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.
SOURCE CITGO Petroleum Corporation
