Both Venezuela and the United States are advancing legal cases against former officials from Citgo, a subsidiary of Venezuelan state oil company PdVSA, signaling that longstanding accusations of corruption at the company may finally be coming to a head.
In Venezuela, six Citgo executives, five of whom hold US citizenship, are facing trial after more than two years’ imprisonment. The so-called Citgo Six are charged with embezzlement relating to a never-executed proposal to refinance $4 billion in Citgo bonds.
Meanwhile, US prosecutors are advancing their own probe into bribery and money laundering at the company. The investigation implicates US companies, Venezuelan officials and even a former Florida congressman.
The Houston-based oil company Citgo has been owned by Petróleos de Venezuela SA (PdVSA) since 1990. It was the United States' eighth largest refinery in 2019, according to Reuters, controlling four percent of the nation’s oil supply.
Below, InSight Crime provides a primer on the cross-cutting corruption investigations against the company’s senior executives.
The Citgo Six
On November 21, 2017, Citgo president Jose Pereira was called from his home in Houston, Texas, to an emergency budget meeting in Caracas, along with five other Citgo executives. Upon their arrival, all six were detained at gunpoint by masked security agents. None of them have returned to the United States since.
Venezuelan Attorney General Tarek William Saab accused the executives of “putting Citgo’s assets at risk while obtaining personal benefits.” The charges stemmed from their alleged role in negotiating a deal with US, Dubai and Swiss-based companies to refinance $4 billion of Citgo bonds.
Saab claimed the six men stood to receive a payoff of 1.5 percent of the value of the deal, which offered a 50 percent stake in Citgo as collateral, without Venezuelan government approval, according to the Associated Press.
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In a November 2017 televised address, Venezuelan President Nicolás Maduro declared that the men were Venezuelan nationals and would be tried as “traitors.”
But the case has been stagnant for well over two years. For much of that time, the executives are believed to have been held in the Helicoide, the infamous Caracas prison for political detainees.
Although US officials have repeatedly demanded the release of the Citgo Six, a mid-July meeting between former New Mexico Governor Bill Richardson and President Maduro has given the case new momentum.
After the meeting, two of the six men were moved to house arrest and allowed to meet with their lawyers for the first time in months, Reuters reported.
The announcement that the executives are finally to face trial is seen as a major step forward, although concerns remain over whether they will be tried fairly in Venezuela.
US Bribery Cases
Even as the six Citgo executives hope for a speedy resolution to their ordeal, US authorities are deepening their own investigation into corruption at the company.
The probe has its roots in the 2015 arrest of Abraham Jose Shiera Bastidas and Roberto Rincon-Fernandez, who prosecutors charged with making lavish bribes to PdVSA and its subsidiary Bariven in order to secure business for their US-based companies.
Both men pleaded guilty to the $1 billion kickback scheme, along with three PdVSA officials. A 20-count indictment was filed in August 2017 against several Bariven officials and their associates. The case eventually implicated Jose Manuel González Testino, a dual US-Venezuelan national and longstanding contractor for PdVSA based in Florida.
In May 2019, González pleaded guilty to bribing PdVSA officials to “corruptly secure and retain energy and logistics contracts.” The charge related to the payment of $629,000 in bribes to Bariven.
González’s testimony also ensnared Citgo in the scandal. During trial, he admitted to making similar deals with four Citgo officials and one senior executive. The executive was Jose Pereira of the Citgo Six, according to anonymous sources who spoke to the Associated Press. Pereira’s family denies the claim.
On August 6, 2020, former Citgo manager Jose Luis De Jongh Atencio became the first company official to be charged in the United States with violating the Foreign Corrupt Practices Act (FCPA). De Jongh allegedly received over $2.5 million in bribes in exchange for preferential access to Citgo contracts, which he laundered through shell companies in Panama and Switzerland, according to a US federal indictment filed in the Southern District of Texas.
With the unsealing of the indictment against De Jongh, 27 individuals have now been charged in the PdVSA bribery investigation. Twenty have pled guilty.
Citgo Fights Back
Citgo’s former executives and associates face a further threat: Citgo itself.
In January 2019, the US Treasury sanctioned PdVSA, citing massive embezzlement and the need to pressure for a democratic transition in Venezuela. Citgo cut all ties with its parent company the following month, and accepted a new board appointed by the opposition-controlled Venezuelan National Assembly, Reuters reported.
Citgo’s new board is currently pursuing its own lawsuit against González for his bribery of former Citgo officials, declaring that “Citgo lost millions of dollars as a result."
The company is also investigating contracts its former executives struck with US lobbyists back in 2017 in an attempt to avoid facing sanctions. In May 2020, Citgo’s new board announced a lawsuit against former Florida congressman David Rivera -- a Republican known for being a strident anti-communist -- for failure to fulfill a $50 million consulting contract, according to the Associated Press.
Rivera has claimed that the $15 million he was paid was diverted to the Venezuelan opposition with the approval of the “dissident” Citgo executives now imprisoned in Venezuela, according to a Univision report. The Citgo Six deny the claim, and the Miami Herald has cited evidence that Venezuelan Vice President Delcy Rodríguez personally approved the contract. Rivera has been under federal investigation since 2017 but has yet to face criminal charges.