This 2009 post highlighted, in connection with a Foreign Corrupt Practices Act enforcement action concerning conduct involving Petroleos de Venezuela S.A. (PDVSA) (the Venezuelan state-owned oil company) that one of PDVSA’s wholly-owned subsidiaries is Citgo Petroleum Corp.
It was noted that, under the DOJ/SEC’s interpretation, all CITGO employees are thus “foreign officials” under the FCPA despite the fact that CITGO is a Delaware corporation based in Houston. It was further noted that Citgo is both subject to the FCPA and all of its employees (under the DOJ/SEC interpretation) are “foreign officials” under the FCPA.
Since the post, there have been numerous FCPA enforcement actions involving PDVSA including this enforcement action announced in August 2018 against Jose Manuel Gonzalez Testino. The DOJ recently announced that Gonzalez pleaded guilty to one count of conspiracy to violate the FCPA, one count of violating the FCPA and one count of failing to report foreign bank accounts. As stated in the DOJs’ release:
“Gonzalez also admitted to making bribe payments to several PDVSA officials who were based in Houston and employed by Citgo. Though Citgo acted primarily as a refiner, transporter and marketer of petroleum-based products, it also procured goods and services on behalf of PDVSA through its Special Projects group. Gonzalez admitted he and his co-conspirators paid at least four Citgo officials in the Special Projects group and provided gifts and other things of value to a senior Citgo executive. In exchange, Gonzalez admitted the Citgo officials assisted his companies in obtaining contracts for new business, provided inside information concerning the PDVSA bidding process, helped conceal the fact that Gonzalez controlled multiple companies on certain bidding panels for PDVSA projects and assisted Gonzalez in receiving payment priority for outstanding PDVSA invoices.”
“Citgo Petroleum Corp. received a subpoena from the Department of Justice stemming from an investigation into bribery in Venezuela, indicating that the U.S. government is finally turning its attention to the company after years of prosecuting individuals.
The Venezuelan-owned U.S. refiner has pledged full cooperation with the probe, without identifying the reason for the subpoena, it said Monday in an emailed statement. “Earlier this year, under the direction of its newly appointed Board, Citgo engaged outside counsel to conduct an independent investigation, and is committed to taking all appropriate remedial actions in response to the findings,” the Houston-based company said.
The subpoena was handed down on May 14, two weeks before Jose Manuel Gonzalez Testino pleaded guilty to paying bribes to win business from Venezuela’s state-owned oil company, according to people familiar with the situation, who asked not to be identified because the matter hasn’t been made public.
Citgo is conducting roughly 20 internal investigations, some overlapping, into various FCPA-related matters, and the board of directors has hired lawyers for its own inquiry, one of the people said. As recently as last week, external lawyers were seen on the fifth floor of the company’s headquarters in west Houston interviewing Citgo workers deemed as potential witnesses for various investigations, the people said.”
FCPA Institute - Denver (May 4-5)
A unique two-day learning experience ideal for a diverse group of professionals seeking to elevate their FCPA knowledge and practical skills through active learning. Learn more, spend less. CLE credit is available.