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Venezuela’s CITGO under Investigation by the U.S. SEC

By Marianna Párraga | El Universal

Caracas, 15 June 2005 | CITGO’s auditor general, Vladimir Noriega, confirmed that there is an investigation underway by the United States Securities and Exchange Commission (SEC), following a series of denouncements formulated by one of the employees in the PDVSA subsidiary company’s auditing office, in connection with the visit carried out a few months ago by the parliamentarians who make up the Venezuelan National Assembly’s Subcommittee for the Office of the Comptroller, which is handling this case.

Even though the denouncements made by the employee are not directly related to any of the cases being investigated by the National Assembly, sometime during the last few weeks the SEC requested from CITGO information related to refinancing operations carried out last year, the moving of the company’s central offices from Tulsa, Oklahoma to Houston, Texas, and certain presumably untoward payments.

Nevertheless, Noriega assured that up until now none of the matters being investigated by the SEC has entailed specific accusations and attributed the letter drawn up by the employee and sent not only to the SEC but also to CITGO’s independent auditor KPMG to the "Venezuelanizaton” of PDVSA's subsidiary —specifically of the Auditor’s Office—, which had been causing resentment among some employees.

Noriega added that this situation has caused internal clashes during the days approaching the deadline set by the SEC for providing the subsidiary's quarterly financial reports. “We considered this to be sabotage and therefore opened an investigation concerning the denouncements made by this employee, whose results were also sent to the SEC.”

Even though CITGO has rigorously met its deadlines in submitting its financial balances to the SEC, PDVSA has not submitted the corresponding reports pertaining to 2003 and 2004 or those relating to the first quarter of 2005. Repeatedly, PDVSA directors have announced dates for the final submission of these documents, which were to have the endorsement of KPMG, but that has not materialized.

Translation by W.K.

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