Caracas, November 22, 2017 ( venezuelanalysis.com ) – The president of US-based Venezuelan state oil subsidiary Citgo and five other top executives were arrested Tuesday over alleged misdealing in a multi-billion dollar refinancing deal.

According to Attorney General Tarek William Saab, the executives signed an agreement with two private equity funds for a US$4 billion loan on July 15, offering the state firm as collateral.

He said the deal was signed without the authorization of Venezuelan President Nicolas Maduro and contained provisions that were “unconscionable and unfavorable” for state oil company PDVSA.

“[The] contracts that the board of directors signed put in jeopardy not only the future of our subsidiary but the patrimony of the republic,” the top prosecutor said in a press conference Tuesday morning.

Among the Citgo officials detained in Caracas are President Jose Angel Pereira, Vice President of Refining Operations Tomeu Vadell Recalde, Corpus Christi Refinery General Manager Alirio Zambrano, Vice President for Supply and Commercialization Jorge Toledo, Vice President for Shareholder Relations Gustavo Cardenas, and Vice President for Shared Services Jose Luis Zambrano.

The six men were charged with willful embezzlement, association with contractors, money laundering, and criminal association during a hearing before the 30th Caracas Metropolitan Court Thursday. No further details were given in relation to the other charges against them.

Saab also revealed that the contracts were signed with Dubai-based Frontier Management Group Ltd. and US equity fund Apollo Global Management LLC, firms that are widely considered “vulture funds” for their practice of buying up distressed companies in order to take over their assets.

He added that the negotiations were carried out with the help of a Swiss intermediary firm known of Mangore Sarl, one of whose directors, Juan Zavalia Paunero, is mentioned in the Panama Papers. Saab alleged that the Citgo executives and the intermediary shared a “presumed link” with the aim of further embezzling state funds, though he did not offer details.

In addition to corruption, Saab accused the executives of acting “in the service of a foreign power against the country,” suggesting that the US government may have influenced the subsidiary's representatives.

Citgo Ex-President Pereira is cited as an informant in a leaked 2009 US State Department cable, in which he reportedly provided details regarding PDVSA’s negotiation strategy with US oil companies. The cable was published by Wikileaks in 2014 and it remains unclear why no prior legal action had been taken against Pereira.

Speaking on Tuesday afternoon, President Maduro gave his backing to Saab and vowed to deepen anti-corruption efforts.

“I ask for the support of the people and the working class in this huge battle… against corruption, against treason,” he declared.

On Wednesday, the head of state named former Oil and Mining Minister Asdrubal Chavez to the post of Citgo president.

Maduro also confirmed that the executives will go to trial despite reported calls from Washington for them to be freed on the grounds that five of the men are allegedly US-Venezuelan dual citizens.

“Now the US Embassy said today that five of the six arrested are US citizens and as citizens they demand they be freed,” he said.

“I spoke with the attorney general and these people are born in Venezuela and they are going to be judged for corruption and treason,” the president concluded.

The US State Department has yet to issue an official statement on the matter.

Valued at over US$10 billion, Houston-based Citgo Petroleum Corporation is PDVSA’s largest subsidiary, with three active refineries in Illinois, Texas, and Louisiana.

The arrests at the firm are the latest in a crackdown in corruption in Venezuela’s state oil sector, which has seen over 50 officials detained so far, including senior-level executives and managers.

In late October, authorities arrested 11 people at the mixed firms PetroPiar and PetroZamora on charges of embezzlement and sabotage, respectively.