Venezuela state owned oil company accused of engaging in corruption

AP/Fuel Fix:

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.

Chief prosecutor Tarek William Saab said Jose Pereira and five Citgo vice presidents have been detained on suspicion of embezzlement stemming from a $4 billion agreement to refinance company bonds.

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.
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Venezuela is prohibited from refinancing its enormous debt by using US financing institutions.  Some of teh assets of Venezuela have been encumbered by recent loans from Russia.   The Venezuelan government has become an inept socialist basket case that is starving much of the population,  Citgo may be one of its rare profitable operations.  The refineries specialize in the kind of heavy crude exported by Venezuela, but those exports have been shrinking because of falling production.

On the retail side of operations, Citgo has recently been using Houston Astro 2nd baseman Jose Altuve as a spokesman.  Altuve is a Venezuelan native and was recently voted the Most Valuable Player in the American League.