Saturday, October 31, 2020

Citgo gets U.S. subpoena related to Venezuela bribery probe


Citgo Petroleum Corp. received a subpoena from the Department of Justice stemming from an investigation into bribery in Venezuela, indicating that the U.S. government is finally turning its attention to the company after years of prosecuting individuals.

The Venezuelan-owned U.S. refiner has pledged full cooperation with the probe, without identifying the reason for the subpoena, it said Monday in an emailed statement. “Earlier this year, under the direction of its newly appointed Board, Citgo engaged outside counsel to conduct an independent investigation, and is committed to taking all appropriate remedial actions in response to the findings,” the Houston-based company said.

The subpoena was handed down on May 14, two weeks before Jose Manuel Gonzalez Testino pleaded guilty to paying bribes to win business from Venezuela’s state-owned oil company, according to people familiar with the situation, who asked not to be identified because the matter hasn’t been made public.

The Miami executive became the 17th person to plead guilty in a U.S. government investigation into bribery at Petroleos de Venezuela SA, the corporate parent of Citgo, admitting to a violation of the Foreign Corrupt Practices Act, conspiracy and failure to report foreign bank accounts, Justice said in a May 29 statement.

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The subpoena follows years of indictments targeting individuals, the first of which came in late 2015, when the U.S. accused two men of taking part in a $1 billion bribery scheme to secure contracts with PDVSA and linked one of the duo to a former head of Venezuelan military intelligence wanted for alleged cocaine trafficking.

Citgo is conducting roughly 20 internal investigations, some overlapping, into various FCPA-related matters, and the board of directors has hired lawyers for its own inquiry, one of the people said. As recently as last week, external lawyers were seen on the fifth floor of the company’s headquarters in west Houston interviewing Citgo workers deemed as potential witnesses for various investigations, the people said.

The American subsidiary of the state petroleum giant has a waiver from the Trump administration allowing it to continue with day-to-day operations, but U.S. sanctions on Venezuela prevent Citgo executives from having any contact with the parent company.

The new board, spearheaded by chairwoman Luisa Palacios, arrived at the end of February. It was appointed by Venezuela’s opposition leader Juan Guaido with the support of the Trump administration, which recognizes him as the country’s legitimate leader. U.S. sanctions cut off much-needed cash that Citgo had sent back to its ailing parent, making life more difficult for the regime of president Nicolas Maduro.

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