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OFAC issues amended Venezuela-related GL and FAQ
On January 17, the U.S. Treasury Department’s Office of Foreign Assets Control issued Venezuela-related General License (GL) 5J, which supersedes GL 5I and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after April 20, 2023. GL 5J does not authorize any transactions or activities otherwise prohibited by the Venezuela Sanctions Regulations. Concurrently, OFAC updated Venezuela-related FAQ 595 to provide clarification on authorized transactions as well as licensing requirements.
OFAC issues Venezuela-related general licenses
On November 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 41 following the resumption of talks in Mexico City to alleviate the suffering of Venezuelan people and restore democracy. GL 41 authorizes certain transactions related to the identified corporation and its subsidiaries’ joint ventures in Venezuela involving Petróleos de Venezuela, S.A (PdVSA) or any entity owned directly or indirectly, 50 percent or more, that would otherwise be prohibited by Executive Order (E.O.) 13850, as amended by E.O.s 13857 or 13884. OFAC noted that GL 41 prevents PdVSA from receiving profits from the oil sales by the identified corporation, and only authorizes certain specific activities. Other Venezuela-related sanctions and restrictions imposed by the U.S. remain in place. Concurrent with the issuance of GL 41, OFAC issued GL 8K, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities,” as well as two new related FAQs. According to the announcement, “U.S. persons are authorized to provide goods and services for certain activities as specified in GL 41,” and “non-U.S. persons generally do not risk U.S. sanctions exposure for facilitating transactions that are authorized by GL 41.”
OFAC issues amended Venezuela-related general license and FAQ and other notices
On January 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 5I, which supersedes GL 5H and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after January 20, 2023. Concurrently, OFAC updated a Venezuela-related frequently asked question regarding GL 5I. Additionally, OFAC amended the definition of “applicable schedule amount” contained in appendix A to 31 CFR part 501. The amendment became effective January 21.
Asphalt company agrees to pay over $16 million to settle FCPA charges
On September 22, the DOJ announced that a Florida-based asphalt company pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA, agreeing to pay a $16.6 million criminal fine to resolve the charges. According to the information filed in the U.S. District Court for the Eastern District of New York, the company and its affiliates bribed foreign officials in Brazil, Venezuela, and Ecuador with millions of dollars in order to “obtain contracts to purchase or sell asphalt to the countries’ state-owned and state-controlled oil companies, in violation of the FCPA.” Between 2010 and 2015, to execute the bribery scheme in Brazil, the company entered into fake consulting agreements with intermediaries and sent international wires from company bank accounts to offshore bank accounts controlled by the bribe intermediaries. The intermediaries would then pay bribes to Brazilian government officials on the company’s behalf. In Venezuela, between 2012 and 2018, the company used similar fake consulting agreements to bribe Petróleos de Venezuela, S.A. (PDVSA) officials and used code names to hide the names of PDVSA officials in emails and texts. Lastly, in 2014, the company again used similar sham consulting arrangements to bribe Ecuador’s state-owned oil company to secure a contract to supply asphalt.
The announcement notes that the DOJ recently unsealed charges and guilty pleas of five individuals involved in the bribery scheme, including a company senior executive, a company trader, two bribe intermediaries, and a former PDVSA official. Additionally, the announcement states that a different company trader pleaded guilty in 2017 for his role in the scheme and a pending criminal complaint against a former PDVSA official was also recently unsealed in federal court.
OFAC issues amended Venezuela-related general license
On April 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued amended Venezuela General License (GL) 8F, titled “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities.” GL 8F supersedes GL 8E and extends the expiration date for certain authorizations through December 1 that would otherwise be prohibited under Executive Orders 13850, 13857, or 13884.
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DOJ unveils charges against Maduro, Venezuelan government officials
On March 26, the DOJ announced criminal charges against numerous current and former Venezuelan government officials, including “Former President” Nicolás Maduro Moros and two Fuerzas Armadas Revolucionarias de Colombia (FARC) leaders. The charges include allegedly engaging in drug trafficking, laundering drug proceeds using Florida real estate and luxury goods, corruption, and bribery. According to an unsealed four-count superseding indictment filed in the Southern District of New York, Maduro, along with five other high-ranking officials, participated in a “narco-terrorism conspiracy,” conspired to import large-scale cocaine shipments into the U.S., and used—or conspired to use—“machine guns and destructive devices” to further the narco-terrorism conspiracies. The charges also allege that Maduro and the officials negotiated and facilitated FARC-produced cocaine shipments, coordinated “foreign affairs with Honduras and other countries to facilitate large-scale drug trafficking,” and solicited assistance from FARC leadership with respect to militia training.
A separate indictment unsealed in the District of Columbia charges the current Venezuelan Minister of Defense with conspiracy to distribute cocaine on a U.S.-registered aircraft. That individual was previously sanctioned in 2018 by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). (Covered by InfoBytes here.)
A criminal complaint was also filed in the Southern District of Florida charging the current Chief Justice of the Venezuelan Supreme Court with accepting “tens of millions of dollars and bribes to illegally fix dozens of civil and criminal cases,” including a case in which the defendant authorized the dismissal of charges brought against a Venezuelan who was “charged in a multibillion-dollar fraud scheme against the Venezuelan state-owned oil company.” According to the complaint, the defendant laundered the proceeds through U.S. bank accounts, and spent approximately $3 million in South Florida on a private aircraft and luxury goods.
Another unsealed indictment in the Southern District of New York charges three additional Venezuelans with evading OFAC sanctions by working “with U.S. persons and U.S.-based entities to provide private flight services for the benefit of Maduro’s 2018 presidential campaign.”
Additional separate indictments accuse various former Venezuelan officials of drug trafficking and military aircraft smuggling. In addition, several individuals were charged with FCPA violations, including: (i) two individuals for allegedly receiving bribes to award business to U.S.-based companies; and (ii) several individuals for allegedly participating in an international money laundering scheme and conspiring to solicit Petróleos de Venezuela, S.A. (PDVSA) vendors “for bribes and kickbacks in exchange for providing assistance to those vendors in connection with their PDVSA business.” According to the DOJ’s press release, the scheme involved “bribes paid by the owners of U.S.-based companies to Venezuelan government officials to corruptly secure energy contracts and payment priority on outstanding invoices.”
Treasury sanctions Russian company for doing business with Venezuela
On February 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13850, as amended, against a Swiss-incorporated, Russian-controlled oil brokerage and its board chairman and president for operating in the oil sector of the Venezuelan economy. According to the press release, the company assisted Venezuela state-owned Petroleos de Venezuela, S.A., in brokering, selling, and transporting Venezuelan petroleum products.
In connection with the designations, OFAC issued Venezuela General License (GL) 36, titled “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving [company].” GL 36, which expires on May 20, authorizes certain transactions and activities otherwise prohibited under E.O.s 13850 and 13857 that are required in order to wind down business with the company. Concurrently, OFAC issued a new Venezuela-related frequently asked question regarding GL 36, addressing the significance of OFAC’s designation of the company, and whether the E.O. 13850 blocking sanctions on the company apply to its corporate parent and affiliates. In its press release, OFAC added that “all property and interests in property of [the company] and [its president] that are in the United States or in the possession or control of U.S. persons, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated individual and entity, are blocked and must be reported to OFAC.”
OFAC identifies Venezuelan oil tankers as blocked property
On December 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additions to the Specially Designated Nationals List (SDN List) pursuant to Executive Order 13884, which blocks the property of the Venezuelan government. OFAC identified six tankers of Venezuela’s state-owned oil company as property of the Venezuelan Government and therefore as blocked property, after all the vessels recently transported petroleum to Cuba. A seventh tanker also was identified as a blocked property, pursuant to Executive Order 13850 for operating in the oil sector of the Venezuelan economy, after delivering Venezuelan petroleum to Cuba. According to the press release, the vessel’s name had been changed to circumvent sanctions as it moved Venezuelan oil to Cuba. The SDN List was updated to link the new name of the vessel to its former name. OFAC reiterated that its “regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.”