Venezuela Disavows 1980s-Era Bonds

The plot would seem to come right out of a novel in which the reader does not know whom to believe.

A group of investors from Columbus, Ohio, spends $100 million in 2004 to buy zero-coupon bonds — debt that pays interest at maturity — from a Venezuelan state bank that went bankrupt in the 1980s. A few months earlier, in October 2003, Venezuela’s solicitor general ruled that the bonds were valid. But when the investor group tried to redeem the debt, it could not, and learned only later that the solicitor general had reversed herself in December 2003.

That is the basic story line in an international financial dispute that is playing out in Federal District Court for Southern Ohio. The investor group, Skye Ventures, is suing Venezuela for its refusal to honor the bonds, which it says are now worth as much as $1 billion.

The dispute over the bonds, which bear the name of an extinct state agricultural development bank, the Banco de Desarrollo Agropecuario, or Bandagro, has not recently been discussed in public by the government of Venezuela, where President Hugo Chávez rarely lets any issue involving the United States pass.

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