A Venezuelan judge has convicted six former Citgo executives of corruption, a move widely seen as a political challenge by President Nicolas Maduro to the incoming US administration of president-elect Joe Biden.
Biden inherits the Trump administration’s escalating sanctions policy that has thwarted Venezuelan oil trade in a campaign to unseat Maduro.
Five of the six convicted executives — known as the Citgo-6 — are naturalized US citizens, including former board members and vice presidents Tomeu Vadell, Gustavo Cardenas, Jorge Toledo, and brothers Jose Luis and Alirio Zambrano. The sixth, former Citgo acting president Jose Pereira, is a permanent US resident.
The group was arrested in November 2017 during a meeting at PdV’s Caracas headquarters, for allegedly approving a $4bn debt-refinancing agreement guaranteed with a 50pc stake in Citgo. The agreement was not executed, but Venezuelan judge Lorena Cornielles ruled that there was sufficient evidence to convict the six of corruption, a charge denied by their attorneys and US-based relatives.
“My father continues to be an innocent man that is being held against his will,” Vadell’s daughter tweeted yesterday.
The executives were sentenced at Caracas criminal court to between eight and 13 years in prison. The case is likely to be appealed to Venezuela’s rubber-stamp supreme court, where a ruling would reflect the government’s political motivations.
Houston-based Citgo, which operates 760,000 b/d of US refining capacity, is a subsidiary of Venezuelan state-owned PdV. Since early 2019, Citgo has been controlled by Venezuela’s political opposition, effectively severing ties with its parent company in Caracas.
Court twist
Venezuela is at risk of losing control of Citgo over defaulted PdV bonds that were backed by a majority of shares in the refiner in a controversial 2016 debt swap with ironic similarities to the refinancing proposal for which the Citgo-6 were convicted. The Venezuelan opposition led by Juan Guaido has unsuccessfully argued in US courts that the PdV 2020 bonds, backed by Citgo shares, are invalid.
Citgo has taken an arm’s length approach to the six executives.
“While we do not have first-hand knowledge of these reported convictions, we are distressed to read about this outcome,” Citgo said. “We also hope that the Venezuelan authorities honor the request of the US government that they be released.”
Although Citgo stopped paying the five former vice presidents in May 2018, the families still consider them to be Citgo employees. One of the families indicated to Argus that dependent family members still have health insurance through the company.
Citgo has not commented on their current employment status.
At least some of the men are believed to be detained at Sebin military intelligence’s Helicoide prison in Caracas.
Biden, who takes office on 20 January, has said Maduro is a “dictator, plain and simple” and has signaled support for helping to restore Venezuelan democracy. While the new US administration is likely to maintain the overall sanctions framework in the short term, it may work more closely with the EU on a less confrontational approach to resolving the protracted crisis. Biden is also likely to make it easier for Venezuelan migrants to stay temporarily in the US.
