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Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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Citgo President And 5 VPs Arrested On Embezzlement Charges

Citgo President Jose Pereira and five of the company’s vice presidents have been detained in Venezuela on embezzlement charges, according to emerging reports.

The U.S. subsidiary for PDVSA had suffered from unfavorable loans granted by the company’s detained senior officials, chief prosecutor Tarek William Saab said on Tuesday. The accusations are linked to a $4 billion deal that uses Citgo as a guarantee.

The detainees also allegedly gave up confidential business information to a competitor.

Venezuelan authorities are currently investigating the country’s oil sector and the mismanagement that has plagued it over the past few decades.   

In August, when the White House first announced sanctions against Venezuela, its state-owned company, and Citgo, a senior official from the administration told the AP that President Nicolas Maduro’s regime could be relieved of the sanctions if it halts its plans to rewrite the Venezuelan constitution, releases dozens of political prisoners, and negotiates fairly with its political opposition.

After rating agencies declared Venezuela in selective default and after a meeting with creditors on debt restructuring failed last week, the International Swaps and Derivatives Association (ISDA)—a finance industry body—has voted that both Venezuela and its state oil firm PDVSA had defaulted on their debt payments.

Related: Tesla To Spike, Then Crash

Oil distributors now require Citgo to provide prepayment letters or bank letters of credit, instead of allowing the company to employ the standard practice of ordering raw supplies on open credit as a result of the Trump administration’s measures against the company.

Debt payments have put pressure on Caracas’ ability to purchase and import goods for daily and medicinal needs, causing mass protests against Maduro’s regime for its ineffectuality.

Venezuela’s oil output dropped to its lowest in 28 years last month, according to new data released by OPEC earlier this month.

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By Zainab Calcuttawala for Oilprice.com

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