This week, effective March 9, (the “March 2015 Order”), the US government implemented sanctions against named individuals in Venezuela, which appear to focus on government officials. However, as we saw in Russia, many of these officials may be tied to semi-government contracts, landlord/property contracts, or energy and construction projects.
The wording of the March 2015 Order is broad enough that companies with ongoing Venezuelan operations should conduct a review to determine where these sanctions may apply, as they could present challenges for their business.
Of primary importance to these companies, is any direct or indirect relationship with the Corporacion Venezolana de Guayana (CVG). The March 2015 Order lists a sanction against Justo José Noguera Pietri, CVG’s President, with CVG’s subsidiaries including the aluminum producers Alcasa, Venalum and gold mining Minerven.
US persons are prohibited from doing business with such sanctioned individuals. Specifically, the March 2015 Order outlines prohibitions that include, but are not limited to:
- The making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to the Order
- The receipt of any contribution or provision of funds, goods, or services from any such person
There could be legal and financial consequences to engaging with sanctioned entities and persons. Specific to insurance, most policies issued out of the US and the UK include OFAC Sanctions restrictions which explicitly exclude insurance payment for claims resulting from operations, sales, etc. that are in violation of US OFAC Sanctions. We recommend reviewing compliance with these new sanctions with internal or outside counsel.