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PDV US sues ex-congressman over $50 million image deal

Tom Williams/CQ-Roll Call

Former congressman Cuban-American Florida Republican, David Rivera

- PDVSA U.S. subsidiary hired David Rivera to burnish U.S. reputation
- Opposition-run U.S. unit is now suing to recover $15 million

By Chris Dolmetsch/Bloomberg

Petroleumworld 05 14 2020

Venezuela's state oil company in 2017 hired a former congressman with a checkered past to help improve its “long-term reputation and standing” in the U.S. His contracted fee: an eye-popping $50 million to be paid over three months.

In a lawsuit filed Wednesday, the U.S. subsidiary of Petroleos de Venezuela SA said Interamerican Consulting, the firm of Florida Republican David Rivera, only got $15 million in the end. But for that amount, the company says it basically got two reports totaling no more than five pages, much of which was copied from other sources.

Though the deal with Rivera was entered into when PDV USA was controlled by the government of Venezuelan President Nicolas Maduro, the subsidiary is now overseen by opposition leader Juan Guaido, whom the Trump administration recognized as Venezuela's interim president in January 2019. Board members appointed by Guaido filed Wednesday's suit in Manhattan federal court seeking the return of the $15 million .

Interamerican “performed no meaningful services under the agreement, and certainly did not perform the level of services that might reasonably be expected for a fee of approximately $17 million per month,” PDV USA said in the suit.

Rivera, who represented parts of Miami and its suburbs for one term before his 2012 defeat, responded by text message to “ask the Citgo 6 guys,” a reference to six executives of Citgo Petroleum Corp., PDVSA's U.S. refining unit, including five Americans, who have been detained by Maduro's government for allegedly issuing $4 billion in illegal contracts.

“They managed that entire operation, including all the money, in coordination with the Venezuelan opposition, including Leopoldo Lopez,” Rivera said, referring to a prominent politician opposed to Maduro. “That's all I know.”

Read More: Pence Demands Release of Citgo Executives Detained in Venezuela

A lawyer for one of the six executives, who have said they did nothing wrong, called Rivera's comment “false and malicious” and said that, because Citgo is legally and organizationally separate from PDVSA, the six would have had nothing to do with Rivera's contract. “Mr. Rivera's comments are a malicious attempt to imply that the Citgo Six might have been involved in his dealings,” the lawyer, Jesus Loreto, said.

Through a spokesperson, Lopez denied any involvement in the Rivera's contract, saying he was in prison at the time. “It's absurd, any kind of attempt to make a link between Leopoldo Lopez and a contract signed by Maduro's regime representatives, just at the same time when the same regime was keeping Mr. Lopez isolated and tortured in a military prison,” the spokesperson said.

The lawsuit is not Rivera's only legal problem. A federal judge last year reinstated campaign finance charges against him over his alleged contribution of $70,000 to a Democratic primary candidate he hoped would weaken his 2012 general election opponent. The watchdog group Citizens for Responsibility and Ethics in Washington labeled Rivera one of the “most corrupt” members of Congress in 2012.

Rivera has denied wrongdoing and called the accusations against him “politically motivated fake news.”

The Cuban-American Rivera apparently agreed to work for a Venezuelan state oil company despite previously taking a tough stance against that country's socialist dictatorship. In a 2012 statement, he criticized then President Barack Obama for turning a “blind eye” to the global threat posed by Venezuela, which was led at the time by Maduro's predecessor and political mentor, Hugo Chavez.

Rivera is a close friend, former roommate and political ally of U.S. Senator Marco Rubio, a fellow Cuban American Republican who ran for president in 2016 is considered a potential 2024 candidate. Rivera's alleged campaign finance violation and a series of ethics complaints were used against Rubio by his 2016 opponents, including then candidate Donald Trump.

According to Wednesday's lawsuit, Interamerican, whose only employees are Rivera and his sister, was supposed to construct a plan to improve PDVSA's reputation in the the U.S. by building relationships with policy makers, public officials and other “targeted stakeholders.” It was also supposed to provide at least seven bi-weekly reports and a final report with recommendations.

The reports Interamerican did provide “refer generically to a ‘strategic plan,' ‘meetings,' and ‘recommendations,' but do not describe a single element of the alleged plan, identify meeting participants or meeting discussions, or specify what recommendations were made or to whom,” PDV USA said in the suit.

PDV USA says it paid the first three installments under the contract, totaling $15 million , but refused to pay the remaining $35 million . According to the suit, Rivera has repeatedly demanded the rest of the money. PDV USA is requesting the return of the $15 million and a declaration that it has no further obligation due to Interamerican's failure to perform.

— With assistance by Fabiola Zerpa, and Alex Vasquez

Reporting by Chris Dolmetsch from Bloomberg.
05 14 2020



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