CITGO, without merit or meritocracy
23.04.05 | Talking about how PDVSA has deteriorated over the past six years is to tell a story of one disaster after another. Anyone who doubts the truth of this and requires further proof only needs to look at the problems that have paralyzed operations at the Amuay and Puerto La Cruz Refineries recently or the reports published by El Nuevo Herald last week on the huge sums of money that are apparently being paid to intermediaries on sales of oil to third parties, when the usual practice since PDVSA was formed has been to sell directly to the end consumer.
As though that were not enough, this week, The New York Times published a lengthy analysis in which it tells of the deterioration of Citgo, PDVSA’s affiliate in the United States, over the past three years. If this turns out to be true, the illusion that Citgo has not been affected by the crisis within PDVSA will go up in smoke.
Among other things, The New York Times mentions that all but one of the affiliate’s high-ranking executives have resigned, as have seven out of the board’s eight members. And while the newspaper recognizes that Citgo is still a profitable company, it also suggests that other companies in the business are more so. By way of example it states that, while Citgo increased its earnings by 42% in the past year, Valero Energy Corporation doubled its earnings during the same period.
The article also cites several cases of extravagant spending, among them an alleged contribution of $30,000 to a private school attended by the son of one of Citgo’s top executives. Moreover, it claims that this same executive apparently used the company plane to take his family to Europe on vacation. However, the most serious of the many claims made by The New York Times is that, “Mr. Chávez has shaken to the core the company’s once-staid culture, leaving Citgo in a state of near disarray.” In other words, the patterns of the parent company have produced aftershocks beyond Venezuela’s frontiers and, in doing so, have given a blow to meritocracy and given free rein to a situation in which the abuse of power, non-accountability, and the lack of transparency are the norm.
The consequences of these bad management practices will come to light when oil prices drop and refining margins shrink. The loser in this situation is, once again, the country.
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