Citgo's Loot (Research)
Mission Truth
Aug 31 · 16 min read
By William Serafino
Photo: RedRadio
Since Juan Guiadó's self-proclamation in January 2019, the Citgo Petroleum company has been at the center of an extended political, legal and narrative battle for control of its operations.
Some background
This subsidiary of the state-owned Petróleos de Venezuela (PDVSA) in the United States is made up of three huge refineries with a processing capacity of 769 thousand barrels per day and more than 4 thousand gasoline distribution stations distributed in 30 states of the Union. Such figures give Citgo Petroleum a market value of over $ 8 billion , which has made it a highly coveted asset for years.
Even before Guaidó's leap into the void, Citgo was already in the crosshairs of the US government. On May 21, 24 hours after the victory of Nicolás Maduro in the presidential elections, President Donald Trump issued Executive Order 13835 with the aim of prohibiting the sale, transfer or use as collateral of any entity in the United States where the government Venezuelan had a stake greater than 50%.
Logically, the restriction measure was aimed at Citgo, but it was also aimed at blocking the external financing capacity of the Venezuelan state, drowning its income in foreign currency, as analyzed by a strong opposition economist at the time.
At the time, the move was interpreted as the first step in an official embargo on the company, a vision that ended up being confirmed later.
In August 2018, the legal offensive of the Crystallex corporation (where the lawyer José Ignacio Hernández, future “attorney” of Guaidó, was part of his legal team) won a position of strength in the Delaware Court by Judge Leonard Stark . The argument that PDVSA's shareholding control over Citgo made it an alter ego of the Bolivarian Republic of Venezuela, favored the Canadian mining company's claim to collect an old lawsuit over Citgo Petroleum's assets.
In 2018, the US government not only made progress in taking control of the company from the Venezuelan state; Now there was a serious threat of permanent dispossession, which has acquired an increasingly dangerous validity in recent months given the action of Guaidó's fake attorney , who put Citgo on a silver platter to the same corporations with which he had worked years before .
A few days after Guaidó's leap into the void, during the first half of February , his supporters in the National Assembly appointed a new board of directors for Citgo and PDVSA Holding, going beyond the existing legal framework, headed by Luisa Palacios and Carlos Jordá, both linked to the US financial and oil sector.
The decision was taken as a practical step in the “asset protection” campaign, aimed at covering up the looting of national assets under the screen of the fight against corruption of the government of Nicolás Maduro.
Carlos Vecchio, appointed as Guaidó's emissary to the United States, moved forcefully and quickly. In March, he made a "formal" visit to Citgo to emphasize that the parallel government had effective control of the company.
Vecchio argued that, with the illegal change in directive, "we are not only protecting our assets, we are also preventing further destruction and losing the company."
To hide the gravity of Citgo's kidnapping, Vecchio used demagoguery to distract public opinion. The idea consisted of promising that Venezuelans would ultimately benefit: "All that money has to be used for more opportunities for economic and social development, which generates employment and can bring the minimum wage, not to $ 5 as it is right now, but to raise it much more to increase the purchasing power ”.
A spokesman for the US Department of the Treasury consulted by Voice Of America indicated, referring to the 7B license, that said measures on Citgo were intended to prohibit "any profit from returning to the illegitimate Maduro regime." From that moment, and as a complement to Executive Order 13835 of the previous year, Venezuela would not have access to the profits reported by Citgo, nor to fuel, spare parts and other supplies demanded by PDVSA.
Realignment of sanctions
On January 28, 2019, US Secretary of the Treasury Steven Mnuchin and then-national security adviser John Bolton announced PDVSA's inclusion on the Specially Designated Citizens and Blocked Persons List (SDN). in English), pursuant to Executive Order 13850, issued in November 2018.
The measure implied the definitive embargo of PDVSA and its subsidiaries, blocking any transaction with US companies and opening the way to fearsome secondary sanctions. Instantly, at least 9 general licenses were issued that allowed some operations blocked by PDVSA's designation, such as the extension of Chevron's operations in Venezuela, certain transactions with certain bonds and other Citgo marketing activities.
Of all these licenses , the 7B stands out, which allows Citgo to operate in the US market. With this instrument, which has been continuously renewed from 2019 to the present, Washington hinders the company's dividends from going to Caracas and, at the same time, "authorizes" Guaidó's team to maintain effective control of the subsidiary.
In other words, while maintaining the embargo situation, it favors a supervised administration of the coup plotters through the 7B license and others with similar characteristics .
Energy and financial boycott
As of today, the company is in a situation of extreme vulnerability, especially after Judge Leonard Stark determined, at the end of May this year, that Crystallex can collect its historic claim with the sale, under auction conditions, from Citgo refineries.
The legal setback was a catastrophic blow to Guaidó's “asset protection” management and especially to his fake attorney , José Ignacio Hernández, who weakened the defense of Venezuela's national interests by replacing the attorney general of the Republic in front of the American courts.
These events have generated countless reactions that have dismantled the little credibility that Guaidó had left. In parallel, the US government has intervened by modifying and extending some of last year's licenses to prevent Citgo from being auctioned as ordered by Judge Stark of the Delaware court.
Meanwhile the illegal Citgo management tries to feign normalcy. In February this year, as an "anniversary" for the kidnapping of the board, the new management issued a "performance report" which highlights the change in the company's strategic orientation and how it is part of the energy (and financial boycott) ) against Venezuela.
“We also take critical steps to improve the resilience of our operations by quickly and efficiently optimizing our crude portfolio, replacing Venezuelan crude with inexpensive crudes from Colombia, Mexico and Ecuador, and at the same time increasing our light crude runs in the United States. Low-priced light US crude now represents 48% of CITGO's total crude supply and 64% of total US Gulf Coast crude, ”the report states.
This change and replacement of supply routes has benefited oil companies both in the United States and in countries in the region that are commercial rivals of PDVSA and that have intelligently exploited US sanctions as an instrument of unfair competition and war. commercial.
The report also indicates that “These efforts have not only helped us better serve the US market, but have also allowed us to become a major exporter of refined products; in fact, exports now represent 25% of CITGO's total production ”.
In this way, the new Guaidó leadership has whitewashed the destructive US sanctions in the name of an operational readjustment of Citgo. So, while on the one hand Washington blocks and threatens ships, insurers and shipping companies involved in the gasoline trade with Venezuela, on the other hand Citgo increases its fuel exports at the expense of the shortage produced by the sanctions in Venezuela.
A New York Times report in 2018 indicated that Citgo sent Venezuela "around 29,000 barrels a day of refined fuels, such as gasoline." In addition, the US media adds, "Citgo (...) imports 175 thousand barrels of Venezuelan crude every day - almost one out of every five barrels that the country exports to the world -, which provides the left-wing government with dollars that it desperately needs."
In this sense, the substitution of purchases of Venezuelan crude not only hits the Venezuelan finances and PDVSA hard, but the 29 thousand barrels per day that were sent to Venezuela in 2018 are now very surely exported and the profits that it generates do not return to the country. A perfect model of looting and corruption.
In turn, by having Citgo under control, Washington exacerbates the blockade on fuels and the currency drought, the two main vectors of the economic war.
A recent report published in Reuters remarks that the gasoline shortage is due to the fracture of the natural relations between Citgo and PDVSA, its parent company, due to the US sanctions:
But these so-called exchanges with its main partner, Citgo, which is its refining subsidiary in the United States, were interrupted when the government of President Donald Trump sanctioned PDVSA in January 2019 as part of its campaign to oust President Nicolás from office. Maduro, ”says journalist Luc Cohen.
For the benefit of the holders
In that report, the Venezuelan Luisa Palacios was consulted, who currently serves as president of the Citgo board of directors by appointment of Guaidó. According to La Tabla , Palacios is part of an oligarchic family from Caracas and has worked for US financial institutions for a long time.
Palacios told the New York Times in 2018 that
"The integrity of Citgo as a company is at risk (...) I don't see how PDVSA can keep Citgo, because all of Citgo is compromised on one side or the other with different types of lenders, and disgruntled creditors are managing to affect its stability."
Palacios' marked interest in Citgo lenders has been imprinted on the performance reports of the new board.
“When we took on our role as board members last February, our first task was to put CITGO on a solid financial footing. During 2019, we successfully refinanced 70% of the aggregate debt of CITGO and CITGO Holding, managing to reduce the costs of CITGO Holding's debt by $ 220 million in 5 years ”, states the aforementioned report .
A more recent report states that the
"July 6, 2020, CITGO's Board of Directors approved the recommended dividend payment of approximately $ 63 million to its immediate parent, CITGO Holding, Inc., which was paid on July 29, 2020." A few days later, “CITGO successfully refinanced its 2021 Term B Loan with the product of a private offering of 7.00% senior secured notes due 2025. The offering of notes was oversubscribed, allowing CITGO to increase the offer to $ 1,125 billion and provide additional liquidity ”.
These reports establish a whole line of financial priorities for the new board of directors with respect to the final destination of the profits generated by the company.
Among the new priorities are indebtedness, payment to debt holders and the maximization of dividends that, paradoxically, are received by a “parent company” that is also controlled by Guaidó.
Carlos Vecchio's premise of using Citgo money to generate "more opportunities for economic and social development in Venezuela" has proven to be a sham. Luisa Palacios and Carlos Jordá, both on the cusp of Citgo's illegal management, have aligned themselves against the interests of Venezuela.
Helicopter money
An important organization within that gigantic network that is Citgo is the Simón Bolívar Foundation (FSB, hereinafter), a private non-profit foundation established in 2006 to provide medical assistance to a varied panorama of cases in Venezuela and also In U.S.A.
The organization, prior to the kidnapping of Guaidó, had stood out as a source of support for the medical care of children with cancer, who were covered for medical treatment, in addition to transportation and maintenance, in the United States.
After the illegal change of directive, this aim has taken a 180 degree turn. The FSB has become a source of income transfer to a galaxy of interests of various dimensions.
In March of this year, the illegal board of directors appointed by Guaidó appointed Mariela Poleo as president of the Simón Bolívar de Citgo Foundation.
Your profile on the Citgo website highlights that
“Poleo worked for more than 20 years at EQUINOR ASA (formerly Statoil) where he served in various global positions, including the Chief Financial and Control Officer (controller) for exploration in North America and development of offshore projects. In the different positions he has held, Poleo has overseen multi-billion dollar budgets, managing strategic planning, risk and financial analysis for large projects in North America, South America, Norway and Africa ”.
In early August this year, the FSB announced a $ 1 million grant to three international charities: AID FOR AIDS International, FOOD FOR THE POOR INC. and the Pan American Development Foundation (PADF).
According to the consulted report , AID FOR AIDS International would use the resources to provide "nutritional supplements" to 6 thousand children in Venezuela, FOOD FOR THE POOR INC. It would allocate its part to serve 36,000 Venezuelan migrants in Cúcuta, while the Pan American Development Foundation would provide 1.4 metric tons of medicines for 7,000 Venezuelans.
The grant given by the FSB seems too high for the requirements put forth by the selected charities:
The organization AID FOR AIDS was founded in 1996 and according to its official website it aims to provide medicines and retrovirals to people with HIV / AIDS. For that reason, it is curious that the grant obtained is based on the distribution of nutritional supplements, even though it is not the stated objective of the charity.
Adriana Cisneros de Griffin, president of the Cisneros Foundation and vice president of the Venezuelan business organization, is among the founding members of AID FOR AIDS. According to Poderopedia, María Eugenia Maury Arria, current wife of former diplomat Diego Arria , is the president of AID FOR AIDS, although the official website of the organization currently recognizes Laura Messina in the position.
In events of the organization, however, María Eugenia Maury can be seen sharing with Diego Arria and Laura Messina, showing her managerial place in the organization chart.
María Eugenia Maury Arria. Photo: Aid For Aids
María Eugenia Maury Arria and Diego Arria, at a fundraising event. Photo: Aid For Aids
On the other hand, the Pan American Development Foundation (PADF) was created in 1962 as an organization affiliated to the Organization of American States. It receives funding from the United States government and so publicly declares it. The center of its activity is located in Colombia, where it shows its cooperation with US institutions such as the anti-narcotics bureau and security agencies such as the Colombian Police.
Although the PADF presents itself as an organization with humanitarian purposes, data and investigations involve it in activities that are closer to the external interference propagated by Washington. According to a 2010 investigation by attorney Eva Gollinger, "one of the PADF programs, for which it received $ 699,996 from the State Department in 2007, was dedicated to the development of independent media in Venezuela" and journalism via “innovative technologies”.
And precisely in the record of public activities of the PADF you can see this orientation towards media initiatives. It has recently started a school for youtubers in Colombia and the tasks of "humanitarian aid" have only been reduced to the delivery of hygiene supplies to Colombian migrants returned from Venezuela.
There are no records that the delivery of “humanitarian aid” to the 36,000 Venezuelan migrants, which is why it obtained the FSB grant, is being carried out.
Photo: Facebook / FUPAD
FOOD FOR THE POOR INC. It is one of the largest humanitarian organizations in the United States and has a strong Christian profile. The “humanitarian support” to Venezuela has been mostly declarative and its press records do not highlight a systematic activity, which raises broad doubts about the underlying reasons for receiving the FSB grant.
The organization acknowledges that it has worked for years with the United States Southern Command in the deployment of its "humanitarian" operations. Specifically, during the month of October 2018, it collaborated with supplies and personnel in the deployment of the USNS Comfort in Latin America in the context of the pre-war pressure against Venezuela.
On the other hand, the FSB has also announced the selection of 15 projects with a humanitarian profile that will receive a total of 475 thousand 343 dollars in donations. Let's review some of them:
The organization Engagement Foundation Group declares to receive donations and financing from individuals interested in providing supplies, food and medical supplies in Venezuela. Although she claims to have 500 volunteers with whom she has deployed "humanitarian aid" to migrants and refugees from various countries, including Venezuela. However, its activity log is rather small. The organization's management is in the hands of Valeria Viera (executive director), Constanza Viera (assistant executive) and Marta Viera-Blanco, relatives of the illegally appointed ambassador to Canada, Orlando Viera-Blanco.
Also featured is the NGO Chamos , founded in 2007 in the United Kingdom and dedicated to raising "funds to support and improve local programs dedicated to improving the lives of vulnerable children in Venezuela." The president of the organization is the Venezuelan Mariana Siblesz-Álvarez, who in July of this year participated in the seminar "Social development of Venezuela: beyond its borders", sponsored by the British Venezuelan Society and Chamber of Commerce.
Lala Lovera, executive director of "Share for a Life" (Colombia); Roberto Patiño, director of “Alimenta La Solidaridad”, and Felipe Muñoz, advisor to the Presidency of the Republic of Colombia. It was moderated by Peter West, president of the society.
In April 2019, Mariana Siblesz-Álvarez participated in an All Party Parliamentary Group (APPG) event from the United Kingdom on Venezuela, where she shared with Guaidó's fake ambassador , Vanessa Neumann.
In a Facebook post from Chamos, he recorded the moment: “We are delighted to accompany Dr. Vanessa Neumann, Official Representative of President Juan Guaidó in the United Kingdom. We also want to express our gratitude to the Department for International Development of Great Britain for sharing their contributions to help the humanitarian crisis in Venezuela. "
Mariana Siblesz-Alvarez with Vanessa Neumann. Photo: Facebook / NGO Chamos
The NGO Convite , for its part, is dedicated to the care of the elderly and carries out a set of training programs aimed at the development of public policies. The NGO is Venezuelan and was founded in 2006. Its director is Luis Francisco Cabezas, who in 2008 took a right to speak before the Inter-American Court of Human Rights, in order to question the policy of care for adults seniors of the Venezuelan state. For Francisco Cabezas, Convite focuses its activities on "making visible the tragedy of the humanitarian crisis" in Venezuela.
The NGO Friends of the Children of Venezuela is a non-profit organization oriented to the delivery of medicines and hospital supplies in Venezuela. The NGO is directed by Andrés Caldera Radonski, who, due to the similarity in the surnames, could be connected with the opposition politician Henrique Capriles Radonski. In February of last year, Andrés Caldera Radonski on his Twitter account published a photo of Henrique Capriles with Juan Guaidó, showing his support for the ongoing coup agenda.
Some conclusions
Since the illegal takeover of the company, Guaidó's board of directors has oriented the company's profits not only towards obtaining new debt (“refinancing”), but also towards the delivery of “dividends” and pharaonic “humanitarian aid programs. ”In the form of grants and donations, while playing at the worsening of the gasoline shortage and preventing Venezuela from using Citgo resources to face the pandemic.
The delivery of subsidies and donations by the FSB is part of a discretionary and partial use of the money of the Venezuelan company, where most of the benefited NGOs and foundations have a direct or indirect relationship with the family network of political figures Venezuelan women (Diego Arria, Orlando Viera-Blanco, Henrique Capriles Radonski, Vanessa Neumann, etc.) who have bet on the regime change campaign against the Venezuelan government.
Is it a way to silence the criticism of a Diego Arria or to keep a Henrique Capriles in line?
The premise of partisan use of Citgo money takes on greater force given that most of the NGOs and foundations that benefit from FSB donations do not have a systematic activity of delivery of humanitarian goods in Venezuelan territory that justifies their selection to receive grants. Its base of operations, managers and volunteers are outside the national territory.
Precisely most of these foundations are based in the United States and Colombia, and are especially linked to institutions that support the coup against Venezuela such as the OAS and the United States Southern Command.
In this sense, the subsidies do not end in effectively helping Venezuelans in difficult situations, but rather end up liquefying in countries clearly aligned with the confrontational agenda against Venezuela.
This shift towards the politicization of subsidies has fractured the efficient program of expensive medical treatments that had been in place, and benefiting hundreds of Venezuelans, before the illegal takeover of Guaidó.
Most of the selected organizations do not solely carry out humanitarian activities. Even those that stand out the most are those dedicated to “making the crisis visible”, collecting donations and raising information about the “humanitarian crisis”. In short, these are organizations dedicated to politics.
The current Citgo administration reveals a “friend capitalism” scheme , where family and personal connections represent an effective vehicle to achieve a privileged position in the face of obtaining resources and business facilities.
Under these endogamous and influence peddling parameters, the Venezuelan bourgeoisie was born in the shadow of oil revenues in the first part of the 20th century. And with the takeover of Citgo he has returned to his comfort zone as the country struggles daily to stay on its feet.
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