The Petroleos de Venezuela (PDVSA), or Petroleum of Venezuela, is reportedly making moves to replace two of its Directors from its United States Subsidiary Citgo. The State-owned company has made plans to remove Citgo’s Vice President of Refining, Art Klein, along with Vice President of Compliance and Chief Strategy Officer, Rick Esser, from the board of directors. The move comes following the recent sanctions that were placed on the Company by the United States government due to the company’s close ties to the Maduro regime. These maneuvers have now placed the company in further crisis as its stocks have plummeted by 40% considering its oil transports are stranded and United States assets are frozen.
Secretary of the Treasury, Steve Mnuchin, told reporters during a White House Press statement that “The United States is holding accountable those responsible for Venezuela’s tragic decline, and will continue to use the full suite of its diplomatic and economic tools to support interim president Juan Guaido.” This statement supports the United States Treasury’s earlier comments about Citgo and its parent company, as Mnuchin claimed it “has long been a vehicle for corruption.” Conversely Reinaldo Quintero, head of the Venezuelan oil chamber, recently explained the severity of the impact of the Sanctions by stating “We can’t charge, we can’t receive money. Our finances are paralyzed.”
Given the reports of corruption and poverty in Venezuela, which have worsened since Nicolas Maduro’s Presidency, the United States’ most recent sanctions are a response to these ongoing crises throughout the country. The PDVSA has been at the heart of a number of scandals over the past twelve months, with one of the most recent cases being the discovery of $1.2 Billion laundered by a group of Venezuelan elites and other international actors last year. Given how far-reaching these actions have been, and how involved the PDVSA is with Venezuela’s government, it stands to reason that the United States would implement stronger sanctions that stop the company giving money to President Maduro.
The PDVSA has been Venezuela’s primary source of Revenue but this has steadily been declining. The dangerous conditions that the workers have been forced into has led to on-site walk-offs, which combined with inflation and obstacles exporting oil has made the state-owned business difficult to upkeep. However, much of the present woes with the company can be traced back to 2017 when the former head of the company was fired by Maduro and replaced with Major General Manuel Quevedo, in order for to placate the military.
The current woes that are facing PDVSA and its subsidiary Citgo can be traced back to a steadily building crisis. With poor leadership which has worsened an already troubled company and money-laundering scandals that have reached out into the United States itself, it is little wonder that PDVSA and Citgo have been targeted by the United States with stronger sanctions. While the potential removal of two of Citgo’s directors is a response to the United States’ sanctions placed on Venezuela, it is unlikely to solve the ongoing struggles that are facing not only Venezuela but also the PDVSA and its United States Subsidiary.
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