Texas Energy Co. Gets $1.4B Award In Venezuela Bribe Case


Law360 (February 14, 2019, 11:41 PM EST) —A Houston energy company that claimed it was forced out of business because it refused to bribe officials at Venezuela’s state-run oil corporation convinced a Texas federal judge on Thursday to enter a $1.4 billion judgment against the former energy minister of the South American country.

Harvest Natural Resources Inc. and its subsidiary HNR Energia BV won a default judgment last month for $472 million against Rafael Dario Ramirez Carreno, the former energy minister and ex-president of the state oil company Petroleos de Venezuela SA. Ramirez had “failed to answer, appear, or otherwise defend the claims filed against him,” the court said.

But $472 million was the amount of the actual alleged damages, and Harvest had brought its suit under the Racketeering Influenced and Corrupt Organizations Act, which calls for treble damages, the Texas-based company had told the court.

“Because the court found that Harvest and HNR Energia sustained $472 million in actual damages under RICO, a judgment that does not include a treble damages award violates the statute’s requirement for ‘threefold’ recovery,” U.S. District Judge Lee H. Rosenthal wrote in Thursday’s order. “The court amends the judgment to give Harvest and HNR Energia the recovery to which the RICO statute entitles them.”

In addition, Harvest requested an award of attorney’s fees and other costs in an amount to be determined. Ramirez “has fled the country and law enforcement and refused to reveal his current location,” which means the company will incur “additional attorney’s fees, expenses, and costs in attempting to enforce this court’s judgment” that can’t currently be estimated.

Judge Rosenthal also granted that request Thursday and said the company would have to give the court an amount for attorney’s fees and costs within 14 days of enforcing the judgment.

Harvest and HNR inititally filed suit in February 2018 against four individuals and three entities, including Ramirez, alleging that because Harvest refused to pay four separate $10 million bribes in a pay-to-play scheme, the Venezuelan government refused to approve the sale of its energy assets in two deals. Harvest voluntarily released all defendants except Ramirez from the suit in October, court records show.

Harvest had alleged that it had two different buyers lined up to purchase its assets in the separate deals, one in 2013 for $725 million and another in 2014 for $400 million. But as a result of the government’s refusal to approve the sales, Harvest “was forced” to sell the assets to a different buyer for $255 million, at a loss of $470 million.

Harvest is a Delaware company that was established in 1989 and operated as a publicly held energy company until it formally dissolved on May 4, 2017, court records show. Under Delaware law, however, the company will continue to exist until May 2020 for “prosecuting lawsuits, liquidating and closing its business.”

Plaintiffs’ attorney Dane Ball of Smyser Kaplan & Veleska LLP told Law360 that Thursday’s judgment was “a necessary step towards making Harvest whole,” and said his clients plan to vigorously pursue recovery.

“Our firm doesn’t obtain judgments for the fun of it,” Ball said. “Various parties and government agencies have been able to find the fruits of crimes committed by corrupt former Venezuelan officials. We intend to do the same.”

Ramirez Carreno couldn’t be reached for comment.

The plaintiffs are represented by Craig Smyser, Dane Ball, Ty Doyle and Alexander M. Wolf of Smyser Kaplan & Veleska LLP.

Counsel information for Ramirez Carreno wasn’t available.

The case is Harvest Natural Resources Inc. et al. v. Mendoza Garcia et al., case number 4:18-cv-00483, in the U.S. District Court for the Southern District of Texas.

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