Swiss Watchdog Probes Banks In PDVSA Graft Case

Switzerland’s financial markets authority FINMA is probing several local banks as part of a widening net seeking to catch participants in a graft scheme involving Venezuela’s state oil company PDVSA and Venezuelan government officials. The names of the banks involved in the probe were not revealed, but the bribes are estimated at around US$1 billion.

FINMA’s probe is part of a wider crackdown on local banks with dealings in South America, and the regulator told Reuters it is “also clarifying behavior in connection with PDVSA.”

More than a dozen Swiss lenders are the object of FINMA’s attention in the South American investigation, and earlier this month the watchdog made a private bank, PKB, turn over almost US$1.4 billion in illegal profits from companies linked to Petrobras and Odebrecht – the two largest Brazilian companies involved in operation Carwash.

Meanwhile, U.S. prosecutors this month issued a federal indictment against five former Venezuelan government officials as part of the US$1-billion graft probe. According to the indictment, the officials solicited illegal payments from oil industry service vendors to help them win favorable treatment from PDVSA.

One such vendor, Texas-based Harvest Natural Resources, this month filed a suit in a federal court against PDVSA and government officials in Venezuela, alleging it was forced out of business for refusing to pay a bribe of US$40 million. The case didn’t even involve services performed: Harvest says it was asked to pay “a bonus” to the PDVSA officials to be able to sell its Venezuelan assets.

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After it refused to do so, Caracas blocked the sale. The U.S. company was eventually able to sell the assets at much below their fair value, it said, losing US$470 million in the end. Harvest closed shop last year.

To make matters more interesting, Venezuela has called on Interpol to issue a red alert on a former PDVSA president, Rafael Ramirez, as part of its own crackdown on corruption. Caracas has charged Ramirez with intentional embezzlement, money laundering, and association.

By Irina Slav for Oilprice.com

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