Bogota, September 6, 2017 (venezuelanalysis.com) - Nine high ranking officials at Venezuelan state oil company PDVSA were arrested by military intelligence services Monday on multimillion dollar corruption charges.

Executive Director Gustavo Malavé, and colleagues Juan Carrillo, Juan Barreto, Héctor Roque, Cesar Valera, Juan Romero, Adolfo Torres, José Marín, and Henry Sánchez, all worked in PDVSA’s regional sub-division in the west of Venezuela. They stand accused of illegally granting state contracts without following due bidding processes, diverting crude oil exports, and sabotage of the Russian bank Gazprombank, which holds a 40% stake in the joint Venezuela-Russia oil company PetroZamora.

The racketeering ring came to light after a top Gazprombank representative made an official complaint last Friday citing a series of irregularities in the purchase of chemicals for processing crude oil at PetroZamora in Zulia.

According to official investigation documents cited by Venezuelan news site Aporrea, the officials granted contracts to local chemical company, Tratamientos Químicos, C. A, with whom they had direct links. In addition to lacking the capacity to produce the chemicals necessary to refine crude oil, the contracts were also paid at mark-up prices of up to 150%. The actions severely reduced the quality of crude oil produced at the company and unofficial reports estimate that hundreds of millions of dollars were lost between 2010 and 2017.

Up to USD$200 million worth of goods belonging to two of the PDVSA directors was also confiscated by state security forces during raids in relation to the case, reports Venezuelan press.

The nine men will now face trial, while the country's Public Prosecution has designated two of its expert anti-corruption district attorneys to carry out further probes, including the possible investigation of the officials’ family members.

Corruption in the country's state oil sector has been a major news topic since the end of August, when recently appointed Attorney General Tarek William Saab confirmed that the Public Prosecution had opened up an investigation into the embezzlement of hundreds of millions of PDVSA dollars between 2010 and 2016.

The state oil company was effectively renationalised by leftist president Hugo Chavez shortly after coming to office in 1999. Although oil rents were used to fund the government’s flagship social programs for the poor, reports of corruption have continuously dogged the state firm.

According to Saab, prosecutors recently uncovered serious irregularities in the contracting of services across PDVSA’s Orinoco Oil Belt projects, where several contracts had allegedly been paid at more than 230% their worth. The company is estimated to have suffered losses of at least USD$200 million as a result, though Saab said the figure could rise as investigations continue.

In comments to press, the attorney general also accused his predecessor, Luisa Ortega Diaz, of using her position to cover up the multi-million dollar embezzlement scam despite having been asked to carry out an investigation by President Nicolas Maduro.

Ortega fled to Colombia last month after publicly breaking with the administration of Nicolas Maduro earlier in March. She accuses the national government of authoritarianism, corruption, and carrying out political persecution against her.

The Venezuelan government likewise accuses Ortega of grave misconduct during her decade-long stint as top prosecutor. Officials allege she buried corruption cases during her tenure and allowed her husband to run an extortion ring from her office.