HomeNewsVenezuela Oil Crisis May Set Limits on PDVSA Impunity
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Venezuela Oil Crisis May Set Limits on PDVSA Impunity

ELITES AND CRIME / 25 FEB 2021 BY VENEZUELA INVESTIGATIVE UNIT EN

Venezuelan officials may have finally met a PDVSA corruption scandal they cannot allow to go unpunished, hinting at just how dire the country’s oil and gas shortage has become.

In early February, Attorney General Tarek Saab ordered the arrest of four officials of Venezuela’s state-owned oil company Petróleos de Venezuela (PdVSA), including the president of one of its subsidiaries, Jacob Grey, on charges of corruption and oil theft.

In September of 2020, Grey was appointed as head of PDVSA Gas Comunal, which distributes liquefied petroleum gas (LPG) to regular citizens. Since then, he allegedly colluded with the managers of filling plants in order to siphon off and sell thousands of cylinders of the substance.  

SEE ALSO: Despite Vast Oil Reserves, Venezuela Smuggling Gasoline From Colombia, Brazil

Media reports stated that at official subsidized prices, each LPG canister is supposed to cost just $0.02.  However, Saab told reporters that the perpetrators of this scheme used armed men to coerce gas distributers into buying stolen canisters at prices ranging from $10 to $40.

Many Venezuelans are not connected to a natural power grid and therefore rely on LPG for gas, mostly used in cooking. An average Venezuelan family reportedly needs at least 2 cylinders a month, but an ongoing LPG shortage has forced many to turn to firewood instead.

As recently as 2010, Venezuela was self-sufficient in LPG and even exported to other countries. However internal shortages forced the country to start importing, primarily from the US. And, according to Argus, a media group focused on energy markets, the oil sanctions imposed in 2019 effectively cut off the country’s supply.

The corruption scheme, which exacerbated an already dire shortage, first came to light when prosecutors investigated a warehouse owner, who was illegally selling gas cylinders and found 4,000 of them on his property. The man led investigators to Grey and three of his associates, who worked as managers at filling stations around Venezuela.

“They deserve the full weight of the law,” Saab told reporters.

InSight Crime Analysis

Corruption and mismanagement within the PdVSA has been rampant for years, but it has traditionally been met by total impunity, not arrest warrants. Saab’s strong reaction and willingness to go after high-level officials demonstrates just how desperate the situation has become in the world’s most oil-rich nation.

High-level officials of the Maduro regime are often implicated in PdVSA’s money-laundering and embezzlement scandals. They face almost no consequences at least in part because, according to money laundering expert Alejandro Rebolledo, the administration itself has laundered billions of dollars, including through PdVSA-based schemes.

SEE ALSO: Why Oil Theft Spread Across Latin America During Pandemic

This time feels different. While Saab announced the arrest of the three managers, it was Maduro himself who confirmed the arrest of the PdVSA subsidiary’s president, who’d been a rising star of the PSUV party. “Our throats bleed calling for public officials to do the right thing but from behind they are robbing the country," he said.

This week, a government official told Argus that more senior PdVSA figures are involved, suggesting that the prosecutor’s office intends to back Maduro’s statements with more arrests.

Venezuela has the world’s largest oil reserves, but corruption, under-investment and sanctions have left the country with crumbling infrastructure incapable of extracting and processing those reserves.  This has put the country into such dire straits that smugglers have been bringing gasoline in from Colombia and Brazil.

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