Message from the Board of Directors
"We take seriously our responsibility to CITGO's ultimate shareholder, the Venezuelan nation. That means safeguarding CITGO assets and operating the company safely, efficiently and profitably for Venezuela's future."
Our Corporate Structure
CITGO Petroleum Corporation is the indirect subsidiary of U.S.-based PDV Holding, a non-operating stock holding company incorporated in Delaware and headquartered in Texas. PDV Holding is the indirect sole stockholder of CITGO Petroleum Corporation, through ownership of 100% of the shares of its direct subsidiary CITGO Holding, Inc. CITGO Holding, Inc. is the sole stockholder of CITGO Petroleum Corp.
Petróleos de Venezuela (PDVSA), the Venezuelan state oil company, owns 100% of the stock of PDV Holding. Given the current political situation in Venezuela, the PDV Holding board was elected by the ad hoc Board of Directors of PDVSA which was appointed by, and now accountable to, Venezuela’s interim government and the 2015 National Assembly, which are recognized by the United States. CITGO, CITGO Holding, and its parent entity PDV Holding work closely with the U.S. government and legal bodies to ensure all legal standards are met.
All three boards have the mandate of ensuring operational stability, strengthening corporate governance and safeguarding the assets of the business.
Frequently Asked Questions
Although CITGO entities are directly and indirectly owned by Petróleos de Venezuela S.A. (PDVSA), the Venezuelan national oil company, they no longer have any kind of connection with the Nicolás Maduro regime. In the first quarter of 2019, a new Board of Directors was appointed, reporting to PDVSA's ad hoc Administrative Board which was appointed by the Legitimate Government of Venezuela in January of that same year. Thanks to the timely appointment of the new CITGO entities boards of directors, this asset was protected and today it continues to belong to all Venezuelans.
Because the Nicolás Maduro regime continues to control PDVSA's operations in Venezuela, CITGO is currently unable to process the crude produced by PDVSA and it cannot play any role in the Venezuelan oil sector. When PDVSA's operations are controlled by an adminstration appointed by a democratic government -- which enjoys legitimacy and the recognition of the international community -- CITGO will be able to play a key role in the reconstruction of Venezuela through the purchase of crude oil, supplying fuel, providing technical advice, and providing dividends to its final shareholder, when legally and financially capable of doing so.
The debt contracts incurred under the administration of the boards of directors designated by the regimes of Hugo Chávez and Nicolás Maduro resulted in immense indebtedness that prevent the company from paying dividends to its final shareholder -- the Venezuelan nation -- until this debt is reduced substantially. Meanwhile, CITGO is using the profits it has been able to generate, despite the enormous impact that the Covid-19 pandemic has had on the global oil industry, to pay down those debts, while investing in its overall refining capacity, in the maintenance of its three refineries, and in implementing plans to improve industrial safety, reduce costs and improve the profitability of the company. In this way, the new CITGO administration invests to secure a solid operational and financial position that allows it to contribute to the reconstruction of the Venezuealan oil industry when the conditions are right to do so.
One of the primary responsibilities of the Company's Board of Directors is to ensure that CITGO operates under the highest standards of integrity and embraces the industry's best practices in everything it does. One of the first actions the new Board of Directors took when it was appointed in 2019 was to hire an external advisor to perform a full review of the company's corporate governance and internal control systems.
As a result of this review, the Board of Directors:
- Eliminated procurement activites for the company's shareholder.
- Strengthened the essential committees of the Board of Directors, including Ethics and Regulatory Compliance, Audit, and Commercial committees, to better identify risks and advise on strategic development efforts.
- Appointed the company's first Chief Ethics and Complaince Officer, who reports directly to the CEO and the Audit Committee of the Board of Directors.
- Created six Ethics and Compliance teams across the organization, including Supply and Marketing, Shared Services, Finance, and each of the company's three refineries.
With best-in-class corporate governance, the new Board of Directors and the new leadership of the company ensure that ethics and regulatory compliance are an essential part of CITGO operations.
The CITGO Board of Directors and management team have made considerable progress in ensuring that internal regulatory compliance is governed by the industry's best practices.
Based on this, a Corporate Integrity Helpline was created, available for anyone – including business partners – to confidentially report ethics or compliance concerns without fear of retaliation. Likewise, an Investigations Committee was formed, made up of an interdisciplinary team of high-level managers; a new and revised Code of Business Conduct and Ethics was created that outlines the responsibilities of all CITGO employees, officers, contractors, business partners, suppliers, and third-party representatives; and annual and ongoing training is provided to employees and members of the Board of Directors on the Code of Business Conduct and Ethics, the Foreign Corrupt Practices Act (FCPA) and other relevant ethics training and regulatory compliance –generally or specifically – for employees.
All these measures are supervised by the Chief Ethics and Compliance Officer, who is responsible for leading the CITGO Ethics and Regulatory Compliance Committee and for periodically evaluating and confirming that the company meets best practices in the industry.
As soon as the new CITGO Board of Directors took office in 2019, it ordered a comprehensive investigation to review the past practices of the administrations appointed by the Nicolás Maduro regime. These investigations are ongoing, and the company is implementing the best corporate practices on the correct procedure for them.
Similarly, CITGO has assumed an absolute commitment to cooperate with legal authorities, especially with the United States Department of Justice (DOJ). DOJ, which is conducting a multi-year investigation into corrupt practices at PDVSA, initiated an investigation of CITGO in May 2019 that covers the years 2013 - 2018, the period of the past administrations appointed by Nicolás Maduro.
Given that this ongoing investigation by the DOJ coincides with the one being carried out by the Board of Directors, CITGO presents its results to the DOJ. The subpoena and other requests delivered by the DOJ to the Company contain a request to not disclose who and what is being investigated. That is why the CITGO Board of Directors is limited to what can be publicly shared about its investigations while the Department of Justice investigation continues.
The work of the Board of Directors to date has had a positive impact on the company. The commitment to transparency has resulted in the strengthening of regulatory compliance and internal controls of the company. All these actions are extremely important to CITGO, in terms of cooperation with the current investigation of the U.S. Department of Justice, and the mission assumed by this Board of Directors to protect CITGO as an asset for its ultimate shareholder through the strengthening of its financial stability and the improvement of its corporate governance.