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Harry Cassin
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Does FCPA guilty plea signal new trouble for Citgo?

Last week Dick Cassin reported on the FCPA Blog yet another guilty plea in the ever ongoing PDVSA corruption scandal. As Cassin noted, “Jose Manuel Gonzalez Testino (Gonzalez), 49, of Miami, Florida, pleaded guilty in federal court in Houston to one count of conspiracy to violate the Foreign Corrupt Practices Act, one count of violating the FCPA, and one count of failing to report foreign bank accounts.”

This makes 16 guilty pleas with five individuals who have been indicted and are awaiting trial related to corruption at the Venezuelan national energy concern.  

Yet one of the most interesting items in Cassin’s post was the reference to the U.S. company Citgo Petroleum Corporation and its involvement in the bribery scheme. As noted in the Justice Department press release announcing the guilty plea, “Gonzalez also admitted to making bribe payments to several PDVSA officials who were based in Houston and employed by Citgo.”   

Citgo procured goods and services on behalf of PDVSA and “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 for these bribes, “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.”

The reference in this FCPA enforcement action opens up an entirely new and very troubling issue for Citgo. To date, Citgo has managed to avoid the draconian sanctions levied on its 100 percent shareholder PDVSA. However, it now appears Citgo may have been a part of PDVSA ongoing and pervasive corruption.

Citgo has claimed that it is independent from its corporate parent but this case appears to indicate there at least were many more close connections. I am sure the Justice Department will be looking very closely at Citgo to see if those connections still exist, now from the FCPA perspective.


Tom Fox, the Compliance Evangelist, is a contributing editor of the FCPA Blog. He’s the author of The Compliance Handbook. He can be contacted at 832-744-0264

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