CRIMINAL CAPITALI$M
Venezuela oil czar in surprise resignation amid graft probes
Regina Garcia Cano
The Associated Press
Published March 21, 2023
CARACAS, VENEZUELA -
The man responsible for running Venezuela's oil industry -- the one that pays for virtually everything in the troubled country, from subsidized food to ridiculously cheap gas -- has quit amid investigations into alleged corruption among officials in various parts of the government.
Tareck El Aissami's announcement Monday was shocking on multiple counts. He was seen as a loyal ruling party member and considered a key figure in the government's efforts to evade punishing international economic sanctions.
And he led the state oil company PDVSA in a Venezuelan business sector widely considered to be corrupt -- in a country where embezzelment, bribery, money laundering and other wrongdoing are a lifestyle.
"Obviously, they are giving it the patina of an anti-corruption probe," said Ryan Berg, director of the Americas program at the Center for Strategic and International Studies, a Washington-based think tank.
"Rule of law is not being advanced here," Berg added. "This is really a chance for the regime to sideline someone that it felt for some reason was a danger to it in the moment and to continue perpetuating acts of corruption once particular individuals have been forced out of the political scene."
Hours after El Aissami revealed his resignation on Twitter, President Nicolas Maduro called his government's fight against corruption "bitter" and "painful." He said he accepted the resignation "to facilitate all the investigations that should result in the establishment of the truth, the punishment of the culprits, and justice in all these cases."
Venezuela's National Anti-Corruption Police last week announced an investigation into unidentified public officials in the oil industry, the justice system and some local governments. Attorney General Tarek William Saab in a radio interview Monday said that at least a half dozen officials, including people affiliated with PDVSA, had been arrested, and he expected more to be detained.
Among those arrested is Joselit Ramirez, a cryptocurrency regulator who was indicted in the U.S. along with El Aissami on money laundering charges in 2020.
Corruption has long been rampant in Venezuela, which sits atop the world's largest petroleum reserves. But officials are rarely held accountable -- a major irritant to citizens, the majority of whom live on US$1.90 a day, the international benchmark of extreme poverty.
"I assure you, even more so at this moment, when the country calls not only for justice but also for the strengthening of the institutions, we will apply the full weight of the law against these individuals," Saab said.
Oil is Venezuela's most important industry. A windfall of hundreds of billions in oil dollars thanks to record-high global prices allowed the late President Hugo Chavez to launch numerous initiatives, including state-run food markets, new public housing, free health clinics and education programs.
But a subsequent drop in prices and government mismanagement, first under Chavez's government and then Maduro's, ended the lavish spending. And so began a complex crisis that has pushed millions into poverty and driven more than 7 million Venezuela to migrate.
PDVSA's mismanagement, and more recently economic sanctions imposed by the U.S., caused a steady production decline, going from the 3.5 million barrels a day when Chavez rose to power in 1999 to roughly 700,000 barrels a day last year.
David Smilde, a Tulane University professor who has conducted extensive research on Venezuela, said the moves by Maduro's government are more than just an effort to clean its image.
"Arresting important figures and accepting the resignation of one of the most powerful ministers in a case that involves $3 billion does not improve your image," he said. "It is probably because the missing money actually has an important impact on a government with serious budgetary problems."
The Biden administration recently loosened some sanctions, even allowing oil giant Chevron for the first time in more than three years to resume production. Maduro's government has been negotiating with its U.S.-backed political opponents primarily to get the sanctions lifted.
U.S. congressional researchers saw El Aissami as an impediment to Maduro's goals.
"Should Al Aissami remain in that position, it could complicate efforts to lift oil sanctions," a November report from the Congressional Research Center said.
The U.S. government designated El Aissami, a powerful Maduro ally, as a narcotics kingpin in 2017 in connection with activities in his previous positions as interior minister and a state governor. The Treasury Department alleged that "he oversaw or partially owned narcotics shipments of over 1,000 kilograms from Venezuela on multiple occasions, including those with the final destinations of Mexico and the United States."
Under the government of Chavez, El Aissami headed the Ministry of Internal Affairs. He was appointed minister of oil in April 2020.
"El Aissami was a key player in the Maduro government's sanctions evasion strategy. We're talking about someone who knows where all the bodies are buried, so it will be key to watch where he ends up," said Geoff Ramsey, a senior fellow at the Atlantic Council focused on Colombia and Venezuela. "If El Aissami ends up being implicated himself, it could have serious implications for the entire power structure."
In September, Maduro's government renewed wrongdoing accusations against another former oil minister, Rafael Ramirez, alleging he was involved in a multibillion-dollar embezzlement operation during the early 2010s that took advantage of a dual currency exchange system. Ramirez, who oversaw the OPEC nation's oil industry for a decade, denied the accusations.
In 2016, Venezuela's then opposition-led National Assembly said $11 billion went missing at PDVSA in the 2004-2014 period when Ramirez was in charge of the company. In 2015, the U.S. Treasury Department accused a bank in Andorra of laundering some $2 billion stolen from PDVSA.
RELATED STORIES
Middlemen have left Venezuela's PDVSA with $21.2 billion in unpaid bills
By Marianna Parraga
HOUSTON, March 21 (Reuters) -Venezuela's state-run oil company PDVSA has accumulated $21.2 billion in accounts receivable, according to documents viewed by Reuters, after turning to dozens of little known intermediaries three years ago to export its oil under U.S. sanctions.
The internal disclosure of the enormous amount of unpaid sales - about 84% of PDVSA's total value of invoiced shipments - reveals for the first time the depths of revenue losses due to the withdrawal of established oil company buyers since 2020.
The scale of the receivables explains a January freeze on supply contracts by PDVSA's new boss Pedro Tellechea, who sought to halt unpaid cargoes immediately after taking office. A series of attempts to tighten contract terms came after some vessels absconded without payment in recent years.
Venezuelan President Nicolas Maduro on Monday accepted the resignation of oil minister Tareck El Aissami, who served the government for two decades, amid a corruption probe focused on PDVSA and the judiciary. In recent days, the investigation has resulted in the jailing of dozens of officials.
El Aissami has said he will collaborate with the probe.
According to documents provided to the office of Venezuela's attorney general during a long-standing audit of PDVSA contracts, out of a total $25.27 billion in oil exports between January 2020 and this month, PDVSA was only able to confirm the reception of $4.08 billion in payments excluding some swaps like the one with Cuba, which means it has only successfully cashed 16% of exports, according to its count.
POTENTIALLY UNRECOVERABLE
The $21.2 billion in commercial accounts receivable includes about $3.6 billion of potentially unrecoverable bills tied to tankers that left the country without prepaying at least a portion of the cargoes' value, even though customers had agreed to those terms, according to the documents.
The accounts receivable also includes an outstanding balance to be paid by Iran for its receipt of cargoes from Venezuela since 2020 as part of an oil swap between the two countries, the documents show.
Some customers have fought PDVSA's count of failed payments by providing supporting documents that had not been registered with the state company's contract administration system, a company source said.
PDVSA and Venezuela's oil ministry did not immediately reply to a request for comment.
During the audit, PDVSA's departments of International Finances and Accountability said that according to documentation registered by the company's contract system, executives at the Trade and Supply division had been authorizing cargoes to leave Venezuelan waters without completing the payment verification process.
EXECUTIVES ARRESTED
PDVSA's former vice president of supply and trade, Antonio Perez Suarez, and about 20 executives who worked for him have been arrested, according to people familiar with the matter.
Reuters was unable to reach any representative of Perez Suarez for comment.
When the United States first imposed oil sanctions on PDVSA in 2019 in an effort to oust Maduro after a reelection that was denounced as a sham by opponents, PDVSA turned to units of Russian oil firm Rosneft ROSN.MM to trade most of its sales to Asia and to compensate for the loss of its main market, the United States.
But those Rosneft units faced sanctions by the U.S. Treasury Department in 2020, forcing PDVSA to first resort to a Mexico-based network of intermediaries that were also sanctioned by Washington, and later to dozens of less known middlemen, which exacerbated the failed payment issue.
Reporting by Marianna Parraga; Editing by Gary McWilliams and Daniel Wallis
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