By Diego Oré
MEXICO CITY (Reuters) – The Mexican government’s financial crime department is investigating Libre Abordo, a Mexico-based firm that received millions of barrels of Venezuelan crude under an oil-for-food pact, in a probe coordinated with U.S. agencies, the department’s chief, Santiago Nieto, told Reuters.
The Mexican Financial Intelligence Unit is also separately investigating several other companies, which Nieto declined to name, accused of speculating with food shipments to Venezuelan President Nicolas Maduro’s government, he said. That probe is being assisted by the U.S. Drug Enforcement Administration (DEA) and the Treasury’s Office for Foreign Asset Control (OFAC), Nieto said.
Libre Abordo and an affiliated Mexican company, Schlager Business Group, are among firms that have been under investigation by the FBI and the U.S. Treasury and State departments for possible violations of U.S. sanctions on Venezuela, four sources familiar with the probe told Reuters last month.
“We have an open investigation (into Libre Abordo). It has not been completed so I cannot give more information,” Nieto, whose unit reports to Mexico’s finance ministry, told Reuters in an interview last week at his Mexico City office.
The two companies have repeatedly denied any violations, saying their oil-for-food agreement with Venezuela, which was suspended by Maduro in May, was permitted under humanitarian waivers and the contract was with a government entity not included in the U.S. list of sanctioned entities.
Libre Abordo announced on Sunday it was bankrupt and said Venezuela had terminated its oil-for-food agreement under pressure from the United States.
On Monday, Nieto told Reuters the investigation would continue.
Libre Abordo told Reuters in a statement on Tuesday that it was unaware of any investigations in Mexico into its operations, but any such probe would “surely confirm the legality and transparency” of its activities.
The companies provided Venezuela with hundreds of water trucks in exchange for about 30 million barrels of Venezuelan crude and fuel through May, according to Venezuelan state-run oil firm PDVSA’s internal documents and information provided by the firms.
The deal threw a lifeline to Maduro, whose administration is struggling to pay for imports of everything from food to medicine amid an economic crisis.
Washington has imposed sanctions on Venezuela’s government and PDVSA in a bid to oust Maduro. U.S. authorities said in April they were investigating whether Mexican companies had violated those sanctions.
PDVSA did not immediately reply to a request for comment.
Nieto’s unit is separately investigating a group of 25 people and companies from Mexico and Venezuela accused of speculating with food shipments under a program administered by Maduro’s government, known as CLAP, Nieto said.
The program – intended to tackle scarcity and hyperinflation – distributes subsidized food, most of it imported, to registered citizens across Venezuela.
Nieto’s unit has submitted three cases related to the probe to Mexico’s Attorney General’s office, while freezing the bank accounts of 19 companies allegedly linked to “laundering of Venezuelan money in Mexico,” he said.
He declined to name any of the individuals or companies involved.
Elliott Abrams, U.S. special envoy for Venezuela, told Reuters on Friday “there has been vast corruption involved in the (Maduro) regime’s purchase of food in Mexico.” He cited U.S. sanctions imposed in 2019 on several people, including members of Maduro’s family, for alleged fraud in the CLAP program.
Venezuela’s information ministry did not immediately respond to a request for comment. Maduro’s government has repeatedly denied accusations of corruption, overpricing and poor quality of produce in the CLAP program.
An investigation into the CLAP shipments was launched in 2018 by former Mexican President Enrique Pena Nieto’s administration, which closed the case after imposing fines on the companies involved.
The reopened probe is being coordinated with the DEA and OFAC, which oversees the implementation of U.S. sanctions, Santiago Nieto said.
He said the scheme began with the creation of a company in Hong Kong – which he declined to name – owned by the Venezuelan government. This company then opened subsidiaries in Mexico, which bought poor-quality products to be sold at higher prices to the OPEC-member country.
“From our point of view, there was corruption at the attorney general’s office during the previous administration,” said Nieto, a 47-year old lawyer, explaining why the probe had been reopened. He did not provide further details.
Reuters was unable to reach former officials at the attorney general’s office for comment.
Mexican President Andres Manuel Lopez Obrador, who took office in December 2018, has made fighting corruption one of his administration’s priorities. His predecessor, Enrique Pena Nieto, has rejected accusations of wrongdoing during his time in office.