The Boards of Directors of PDV Holding, Inc., CITGO Holding, Inc., and CITGO Petroleum Corporation (the “Companies”), and management, categorically reject the findings of the recently issued report by the Special Commission of the Nicolás Maduro’s controlled National Assembly in Venezuela. In particular, the report alleges the theft of CITGO, coordinated by the 2015-elected Venezuelan National Assembly, the ad hoc Board of Directors of Petróleos de Venezuela S.A. (PDVSA), the executives leading the Companies, and the United States Government. We take this opportunity to clarify the situation and clarify several key aspects regarding CITGO petroleum corporation.
In early 2019, the Venezuelan National Assembly elected in 2015 appointed an Ad Hoc Board of Directors of PDVSA, which in turn appointed a new Board of Directors of PDV Holding, Inc., which subsequently appointed the directors of its subsidiary, CITGO Holding, Inc., and so on. The National Assembly elected in 2015 is the only authority in Venezuela recognized by the United States of A. and, as a result, the current members of the boards of directors have been recognized by the U.S. courts as the legitimate officers and directors of said Companies. Therefore, there is no basis for the allegations included in the report that the members of the boards of directors and the managers of the Companies were illegally appointed.
Since their respective appointments, the different boards of directors and the managers of the Companies have worked tirelessly to ensure that the Companies improve their performance in compliance with applicable laws. When the new boards of directors took over in 2019, CITGO was in a critical situation. It had significant debt and suffered from a severe lack of investment. Poor management by previous administrations, appointed by PDVSA under the control of the Chavez and Maduro regimes, had impacted not only the profitability of the company, but also the safety and reliability of its operations. In addition, there were serious allegations of financial irregularities, conflicts of interest, and acts of corruption that occurred under past administrations. There were also ongoing threats against CITGO’s assets due to litigation against PDVSA and the Government of Venezuela for debts generated during the Chavez and Maduro regimes.
The current executives of the Company have put CITGO in a new direction. Integrity and transparency have been core principles established by board members and management since 2019. In this regard, CITGO has conducted internal and external audits to ensure financial transparency and combat corrupt activities that occurred prior to 2019. CITGO has also invested significant resources to improve its corporate governance, including the appointment of its first Chief Ethics and Compliance Officer and the renewal of its Code of Conduct. In addition, the company has implemented external accountability mechanisms that require the publication of its operating and financial performance on a quarterly and annual basis.
Importantly, CITGO has also proactively cooperated with the investigation conducted by the U.S. Department of Justice, in line with its goal of complying with U.S. laws and acting as a responsible corporate entity. PDV Holding, Inc. and CITGO continue to actively defend their interests in court against creditors seeking to satisfy debts of more than $20 billion generated by the Chávez and Maduro regimes. Creditors expect to be paid through the sale of PDV Holding, Inc. shares ordered by the District Court of Delaware in October 2023.
In summary, the record shows that the allegations of theft by CITGO’s senior management are unfounded. Since 2019, the boards of directors and management have increased the value of CITGO by implementing a strategy that promotes continuous improvements in operational excellence, commercial excellence and diverse investments, within a framework that prioritizes strong corporate governance, ethics and regulatory compliance, and social responsibility. This has resulted in strong financial performance reflected in its financial balance sheet with cash on hand exceeding the company’s debt.
On the other hand, the allegations stated in the report regarding the Simon Bolivar Foundation (the “Foundation”), a private non-profit foundation whose sole member is CITGO, are also baseless. In fact, the Foundation, through grants administered by qualified non-profit organizations, has provided assistance to a large number of people affected by the complex humanitarian emergency unfolding in Venezuela. Importantly, the Foundation has been subject to internal and external audits and, like CITGO, maintains strict compliance with U.S. federal, state and local laws. In addition, the Foundation is committed to transparency, as demonstrated by its four annual reports, available on its website www.simonbolivarfoundation.org.
We wish to emphasize that both the members of the boards and the management of the Companies have had the firm purpose of fulfilling their fiduciary obligations to the Companies and to their shareholders. The board of directors, senior management and the entire organization that comprises CITGO are committed to elevating the company to the highest standards in the industry, and will continue to do so, despite these unsubstantiated allegations.