TCRLA_Public/050617.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                    L A T I N   A M E R I C A

           Friday, June 17, 2005, Vol. 6, Issue 119



AGUAS ARGENTINAS: Government Sweetens Deal with Future Rates
CAMPO ARADO: Court Rules Company Bankrupt
CORPORACION BAIK: Enters Bankruptcy on Court Orders
CORPORACION TURISTICA: Declared Bankrupt by Court
EDESUR: Close to Signing New Deal With Government

GRUNBAUM, RICO: Court Designates Trustee for Liquidation
RESTAURANT LIGURE: Files for Bankruptcy
SANATORIO VALENTIN: Court Orders Liquidation
SIDERAR: Bracing for Potential Energy Supply Shortages


EASTMAN KODAK: To Halt Production of Black-and-White Photo Paper
ELETROPAULO METROPOLITANA: $200M Real-Linked Bonds Get 'B' Rtng
LIGHT SERVICOS: Board OKs Debt Conversion Proposal

C O S T A   R I C A

BICSA: Gets Clearance to Operate in El Salvador


ALESTRA: Court Throws Out Creditor's Bankruptcy Petition
DIRECTV GROUP: Completes $1.0B 6 3/8% Senior Note Financing
SATMEX: Court Sets July 7 Bankruptcy Petition Response Date
TV AZTECA: Azteca Holdings Redeems $60M Notes Due 2005
TV AZTECA/ELEKTRA/IUSACELL: Salinas Downplays Delisting Effects

P U E R T O   R I C O

R&G FINANCIAL: Wolf Haldenstein Commences Class Action Lawsuit

T R I N I D A D   &   T O B A G O

BWIA: Task Force Advises 12-Year Restructuring


PDVSA: SEC Commences Investigation at US Refining Unit

     - - - - - - - - -


AGUAS ARGENTINAS: Government Sweetens Deal with Future Rates
In an effort to reach a new concession contract with Aguas
Argentinas as soon as possible, the Argentine government offered
the Buenos Aires water utility two rate increases worth a total
of 38% in 2006. According to Business News Americas, the
government has offered an increase of 15% and 20% in January and
July 2006, respectively. However, it did not offer any increases
for this year, which is what Aguas had proposed.

The government also proposed a plan to set up a fund for future
investments of some ARS250 million (US$87mn). The funds will
come from the proposed rate increases.

Argentina is looking to wrap up negotiations with Aguas at the
earliest possible date in order to show progress on the
privatization front in its upcoming talks with the International
Monetary Fund.

The main sticking point in the negotiations is the US$650mn in
default debt held by Aguas. The company is insisting on an
official credit of US$300mn to be paid back over 18 years with a
moderate interest rate, while the government wants to avoid
being seen as loaning money to services providers.

Aguas is the sole provider of potable water and sewerage
services in the City of Buenos Aires and 17 surrounding
districts. The Company is 35%-owned and operated by Suez
Lyonnaise des Eaux S.A. (Lyonnaise), a leading French water
services and construction group.

CAMPO ARADO: Court Rules Company Bankrupt
Mar del Plata's civil and commercial Court No. 11 decreed the
bankruptcy of Campo Arado S.A., reports Infobae. The Company
will initiate the process with Mr. Natalio Maydan as receiver,
who will verify creditors' claims until Aug. 1, 2005. The
Company's case will conclude with the liquidation of its assets
to repay creditors. Clerk No. 11 assists the court in handling
the proceedings.

CONTACT: Campo Arado S.A.
         Solis 3878
         Mar del Plata

         Mr. Natalio Maydan, Trustee
         Avda Luro 3894
         Mar del Plata

CORPORACION BAIK: Enters Bankruptcy on Court Orders
Corporacion Baik S.A. enters bankruptcy protection after Court
No. 17 of Buenos Aires' civil and commercial tribunal, with the
assistance of Clerk No. 33, ordered the Company's liquidation.
The order effectively transfers control of the Company's assets
to a court-appointed trustee who will supervise the liquidation

Infobae reports that the court selected Hector Ricardo Martinez
as trustee. Mr. Martinez will be verifying creditors' proofs of
claim until the end of the verification phase on Aug. 19, 2005.

Argentine bankruptcy law requires the trustee to provide the
court with individual reports on the forwarded claims and a
general report containing an audit of the Company's accounting
and business records. The individual reports will be submitted
on Sep. 19, 2005 followed by the general report, which is due on
Oct. 19, 2005.

CONTACT: Corporacion Baik S.A.
         Avda Nazca 271
         Buenos Aires

         Mr. Hector Ricardo Martinez, Trustee
         Avda Independencia 2251
         Buenos Aires

CORPORACION TURISTICA: Declared Bankrupt by Court
Corporacion Turistica Internacional S.A. is now "Quiebra" -
meaning bankrupt, says Infobae. Buenos Aires' civil and
commercial Court No. 4 decreed the Company's bankruptcy and
appointed Francisco Spigel, as receiver for the Company. Mr.
Francisco Spigel will be reviewing creditors' claims until Aug.
19, 2005. Analyzing these claims is important because the
outcome of the process will determine the amount each creditor
will get after all the assets of the Company are liquidated. The
court, which is aided by Clerk No. 8, will conclude the
bankruptcy process by liquidating its assets to repay creditors.

CONTACT: Mr. Francisco Spigel, Trustee
         Avda Cordoba 859
         Buenos Aires

EDESUR: Close to Signing New Deal With Government
Local power distributor Edesur, a unit of Spain's Endesa, is
expected to sign a new contract with Argentine regulators before
the end of the week, says Dow Jones Newswires. Spanish Prime
Minister Jose Luis Rodriguez Zapatero reportedly helped in the
negotiations by urging Endesa officials in Madrid to accept the
new Edesur deal.

"The deal has still not been signed, but there is a virtual
accord," Dow Jones Newswires quoted an official from Argentina's
ad-hoc utility contract renegotiation agency, Uniren, as saying.

Edesur had originally rejected the Argentine government's offer,
arguing that the rate increases it includes are too low. In a
last-ditch bid to get Edesur to sign an agreement and avoid a
contract-by-decree, the Kirchner administration reportedly sent
the Company another offer last week, after threatening to
publish a new contract by decree this Friday.

          San Jos, 140
          Buenos Aires
          Tel: 4383-0200

GRUNBAUM, RICO: Court Designates Trustee for Liquidation
Buenos Aires accountant Estudio Rafael Hernandez - Emilio
Giacumbo was assigned trustee for the liquidation of local
company Grunbaum, Rico & Dacourt S.A.I.C. y F, relates Infobae.

The trustee will verify creditors' claims until Aug. 24, 2005,
the source adds. After that, he will prepare the individual
reports, which are to be submitted in court on Oct. 5, 2005. The
submission of the general report should follow on Nov. 16, 2005.

The city's civil and commercial Court No. 9 handles the
Company's case. Clerk No. 18 assists the court with the wind-up

CONTACT: Grunbaum, Rico & Dacourt S.A.I.C. y F
         Suipacha 211
         Buenos Aires

         Estudio Rafael Hernandez - Mr. Emilio Giacumbo, Trustee
         Avda Corrientes 1250
         Buenos Aires

RESTAURANT LIGURE: Files for Bankruptcy
Buenos Aires' civil and commericial Court No. 17, assisted by
Clerk No. 33, is currently reviewing the merits of the
bankruptcy petition that Restaurant Ligure S.A filed after
failing to pay its debts, Argentine daily Infobae reports.

The petition, if granted by the court, will result to the
liquidation of the Company's assets.

CONTACT: Restaurant Ligure S.A.
         Buenos Aires

SANATORIO VALENTIN: Court Orders Liquidation
Sanatorio Valentin Alsina S.A. prepares to wind-up its
operations following the bankruptcy pronouncement issued by
Court No. 5 of Lomas de Zamora's civil and commercial tribunal.
The declaration effectively prohibits the Company from
administering its assets, control of which will be transferred
to a court-appointed trustee.

Infobae reports that the court appointed Estudio Alvarez,
Dominguez, Hara Contadores Publicos as trustee. The trustee will
be reviewing creditors' proofs of claim until Aug. 11, 2005. The
verified claims will serve as basis for the individual reports
to be presented for court approval on Sep. 27, 2005. The trustee
will also submit a general report of the case on Nov. 11, 2005.

The case will end with the sale of the Company's assets.
Proceeds from the sale will be used to repay the Company's

CONTACT: Estudio Alvarez, Dominguez, Hara Contadores Publicos
         Espana 266
         Lomas de Zamora

SIDERAR: Bracing for Potential Energy Supply Shortages
Argentine flat steelmaker is closely monitoring energy supplies
as the country's natural gas distributors have started imposing
restrictions on clients due to the early cold spells in April
and May, reports Business News Americas.

"We haven't had meaningful cuts," Siderar President Daniel
Novegil said. "We've had some restrictions, but our contracts
are firm. It's an issue we're following with extreme attention."

Argentina is facing a repeat of last year's energy shortfall, a
product of increased demand that has outpaced mostly stagnant
investment in the sector.

The renewed energy concerns come as Siderar is carrying out a
massive expansion plan to increase annual production capacity by
more than 50%. The Company is investing US$680 million between
2005 and 2008 on added capacity, streamlining current production
lines and improving technology.

Siderar is owned by Argentine industrial conglomerate Techint
(TCNT.YY), which in May announced plans to consolidate its flat
and steel holdings into a new company. Siderar will be part of
this new subsidiary, as will Sidor of Venezuela and Mexican
steelmaker Hylsamex (HYLSAMX.MX), which Techint is buying from
conglomerate Alfa (ALFA.MX).

CONTACT:  Siderar S.A.I.C.
          Leonardo Stazi (CFO)
          Pablo Brizzio (Financial Manager)
          Guillermo Etchepareborda (IR)
          54 (11) 4018-2308 / 2434 / 2752


EASTMAN KODAK: To Halt Production of Black-and-White Photo Paper
As part of a plan to consolidate its worldwide manufacturing
operations in order to eliminate excess capacity, Eastman Kodak
Co. will cease production of black-and-white film paper for the
professional market by the end of the year.

Citing spokesman David Lanzillo, Dow Jones Newswires reports
that the paper, used by studio and professional photographers to
make prints, is produced at facilities in Rochester and Brazil.
Lanzillo said he could not specify how many employees will be
affected by the decision.

The Company will continue to make black-and-white film and
chemicals for processing, Mr. Lanzillo added.

Kodak reported a first-quarter loss of US$142 million in April
because of a steady slide in revenues from film and other
chemical-based businesses and higher-than-expected costs to
cover steep job cuts.

CONTACT:  Eastman Kodak Co
          343 State Street
          Rochester, NY 14650
          Phone: (585) 724-4000
          Fax: (585) 724-0663
          Web Site:

ELETROPAULO METROPOLITANA: $200M Real-Linked Bonds Get 'B' Rtng
Standard & Poor's Ratings Services assigned its 'B' rating to
the forthcoming five-year, US$200 million Brazilian Real-linked
unsecured and unsubordinated bonds to be issued by Eletropaulo
Metropolitana Eletricidade de Sao Paulo S.A. (Eletropaulo). The
new bonds will count on a fixed interest rate to be defined
during a bookbuilding process.

At the same time, Standard & Poor's affirmed its global scale
local and foreign currency 'B' corporate credit ratings assigned
to Sao Paulo, Brazil-based Eletropaulo. The outlook on the
corporate credit ratings is stable.

The transaction will not increase the company's total debt
because at least 50% of the proceeds will be used to prepay
short- and long-term positions of debt restructured in 2004
(original amount of Brazilian Real (BrR) 2.3 billion), and the
remainder will be applied to enhance liquidity. Eletropaulo is
also working on a local issue of debentures under a shelf
registration program of BrR1.5 billion, which should use
proceeds in a similar fashion.

"Overall, this issue will reduce foreign currency denominated
debt, fairly smoothen out the total debt profile, and relieve
2005 amortization requirements," said Standard & Poor's credit
analyst Marcelo Costa.

Despite the fact that about BrR3.5 billion (or 70% of
Eletropaulo's total debt), of which BrR1.2 billion refers to
BNDES financings (rationing recovery or deferred Conta de
Compensacao dos Valores da Parcela "A" receivables) and
BrR1.9 billion refers to pension fund liabilities; count on
different types of pledges on receivables, no notching down was
assigned to this issue. In our assessment, considering an event
of a potential bankruptcy, the amount of receivables trapped as
collateral to those debts would represent only 3% of total
assets because the receivables pledge on those debts are not for
100% of the debts.

The stable outlook on Eletropaulo's ratings reflects Standard &
Poor's expectation that the company will continue to present
adequate performance that results in fairly favorable credit
metrics for the rating category (minimum EBITDA margin of 18%,
minimum FFO to interest coverage of 3.0x, FFO to total debt in
the area of 15%), necessary to mitigate the still limited
financial flexibility.

Primary Credit Analyst: Marcelo Costa, Sao Paulo (55) 11-5501-

Secondary Credit Analyst: Milena Zaniboni, Sao Paulo (55) 11-

LIGHT SERVICOS: Board OKs Debt Conversion Proposal
The board of Light Servicos de Electricidad has approved the
electric power utility's conversion of BRL1.03 billion in debt
into new shares to be held by parent company Electricite de
France (EDF) for a price of BRL11.13, reveals Dow Jones

The conversion is part Light's program to restructure overdue
debts worth BRL1.77 billion. The Company has total debts of
approximately BRL3.7 billion (US$1.5 billion).

The other part of the program requires Light to secure some
BRL727 million from Brazil's National Development Bank (BNDES)
through the issuance of convertible debentures under the bank's
electric power credit program. The debentures could later be
converted into shares worth about 20% of Light's total capital.

BNDES established the special credit line after a number of
electric power utilities ran into financial problems following a
slump in demand resulting from nine months of government-imposed
power rationing in 2001 and 2002.

Light already owes BNDES and Brazil's Treasury some $440

          Avenida Marechal Floriano, 168
          20080-002 Rio de Janeiro, Brazil
          Phone: +55-21-2211-2794
          Fax:   +55-21-2211-2993
          Home Page:
          Bo Gosta Kallstrand, Chairman
          Michel Gaillard, President and CEO
          Joel Nicolas, Executive Director, Operation
          Paulo Roberto Ribeiro Pinto, Executive Director,
                                 Investor Relations and CFO

C O S T A   R I C A

BICSA: Gets Clearance to Operate in El Salvador
Banco Internacional de Costa Rica S.A.'s (Bicsa) has obtained
authorization from the government of El Salvador to open a
representative office in that country. According to Business
News Americas, Bicsa will be able to make loans and investments
in El Salvador, but will be prohibited from taking deposits from
the public.

S&P earlier assigned Bicsa with a foreign currency credit rating
of BB/Negative/B to reflect the bank's low profitability and the
weak growth of its loan portfolio, along with lower
capitalization than one year ago.

Bicsa is a wholesale bank specializing in short-term trade
finance and corporate loans. It operates mainly through Bicsa
Panama, and an agency in Miami.


ALESTRA: Court Throws Out Creditor's Bankruptcy Petition
A creditor of Mexican service provider Alestra failed to secure
approval from a local court on its petition to force the Company
into bankruptcy protection. According to Business News Americas,
the court dismissed the petition filed by Eximius Capital
Funding and ordered it to pay the legal costs involved in the

Last November, Alestra managed to restructure US$630 million in
debt to mature in 2010. Eximius Capital, which holds US$15
million in Alestra debt, rejected an offer to participate in the
debt restructuring negotiations.

CONTACT: Mr. Jorge Escribano
         Alestra - Mexico
         Phone: +52 8 503 5011

DIRECTV GROUP: Completes $1.0B 6 3/8% Senior Note Financing
The DIRECTV Group, Inc. (NYSE:DTV) announced Wednesday that its
subsidiaries, DIRECTV Holdings LLC and DIRECTV Financing Co.,
Inc. (collectively, "DIRECTV"), have closed their previously
announced offering of $1.0 billion aggregate principal amount of
their 6 3/8 percent Senior Notes due 2015. DIRECTV received
approximately $1.0 billion in net proceeds from the offering
and, as previously announced, plans to use the net proceeds from
this offering to repay $500.0 million of borrowings under its
current senior secured credit facility with the remainder of the
proceeds to be retained by DIRECTV for general corporate
purposes. The ten-year senior notes are unsecured and are
guaranteed by all of DIRECTV's material domestic subsidiaries.

The senior notes were sold pursuant to Rule 144A and Regulation
S under the Securities Act and have not been registered in the
United States under the Securities Act or in any other
jurisdiction and may not be offered or sold in the United States
absent registration or an applicable exemption from the
registration requirements.

The DIRECTV Group, Inc. (NYSE:DTV) is a world-leading provider
of digital multichannel television entertainment. For more
information please visit

        Bob Marsocci
        Phone: 310-726-4656

SATMEX: Court Sets July 7 Bankruptcy Petition Response Date
A US court gave creditors of Mexican satellite operator Satmex
and the Company's CEO Sergio Autrey until July 7 to resolve
their differences regarding a US bankruptcy filing, says
Business News Americas.

Late last month, US bondholders of at least US$379 million owed
by Satmex filed an involuntary bankruptcy petition in the U.S.
Bankruptcy Court for the Southern District of New York. June 15
was the deadline for Satmex to respond to the suit.

However, the court extended the deadline after Autrey and the
bondholders, who represent 36 investment funds, reached an
agreement at the last minute.

The new deadline could still be shortened if Satmex or a
creditor decides to file for bankruptcy under Mexican bankruptcy
law, known as a concurso mercantile. Recent speculation suggests
that some Mexicans want any bankruptcy proceeding to fall under
the jurisdiction of Mexico.

The Mexican government holds a US$188-million note for a loan it
made to Firmamento, a holding company controlled by Autrey, when
Satmex was privatized in 1997. The government is apprehensive
that the note may not be considered as Satmex debt under US law
and would be lost in a debt restructuring deal. In other words,
it allegedly fears that the loan would be written off as part of
a haircut debt-restructuring plan carried out in the US.

Satmex has been in default since 2003, now on a total of US$523
million within a debt load that reportedly totaled US$800
million in December 2004.

TV AZTECA: Azteca Holdings Redeems $60M Notes Due 2005
- Also Amortizes US$24 Million and US$2 Million Maturities of
its 2008 Notes
- Aggregate Amortizations of US$139 Since July 2003 Cut Debt in

Azteca Holdings, S.A. de C.V., the controlling shareholder of TV
Azteca, S.A. de C.V., one of the two largest producers of
Spanish language television programming in the world, announced
today that it redeemed its 12% Senior Notes due June 15, 2005
with an outstanding balance of US$60 million. The source funds
for the redemption come from private financial institutions and

The company also amortized maturities of US$24 million from its
12% Notes, and US$2 million from its 10_% Notes, due 2008.

Azteca Holdings, the owner of 55% of the capital stock of TV
Azteca received US$32 million from a US$59 million distribution
to shareholders made by TV Azteca on June 9, as part of an
ongoing cash distribution plan. Azteca Holdings used the
proceeds to amortize US$26 million in maturities, and to make
corresponding interest payments on its total debt.

The US$26 million amortization, when added to prior debt
reductions made by Azteca Holdings since July 2003 of
approximately US$113 million, represents a reduction of the
company's total debt by US$139 million, or 50%, to US$140
million from US$279 million.

"We are committed to continue satisfying our obligations
following the schedule of our maturities, which entails being
debt free by 2009," said Diego Foyo, Chief Executive Officer of
Azteca Holdings. "In the process we are substantially
strengthening our capital structure, further reducing interest
expense, and at the same time eliminating the risk of the
holding company selling TV Azteca shares to cover this debt."

TV Azteca shareholders have approved additional cash
distributions for 2005 under the ongoing disbursement plan, of
approximately US$21 million to be made on December 1. Azteca
Holdings expects to use its corresponding portion of the
proceeds to make interest payments.

Azteca Holdings, S.A. de C.V. is a holding company whose
principal asset is 55% of the capital stock of TV Azteca, S.A.
de C.V.

TV Azteca is one of the two largest producers of Spanish
language television programming in the world, operating two
national television networks in Mexico, Azteca 13 and Azteca 7,
through more than 300 owned and operated stations across the
country. TV Azteca's affiliates include Azteca America, operator
of a broadcast television network focused on the rapidly growing
United States Hispanic market; and, operator of an
Internet portal for North American Spanish speakers.

TV AZTECA/ELEKTRA/IUSACELL: Salinas Downplays Delisting Effects
Mexican tycoon Ricardo Salinas made light of the potential
negative effects of the delisting of his three companies from
the New York Stock Exchange (NYSE), says Business News Americas.
Speaking to reporters during an opening of a new branch of his
retail chain Elektra, Mr. Salinas revealed the Salinas Group
earns US$1 billion per year, so there should be no problems of
cash flow.

The Salinas Group informed the NYSE this week that the American
Depositary Receipt (ADRs) program that television channel TV
Azteca (NYSE: TZA), mobile operator Iusacell (NYSE: CEL), and
Elektra have in the United States will cease to trade in July
and shareholders will have 60 days to exchange their stock for
stock traded on the Mexican stock market BMV.

According to Mr. Salinas, most of the companies' majority and
minority shareholders were convinced delisting was the best
option for the companies given that trading in the US, "no
longer has any benefits."

The delisting will result in a considerable reduction in costs
associated with trading on the NYSE, Mr. Salinas stated.

Meanwhile, the delisting has spurred speculation that it had
more to do with fraud charges brought by the US Securities
Exchange Commission (SEC) against Mr. Salinas and other TV
Azteca officials over a 2003 debt transaction involving Salinas'
other mobile phone company Unefon.

P U E R T O   R I C O

R&G FINANCIAL: Wolf Haldenstein Commences Class Action Lawsuit
Wolf Haldenstein Adler Freeman & Herz LLP filed a class action
lawsuit in the United States District Court for the Southern
District of New York, on behalf of all persons who purchased or
otherwise acquired the securities of R&G Financial Corp. ("R&G
Financial" or the "Company") (NYSE: RGF - News) between April
21, 2003 and April 25, 2005, inclusive, (the "Class Period")
against defendants R&G Financial, certain officers and directors
of the Company, and R&G Financial's accountant and auditor,
PriceWaterhouseCoopers, LLP.

The complaint alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements throughout the Class Period that had the effect of
artificially inflating the market price of the Company's

The complaint further alleges that defendants made statements
during the Class period that were materially false and
misleading when made because defendants, including R&G
Financial's accountant and auditor, PWC, failed to disclose or
indicate the following:

(1) that R&G Financial's earnings quality had been significantly
weakened by the Company's use of more aggressive assumptions to
generate gain on sale income, as well as to the value it
retained in its IO residuals in securitization transactions;

(2) that R&G Financial's methodology used to calculate the fair
value of its IO residual interests retained in securitization
transactions was incorrect and caused the Company to overstate
its financial results by at least $50 million;

(3) that the Company's financial statements were not prepared in
accordance with GAAP and GAAS;

(4) that the Company lacked adequate internal controls and was
therefore unable to ascertain the true financial condition of
the Company; and (5) that as a result, the value of the
Company's net income and financial results were materially
overstated at all relevant times.

If you purchased or otherwise acquired R&G Financial securities
during the Class Period, you may request that the Court appoint
you as lead plaintiff by June 27, 2005. A lead plaintiff is a
representative party that acts on behalf of other class members
in directing the litigation. In order to be appointed lead
plaintiff, the Court must determine that the class member's
claim is typical of the claims of other class members, and that
the class member will adequately represent the class. Under
certain circumstances, one or more class members may together
serve as "lead plaintiff." Your ability to share in any recovery
is not, however, affected by the decision whether or not to
serve as a lead plaintiff. You may retain Wolf Haldenstein, or
other counsel of your choice, to serve as your counsel in this

CONTACT:  Fred Taylor Isquith, Esq.
          Gustavo Bruckner, Esq.
          Paulette S. Fox, Esq.
          Derek Behnke
          270 Madison Avenue, New York, New York 10016
          Tel: (800) 575-0735

T R I N I D A D   &   T O B A G O

BWIA: Task Force Advises 12-Year Restructuring
The seven-member task force appointed by the government to make
recommendations for the viability of BWIA advised the government
to restructure the cash strapped state-owned airline over a 12-
month period.

But the Jamaica Gleaner reports that the task force, chaired by
businessman Arthur Lok Jack, has warned that restructuring would
be the "most difficult (option) to execute."

The task force further warned that restructuring should only be
undertaken under certain critical conditions, otherwise this
would be "the worst option."

Chief among the conditions is a complete overhauling of BWIA's
current management structure that would include, critically, the
introduction of entirely "new leadership" with particular
reference to the airline's board of directors and senior

         Phone: + 868 627 2942
         Home Page:


PDVSA: SEC Commences Investigation at US Refining Unit
The US Securities and Exchange Commission (SEC) is currently
carrying out an investigation into Citgo Petroleum Corp., the US
refining arm of Venezuelan state oil firm Petroleos de Venezuela
SA (PDVSA). According to Citgo's auditor general, Vladimir
Noriega, the investigation was launched after an employee at the
auditing office sent a letter to the SEC and Citgo's auditing
firm KPMG denouncing irregularities at the firm.

The SEC investigation is the latest probe into Houston-based
Citgo, which is also the focus of an investigation by
Venezuela's National Assembly.

Even though the allegations made by the employee are not
directly related to any of the cases being investigated by the
National Assembly, sometime during the last few weeks the SEC
requested from Citgo information related to refinancing
operations carried out last year, the moving of the Company's
central offices from Tulsa, Oklahoma to Houston, Texas, and
certain presumably untoward payments.

Nevertheless, Mr. Noriega assured that, up until now, none of
the matters being investigated by the SEC has entailed specific
accusations. Mr. Noriega also attributed the letter written by
the employee to the "Venezuelanizaton" of PDVSA's subsidiary -
specifically of the Auditor's Office, which had been causing
resentment among some employees.

Mr. Noriega added that this situation has caused internal
clashes during the days approaching the deadline set by the SEC
for providing the subsidiary's quarterly financial reports.

"We considered this to be sabotage and therefore opened an
investigation concerning the denouncements made by this

Even though Citgo has rigorously met its deadlines in submitting
its financial balances to the SEC, PDVSA has not submitted the
corresponding reports pertaining to 2003 and 2004 or those
relating to the first quarter of 2005.

Repeatedly, PDVSA directors have announced dates for the final
submission of these documents, which were to have the
endorsement of KPMG, but that has not materialized.


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter - Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Sheryl Joy P. Olano, Editors.

Copyright 2005.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
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