I recently wrote about international corruption hitting my home city of Houston in the context of the Petrobras bribery and corruption scandal. Recently there were several individual criminal indictments against persons who worked for the Venezuelan energy company PdVSA, one of whom lived in Houston and others who had a Houston connection. Now we have the first civil action filed in Houston for the massive bribery and corruption that engulfed PdVSA and those who tried to do business with it over the past few years.
The case involves the Houston-based company Harvest Natural Resources, an oil and gas producer, which alleges it went out of business because it refused to pay $40 million in bribes to former officials and business partners of PdVSA. Reports said the lawsuit was filed “against former Venezuelan and PdVSA officials, alleging that they blocked the sale of Harvest’s Venezuelan holdings after the company refused to pay them a “bonus.” Harvest eventually had to sell the assets at fire sale prices, estimating that it lost $470 million. The company closed its operations last year.
Interestingly, PdVSA was not named as a party, only those individuals who tried to extort money from Harvest, which was trying to sell an interest in a Venezuelan entity, whose transfer PdVSA officials named in the lawsuit had to approved. These individuals were part of the PdVSA corruption “management team” laid out in the Justice Department’s criminal indictments. It is unusual to bring suit against those who sought bribes, particularly when they were not paid. Yet, that is exactly the legal strategy that Harvest Natural Resources is employing. It will be interesting to see how the company proceeds, if it can make a successful case and most importantly if it can collect damages on any award it may receive from the court.