With Maduro Out, Venezuela’s Victims Deserve Justice

The new year started with a bang (or two) in Caracas, Venezuela, where U.S. forces captured dictator Nicolás Maduro and brought him back to America for trial. Wisdom of U.S. foreign policy aside, it’s a great time for the people of Venezuela after 26 long and oppressive years of a socialist dictatorship. To the many victims of Maduro and his predecessor Hugo Chávez’s rule, the struggle is just beginning to get justice for regime-led thefts, countless crimes against humanity, and the destruction of the Venezuelan economy.

Entrepreneurs have had some success in getting American judges and global bureaucracies to acknowledge these crimes. However, the U.S. government has stood in the way of a forced sale of Venezuelan assets to repay the victims. It’s time for the Trump administration to end this injustice and ensure these wrongs are righted.

For the Canadian mining company Crystallex, setting up shop in Venezuela seemed like a golden opportunity. Crystallex contracted with the Venezuelan government in 2002 for the right to develop and extract gold from a site in Las Cristinas, Venezuela over a 20-year period. Government leaders bound by the rule of law and decency would honor this multi-year promise and sit back as jobs and wages skyrocketed and tax revenues flooded state coffers.

Sadly, Chávez held his people captive to his deranged and profoundly cynical political and economic worldview. The petty dictator seized Venezuela’s gold mines in 2011, expropriating Las Cristinas in the process without any compensation. Venezuela then bequeathed mining rights to the state-owned oil and gas company PDVSA (Petróleos de Venezuela, S.A.), which in turn sold a significant portion of mining-related shares to the Venezuelan Central Bank.

In the 14 years since the mine seizure, Crystallex and other expropriation victims have faced a lengthy, complicated, and expensive legal battle for restitution. In 2017, U.S. District Judge Rudolph Contreras confirmed the award that an arbitration tribunal under the World Bank’s International Centre for Settlement of Investment Disputes ordered the previous year. But collection has proven easier said than done.

Since then, U.S. courts have struggled mightily to put together an auction and distribution of proceeds that would satisfy the many victims of Chávez and Maduro. Some prospective bidders favor an auction that would make expropriation victims such as Crystallex and ConocoPhillips whole, while others have made their case for negotiated payments to PDVSA bondholders to keep future litigation off the table.

Finally, on Nov. 25, Judge Leonard Stark put an end to years of squabbling and approved Elliott Investment Management’s $5.9 billion bid for PDVSA’s U.S. subsidiary. The bid avoids a minefield of issues by making needed payments to bondholders while giving theft victims their due. As Judge Stark explained, “many of the judgment-creditors who have spent years and millions of dollars trying to recover on billions of dollars of judgments, to compensate them for harm inflicted by one or more of the Venezuela Parties years or decades ago, will finally obtain relief.”

Unfortunately, the U.S. government is standing in the way of restitution. Any transaction to redistribute the Venezuelan government’s American holdings requires the approval of the Department of Treasury’s Office of Foreign Assets Control (OFAC). OFAC claims it is open to approving the transaction, but it is “premature to issue any such license or express a definitive view on the issuance of a specific license in a future scenario.”

OFAC must take decisive action and approve the transaction. Now that Maduro is out the door, the Venezuelan people are looking to American leadership for clarity on their country’s future. Immediate restitution would be a welcome sign that the old and bankrupt socialist order is at an end, and property rights will be respected from this day forward. It’s time for a new approach that rejects government thuggery and embraces freedom.

Ross Marchand is the executive director of the Taxpayers Protection Alliance.