By Steve Holland and Alexandra Ulmer
WASHINGTON/CARACAS (Reuters) - Venezuelan President Nicolas Maduro said on Wednesday that Venezuelan-American executives at refiner Citgo who were arrested in a corruption sweep this week would be tried as “corrupt, thieving traitors” despite a request by the United States to free them.
Five of six executives of U.S.-based refiner Citgo [PDVSAC.UL] who were arrested in Caracas this week are U.S. citizens, according to a source familiar with the matter, possibly complicating Venezuela’s corruption sweep of the oil industry.
The six executives included acting Citgo President Jose Pereira, who has Venezuelan citizenship and U.S. permanent residency, the source said. Citgo did not respond to requests for comment.
Late on Wednesday, Maduro tapped Asdrubal Chavez, a former oil minister and cousin of the late president Hugo Chavez, to replace Pereira.
Military intelligence agents detained the Texas-based executives during an event at state oil company PDVSA’s headquarters in Caracas on Tuesday, two sources told Reuters. U.S.-based Citgo Petroleum Corp (Citgo) is a Venezuelan-owned refiner and marketer of oil and petrochemical products.
Maduro said the U.S. embassy had requested that its nationals be freed. He mocked the demand and vowed that the men, who are also Venezuelan, would pay for alleged wrongdoing in a financial deal.
“These are people born in Venezuela, they’re Venezuelan and they’re going to be judged for being corrupt, thieving traitors,” Maduro said in a televised broadcast during which he also sang and danced salsa.
“They’re properly behind bars, and they should go to the worst prison in Venezuela.”
Relations between Caracas and Washington have long been tense. They have further soured under President Donald Trump since his administration imposed sanctions on Venezuelan officials including Maduro, and economic sanctions that have impeded the OPEC nation’s access to international banks.
Venezuela has defaulted on sovereign debt and bonds issued by PDVSA after failing to make timely payments, a New York-based derivatives group ruled on Thursday.
Late on Wednesday, a U.S. State Department official said, “We have seen media reports of the arrest of U.S. citizens in Venezuela. Venezuela is required under the Vienna Convention on Consular Relations to provide consular notification to the U.S. upon request of a detained U.S. citizen, and to provide consular access.
“When a U.S. citizen is arrested overseas, we immediately request permission to visit him or her. We have no additional information to offer at this time.”
Venezuelan state Prosecutor Tarek Saab has declared a “crusade” against “organized crime” in Venezuela’s oil industry. Saab told a news conference on Tuesday that his office had uncovered a roughly $4 billion planned deal with foreign companies, offering the refiner as guarantee in a detrimental deal for Venezuela.
According to Saab, the deal was with U.S. investment fund Apollo Global Management LLC and Dubai-based Frontier Management Group LTD, and also included a Swiss-based intermediary, Mangore Sarl. He added there was a “presumed” link between Mangore Sarl and the Citgo executives.
Opposition leaders have attributed the arrests to in-fighting among government factions and the cash-strapped government’s desire to gain control of money-making companies rather than a genuine desire to root out corruption.
Venezuela has whipped out much of Citgo’s top brass at a delicate time for the OPEC nation, which has been declared in selective default after some late payments. But as Venezuela is making efforts to pay, bondholders of some of the world’s highest yielding debt have so far been tolerant of the delays.
The five other arrested executives are: Tomeu Vadell, vice president of refining operations; Alirio Zambrano, vice president and general manager of Corpus Christi refinery; Jose Luis Zambrano, vice president of shared services; Gustavo Cardenas, vice president of strategic shareholder relations, government and public affairs; Jorge Toledo, vice president of supply and marketing.
Additional reporting by Matt Spetalnick in Washington and Diego Ore in Caracas; Editing by Toni Reinhold and Diane Craft