OFAC Greenlights Sale of Citgo Shares
The United States government clarified on Monday, May 1st that the current sanctions are not an obstacle for the execution of the embargo on the Venezuelan state-owned Citgo, while issuing a license authorizing the 2016 National Assembly to negotiate with creditors of the Venezuelan state.
The Office of Foreign Assets Control (OFAC) clarified what had already been announced by the Department of Justice that “it will not take enforcement action against any person or entity for participating, facilitating, or complying with the preliminary steps set forth in the Court-Ordered Sale Procedures, or for conducting transactions that are incidental and necessary to participate, facilitate, or comply with such steps.”
This clears the way for the Citgo embargo to be executed according to a schedule set by the special master, which includes a call for bidders to acquire the shares of Venezuela’s most valuable foreign asset, which was subject to legal action due to the expropriations by the Hugo Chávez government.
OFAC also clarified in its questions and answers section regarding Venezuelan sanctions that a license will be required to complete the sale, but that it “intends to implement a favorable licensing policy in relation to the execution of a sale” and that “it would be maintained without prejudice to reconsideration if the foreign policy and national security interests of the United States change.”
“By making these licensing determinations, OFAC is committed to fair and equitable treatment of potential creditors,” they added.
On the other hand, OFAC issued a license, number 42, authorizing negotiations between the Republic and PDVSA creditors with the 2016 National Assembly, its delegated commission, or whoever is designated for this purpose. With this decision, the Treasury Department adjusts to the political changes generated following the dissolution of the interim government.
So far, eight companies have successfully obtained court orders allowing them to collect compensation for expropriation or debt default through the Citgo embargo. The case that opened this path was that of Crystallex, a Canadian miner expropriated by Chávez in 2006.
