral in favor of the holders of the PDVSA 2020 Bonds, whose issuance has even been linked to Samarck López. It is time that Venezuela determine the responsibility – moral, at least – of those who promoted and encouraged this irresponsible indebtedness that favored and facilitated transnational kleptocracy and the systematic violation of human rights, now under investigation before the International Criminal Court. 

It only remains for me to say, with Juan Germán Roscio, how fruitful is the ignorance that makes the courtship of tyranny!

Note: English translation of an original published in La Gran Aldea