ATLANTA (CN) — An attorney for a trust linked to Venezuela’s state-owned oil company asked an 11th Circuit panel Friday to reinstate its antitrust and racketeering complaint accusing international energy trading firms of cheating the company out of billions through a bribery conspiracy.
Petróleos de Venezuela, S.A., or PDVSA formed the PDVSA US Litigation Trust in 2017 to investigate and pursue antitrust, racketeering and fraud claims against a multitude of conspirators who allegedly participated in a price-fixing and bid-rigging conspiracy to force PDVSA to sell its goods at below-market prices.
Two years ago, the trust filed a lawsuit against more than 40 defendants, including international oil companies, banks and former PDVSA traders who are accused of setting up a special computer server to steal the company’s confidential information.
The trust alleges that the defendants looted PDVSA by engaging in a slew of conspiratorial actions, including bribing and corrupting PDVSA’s agents to obtain inside information that would allow them to undercut PDVSA’s bids for energy products.
A federal judge threw out the lawsuit last year, finding that PDVSA’s assignment of its claims to the trust “is of questionable authenticity and legality.”
Arguing on behalf of PDVSA on Friday, famed litigator David Boies of Boies Schiller & Flexner told a three-judge panel of the Atlanta-based appeals court that the creation of the trust was necessary because “everybody was concerned that the people who were engaged in the corruption would use their political influence to try to get one faction or another to kill this litigation.”
“PDVSA could have sued itself as the plaintiff. However, there was a recognized culture of corruption in Venezuela that infected all political factions and everyone knew that the conspirators, who were well-funded and well-connected, would use all their influence to try to derail the litigation once they learned of it,” Boies told the panel.
In his ruling dismissing the case, U.S. District Judge Darrin Gayles found that anyone who might be able to testify as to the authenticity of signatures on an agreement creating the trust is unavailable due to political unrest in Venezuela.
Only two of the individuals who signed the trust agreement acknowledged their signatures. PDVSA has been unable to authenticate the other three signatures in court.
Gayles also noted that the Venezuelan National Assembly has declared the trust agreement invalid and unconstitutional.
In a final blow to the trust’s case, Gayles ruled that New York law prohibits the assignment of claims “with the intent and for the primary purpose of bringing a lawsuit.”
“The clear purpose of the trust agreement was to bring this lawsuit – with attorneys and investors as the primary beneficiaries,” the judge wrote.
Urging the panel to uphold the order dismissing the lawsuit, attorney Bruce Birenboim of Paul, Weiss, Rifkind, Wharton & Garrison argued that the trust never proved it had legal standing to sue his clients.
“This is a situation where I think it’s critically important that the authentication rules be applied rigorously,” he said.
U.S. Circuit Judge Adalberto Jordan, a Barack Obama appointee, questioned whether the evidence in the record was sufficient to prove that the trust assignment was authenticated by the proper officials.
“This document has multiple signatures and you’ve got competent evidence that some of the signatures were genuine and legitimate. Why isn’t that enough to get you past the authentication hurdle?” Jordan asked.
“There was not a single witness with personal knowledge of a single signature on this trust agreement,” Birenboim replied. “Anyone could have signed the document.”
“In order to have standing, the trust has to have a lawful assignment,” the attorney added, explaining that the trust is void and there can be no lawful assignment if the signatures cannot be authenticated.
Birenboim later conceded that there is evidence in the record that two U.S. trustees legitimately signed the assignment, but he said their signatures “cannot lawfully transfer claims” to the trust.
“Plaintiffs did not meet their burden at all in showing that this was an official government act,” he said.
Jordan was joined on the panel by Senior U.S. Circuit Judges R. Lanier Anderson III, a Jimmy Carter appointee, and Gerald Baird Tjoflat, a Gerald Ford appointee.