Insurance Fight Over $395 Million in Stolen Oil

MANHATTAN (CN) — Two years after the Carlyle Group lost more than $395 million it invested in a Moroccan refinery, the private equity firm sued Lloyd’s insurance for refusing to foot the bill for the theft.

Carlyle Commodity Management sued Certain Underwriters at Lloyd’s London on Friday in New York County Supreme Court.

VMF, a portfolio company advised by Carlyle, entered into a master commodity agreement with Moroccan oil refinery SAMIR — Societé Anonyme Marocain de L’Industrie du Raffinage — in December 2014.

Carlyle says the parties revised the agreement several times over the next year, leading the six plaintiffs to acquire 959,999 metric ton equivalents of crude oil and petroleum products for more than $429 million.

“From time to time, plaintiffs received storage tank reports from SAMIR that had been certified and stamped by an international, third-party storage tank inspection company indicating the amount of plaintiffs’ crude oil and petroleum products stored at SAMIR,” the 26-page lawsuit states.

But Carlyle says it learned about discrepancies in the amount of crude oil and petroleum products stored with SAMIR.

“When such issues were identified, SAMIR provided various explanations and responses, including but not limited to the fact that SAMIR was processing greater amounts of crude oil due to Morocco’s busy driving season and the fact that the price of crude oil was declining,” the complaint states. “Representatives of SAMIR repeatedly assured CCM personnel that SAMIR was working to rectify the discrepancies.”

Carlyle says it concluded that the bulk of the crude oil and petroleum products had been stolen in January 2016.

“At no time did plaintiffs consent to SAMIR selling or disposing of plaintiffs’ crude oil and petroleum products stored at SAMIR that are the subject of this action,” the lawsuit states.

Carlyle says it has more than $33 million in haircut payments from SAMIR, but Lloyd’s should cover the theft and willful misconduct for the remainder.

It seeks the money that it lost and a declaration that Lloyd’s policy applies.

It is represented by David Yohai of Manhattan-based Weil Gotshal & Manges.

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