*

Gold Reserve ( GDRZF ) accuses advisors of conflict of interest

*

Court officer switched auction winner recommendation to

Elliott's Amber Energy

*

Venezuela's lawyers also seek disqualification of court

officer,

advisors

By Marianna Parraga

HOUSTON, Oct 20 (Reuters) - Toronto-listed miner Gold

Reserve ( GDRZF ) on Monday accused firms advising a U.S. court on

the auction of Citgo Petroleum's parent of receiving some $170

million in fees from a bidder that was recommended as the winner

of the process and parties that would obtain proceeds as a

result.

The accusations are the latest twist in an auction that has

dragged on for nearly two years and could threaten to slow it

further.

The Delaware court on Monday began discussing the fees in a

hearing following Gold Reserve's ( GDRZF ) motions earlier this month to

disqualify a court officer and the judge overseeing the auction

in addition to advising firms Weil, Gotshal & Manges, and

Evercore ( EVR ) over the alleged conflict of interest.

"Normal folks would reasonably question the impartiality of

advisors who have received $170 million in fees from the very

party whose bids they are evaluating in an auction process,"

Michael Bowe, counsel for Gold Reserve ( GDRZF ), told the court.

Court officer Robert Pincus in August switched his

recommendation for the auction's winner to Elliott Investment

Management's Amber Energy from Gold Reserve ( GDRZF ) subsidiary Dalinar

Energy, prompting objections from rival bidders and creditors.

Gold Reserve ( GDRZF ) is now arguing that Weil represented Elliott

while the Citgo sale was ongoing, and that the two advising

firms had relationships with some holders of Venezuelan bonds

standing to receive auction proceeds under Amber's proposal.

Weil, Gotshal & Manges, Evercore ( EVR ) and Elliott did not

immediately reply to requests for comment.

The auction of Venezuela-owned PDV Holding, parent of

Houston-based refiner Citgo Petroleum, aims to compensate up to

15 creditors for past debt defaults and expropriations in

Venezuela. A final winner has not yet been selected by the

court.

Lawyers representing Venezuela also filed a motion this

month to disqualify Pincus and the two advising firms. Gold

Reserve ( GDRZF ) is requesting a temporary stay of all decisions

concerning any bids submitted pending resolution of the

disqualification motions.