Venezuela arrests six Citgo executives over alleged embezzlement

Venezuelan authorities detained the acting president of Citgo, the state-owned oil company’s U.S. subsidiary, and five other executives for their alleged involvement in a corruption scheme, officials said Tuesday.

Jose Pereira and five Citgo vicepresidents have been detained on suspicion of embezzlement stemming from a US$4-billion agreement to refinance company bonds, Venezuela’s chief prosecutor Tarek William Saab said.

According to Saab, the deal provided “unconscionable and unfavourable” terms for state oil giant PDVSA and offered Citgo itself as a guarantee on repayment without prior government approval. Mediators of the contract were purportedly eligible for a 1.5 per cent payoff of the total.

Saab described the Citgo executives as facilitators for U.S. international pressure on Venezuela’s oil sector, “putting at risk Citgo’s assets while obtaining personal benefits.”

Venezuela’s Minister of Communication Jorge Rodriguez accused the men of acting as spies for North American interests in exchange for a few dollars.

“They will wear yellow jumpsuits and have a new address in the General Penitentiary of San Juan de los Morros,” he said.

The detentions are part of an ongoing probe by Venezuelan authorities into the country’s oil sector, which has struggled in recent years amid mismanagement and declining production. Nearly 60 arrests have been made related to corruption involving PDVSA.

Officials at Citgo distanced themselves from the arrests, saying in a statement that the Houston-based company operates independently and meets the standards and regulations set by the United States. The company adds that it is closely monitoring the situation.

The arrests come amid an ongoing probe by U.S. prosecutors spanning multiple years into corruption at state oil company PDVSA. The U.S. Treasury Department in 2015 accused a bank in Andorra of laundering some US$2 billion stolen from the state oil company.

Some 10 individuals have pleaded guilty for their roles in the payment of bribes and kickbacks, and U.S. federal officials in October arrested four high-ranking officials, including at least two aides to Venezuela’s ambassador to the UN.

The Trump administration imposed sweeping financial sanctions against Venezuela in August, prohibiting financial institutions from providing new money to the government or PDVSA.