Operation Money Flight: Prosecutions Continue Against Embezzlement Of Venezuelan State Oil Funds

The US’ Department of Justice (DoJ) has strengthened its grip on an international effort, nicknamed Operation Money Flight, to crack down on individuals that embezzled billions of dollars from PDVSA, Venezuela’s national oil company.

Alvaro Ledo Nass, PDVSA’s former general counsel, plead guilty to a US District Court in March of this year for taking bribes worth $11.5 million between 2012 and 2017 to look the other way while at least $550 million was defrauded from PDVSA. 

Under a plea deal, Ledo Nass will spend three years in prison in return for full cooperation with the DoJ’s investigation. The bribes that he took have also been confiscated as the US continues its strategy of freezing embezzled assets in the first instance. 

While Ledo Nass’ case has now been settled, the prosecution of a wider criminal network of individuals who stole PDVSA funds is ongoing. This will take time, however, and Operation Money Flight’s continued success is dependent on other national prosecutors being as robust as the DoJ.

Indeed, the ex-PDVSA lawyer was just one small part of a web of corrupt, well-connected actors that used opaque financial mechanisms to embezzle, launder, and hide national oil revenues. 

Since September 2022, Venezuela’s attorney-general’s office has been attempting to extradite a number of ex-PDVSA senior figures from Europe for these crimes. 

Former-oil minister and PDVSA chief Rafael Ramirez and once Deputy Energy Minister Nervis Villalobos are both wanted in connection to a financial scam under which the state oil company incurred damages worth $5 billion. 

The two men are allegedly part of a scheme whereby PDVSA took out a large loan from an offshore company in bolivars, the Venezuelan currency, which was paid back in dollars. This allowed the perpetrators to benefit on a grand scale from the sizeable spread between the official and unofficial bolivar-dollar exchange rate. 

There are a number of ongoing cases against the unconvicted members of this scheme, which are likely to be influenced by the strong signal sent to other national prosecutors by the US DoJ in its conviction of Ledo Nass. 

In Switzerland, for example, prosecutions continue against both ex-PDVSA employees and those that helped them to launder stolen state funds via the Swiss financial system. 

As reported in Neue Zürcher Zeitung, a Swiss asset manager name Ralph Steinmann was arrested in July of last year on suspicion of involvement in the billion-dollar laundering scandal. 

Steinmann and Luis Ferando Vuteff, another asset manager, were simultaneously charged by the US DoJ on one count of conspiracy to commit money laundering ‘as part of a $1.2 billion international scheme to launder funds corruptly obtained from PDVSA’.

The DoJ alleges that from 2014 to 2018, Steinmann and Vuteff conspired to use various international bank accounts to launder funds stolen under the corrupt foreign exchange scheme. 

Vuteff has been arrested but is still pending extradition from Switzerland to the US, while Steinmann is characterized by the DoJ as a fugitive. Indeed, Steinmann has not been extradited from Switzerland, while stolen PDVSA assets located in the country have not been frozen as of yet. 

Such is the extent and international nature of the criminal web that Operation Money Flight is investigating that it will take time to bring all the perpetrators to justice. 

That said, the US DoJ has clearly signaled to other national prosecutors that progress can be made and fast via both convictions and restitution in the form of freezing assets stolen from PDVSA.

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