Chinese firm sues Venezuela as crisis tests ally’s patience

One of China’s biggest state- run conglomerates has sued a Venezuelan counterpart in a U.S. court in a dispute over unpaid bills, a sign of Beijing’s growing impatience with its socialist South American ally as it slides into bankruptcy.

In the lawsuit filed Nov. 27 in a Houston federal court, a U.S. subsidiary of Sinopec sought more than USD23 million in damages from Venezuela’s state-run oil company, PDVSA. Sinopec alleges it never received full payment for 45,000 tons of steel rebar it agreed to sell PDVSA for $43 million and which was delivered in 2013.

The lawsuit, while small in size, says PDVSA through its U.S. subsidiary Bariven reneged on repeated promises to pay Sinopec, at one point costing the Chinese company $2 million in losses after it entered into arbitration with a supplier it agreed to purchase the steel from to carry out the deal.

“This is not simply a case of a broken promise to pay,” Sinopec said in the court documents, accusing PDVSA of “deceit” and “willful deception” in its refusal to pay its bills. “Rather, this case involves a complex commercial transaction specifically calculated to leave Sinopec without a remedy.”

The Chinese “usually take a more diplomatic tone” and are clearly angry, Russ Dallen, head of local brokerage Caracas Capital, wrote in a report in which he revealed the existence of the lawsuit. AP