Venezuela arrests former top oil officials

Venezuela´s two top former oil industry officials were arrested in pre-dawn videotaped raids, the latest figures swept up in an official crackdown on corruption that the government blames for plummeting oil production.

Former energy minister Eulogio Del Pino and former PdV chief executive Nelson Martinez – both veteran oilmen - were arrested on multiple corruption charges by the defense ministry's military counter-intelligence division (DGCIM).

The detentions took place just days after Venezuelan president Nicolas Maduro replaced them with Manuel Quevedo, a National Guard major general with no oil industry experience.

In announcing today´s arrests and airing videos of their detentions, acting attorney general Tarek Saab said corruption charges lodged against dozens of executives of state-owned PdV since August 2017 include the theft of crude and oil-related equipment worth hundreds of millions of dollars, contract rigging, bribery, money-laundering and participation in an ongoing conspiracy orchestrated by the US government to cripple the oil industry and destabilize the Maduro presidency.

Del Pino and Martinez are the two most senior former oil executives jailed since the government-controlled constituent assembly (ANC) appointed Saab acting attorney general in August 2017. He replaced Luisa Ortega who was sacked for opposing Maduro's decision last June to shut down the elected opposition-controlled national assembly.

Saab said the arrests of Del Pino and Martinez raise to 65 the number of PdV managers jailed on corruption charges since August, including 16 of the company's senior executives.

"These arrests cannot be seen as isolated events, but rather as the dismantling of a corruption cartel inside PdV," Saab said.

In the videos taken by state-owned VTV television, dozens of balaclava-clad agents dressed in black are seen handcuffing Del Pino and Martinez at their Caracas homes. Both are shown being fingerprinted at an undisclosed location.

Three personal associates of the jailed executives told Argus that Del Pino and Martinez apparently did not suspect that the government would bring corruption charges against them.

"They were sleeping in their beds when the DGCIM raided their homes," one of the associates said.

Martinez was charged with taking part in a conspiracy to illegally refinance up to $4bn of debt owed by PdV's Houston-based downstream subsidiary Citgo, Saab said. Six senior Citgo executives were arrested in Caracas last week in connection with the alleged illegal Citgo debt refinancing scheme.

Del Pino was charged with conspiring to rig contracts while serving as PdV's chief upstream manager before he was named PdV chief executive in 2014, Saab added.

Saab said investigators with the attorney general's office and DGCIM determined that Del Pino, Martinez and dozens of other imprisoned former senior PdV executives were collectively "responsible for the loss of at least 15,700 b/d of crude from January 2015 through October 2017."

"These corrupt executives are responsible for the fiscal deficit we have today," Saab declared.

Notably, Saab pointed out that PdV´s upstream joint venture Petrozamora, in which Russia's Gazprombank holds a 40pc stake, also suffered over $500mn in corruption-related losses. The Russian firm is the only one of PdV´s foreign partners mentioned by Saab today.

The spectacular wave of arrests coincides with an accelerating decline in Venezuelan crude production, some $1.5bn in defaults on PdV and sovereign bond interest and escalating operating pressure on the oil industry stemming from US financial sanctions imposed on PdV in August. The Venezuelan economy is in freefall, with near hyperinflation and extensive shortages of food and medicine.

Saab declined to confirm that Maduro this week also fired UN ambassador Rafael Ramirez, who held the twin posts of energy minister and PdV chief executive for over a decade from 2003-14.

But a presidential palace official told Argus that Ramirez has indeed been fired by the president and instructed to return immediately to Caracas to cooperate with the attorney general's investigation of corruption within PdV.

Ramirez likely will be arrested when he returns to Venezuela, the official added.

"Ramirez's brother and cousin currently are under federal investigation in the US and Spain, respectively, for alleged money laundering and taking bribes from oil industry contractors and suppliers while Ramirez was in charge of the energy ministry and PdV," the official said. "Ramirez has much to explain," the palace official added.

A spokesperson at Venezuela´s mission to the UN in New York declined to comment. Ramirez has long denied accusations of corruption.

Ironically, the toppling of Ramirez is consistent with investigations carried out by opposition legislators in the now-neutralized national assembly, which determined in 2016 that over $11bn was stolen from PdV during Ramirez's tenure.

The government-controlled Supreme Court shut down the assembly's investigation in fourth quarter 2016 after Ramirez filed a protest before the court claiming that his honor and integrity were being questioned illegitimately, with the aim of discrediting PdV and crippling the Maduro government.