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Citgo Employees As Foreign Officials

Citgo3

In this 2009 post, the issue was raised whether the DOJ’s “foreign official” interpretation would become so broad that employees of Citgo Petroleum (a Delaware corporation with headquarters in Houston) would be considered “foreign officials” under the Foreign Corrupt Practices Act because Citgo is a subsidiary of Petroleos de Venezuela S.A. (PDVSA).

In this little noticed FCPA enforcement from February 2020 against Tulio Anibal Farias-Perez in the sprawling PDVSA related actions, the DOJ did allege this theory of prosecution.

According to the criminal information, Farias is a Venezuelan citizen (and since 2014 a resident of Texas) who was a partner with a 50% ownership stake in several closely held companies, including U.S. companies, that he controlled together with Jose Manuel Gonzalez Testino that were used to secure contracts with PDVSA. (As highlighted in this prior post, Gonzalez was charged in August 2018).

According to the information, Farias, Gonzalez, and their co-conspirators discussed in person, over e-mail, and through encrypted messaging services how they would obtain and retain contracts and other business advantages with PDVSA by providing things of value to PDVSA officials including Official B who is described as a Citgo employee between 2010 and 2018.

As stated in the information:

“Farias, Gonzalez, and their co-conspirators paid bribes by giving PDVSA officials cash at in-person meetings; sending wire transfers to bank accounts controlled by PDVSA officials or their relatives and associates; and providing other things of value, including recreational travel such as plane tickets and hotel accomodations, Super Bowl and other sports tickets, meals including ‘team dinners’ for members of Farias and Gonzalez’s ‘team’ of PDVSA officials in Houston, entertainment, original artwork, and luxury consumer goods including jewelry and watches.”

The information specifically mentions that in October 2014 “Farias took Official B to a World Series game in San Francisco, California between the Kansas City Royals and San Francisco Giants” and that in February 2015 “Farias and another co-conspirator took Official B to Super Bowl XLIX in Glendale, Arizona.”

As highlighted in this 2019 post, Citgo itself is under FCPA scrutiny regarding its business in Venezuela resulting in the odd dynamic of Citgo being both subject to the FCPA and all of its employees (under the government’s interpretation) being “foreign officials” under the FCPA.

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