New Venezuela prosecutor expects more arrests in oil graft cases

By Alexandra Ulmer CARACAS (Reuters) - Venezuela's new chief prosecutor Tarek Saab said he expects further arrests in widening oil-sector bribery scandals, after most of state energy company PDVSA's top brass in the western region was detained in a major sweep this week. The two other significant oil cases he is investigating are overbilling in equipment sales at Venezuela's main oil-exporting port of Jose, as well as at least $200 million in an overpricing case involving 10 companies in the oil-rich Orinoco Belt. "There are going to be arrests there, without a doubt" Saab said in an interview, adding details about the specific projects or joint ventures involved were confidential but he was interested in recovering capital. "This is just getting started." Caracas-based PDVSA has been tarnished in recent years by international graft investigations. The company is the financial motor of President Nicolas Maduro's leftist government but is suffering crippling operational problems. It has blamed a small group of wrongdoers for the ills and promised a war on graft. The opposition says PDVSA is a rat's nest of corruption, and a congressional report last year said $11 billion was lost at the company between 2004 and 2014, when Rafael Ramirez was in charge. He denied the allegations. Saab, who took control of the prosecutor's office last month, has vowed to lead a "crusade" against corruption in the nation with the world's biggest crude reserves. The lawyer and former human rights ombudsman wants to focus in particular on the oil industry, the source of over 90 percent of crisis-hit Venezuela's export income. As evidence of his seriousness, Saab pointed to this week's arrest of eight oil executives in Venezuela's traditional oil-producing region near Colombia. His office accuses them of irregularities including smuggling Venezuela's highly-subsidized oil to Caribbean islands. The case was triggered by complaints from oil project Petrozamora, an venture between PDVSA and Russia's Gazprombank. "We produced eight arrests and there can be more. We want to get to the bottom of this," said Saab in an interview in his office in central Caracas on Thursday afternoon. Saab said one person allegedly involved in the Jose case had turned himself in but declined to give details. An internal police message seen by Reuters says Pedro Leon, a powerful executive who led PDVSA's Orinoco Belt development for years before abruptly leaving at the start of the year, had returned to Venezuela this month and handed himself in. PDVSA has not responded to requests for comment on the cases. SAAB SPARS WITH PREDECESSOR The son of Lebanese immigrants who was born in the oil-producing state of Anzoategui, Saab trained as a lawyer and has been a state human rights ombudsman and Socialist Party governor. In the opposition's eyes, the government ally lacks legitimacy, and his appointment to replace Luisa Ortega, who was removed after she broke with Maduro over human rights, is a sign of Venezuela's swerve into dictatorship. Opposition politicians say bribery cases are a reflection of turf wars, not a genuine intent by Maduro's unpopular government to root out graft. Saab, in turn, accuses his predecessor Ortega, who fled Venezuela on a speedboat last month, of running an extortion ring that allowed culprits to pay in exchange for getting off the hook. She has rejected the claims as politically motivated. After being removed in a rare public fissure between Venezuelan officials, Ortega went into hiding and fled on a speedboat to Aruba. Since then, she has been traveling around Latin America denouncing the Maduro government for allegedly persecuting her and engaging in corruption. "She has no credibility," said Saab in his office decorated with photos of Maduro, works by famous Venezuelan artists and drawings by his daughter. "She's a person who lies repeatedly." Saab said Ortega's file on engineering conglomerate Odebrecht, which is ensnared in Brazil's biggest graft scandal, only had 10 pages. He stressed he was pushing forward with the case. He said he did not rule out traveling to Brasilia to meet the neighboring country's prosecutors. Ortega, who says she remains Venezuela's real chief prosecutor and was recently in Brazil herself, contends Saab is an "imposter" seeking vengeance. "What he's done is spend all his time persecuting me, creating cases to prosecute me and my family," Ortega told neighboring Colombia's W Radio this month. Saab was also in the limelight this year for family reasons. His son Yibram, a law student, in April stunned Venezuela by publicly coming out against the government, stating he had participated in anti-Maduro protests, and urging his father to "end the injustice." Saab, whose office also features photos of his children, said he respected his son's right to his opinion and loved him just the same. (Reporting by Alexandra Ulmer; Editing by Girish Gupta and Cynthia Osterman)