October 26, 2017 / 2:38 PM / 2 years ago

Venezuela graft probe claims another top executive at oil firm PDVSA

CARACAS (Reuters) - A top executive at Venezuela’s PDVSA [PDVSA.UL] and 10 other oil executives were arrested as part of growing graft investigations that are ridding the state energy company of much of its top brass, the OPEC member’s state prosecutor said on Thursday.

Orlando Chacin, who led the subsidiary for joint ventures with foreign partners, was arrested at PDVSA’s Caracas headquarters on Tuesday, sources told Reuters on Thursday. He was the right-hand man of the company’s former president, Eulogio Del Pino, who is now the nation’s oil minister.

Ten other executives were arrested, including at the Petropiar and Petrozamora joint ventures with U.S. major Chevron Corp and Russia’s Gazprombank, respectively, for alleged wrongdoing including overpricing and non-execution of planned projects, prosecutor Tarek Saab said in a press conference.

PDVSA did not immediately respond to a request for comment.

President Nicolas Maduro’s socialist government and PDVSA, which is formally known as Petroleos de Venezuela SA, have repeatedly vowed to take steps to combat corruption, which has affected the nation and its oil industry for decades.

Opposition leaders say PDVSA has been crippled by malfeasance under 18 years of socialist rule. They say sporadic arrests are the result of infighting among rival government factions.

Sources close to PDVSA say the arrests owe more to turf wars for control of the company, which is the financial motor of Venezuela’s ailing economy, than a wholesale effort to clean up graft.

The cash-strapped company, whose oil production has tumbled close to three-decade lows, has recently undergone a leadership change, with veteran oil executive Nelson Martinez replacing Del Pino in August.

Other once-prominent PDVSA executives under Del Pino have since been detained, including Pedro Leon, a powerful executive who led the company’s Orinoco Belt development, and Gustavo Malave, the company’s boss for the western region.

Saab, who in August replaced a dissident prosecutor who had split with Maduro, told Reuters last month he expected further arrests in widening oil-sector bribery scandals. The opposition dismisses Saab as a stooge, alleging he illegally replaced former prosecutor Luisa Ortega, who was removed after she broke with Maduro over human rights and has since fled the country.

A former Socialist Party governor in oil-rich Anzoategui, Saab says he has done more in a few months than Ortega did in years and has vowed not to back down.

“We still think there’s a long road to go,” Saab said in the press conference announcing the arrests.

Reporting by Alexandra Ulmer; Editing by Lisa Von Ahn and Susan Thomas

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