You have all heard in the last ten days the cries in defense of sovereignty coming from the leaders of the revolution from top man Hugo Chavez, to Rafael Ramirez, to any bit size National Assembly Deputy trying to get his image on TV to get his or her opinions on the matter:
Treason! -Cried most of them.
Nobody was defending sovereignty in the IVth. Republic! – Cried all of them.
Let’s jail them for allowing foreign Courts to rule on contracts that should only have a Venezuelan jurisdiction – Cried some.
Nobody protects the Fatherland like the revolution! – Dared to say a few.
But as with so many other things in the revolution, they are simply following Maddona’s suggestion and simply striking a pose for the revolution, either cynically saying what they know is not true, or following the words of the “leaders” or simply speaking out of their customary ignorance.
The problem for the revolution is that it tries to blame the past for all of our problems, but the revolution is simply becoming the past. Nine years of incompetence, futility and inefficiency can no longer be hidden so easily. And if there is a fault in the way the Government has handled the ExxonMobil contract, the truth is that they have never, yes, never done anything to defend sovereignty in the way they claim and in the end, as I suggested two days ago, they are the true traitors, the ones that are leading Venezuela and PDVSA into oblivion through their stupidity and ignorance.
You see, a friend took the trouble of going through the Prospectuses of most of the Sovereign bonds issued by Chavez’ Government over the last few years, to understand how the revolution “protected” the country’s sovereignty and was kind enough to send me a compilation of the relevant sections of each of them.
What these documents show is that the revolution is as incapable and inefficient when it lies, as when it tries to solve the country’s problems.
Let’s take, for example, and in no particular order, the Global 25 bond issued by the Republic in April 2005 to the tune of US$ 1.6 billion and a coupon of 7.65%.
Right off the bat, the prospectus says:
“Venezuela is a foreign state. As a result, you may not be able to effect service of process within the United States against Venezuela or enforce against Venezuela judgments in the courts of the United States predicated on the civil liability provisions of the federal or state securities laws of the United States. Venezuela has agreed to submit to the jurisdiction of United States federal and New York state courts located in the Borough of Manhattan, New York, New York, the courts of England located in London and the courts of Venezuela located in Caracas, and has waived some immunities and defenses in actions that might be brought against Venezuela with respect to the bonds. Under Venezuelan law, neither Venezuela nor any of Venezuela’s property have any immunity from the jurisdiction of any court or from set-off or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution or otherwise), except that Venezuela, as well as Venezuela’s properties located in Venezuela, have immunity from set-off, attachment prior to judgment, attachment in aid of execution of judgment and execution of a judgment in actions and proceedings in Venezuela.”
Where I have placed in bold the most important part which indicates that not only can the Courts of the US express judgment against the country, but Venezuela has explicitly agreed to submit to the jurisdictions of not one, but two foreign Courts: those located in the Borough of Manhattan and those of London.
Recall this bond was issued less than two years ago and seven years into the “revolution” and under the Presidency of Hugo Chavez.
Later in the same Prospectus, we come up with the following description of what laws will govern the bonds:
“The Fiscal Agency Agreement and the bonds are governed by, and shall be construed in accordance with, the laws of the State of New York.
The Republic agrees that any suit, action or proceeding against it or its properties, assets or revenue with respect to the bonds (a “Related Proceeding”) shall be brought exclusively in the courts of England that sit in London; in the Supreme Court of the State of New York, County of New York; in the United States District Court for the Southern District of New York; or in the courts of the Republic that sit in Caracas, as the person bringing such Related Proceeding may elect in its sole discretion,…The Republic also agrees that any judgment obtained in any of the Specified Courts arising out of any Related Proceeding may be enforced or executed in any Specified Court … by means of a suit on the judgment or in any other manner provided by law. The Republic hereby irrevocably submits to the exclusive jurisdiction of each of the Specified Courts for the purpose of any Related Proceeding and, solely for the purpose of enforcing or executing any judgment referred to in the preceding sentence (a “Related Judgment”), of each Specified Court and each Other Court….
The Republic agrees that service of all writs, process and summonses in any Related Proceeding or any suit, action or proceeding to enforce or execute any Related Judgment brought against it in England may be made upon the officer in charge of the department of consular affairs at the Embassy of the Republic, presently located at One Cromwell Road, London SW7 2HW, England (the “London Process Agent”) and service of all writs, process and summonses in any Related Proceeding or any suit, action or proceeding to enforce or execute any Related Judgment brought against it in the State of New York may be made upon the Consul General of the Republic or, in his or her absence or incapacity, any official of the Consulate of the Republic, presently located at 7 East 51st Street, New York, New York 10022, U.S.A. (the “New York Process Agent” ….
The Republic irrevocably consents to and waives any objection which it may now or hereafter have to the laying of venue of any Related Proceeding brought in any of the Specified Courts …
.. the Republic irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted by the laws of such jurisdiction (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States) and consents generally for the purposes of the State Immunity Act of 1978 of the United Kingdom to the giving of any relief or the issue of any process in connection with any Related Proceeding or Related Judgment,…”
Here I have removed a lot of the legalese just emphasize the main two points:
1) The Republic (under Chavez and the revolution!) irrevocably submits to two foreign Courts and even establishes the procedures for summons and notifications (including addresses!)
) The Republic (under the revolution and Chavez!) irrevocably waives any immunity which as a sovereign State some countries may give it and even specifies that it waives its rights to relief and immunity that it may receive under specific laws of the United States and the United Kingdom.
Amazingly enough, you can find similar paragraphs in the bonds issued by the Bolivarian Republic of Venezuela, under Chavez, under the “revolution” for the bond maturing in 2010, 2011, 2013, 2014, 2015, 2018 and 2034, many of which were only issued as a way of absorbing the excess monetary liquidity injected into the Venezuelan economy by political purposes and in irresponsible fashion by the revolution and its incompetent leaders. I will not bore you with showing you bond after bond since the same terms are applied to all of them.
So much for the revolution’s defense of Sovereign rights, which they are complaining and demanding from those that preceded them.
But it is interesting, given that all of these issues have to do with oil and PDVSA and the fight between ExxonMobil and PDVSA, to look at what the prospectus for the PDVSA bonds issued less than a year ago by the Chavez Government said, given the recent accusations and charges against the leaders of PDVSA and Venezuela before Chavez came to power, in the case of ExxonMobil’s injunctions against PDVSA.
In late March 2007, PDVSA issued a Prospectus and it contains such jewels as:
“The Indenture will provide that the Notes will be governed by, and construed in accordance with, the laws of the State of New York.”
Consent to Jurisdiction and Service of Process; Sovereign Immunity
“The Issuer has consented to the non-exclusive jurisdiction of any court of the State of New York or any United States federal court sitting in the Borough of Manhattan, New York City, New York, United States, and any appellate court from any thereof, and has waived any immunity from the jurisdiction of such courts over any suit.”.
“the Issuer will waive such immunity and will agree not to assert, by way of motion, as a defense or otherwise, in any suit, action or proceeding the defense of sovereign immunity or any claim that it is not personally subject to the jurisdiction of the above-named courts by reason of sovereign immunity or otherwise, or that it is immune from any legal process…or from attachment either prior to judgment or in aid of execution by reason of sovereign immunity.”
This one is truly remarkable. First or all, it basically repeats the same Courts as those used for the Sovereign bonds and waiving from immunity that any Sovereign protection Venezuela may have (PDVSA is not Venezuela by the way). But what is truly most remarkable and cynical is that the same revolutionary Board of Directors that repurchased PDVSA’s bonds in 2004 at an outrageous premium, which had no financial justification other than to protect the Board members as individuals from US legislation under the Sarbanes-Oaxley Act, is capable of not only issuing bonds under foreign jurisdiction, but going as far as waiving any possible immunity that Venezuela may have as a Sovereign Nation under the laws of the countries where these jurisdictions are.
But then, these same people, these fake and paper revolutionaries, come on TV, accuse the Governments of the past of being traitors and giving up Sovereignty, when they have given up the remnants of Sovereign rights the country may have had, even waiving the Sovereign rights of Venezuela and what is worse, destroying and, using a word they seem to love, irrevocably mismanaging the country’s premier industry into oblivion.
This did not happen last Century, under Caldera and the IVth. Republic, this happened ten months ago, under Chavez and his so called revolution.
It is time for these cynical and incompetent liars to stop destroying what is left of PDVSA and Venezuela.