HOUSTON, July 24,
2024 /PRNewswire/ -- This month, CITGO Petroleum
Corp. achieved a substantial judicial award in a multi-year effort
to expose a corrupt contracting conspiracy that defrauded CITGO and
its parent companies through a complex international bribery
scheme. The award of more than $340
million in damages and interest, entered by the District
Court for the Southern District of Texas, granted judgment in full to CITGO
against its former contractor, Petroleum Logistics Service Corp.
(PLS), and PLS's founder, Jose Manuel
Gonzalez Testino.
Since the new Board of Directors assumed control of CITGO in
2019, CITGO has worked tirelessly to adopt the best standards of
corporate governance, internal controls and transparency, and to
seek compensation from those who had previously defrauded CITGO. As
part of that effort, CITGO launched this litigation in 2020 to hold
PLS and Testino accountable for engineering a pervasive scheme of
bribery and fraud. As uncovered in documents obtained
in the litigation and detailed in full in CITGO's filings in the
case, Testino, PLS, and others participated in a conspiracy lasting
from approximately 2012 to 2018 (prior to the new Board of
Directors), through which CITGO was defrauded out of hundreds of
millions of dollars. Testino and PLS paid millions of dollars in
bribes to then-CITGO employees to induce those employees to award
PLS (and a number of suitcase companies affiliated with PLS) highly
lucrative contracts for the sale and transportation of various
goods and equipment, all purportedly for the benefit of CITGO's
ultimate shareholder in Venezuela.
PLS and the affiliated companies then charged CITGO grossly
inflated prices, fees, and expenses for those goods and services,
and concealed that conduct through bribing a number of CITGO's
former employees.
Accountability against PLS and Testino has taken years to
achieve, in large part because they refused to participate in the
litigation, and several entities and individuals associated with
Testino and PLS resisted subpoenas and court orders to provide
documents and depositions. CITGO ultimately prevailed against those
delays, revealing a vast network of corruption and
fraud detailed at length in CITGO's Motion for Default
Judgment filed in February 2024. In
May 2020, CITGO sued PLS and Testino
to recover the damages inflicted by the bribery scheme.
On July 11, 2024, the District
Court for the Southern District of Texas granted CITGO's Motion for Default
Judgment, holding PLS and Testino's estate liable for
fraud, breach of contract, and civil violations of the
Racketeer Influenced and Corrupt Organizations Act. On July 16, 2024, the Court awarded CITGO over
$254 million in trebled damages, and
over $89 million in prejudgment
interest. It is unclear what funds may be accessible from the
Defendants to enforce this judgment, but CITGO intends to pursue
enforcement of the Default Judgment, as appropriate, and to hold
accountable any entities or individuals who participated in this
now documented conspiracy.
Links to copies of CITGO's Motion for Default Judgment and the
Order awarding damages are below.
- Plaintiff CITGO Petroleum Corps. Motion for Default Judgment
Against Defendants
- Order Awarding Damages
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SOURCE CITGO Petroleum Corporation