Thursday, April 21, 2005

Citgoing, Going, Gone: More Venezuelan Cronyism

I keep picking on Venezuela, but mainly because articles like this one in the International Herald Tribune keep popping up. Petróleos de Venezuela, the state-owned owner of US Citgo, is shaking up that operation from top to bottom. "Almost every high-ranking executive has resigned over the past two years, including the refining chief, the chief financial officer, the head auditor and the marketing director." Transparency is a problem, it seems:
Geoff Reid, a former assistant treasurer, said in an interview that he had left in part because it had become hard to track the company's cash flow and he had become concerned about his "personal liability" in approving Citgo's financial statements.
Worse, it appears that crony capitalism is moving in as part of the deal:
Of the recent moves, perhaps the most debilitating have been Chávez's efforts to put his loyalists, including some former military colleagues, in charge of the company. In doing so, he has reversed a tradition, in place since Petróleos de Venezuela took control in 1990, of letting American executives run Citgo.

In interviews, more than a dozen former Citgo managers said a marked shift in Citgo's culture had followed the arrival of the Venezuelan expatriates. In moving the company from Tulsa, Oklahoma, to Houston last year, for example, they spent lavishly on a bulletproof enclave at the new head office. A company plane took a top Citgo executive and his family on trips to Europe. And a large donation came from a related company bank account to one of Houston's most exclusive private schools, attended by the son of Antonio Rivero, a Citgo executive who participated in a failed coup attempt with Chávez in 1992.

Much of the intrigue is linked to Rivero, who was named Citgo's No. 2 executive in 2003 as part of an effort to make Citgo more accountable to Caracas. Rivero, together with Luis Marín, Citgo's former chief executive, were placed on leave from Citgo in recent weeks after an investigation into corruption accusations against them gained momentum in the Venezuelan Congress. In its most recent filing with the U.S. Securities and Exchange Commission, Citgo revealed that it had engaged a team of outside lawyers to investigate corruption accusations related in part to the move. Citgo said it expected to incur total costs of $69 million for the move, of which $37 million went to refurbish its new offices.

Rivera had no prior experience in the oil business, naturally enough. These were the sorts of shenanigans that went on at Gulf Oil prior to T. Boone Pickens shaking that kind of extravagance out of them. That Americans (not to mention the world) relies on suchlike for their energy future is appalling.