January 30, 2020 / 2:48 PM / 24 days ago

Venezuela opposition lawyer declines to use foreign litigation fund

CARACAS, Jan 30 (Reuters) - The Venezuelan opposition's overseas legal representative has said he will not use $20 million of funding approved by the National Assembly for litigation to protect the country's overseas assets from lawsuits by creditors.

Jose Ignacio Hernandez told National Assembly President Juan Guaido in a letter dated Jan. 29 that he would not make any payments with the funds because Tuesday's vote authorizing their use did not have the support of the entire opposition.

"Until there is a political decision with the desired consensus, no fees will be paid based on the Jan. 28 agreement, which considerably increases the risk to overseas assets," Hernandez wrote.

The $20 million is held in accounts previously belonging to socialist President Nicolas Maduro's government that Washington has frozen.

Hernandez offered to resign in the letter, in which he also said that lack of consensus among the opposition was hampering efforts to protect Venezuelan assets.

It was not immediately evident if he would leave his post. Hernandez declined to comment.

A spokesman for Guaido, who most Western democracies recognize as Venezuela's president rather than Maduro, said he had no immediate comment.

Lawmakers from the First Justice opposition party had objected to the funding measure on the grounds that it did not clearly identify what cases would be financed.

Offshore assets including U.S. refiner Citgo have long been seen as attractive by investors holding defaulted Venezuelan bonds and companies seeking to be paid back for the nationalization of their holdings.

The opposition has sued in U.S. court to contest the validity of one bond backed by Citgo.

The opposition assumed control of Citgo, and the responsibility of protecting it from creditors, after the United States recognized Guaido as Venezuela's legitimate president last year as part of its bid to remove Maduro on the basis that his 2018 re-election vote was rigged.

Maduro calls Guaido a U.S.-backed puppet seeking to oust him in a coup, and says the opposition is trying to "steal" Citgo. He remains in control of the Venezuelan state and armed forces despite U.S. sanctions and diplomatic pressure from dozens of countries for him to resign amid an economic crisis.

In the letter, Hernandez said he had been trying to explain to lawmakers the importance of approving the funds for months and regretted that there was not yet total consensus in favor of their use.

"This delay was an obstacle to the defense of the state's interests," he wrote. "It created unnecessary risks to the protection of the state's assets, and it gave unnecessary advantages to the lawyers and creditors of Nicolas Maduro's regime." (Reporting by Luc Cohen and Mayela Armas; Editing by Catherine Evans)

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