US lawsuit: Venezuela cheated of billions by rigged oil bids
March 9, 2018
CARACAS, Venezuela (AP) — A trust linked to Venezuelan state oil company PDVSA has filed a lawsuit against Glencore, Lukoil and other energy trading firms for their alleged role funneling bribes to corrupt company officials in exchange for rigged oil purchase and sale contracts.
The civil complaint was unsealed Thursday by a federal judge in Miami and alleges the ongoing scheme cheated the socialist-run company of billions in lost revenue since 2004.
The lawsuit comes as the U.S. expands its own criminal investigation into corruption at PDVSA. At least $11 billion is believed to have gone missing from the company in the past decade, according to a 2016 report by the opposition-led National Assembly, and among those prosecutors believe took bribes is the country's former oil czar Rafael Ramirez, who was not named in the new lawsuit.
The scheme to fix prices, rig bids and eliminate competition, as well as steal highly-confidential information by cloning the company's servers, was allegedly started by two former PDVSA traders, Francisco Morillo and Leonardo Baquero. Swiss-based Glencore and Russia's Lukoil are named as among more than 40 defendants including rogue traders at multinational traders, shell companies, mid-level PDVSA officials and a Florida bank.
In 2004, the two Venezuelan men established in Panama a consulting firm, Helsinge Inc., which also had offices in Miami, Geneva and the British channel island of Jersey. The company was the conduit by which some of PDVSA's biggest clients and supplier allegedly obtained insider information on PDVSA's tenders for the sale of its oil exports as well as the purchase of the light crude with which Venezuela refines its heavy crude.
Among other illicit activities, a "clone server" was allegedly installed at Helsinge's Miami offices by a PDVSA IT administrator nicknamed "the Nerd" to give the middleman and their clients real-time access to information on competing bids and future tenders.
In exchange for the sneak peak and other unfair advantages, Helsinge — which was not authorized to transact directly with PDVSA — allegedly charged monthly retainers from the international oil companies of $15,000 to $150,000 plus added compensation of up to $0.22 per barrel of oil product bought or sold. Some of that money was paid out from Panamanian shell companies in the form of bribes to four PDVSA managers, one of whom, Ysmael Serrano, currently heads the company's commercial and supply department, according to the lawsuit.
An email sent through the website of Helsinge, which does not list a phone number or address for the company, went unanswered.
Glencore and Lukoil did not immediately comment. There is no evidence the companies encouraged the corrupt dealings, except for communications between Helsinge and traders for the oil companies discussing wire transfers and ways to change the terms of future tenders before they are released to the general market.
PDVSA also did not comment.
Last month, prosecutors in Houston unsealed charges against five former senior officials, including a deputy oil minister, for bribe-taking. The indictment alleges Ramirez was one of the recipients of the illegal payments. Ramirez left the U.S. for an undisclosed location after resigning as ambassador to the United Nations in December and has since been targeted by a separate corruption probe in Venezuela.
The evidence in the lawsuit was partly collected by a former Scotland Yard investigator hired by the trust who had access to PDVSA's servers in Caracas last year. It's also based on damaging emails, banking records and instant messages provided by Morillo's estranged wife — some of which are included in the complaint — detailing how the alleged conspiracy was carried out.
The trust is represented by attorneys from Boies Schiller Flexner, the same New York law firm defending Venezuelan First Lady Cilia Flores' nephews in a federal drug-trafficking case.
AP Writer Scott Smith contributed to this report.