[This article has been updated to note that the UK Supreme Court declined to hear an appeal to overturn an Appeal Court ruling in favour of PetroSaudi relating to a Letter of Credit].
The Venezuelan newspaper ‘Venezuela al Dia’ has just reported a highly significant development in the courts of that country. It adds yet another jurisdiction to the many now investigating, and in this case prosecuting, 1MDB related crimes.
According to the paper, the Attorney General’s Office of Venezuela has brought charges against a raft of officials from the state oil company PDVSA, who they say colluded with the company PetroSaudi in a fraudulent oil contract. The deal was designed to net the Saudi ‘joint venture partner’ of 1MDB a staggering half million dollars a day each for two substandard drilling ships that were engaged to operate in Venezuela’s coastal waters.
Sarawak Report has already reported on the questionable nature of the deal, which was secured after PetroSaudi was able to place several million dollars up front on the table. That money had come from 1MDB and the contract was supposed to be part of their joint venture.
All the six men named in the indictment (Romer Valdez, Jesus Figueroa, Lioner Valdez, Adelso Molero, Elías Roa and Rafael Rodríguez) feature in correspondence between PetroSaudi and PDVSA relating to those deals, according to the information seen by Sarawak Report.
The US Department of Justice court filing on 1MDB has likewise exposed serious concerns about PetroSaudi’s Venezuelan venture, citing that the two aging drill ships had also turned out to have been the sole asset on which 1MDB’s supposed $2.3 billion worth of ‘units’ in a mystery Cayman Island investment trust portfolio relied. The ships are worth less than $100 million and neither are currently operational.
Despite a lamentable record of delivery of oil by these two rigs, which led to PDVSA refusing to continue to fulfil its astronomical rental agreements, PetroSaudi has continued to press for its half million a day payments (money that in theory ought to go to 1MDB). The company had succeeded in getting the Venezuelans to agree to a bank letter of credit arrangement whereby $130 million would be paid to PetroSaudi in the event of such a dispute.
Sarawak Report has reported that the UK High Court (which had jurisdiction over the deal) originally backed PDVSA’s refusal to release the $130 million Letter Of Credit, on the basis there was evidence of fraud on the part of PetroSaudi and its collaborators on the deal. However, the Court of Appeal has subsequently reversed that decision.
[Update – The Supreme Court upheld the Appeal Court ruling].
Meanwhile, separate claims of innocence with regard to the Venezuela deal on the part of 1MDB and PetroSaudi have been contradicted by the official actions of state regulators and investigators in Venezuela. Below is our translation of the article:
On September 20, the 10th Court of Control of the Metropolitan Area of Caracas admitted a complaint filed by attorney Rafael Antonio Osío Tovar against Romer Valdez, Jesus Figueroa, Lioner Valdez, Adelso Molero, Elías Roa and Rafael Rodríguez for the crimes of embezzlement and falsification, for irregularities in the rental of an oil rig in a $ 1.3 billion contract between Petróleos de Venezuela, Neptune Marine & Drilling and PetroSaudí.
The plaintiff, Osío Tovar, who is part of the Attorney General’s Office, filed a case against the six men linked to Petróleos de Venezuela (PDVSA), after finding alleged fraud and misappropriation of funds contained in the contract signed in 2007 for the lease of a drilling vessel. The multi-million dollar Drilling Contract No. NMD DISC DRL 151.0035 was entered into between PDVSA and Neptune Marine & Drilling in October 2007 to lease the Discover unit for offshore operations, negotiated and signed by Luis Vierrna’s team, with the direct participation of Eulogio del Pino, reported the prestigious magazine Petroleum World.
The contract, already close to its expiration, was scandalously restored and ceded to PetroSaudi on January 10, 2010 pursuant to an assignment agreement between PDVSA, PetroSaudi and Neptune. In parallel, to complete the plan, a separate agreement was signed [Drilling Contract No. 4600036377] in September 2010 between PDVSA and PetroSaudi Oil Services, for a record number of more than 1300 million dollars, adding another boat the Saturn, to the operations of PDVSA.
Approved by Del Pino and the rest of the executives, PDVSA paid daily rates of more than half a million dollars for each ship, with a surcharge, more if you take into account that the ships were considered useless scrap, that did not meet any of the objectives of drilling, as evidenced in the Internal Reports of the Offshore Division of PDVSA.
PetroSaudí is a private company, of a more financial nature than operational. It was founded in 2005 by a member of the Saudi royal family, Turki Bin Abdullah Al Saud, and a Saudi citizen, Tarek Essam Ahmad Obaid.
Despite this conflict, last March a London court ordered PDVSA to pay PetroSaudí’s USD 130 million in unpaid bills. Venezuela reacted announcing that it would appeal the decision and denounced the company before the Permanent Court of Arbitration of the United Nations for breaching the terms of the Saturn contract. According to documents to which this wording obtained access, Valdez has given a power of attorney in the US state of Texas to Jose Antonio Bonvicini, Luis García, Daniel García and Luis Miguel García, in order to represent him before Venezuelan courts and the Public Ministry and clarify the facts to which it is linked.