In April, the US Treasury’s Office of Foreign Assets Control (OFAC) gave the green light to auction off shares of the Venezuelan-owned CITGO Petroleum Corporation. CITGO refines, transports and sells petroleum and other fuels and lubricants. Despite being based in the US state of Texas, the company is majority-owned by Venezuela’s national oil company PDVSA. With three refineries and 4,000 petrol stations, CITGO is worth $10bn. Venezuelan Vice-President Delcy Rodriguez rightly denounced the OFAC decision as ‘the theft of the century’.
In 2016, in order to stave off a default on sovereign debt, Venezuela pledged 50.1% of CITGO as collateral to its creditors. This deal meant that Venezuela did not have to pay the principal on debts it owed until 2020, buying it time. However, Venezuela has since defaulted on these bonds as it has been blocked from servicing or refinancing the debt due to over 900 US-imposed sanctions enforced which freeze international payments and cut it off from credit. This has left CITGO in serious trouble. This was compounded by the United States’s recognition of Juan Guaido, a then little-known politician, as its proxy ‘interim president’ of Venezuela in January 2019. As part of this operation – essentially a protracted coup against the legitimate elected Venezuelan president, Nicolas Maduro – the US seized CITGO in 2019. Though Guaido’s coup ultimately failed, the default on the PDVSA bonds has left CITGO open to a sustained attempt by creditors to claw back their debts through the US courts. CITGO is also being pursued by Canada’s Crystallex and US companies ConocoPhillips and Owen Illinois who seek revenge against Venezuela for historic oil and mining nationalisations.
Vultures circle
Guaido, while masquerading as Venezuelan president, set up a phoney alternative CITGO board which the US Treasury Department dutifully recognised. He has essentially enabled these creditors to get their claws into CITGO, with his legal team not even bothering to turn up to court in October 2021, allowing ConocoPhillips to win ‘compensation’ of $8.5bn by default. His appointed attorney Jose Hernandez was previously an expert witness for Owens Illinois and provided legal consultancy services for Crystallex, making it clear that the theft of CITGO was an inside job all along. In December 2022, after three years of flops and failures, Guaido was sacked and has retired to Miami. OFAC will now oversee the auctioning off of CITGO shares with plans to implement a ‘favourable licensing policy’ for their sale or settlement. The vultures are lining up to tear chunks off Venezuela’s most prized overseas asset.
Meanwhile, the US continues to overtly interfere in Venezuelan political affairs by recognising what it calls the ‘2015 National Assembly’, a handful of opposition politicians elected to the National Assembly in 2015. Despite that assembly’s five-year term having expired in 2020, when the Venezuelan people elected a new national assembly, the US continues to ‘extend the mandate’ of the ‘2015 National Assembly’ because it was the last one to secure an opposition majority. Though Guaido is long gone, this ridiculous ‘government’ is the only one that the US recognises. Guaido’s post as ‘2015 National Assembly President’ is now filled by Dinorah Figuera, an opposition figure who resides in Spain. Figuera has been awarded $347m, presumably to fund campaigning ahead of next year’s presidential election.
Fighting sanctions and corruption
While slush funds flow into the pockets of the opposition, cash owed to the Venezuelan state remains frozen. In November an accord was reached to release $3bn of seized assets to the UN for investment in Venezuela’s education, healthcare and infrastructure. The US continues to withhold payment while discussions continue at a snail’s pace. The continued blockade has forced Venezuela to negotiate with unreliable intermediaries to circumvent sanctions, resulting in over $20bn in lost revenue. An audit of PDVSA found only 16% of oil sales over the last three years had been paid for, $4bn out of $25bn owed. After US secondary sanctions hit trusted trading partners, Venezuela has had to use smaller, inexperienced intermediaries in opaque deals to get its crude oil onto the global market, often selling at huge discounts or through cryptocurrency.
Payment delays are not PDVSA’s only problem. A huge anti-corruption probe revealed at least $3.6bn has been embezzled from the state oil company. The investigation resulted in the resignation of oil minister Tareck El Aissami and the arrest of over 60 public officials, businessmen and judges. These include PDVSA’s former vice president of supply and trade, Perez Suarez, the head of SUNACRIP (which has oversight of crypto-assets), the President of the industrial Venezuelan Guyana Corporation and several elected officials. Announcing the operation, President Maduro exclaimed ‘Those who think they can play a double game, play simultaneously for the crooks and for the revolutionaries, are seriously mistaken’.
Venezuela’s elected National Assembly has now pushed through an anti-corruption law, seizing over 1,000 assets including mansions, estates, luxury cars and private planes. The move has been welcomed by revolutionary mass organisations, with the Campesino Struggle Platform occupying four farms allegedly belonging to Perez Suarez, declaring ‘President Nicolas Maduro, the mobilised people give you their full support in the fight against corruption!’
Oil workers had been denouncing corruption for years. Former executives Alfredo Chirinos and Aryenis Torreabla blew the whistle on corruption in the supply and trade department of PDVSA in 2021. Yet rather than acting on their concerns, the Public Ministry and PDVSA’s security authorities pursued Chirinos and Torreabla through the ‘anti-terrorism court’, claiming they were ‘disseminating confidential information’ to the US. Sentenced to five years in jail, the pair spent two years under house arrest before being cleared of all charges and freed. The episode illustrates how deep corruption runs.
Since the election of the late Hugo Chavez in 1998, Venezuela’s Bolivarian revolution has fought to build ‘socialism of the 21st century’, ploughing oil wealth into social welfare missions, building 4.5 million units of social housing and providing universal free health care and education. As a result Venezuela has been targeted by sanctions, US-backed coups and opposition violence. Meanwhile, huge sections of the economy remain in private hands. Venezuela’s ruling socialist party, the PSUV, is a cross-class alliance bringing together working class revolutionaries, seasoned politicians and the so-called ‘revolutionary bourgeoisie’ who seek juicy state contracts. Corruption, rife wherever abundant mineral resources attract multinational investors, remains a persistent problem, exacerbated by US sanctions. Nevertheless the $3bn fraud pales in comparison with the estimated $350bn losses inflicted on Venezuela as a result of sanctions, lost income and frozen assets.
Sam McGill
FIGHT RACISM! FIGHT IMPERIALISM! 294 June/July 2023
