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Apollo Global : vulture fund and promoter of sanctions against Venezuela

Misión Verdad, Noviembre 29 de 2017

According to investigations by Venezuela’s Attorney General’s office, Apollo Global Managementwas contracted to refinance part of US$4 billion of Citgo’s debt in exchange for the offer of an oil refinery as collateral in a deal regarded as damaging to the Bolivarian Republic of Venezuela. This operation, for which six top Citgo executives were arrested, including the company’s president, also reveals the powerful conspiratorial relationship of this vulture fund with the world of US politics and high finance.

History and business profile of Apollo Global Managment

The very origins of this vulture fund demonstrate the nature of its refinance strategy as regards Citgo. Three of its founders, Leon Black, Joshua Harris and Marc Rowan, all started business working in the Drexel Burnham Lambert investment bank until 1990 when that institution went bankrupt with some of its executives jailed for abusing privileged information to do business.

During the 1980s, Drexel Burnham Lambert was regarded as the fifth most important US investment bank. Black, Harris and Rowan helped lead the company’s design of junk bond transactions. That market broadened the finance world’s horizons by reviving interest in debt instruments of high risk companies or States via prospects of higher returns on the purchase of their debt. As the financial web site Bloomberg has noted, “the trillion-dollar market for junk bonds they spawned, and their swagger during the investigation that brought them down helped make global finance what it is now”

In effect, Drexel Burnham Lambert became a school for top executives who now hold senior positions in other financial entities like Goldman Sachs and Jefferies Group, specialists in making money from market speculation. This is so to such an extent that many of these executives regard their work at Drexel Burnham Lambert as a triumph of capitalism, when asked about their time at the investment bank, which still inspires admiration on Wall Street according to Fortune magazine

Another of the techniques typical of Drexel Burnham Lambert was to use money from the junk bond market to buy out large companies on behalf of small and medium sized investors. In this way they aggressively took over important businesses while at the same time making enemies of major players in Wall Street. One of the people responsible was Leon Black, then head of Mergers and Acquisitions at Drexel Burnham Lambert and a founding partner of Apollo Global Management.

It was Black who in the same year Drexel Burnham Lambert went bust, founded Apollo Global Management along with Harris and Rowan, also former executives of the same bank. Apollo Global Mangement used the strategy now known in the financial world as vulture funds, namely the aggressive purchase of debt from precarious companies and States with the aim of subsequently confiscating their assets. In this way, during the 2008 financial crisis Apollo Global Management’s assets grew from US$100 billion to over US$230 billion.

One of their most controversial alleged fraudulent operations was their debt-restructuring for the CEVA Logistics multinational company with branches in over 100 countries. Earlier this year CEVA staff brought a class action alleging that Apollo Global Management fraudulently benefited from a phony “restructuring” that destroyed the value of shares held by CEVA employees.

This more than anything indicates the dangers posed by this company when it comes to administering refinance operations like the one signed by Citgo in 2017.

Apollo Global’s banking links and the blockade of Venezuela

This profile of the founders of Apollo Global Management helps understand the speculative nature of the operations it runs on behalf of most of its shareholders, among them the very cream of the global capitalist elite, including Goldman Sachs, JP Morgan, Bank of America, Morgan Stanley, Citigroup, Deutsche Bank and other equally important but less well known financial institutions.

In that sense, the characteristics of the contract signed by the six high level Citgo executives were liable to create the conditions for non-payment, so that Citgo’s refinance creditors, facilitated by Apollo Global Management, would eventually be able to get control of one of the company’s US refining circuits, put up as collateral against the loans.

That deal combines the vulture profile of Apollo Global Management with the financial blockade of a PDVSA subsidiary, Citgo, institutionalized by President Trump’s sanctions and the active collaboration of Citgo’s former executives, who set up its bankruptcy via a contract signed behind the backs of President Nicolas Maduro and PDVSA’s central authorities. It all adds up to a scheme of blockade and suffocation aimed at creating the conditions to destroy the national oil company PDVSA as Venezuela’s main source of income.

This is a strategic objective of the Trump Administration that doesn’t even try to hide behind the defense of five of the six arrested Citgo executives by the US State Department as being “United States citizens”.

In that context, all that remains is to note that Leon Black and Joshua Harris, two of Apollo Global Management’s founders are also members of the Council for Foreign Relations which in April this year proposed to the US Congress a route map for the overthrow of the government of President Maduro. That document recommended sanctions against officials of Venezuela’s Bolivarian government, the application against Venezuela of the Democratic Charter of the Organization of American States and the formation of a coalition of countries in support of the blockade of Venezuela.

It goes without saying that every effort was made to carry out these recommendations by means of continuing selective sanctions against Venezuelan government officials, the operational work of Luis Almagro, OAS Secretary, attempting to apply the Democratic Charter and the formation of the Lima Group of 12 countries advocating the overthrow of President Nicolas Maduro. All this long before the application of economic sanctions against Venezuela and the signing by the Citgo executives of a contract described by the Attorney General’s office as “high treason”.