Bloomberg

(Bloomberg) -- Switzerland’s top criminal court has paved the way for the release of records that could provide details about money flows in a sweeping Venezuelan corruption investigation.

In an as-yet unpublished decision, the court rejected one of two appeals from Swiss bank account holders who sought to block the handover to U.S. federal investigators of transaction records linked to Venezuela’s state oil company Petroleos de Venezuela SA, according to Folco Galli, a spokesman for the Federal Office of Justice in Bern. The second appeal is still pending, he said.

Federal prosecutors in New York and Houston are probing connections between PDVSA, the linchpin of Venezuela’s oil industry, and local executives at firms including Derwick Associates, a Venezuelan energy company. The U.S. is looking into whether billions of dollars in funds obtained through corrupt activity flowed directly or indirectly from Venezuela to Switzerland, according to a person briefed on the matter, who asked not to be named because the matter is still under investigation.

Switzerland’s Federal Office of Justice, which coordinates international requests for extradition or other legal assistance, gave initial approval in March to hand over details to Texas prosecutors of wire transactions between eight banks and individuals or companies suspected of bribery or other criminal conduct in Venezuela. The office said it handed over data in early June from a separate set of clients of four banks who had not challenged its decision.

Information Request

Preet Bharara, the U.S. Attorney in Manhattan, requested information on 18 Swiss banks last year to assist in his investigation into Derwick Associates, the Swiss government said in March, some of which overlap with the eight cited by Houston prosecutors. The Swiss Justice Office is currently evaluating whether the documents it has gathered are needed to pursue criminal proceedings in the U.S., the office’s spokesman said. It will then determine the extent of its legal assistance, he said.

Swiss authorities have not named any of the 18 banks, as is their practice, and none of them have been accused of wrongdoing. They include UBS Group AG and EFG Bank AG, the person briefed on the matter has said. A spokesman for UBS declined to comment, as did a spokeswoman for EFG.

While the Swiss banks themselves are not targets of Bharara’s office, any evidence of lax oversight of suspicious transfers of money from Venezuela could expose them to regulatory action in the U.S., the person said.

Spokesmen for the U.S. Justice Department and Bharara’s office also declined to comment.

The second appeal before the Federal Criminal Court is still under consideration, said a spokeswoman for the court. She declined to provide further details of the rejected appeal because it has not yet been published. Under Swiss law, the identities of the appellants in the cases aren’t disclosed.

To contact the reporters on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net, Greg Farrell in New York at gregfarrell@bloomberg.net. To contact the editors responsible for this story: Alan Katz at akatz5@bloomberg.net, Simone Meier

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