US Expands Probe of Venezuela PdVSA to Money Laundering

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Authorities in the US have launched investigations into Venezuela’s state-owned oil company on corruption allegations, including possible involvement in the black market currency exchange and money laundering.

Earlier this month, US prosecutors and federal agents met to coordinate actions on multiple probes into Venezuela’s state-owned oil giant, Petroleos de Venezuela (PdVSA), according to the Wall Street Journal

US authorities are investigating whether PdVSA provided billions of dollars in kickbacks for Venezuelan leaders, and if it was involved in the black market exchange and money laundering schemes, the Journal said.

In March 2015, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a statement saying that more than $4 billion in Venezuelan money was laundered through the Andorran bank Banca Privada d’Andorra, half of which had been “siphoned” from PdVSA.

The allegations came as part of a wider FinCEN investigation into the bank, which was also accused of laundering money for Russian and Chinese criminal organizations.

Since the initial accusations, the US and Spain have investigated the financial dealings of top PdVSA executives, including Diego Salazar and Rafael Ramirez, who is now Venezuela’s ambassador to the United Nations.

Documents from these investigations highlight the use of shell companies and kickbacks by Salazar and others to move millions of dollars and turn high personal profits, the Journal reported.

InSight Crime Analysis

The corruption investigations further mar the already poor reputation of PdVSA, and highlight the deep-seated involvement of Venezuela’s high-level officials in criminal activities.

The Council on Foreign Relations says that PdVSA accounts for 25 percent of Venezuela’s Gross Domestic Product and 50 percent of government revenue, and the country depends heavily on such funds to support social services. Yet the company has been plagued by widespread corruption and financial malfeasance, weakening profits and hampering services. 

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The current investigation is reflective of rampant issues in the state-owned oil company. In January 2015, a former Venezuelan security chief made allegations that PdVSA airplanes were used to transport illegal drugs. And in February, authorities arrested PdVSA’s production boss and an oil ministry employee on corruption charges.

Such criminal activities seem to pervade many of Venezuela’s institutions at the highest levels. The country’s major drug trafficking organization, the Cartel los Soles, is made up of corrupt officials throughout the military. And multiple high-level arrests have demonstrated that strong ties between government officials and criminal organizations are the norm.   

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