PDVSA faces $100 million lawsuit over ambassador’s alleged con man links

Screen Shot 2013-04-16 at 11.42.21 PMPDVSA, Venezuela’s state oil company, will have to defend itself in US court in a bizarre $100 million case that involves the Venezuelan ambassador to Nigeria, a 2-person law firm in Mississippi, a white-haired Caribbean con man and imaginary tankers full of fuel.

It all started in 2006, when the Nigerian government created a new state fuel import company called Skanga Energy & Marine. Managing Director Christian Imoukhuede approached Venezuelan representatives in his country about buying diesel and gasoline. According to Skanga’s lawsuit, he spoke to Enrique Arrundell, Venezuela’s trade consul, who told him he’d have to work with an agent, rather than buying directly. The agent was a company called Arevenca.

Imoukhuede and others flew to Caracas in October, 2006, according to the complaint:

The Skanga representatives were personally met at the airport by Venezuelan government officials, including Arrundell. Rather than waiting in the normal passport lines to enter Venezuela, the Skanga representatives were ushered into a VIP lounge, where they waited while immigration formalities were handled on their behalf by the Venezuelan officials.

After arriving in Caracas, Skanga representatives met with representatives of [Arevenca] to discuss the Transaction. The Caracas meeting was arranged by Arrundell, held at a Caracas hotel, and attended by Arrundell, Imoukhuede, Defendant Javier Gonzalez Alvarez, and others.

Francisco Javier González Álvarez, the brilliant trickster behind ArevencaRegular readers know that “Javier Gonzalez Alvarez” isn’t the guy’s name. They are talking about Francisco Javier González Álvarez, a brilliant and elusive con man who over the past 13 or so years has turned Arevenca into an ever-more-ambitious nexus of confidence games.

The Skanga team also visited the oil ministry, and the next day wrote a letter to Asdrubal Chávez, cousin of the late president, who at the time was manager of commercialization and supply at the state oil company.

Click for larger version

Click for larger version

“following our visit to the Petroleum and Energy ministry yesterday October 30, 2006, we wish to express our very strong interest in purchasing petroleum products from your company amongst many business interests available to us in Venezuela and Nigeria,” Skanga wrote. “We are exploring an open business relationship that will be exclusive to both companies for an initial period of 6 months for a start and wish to convey the following options open for a start based on our discussion:
• Duration of transactions is 6 (six) months for a start.
• Products available to be purchased with the first right of refusal are AGO (Gas oil), PMS (premium motor spirit) DPK (Dual kero), Jet Al fuel, Bitumen and Fuel oil.
• We are considering 35,000 metric tones of AGO for the first option and repeated frequency of about 3 cargoes monthly for used in Nigeria.
• All transactions shall be by Letters of credit (LC) to cover the cost of product, Insurance and freight and irrevocable Bankers Guarantee (BG).”

Asdrubal Chávez hung up on me before I could ask him anything in two consecutive calls, so I sent him a series of text messages asking about this. He never replied.

A month later, Arevenca offered a cargo of diesel. Skanga claims to have done the right thing — it took the offering documents to the Venezuelan consulate to find out if they were legitimate. Staff there vouched for the veracity of the documents, Skanga says. Under the terms of the contract, Skanga had to prepay the freight. (By the way, this isn’t normal. I don’t know why Skanga fell for this, what is known as an advance fee fraud.* It’s remarkable, since that is a type of fraud that is very common in Nigeria.)

In any case, Skanga wired $1.4 million to Arevenca’s bank account via New York intermediaries. (By coincidence, the ultimate beneficiary account was the same Swiss bank account mentioned in another lawsuit, when a Puerto Rico asphalt company accused Arevenca of stealing $7.8 million.)

González, according to the lawsuit, kept reeling them in. From Skanga’s complaint:

At approximately the same time, the Corporate Defendants proffered to Skanga an offer to purchase 70,000 metric tons ofpremium motor spirits (the “Additional Product”) for US$35.7 million, which Alvarez, individually and on behalf of Corporate Defendants, represented to be en route to Nigeria on a seafaring vessel in or near Nigerian waters.

This time, the prepayment was $9.8 million. The fuel, of course, never arrived.

Skanga no longer seems to exist outside this lawsuit. I found old evidence of a website, but the domain is now held by a Dutch trading company with no other assets. I found people whose social media profiles hinted at a past association with Skanga, but no one wrote me back. Jennifer Smith, the company’s former lawyer at Robinson Brog in New York took a call but politely declined to comment beyond recommending I read the public filings. In fact, I have yet to see any documentation in the case file that Skanga was ever legally incorporated. And I don’t have the contacts in Nigeria to go pull those records.

As of last June, Arevenca had never been served in the case. I’m not aware that that has changed. It’s unlikely ever to happen, since the suit doesn’t just name González incorrectly, it even names the company incorrectly, calling it Arevenca SA. In all of Arevenca’s vast organization chart, there is no such company. There is no way to know if the errors are the result of intent or incompetence. Either way, they made it easy for PDVSA to claim that it has never had any relationship with either of its co-defendants. I hope that someone will at some point ask PDVSA if they have ever had any relationship with Arevenca or Francisco Javier González.

Image from Foreign Ministry page on Flickr, click for full size

Enrique Arrundell. Image from Foreign Ministry page on Flickr, click for full size (in which you can see his very cool angled buttonholes with contrasting color binding)

PDVSA is left defending itself. At first blush, that looks easy. There’s no proof in the record that anyone at PDVSA ever knew anything about Skanga’s offer to buy fuel. If His Excellency Ambassador Arrundell really misled Skanga, the Republic should probably be on the hook for some sort of fraud. But the Republic isn’t PDVSA.

The jurisdiction issue is interesting, if you’re into this sort of thing. It’s one of the oddities of this modern world that many international conflicts end up in New York court. In this case, a deal between a Nigerian and a Spanish-Venezuelan was agreed in Venezuela. PDVSA requested that the case be dismissed as it should be tried in Nigeria or Venezuela. District Court judge Denise Cote turned down PDVSA’s motion last June. Her decision gave a series of reasons. The company isn’t covered under sovereign immunity because it had an “agency relationship” with Arevenca, she wrote:

Skanga’s amended complaint pleads numerous facts which together support a reasonable inference that PDVSA conferred actual authority upon Arevenca and Alvarez to engage in the course of dealing described. From beginning to end, Arrundell, Venezuela’s trade consul to Nigeria, assured Skanga that it was dealing with PDVSA through PDVSA’s authorized agents and confirmed all representations of agency made by Alvarez. Arrundell proposed that Skanga enter a transaction with PDVSA, introduced Skanga to Arevenca, and in conjunction with other Venezuelan officials coordinated a visit by Skanga representatives to Caracas. In addition, after Alvarez sent Skanga documents related to the shipment of diesel fuel on the P. Ventur that appeared to bind both PDVSA and Arevenca, Skanga contacted officials at Venezuela’s Nigerian embassy. These officials confirmed the authenticity and origin of the documents, including a bill of lading with PDVSA’s corporate logo and a certificate of quality stating “[a]nalysis herein were [sic] witnessed by PDVSA and Arevenca.” The amended complaint asserts that Arrundell remains a high-ranking Venezuelan diplomat. He is now the Venezuelan ambassador to Nigeria. His role in arranging and facilitating the transaction between PDVSA and Skanga and vouching for the agency relationship constitutes strong circumstantial evidence of actual authority.

In other words, Arrundell may have acted badly, but he was promoted to ambassador all the same. That indicates that he was acting on behalf of the government. I sent a series of e-mails, phone messages and personal messages to Reinaldo Bolívar, the deputy foreign minister for Africa, to ask about the case, but he never returned my messages. Arrundell’s office initially agreed to an interview, but after I sent a copy of this decision, the embassy in Abuja stopped responding to my e-mails.

Also, the politicization of PDVSA made it reasonable to think that a diplomat was representing the company, Cote wrote. The “relationship between PDVSA and other, official organs of the Venezuelan state permits the inference that Venezuelan diplomats and other government officials are empowered to speak on behalf of both the Venezuelan government and its organ PDVSA.”

The New York venue is reasonable, she said, because of the use of a New York bank: “Skanga’s money disappeared down the rabbit hole in New York, and Skanga wishes to follow it.”

PDVSA appealed that decision. Robinson Brog pulled out at the same time. It looked grim for Skanga.

But never mind that: They won. In a decision published April 10, a three-judge panel of the Second Circuit decided that Cote had decided correctly. The case now goes to trial in New York. It’s going to be interesting to see whether Skanga can show that Arrundell led them astray and whether that puts PDVSA on the hook for a refund and damages.

PDVSA’s lawyer, Vivek Krishnamurthy of Foley Hoag in Washington, declined to comment on the case in either e-mail, a phone call or even when I dropped by in person. (Yes, this is how I spend my vacation in DC.) He is currently out on leave and his replacement didn’t return a phone message.

I wrote up part of this case a year and a half ago in my first article about Arevenca. At the time, my pal Juan Nagel wrote in the comments, “It takes a certain amount of talent to scam the Nigerians. This ain’t a blog post, it’s a Coen brothers movie waiting to be made.”

The more I learn, the righter he seems.

* Maybe, new to the business, Skanga’s executives didn’t know how things worked. Maybe they thought they were outsmarting someone else, and didn’t notice that they were falling into their own trap. Another possibility I’ve wondered about all along is whether Skanga may have been cahoots with Arevenca, and all of this is a shakedown of PDVSA — that would explain why they spelled Arevenca’s and González’s name wrong in the suit, even though they had his name spelled correctly on a letter requesting the money transfer to Switzerland. We’ll see.

PS: I got a short Spanish version of this published in Caracas newspaper El Mundo Economía y Negocios yesterday. Let’s see if Arevenca puts that on their website with their other press clippings.

7 thoughts on “PDVSA faces $100 million lawsuit over ambassador’s alleged con man links

    1. sapitosetty Post author

      The guy who always shows up in Arevenca’s lawsuits and financial documents is Francisco Javier González. Seems like a nice enough guy as long as he doesn’t owe you money. He’s always been a gentleman to me on the phone. I’ve heard rumours of deeper layers, some shadowy dudes whose names show up on some documents. And there is the unconfirmed rumour that he was once testaferro for a very powerful person in the Venezuelan government. Publishable proof is hard to come by. For now, I say this scam starts and ends with Pancho González.

  1. carol watkins

    Your determination to stay with this and attempt to unravel the twists and turns of the plot is remarkable. Indeed a movie plot here but who would star?

  2. Mariale

    I will tell you guys who this Gonzalez man is, he is a scammer and a crook. He tried to scam someone in my family. Then he scammed and stole money from my parents. We lived the drama behind the name Francisco Javier Gonzalez Alvarez, I’ve seen him myself and it’s the same man as in the pic.

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