To dodge sanctions, Venezuela turns to Asia asphalt giant

MIAMI (AP) - Back in January, a year-long campaign of US sanctions took its toll on Venezuela's state-owned oil company. Many of PDVSA's overseas bank accounts have been frozen, affecting the solvency of vendors that PDVSA relies on to help keep the nation's crude oil flowing.
So the company relied on a long-standing customer in Thailand, Tipco Asphalt, to mitigate the impact: In exchange for oil rebates, Tipco would pay PDVSA's bills and deduct the amounts from the Venezuelan oil giant's debts, The Associated Press records.
PDVSA quickly took advantage of the agreement. On January 10, the oil company sent Tipco executives 43 emails with money orders, which resulted in a minor reprimand.
"Tipco is a PDVSA customer, not the Venezuelan central bank," commented Jean-Pierre Pastor, Tipco's legal representative in Venezuela, in an email to PDVSA.
The email is just one of dozens of documents the AP received as part of an investigation into how Venezuela is trying to circumvent harsh US sanctions that have exacerbated an economic collapse rarely seen outside of war zones. At a time when Nicolás Maduro's government is viewed as a pariah in the West, the financial agreement with Tipco has tacitly allowed PDVSA to move hundreds of millions of dollars around the world, records show.
The publicly traded Thai company says its payments to third parties are a standard feature of its Venezuela oil purchases, which are not excluded by US sanctions that only apply to American companies. Even so, the AP has learned that the spending is being scrutinized by the Trump administration, which sees it as a lifeline for Maduro.
The documents - bills, contracts and transfers - were made available to the AP by a former PDVSA advisor outside Venezuela on condition of anonymity for fear of retaliation.
Attorneys and forensic accountants who reviewed the documents said Tipco could be sanctioned for violating US policies that aim to starve Maduro on oil revenues. Processing payments could also lead to a fraud or money laundering investigation against Tipco in the US if American companies were involved, as appears to be the case in some cases, said David P. Weber, who investigated corruption while working in the US -Finance Department was busy.
"It may have been a good idea to make a profit as a financial intermediary," said Weber, who is now a professor of forensic bookkeeping at Salisbury University, Maryland. "But when Tipco got involved in such risky activities, he fell into one of the most despicable governments in the world."
Tipco announced on September 11th - four days after the AP sent detailed questions to it - that it would stop buying crude oil from Venezuela in order not to be sanctioned by the US.
Meanwhile, CEO Chaiwat Srivalwat vigorously denied any wrongdoing in an email to AP.
"We never sponsored or offered any services to PDVSA," he said. "These payments only corresponded to the amount of crude oil bought by PDVSA."
The Venezuelan Ministry of Oil did not respond to repeated requests for comment.
Tipco is one of the largest asphalt distributors in Asia, with sales of over US $ 1.2 billion last year. The largest shareholder is the French road builder Colas.
Much like a third party payment processor, Tipco has transferred millions of dollars from its accounts at Thailand's oldest bank to PDVSA customers around the world, documents show. Instead of accepting payment for the crude oil sold, PDVSA kept a running tab with its long-time customer and regularly sent Tipco detailed instructions to pay the suppliers on its behalf.
Since early 2019 - when the Trump administration sanctioned PDVSA - records indicate that nearly 100 companies have received hundreds of millions of dollars this way. These include the global law firm Dentons, shipping companies and small Venezuelan law firms with bank accounts in Russia and Turkey, according to the documents. Even OPEC, the Venezuela oil cartel founded in 1960, was paid fees of 2 million euros (2.3 million US dollars) through Tipco.
"We were never told that we would be paid by Tipco," said a Latin American representative for Russian truck manufacturer Kamaz on condition of anonymity as the company is still waiting to pay half of the $ 10.2 million owed receive.
According to the documents, knowledge of the arrangement went right up to the top of Tipco. Several emails with cable instructions are addressed to Tipco's CEO. Pastor, the brother of Tipco's board member Jacques Pastor, a Colas manager, was also copied.
The majority of transactions for European providers were processed in euros. However, some American vendors have also received millions of dollars through Tipco and are currently under criminal investigation by four US law enforcement officers on condition of anonymity to discuss an ongoing investigation.
How did Tipco benefit from the deal? Cheap oil. When international crude oil prices hit $ 41 this summer, PDVSA offered Tipco discounts of around $ 25 a barrel for a delivery of 700,000 barrels, according to a summary of the proposal.
Chaiwat told the AP that Tipco had bought around 18 million barrels since early 2019.
"PDVSA is in survival mode," said Francisco Monaldi, who leads the energy program for Latin America at Rice University. "Because of sanctions, they have no alternatives, so anyone willing to take on the legal and reputational risk can easily take advantage of them."
With Maduro held in power, the US is considering expanding sanctions by filling in loopholes that allow a small number of non-US companies to continue doing business with Venezuela. Tipco is now looking for a replacement for its Venezuelan crude oil or is risking the closure of its refinery in Malaysia.
In the meantime, PDVSA is preparing for more pain.
With drivers waiting inside for days to fill up their cars with gasoline and production at its lowest level since the 1920s, the government unveiled plans for an "anti-blockade law" last week. Measures to stimulate foreign investment include a proposal that gives the PDVSA enhanced powers to secretly sign oil deals, according to an AP presentation.
"The imperialists have tried by all means to hinder the development of Venezuela," said Oil Minister Tareck El Aissami in a speech in which he outlined the bill.
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Contact the AP global investigation team at Investigative@ap.org.
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AP author Grant Peck in Bangkok, Jamey Keaten in Geneva, and investigative researcher Randy Herschaft in New York contributed to this report.
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Joshua Goodman on Twitter: @APJoshGoodman
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