Chevron scandal: The fall of an oil giant in Venezuela.
Executive Summary
This report analyzes a series of key developments that have significant strategic implications for Venezuela and the region. On one hand, it has been discovered that the American oil company Chevron allegedly violated the terms of its license by paying 300 million dollars to Nicolás Maduro’s regime, which could lead to the revocation of its operating permit in Venezuela by the incoming administration of Donald Trump. On the other hand, Maduro’s government appears to be intensifying its efforts to collect taxes and limit the diplomatic presence of countries that support the opposition, reflecting the severe economic crisis facing the country. These events occur within a context of increasing international pressure against Maduro’s regime, led by the new incoming U.S. government. According to information provided by Bloomberg, this news agency was the one that obtained and revealed the data regarding Chevron’s payments to Maduro’s regime, which could have originated from the Seniat (Venezuelan tax service) or from a leak within Chevron itself.
Analysis
Chevron and the 300 million dollars paid to Maduro: The leak of information about Chevron’s payments to Maduro’s regime, in apparent violation of the terms of its license, represents a serious irregularity that will likely be investigated by U.S. authorities. This jeopardizes the continuity of Chevron’s operations in Venezuela, as the new Trump administration seems determined to take strong action against Maduro’s regime, including the possible revocation of licenses for companies like Chevron. The departure of Chevron and other foreign oil companies from Venezuela would have a significant impact on the already deteriorated economy of the country, forcing it to seek alternatives like Iran, which will also face increased pressure from the Trump administration.
According to information provided by Bloomberg, Chevron Corp. reportedly filed tax declarations in Venezuela for approximately 300 million dollars, raising doubts about the benefits Nicolás Maduro receives from the company’s oil production, despite the sanctions. The company also reported that its operations in Venezuela owed 8.1 billion bolivars to Seniat in March 2024, although it is unclear whether the company has made these payments. Chevron claims to comply with Venezuelan laws and regulations, but any payment to the government could violate General License 41, which prohibits the company from paying taxes to state controlled entities.
“Companies like Chevron are contributing billions of dollars to the regime’s coffers, and it has not fulfilled any of the promises it made,” said Secretary of State candidate Marco Rubio during his Senate confirmation hearing. “All of that needs to be explored”.
“Chevron is not only allowing oppression but is benefiting from it,” said Florida Republican representative María Elvira Salazar in an email. “Their licenses need to disappear”. Chevron has presented documents indicating that its operations in Venezuela, under the registered entity Chevron Global Technology Services Company, have a tax liability of 8.1 billion bolivars with Seniat as of March 2024. This data, obtained through a Bloomberg News review, raises questions about the nature and compliance of those payments, given the lack of clarity on whether Chevron has actually settled that tax debt and how it would have done so.
The company’s spokesperson, Bill Turenne, assured in an email that Chevron operates in Venezuela in accordance with all relevant laws and regulations. However, any payment made to the Venezuelan government could contradict the restrictions imposed by the Office of Foreign Assets Control of the U.S. Treasury, which granted Chevron an exemption under General License 41. This license explicitly prohibits the American company from paying taxes, royalties, or dividends to Petróleos de Venezuela SA (PDVSA) and any other state entity. Additionally, it limits Chevron’s activities by prohibiting the sale of oil to markets outside the U.S. and the expansion of its operations in the country.
The situation is complex, as Chevron finds itself in a delicate position between complying with local regulations and avoiding international sanctions. This generates a debate surrounding the ethics of its operations in a country where Maduro’s regime has been accused of human rights violations and authoritarian practices. The lack of transparency and corporate accountability from Chevron raises questions about its commitment to ethical principles and respect for human rights in the Venezuelan context.
Record Tax Collection in Venezuela and the Economic Crisis
The announcement from Maduro’s regime about the record tax collection of 12 billion dollars by Seniat, led by José David Cabello, reflects the government’s desperate efforts to generate revenue amid the deep economic crisis. With a national budget of only 24 billion dollars, half of what it was 14 years ago, Venezuela increasingly relies on foreign investment and tax collection to maintain its state apparatus and fund its programs. This situation highlights the severity of the economic crisis and the fragility of the Venezuelan rentier model, which could be further aggravated by the departure of key companies like Chevron.
Summary of the Relationship Between José David Cabello and Diosdado Cabello
The analysis highlights the close relationship between José David Cabello, the head of Seniat, and Diosdado Cabello, one of the main leaders of Maduro’s regime. José David Cabello, brother of Diosdado Cabello, was praised by Maduro for the “record collection” of taxes, suggesting that his actions at the helm of Seniat align with the priorities and strategies of Diosdado Cabello and the harder sector of Chavismo. This establishes a close connection between the Cabello brothers, where José David Cabello is aligned with Diosdado Cabello and the more authoritarian wing of Maduro’s government, contributing to the perpetuation of the regime through tax collection.
Importance of the Efforts of Marco Rubio, María Elvira Salazar, and Others: Figures like Senator Marco Rubio and Representative María Elvira Salazar, both from the Republican Party, have been important critics of Chevron’s role in Venezuela and have urged for more vigorous action against Maduro’s regime. These efforts from key officials in the new Trump administration underscore the priority that Venezuela policy will have in the incoming administration, which could lead to increased pressure and sanctions against companies that have continued operating in the country.
Conclusion:
This case highlights the challenges multinational corporations face in politically sensitive environments, where they must balance legal obligations and ethical considerations. The departure of Chevron and other oil companies from Venezuela could have a devastating impact on the already fragile economy of the country, underscoring the need for coordinated action from the international community to promote a democratic transition and address the humanitarian crisis in Venezuela. There must be corporate accountability where multinationals are held responsible for their actions and ensure they do not contribute to the perpetuation of authoritarian regimes and human rights violations. The lack of transparency and accountability from Chevron regarding its operations and payments in Venezuela raises doubts about its ethical commitment and respect for human rights.
By William Acosta, NYPD, Retired and Jesus Daniel Romero, USN, Retired
Credits: Bloomberg, The Wall Street Journal, The New York Times.