Gold Reserve Raises Serious Allegations of Corruption in CITGO Auction
The Canadian miner Gold Reserve (GRZ.V) has filed a formal complaint in a federal court in Delaware (USA) on Monday, asserting that advisors involved in the legal process allegedly received $170 million in commissions from a favored bidder in the auction of PDV Holding, the parent company of CITGO Petroleum.
This accusation, filed during a hearing regarding fees that started this Monday, jeopardizes the progress of the most valuable legal process related to Venezuelan assets abroad, which has already been stalled for nearly two years amidst objections, appeals, and conflicts of interest disputes.
A Multi-Million Dollar Auction Under Dispute
The case dates back to 2017 when Crystallex, later acquired by Gold Reserve, initiated a lawsuit to recover compensations for the expropriation of its gold mines in Venezuela. Since then, at least 15 creditors —including ConocoPhillips, Gold Reserve, and the 2020 PDVSA bondholders— have been seeking to reclaim a part of the over $19 billion owed by the Venezuelan government.
CITGO Petroleum, headquartered in Houston, is considered the most valuable asset of Venezuela abroad, with a refining capacity of 807,000 barrels per day and an estimated value exceeding $10 billion.
The objective of the legal process is to distribute the funds obtained from the sale of PDV Holding among the various creditors, with the final approval from the U.S. Department of Treasury.
A new bid from Amber Energy now joins the CITGO auction, which the court expert has converted into the highest offer in the sales process.
Key Timeline of the CITGO Auction
2024: The initial bid from Amber Energy (Elliott Investment Management) for $7.3 billion was rejected, prompting a new round of bidding.
March 2025: Dalinar Energy, a subsidiary of Gold Reserve, submits a preliminary offer of $7.38 billion, combining capital and debt.
July 2025: The court recommends Dalinar as the winner, surpassing Red Tree Investments ($3.7 billion).
August 2025: Unexpectedly, the judicial officer Robert Pincus reverses the recommendation, favoring Amber Energy (Elliott) with a lower bid of $5.86 billion.
October 2025: During a fee hearing, Gold Reserve reports irregular payments to the legal advisors and requests the disqualification of several parties from the process.
Details of the Allegation: The $170 Million Scrutinized
According to Gold Reserve, the firms Weil, Gotshal & Manges (legal advisors) and Evercore (financial advisors) allegedly received approximately $170 million in fees stemming from:
Amber Energy (Elliott Investment Management): the bidder recommended as the winner, which supposedly funded the fees for the very advisors assessing its proposal.
Venezuelan bondholders, who would benefit from Amber’s payment plan, creating a direct conflict of interest.
Attorney Michael Bowe, representing Gold Reserve, stated:
“Any reasonable person would question the impartiality of advisors who have received $170 million from the same party whose offers they are evaluating.”
Meanwhile, Paul Rivett, executive vice president of Gold Reserve, defended the transparency of their proposal:
“Our bid of up to $7.9 billion is the most favorable to the most vulnerable creditors. The process must protect fairness, not the interests of large funds.”
Judicial and Economic Implications
Inevitable Delay:
The allegation could extend the auction by several more months, affecting payments to creditors and delaying any final resolution.
Risk for Venezuela:
If the process remains disputed, CITGO could fall totally outside Venezuelan control, solidifying the loss of PDVSA’s key asset.
Conflict with the U.S.:
The Department of Treasury holds veto power over the final outcome since CITGO remains under special licenses due to sanctions against Venezuela.
Competition Among Bidders:
Gold Reserve/Dalinar: bid between $7.38 and $7.9 billion.
Amber/Elliott: $5.86 billion, with prior agreements with bondholders.
Vitol: $8.45 billion (rejected).
Black Lion: $8 billion (in cash).
Next Steps
The judge Leonard Stark, overseeing the case, must determine if the fees violate ethical standards and if the alleged lack of impartiality warrants overthrowing the recommendation in favor of Amber Energy.
This decision could reopen the possibility for Dalinar Energy (Gold Reserve) or even force a new round of bids directly supervised by the U.S. Treasury.
The regime of Nicolás Maduro has repeatedly labeled the process as a “judicial robbery”, denouncing a “political operation disguised as economic justice.” However, creditors and U.S. courts argue it’s a legitimate compensation for treaty violations and unpaid debt.
Gold Reserve’s complaint not only reignites old tensions between creditors and the Delaware judicial system but also questions the integrity of the largest sovereign debt litigation in recent Latin American history.
If the irregular fee payments are confirmed, the entire CITGO auction could be annulled, delivering a direct blow to Elliott Management’s interests and a crucial turn in the long battle over PDVSA’s assets in the United States.