Six Top CITGO Execs Jailed in Anti-Corruption Investigation

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Six Top CITGO Execs Jailed in Anti-Corruption Investigation

CITGO station exterior

CARACAS, Venezuela — Authorities in Venezuela detained Jose Pereira, acting president of CITGO, the state-owned oil company's U.S. subsidiary, and five other executives for alleged involvement in a corruption scheme on Nov. 21.

According to the Associated Press, they were detained on suspicion of embezzlement through a $4 billion agreement to refinance company bonds. Chief prosecutor Tarek William Saab stated that the deal provided "unconscionable and unfavorable" terms to Venezuela-owned oil company Petróleos de Venezuela S.A (PDVSA) and offered CITGO as a guarantee on repayment without prior government approval. Additionally, contract mediators were said to be eligible for a 1.5 percent payoff of the total deal.

The detentions are part of an investigation into Venezuela's oil sector, which has struggled due to mismanagement and a drop in production in recent years. Approximately 60 other arrests related to alleged corruption involving PDVSA have been made this year.

Five of the six detainees hold dual citizenship in the United States in Venezuela. Pereira is a permanent resident in the U.S.

CITGO executives put U.S. and international pressure on the country's oil sector, "putting at risk Citgo's assets while obtaining personal benefits," Saab said.

After the detention, Houston-based CITGO officials released a statement that the state-run PDVSA operates independently and meets U.S.-set standards and regulations.

President Nicolas Maduro spoke harshly against the detained executives, calling them "thieves and traitors." He has named former oil minister Asdrubal Chavez as CITGO's new president and National Guard Major General Manuel Quevedo as president of PDVSA and Venezuela's minister of oil.

Communications Minister Jorge Rodriguez stated the alleged embezzlement scheme extended to "sabotage" and "espionage."

In August, the Trump administration imposed financial sanctions against Venezuela that prohibit financial institutions from providing new money to the government or PDVSA. CITGO is also prohibited from sending dividends to Venezuela.

On Nov. 24, the U.S. State Department reported that the U.S. Embassy requested immediate access to the detained executives who hold American passports. Under international law, Venezuela is obligated to provide information on the arrest of U.S. citizens upon request, according to the department, the news outlet reported.