Venezuela Pledges To Cover Oil Pension's Losses From U.S. Ponzi Scheme

Mar 28 2011 | 1:20am ET

Venezuela's state-owned oil company said it will make up for any losses it suffered in a fraudulent hedge fund, despite disclaiming any responsibilities or ties to the Michael Kenwood Group.

Venezuelan Oil Minister Rafael Ramirez said the Petróleos de Venezuela isn't responsible for the losses because Michael Kenwood's Francisco Illarramendi, who pleaded guilty to running a $500 million Ponzi scheme earlier this month, was not an employee. Ramirez said Illarramendi "has no relation with PDVSA."

"He had a service contract at one time," Ramirez explained.

Still, the minister said on Venezuelan television, "we have decided to back the workers, we will take on the problem, guarantee income, the retirement packages and above all the pensions of the workers."

Ramirez said that Illarramendi's contract ended two years before his fraud began.

Illarramendi's fraud had deep ties to Venezuela. In addition to ensnaring both the country's oil company and some of its richest families, Illarramedi allegedly had two Venezuelan men doctor up a letter from an accountant attesting to the existence of $275 million that did not, in fact, exist.

Prosecutors have charged those two men, Juan Carlos Guillen Zerpa and Juan Carlos Horna Napolitano, with conspiracy to obstruct a Securities and Exchange Commission probe.


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