This material belongs to: Chron.
CARACAS, Venezuela — 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.
According to Saab, the deal provided “unconscionable and unfavorable” 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 percent 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.”
A Citgo spokesman said they are looking into the investigation to better understand the situation.
“We are monitoring the situation very closely and are using the full strength of our resources to bring prompt resolution to this matter,” the Citgo spokesman said in a prepared statement. “Our priority is to protect the interests of our company and our employees. Citgo is a U.S. based company that operates independently, and to the standards and regulations set in the U.S. We have procedures in place to ensure ongoing operations and the continuous supply of product to our customers.”
Citgo was founded as an American company more than 100 years ago, but has operated as a PDVSA subsidiary for three decades.
Citgo counts about 4,000 employees and and contractors in the U.S., including more than 800 here in Houston. Citgo has about 160 branded gas stations in the Houston area, and about 5,500 stations nationwide. Citgo also owns oil refineries in Corpus Christi, Lake Charles, La.; and Illinois.
The detentions are part of an ongoing investigation by Venezuelan authorities into the country’s oil sector, which has struggled in recent years amid mismanagement and declining production. Thus far Saab’s office has made nearly 60 arrests related to corruption involving PDVSA.
The Trump administration imposed sweeping financial sanctions against Venezuela in August, prohibiting financial institutions from providing new money to the government or PDVSA. The sanctions also prohibit Citgo from sending dividends back to Venezuela as well as ban trading in two bonds the government recently issued to circumvent its growing isolation from western financial markets.
Venezuela has struggled to crawl out of economic ruin amid triple-digit inflation, food and medical shortages and a decline oil prices. Maduro recently announced his plan to renegotiate foreign debt that he said had become impossible to pay because of a U.S.-led financial “blockade” against the socialist nation, though he has offered few details to investors on how he plans to do that.
The Venezuelan government and PDVSA officially defaulted on billions of dollars’ worth of bonds earlier this month. The International Swaps and Derivatives Association, a group of banks and brokers that determine whether an entity like Venezuela has failed to make on-time payments on its debts, recently voted to say that Venezuela had defaulted. Two other rating agencies — Fitch and Standard & Poor‘s — have also determined that Venezuela’s government is in default.