Archive for October 1st, 2003

The timeline of PDVSA’s lies on its financials

October 1, 2003

Yesterday I reprinted an article from Dow Jones on how PDVSA had yet to present its financials to the US Securities and Exchange Commission. Today’s Tal Cual had a complete description of what the Government had said on the issue:

June 27th.: Ali Rodriguez (President of PDVSA) says they are waiting for the close of January and February and have asked for an extension from the SEC. (My comment: This is ignorance, you don’t need those months to prepare 2003 financials)

June 29th.: The President of PDVSA says that even though they could ask for a second extension, they expect to have the financials ready in fifteen days. (My comment, more ignorance, it would take at least three months after PDVSA completed its financials for any firm to audit them fully)

June 30th. : PDVSA Finance hands in its financials under the form 6K (not 20F as it should have been) and registers as requesting an extension.

July 1st.: Minister of Energy and Mines Ramirez says PDVSA had handed in its reports to the SEC, in truth, it had only been its subsidiary PDVSA Finance (My comment: Ignorance or trying to fool all the people all the time, this is the same guy who says weekly that PDVSA is producing over three million barrels of oil a day, while OPEC reports 2.5 million)

July 14th.: Ramirez announces that the financial statements have been completed and will be audited in fifteen days (My comment: This guy is extremely ignorant)

July 15th.: Extension ends PDVSA does not file.

July 23d. : The Vice-Minister of Energy and Mines announces that at the latest they will hand in the audited financials to the SEC by August 30th., but they can do it until September. 30th.

September 30th.: PDVSA does not hand in the financials, sources within the company tell Dow Jones it will be done by Oct. 30th., my sources say no way.

My guess is that the autumn equinox interfered with the auditors too.

CNE authorizes recall petitions.

October 1, 2003

The Consejo Nacional Electoral (CNE), which regulates elections, admitted all of the requests to gather petitions for the recall referenda presented by the Govrnment party MVR as well as the opposition and gave each side five days to supply the dates and location of where the signatures will be gathered for all of them. Even if the MVR’s requests were flawed, I am glad they were admitted. This step has no legal basis whatsover in my humble opinion.

Chavez denies links to terrorism

October 1, 2003

President Hugo Chavez denied today the accusations in an article in US News & World reports (see below) that his Government had terrorist links. According  to Chavez (version is Spanish here) he wants normal relatiosn with the US, blaming extreme right-wing US groups for it. He drew a parallel between this and whta happened to Chilean President Salvador Allende in the 70’s. He did not explain why his Government did not sign the proclamation agaisnt terrorism in Paraguay in August……

The autumn equinox ruins Chavez’ program…..

October 1, 2003

Last Sunday Chavez’ traditional and lengthy Sunday program was not broadcast. Rumor has it the reason was that MVR had not defined its strategy on referendum issues. But the best part was the explanation given by the Minister of Infrastructure Jesse Chacon for cancelling the program:

“the incidence of the atmospheric phenomenon known as the autumn equinox, which has been present in our country between September 25th. and 30th. makes transmissions difficult in the time period between eleven in the morning and two in the afternoon.”

I confess getting the feeling I wasted my time getting a science Ph.D. and having no knowledge about this obviously very interesting and novel atmospheric phenomenon known in revolutionary circles as the autumn equinox…..

This is what makes this a true revolution, these guys are capable of getting up in front of a microphone, keep a straight face and say the most unbelievable things or explanations about any subject, knowing that they have no clue about what they are talking about. Maybe Minister Chacon made some wine before making his statements.

Referendum Regulations: Terrible but great!

October 1, 2003


The new referendum regulations are terrible. Terrible, because they violate the spirit of what a referendum is supposed to be. They make it complicated, cumbersome and almost impossible to gather sufficient signatures to recall any public official. Only if the voters are extremely upset or disappointed will a recall vote ever be possible in Venezuela given these new regulations. Simply allowing only four days to gather the required signatures is absolutely ludicrous and, in my mind, goes against the spirit of what a recall referendum should be. Moreover, publishing the National Identification number of each and everyone that signed the petition for the recall, is a limitation of the right to privacy in a country where political cronyism is the rule of the day, where a large fraction of working and voting Venezuelans work for the Government and where politics influences who is hired for low paying Government jobs. Finally, the idea that each and every signature in the petition will be checked until the minimum number of people that is required is validated, is simply an insult to technical concepts. It is obvious that sampling would suffice, but the regulations are meant to impede the presidential referendum against Hugo Chavez from ever taking place.


And all of the above is what may make these regulations great in the medium term, if the recall referendum against President Hugo Chavez is ever held. While I am a believer that the Constitution is meant to be respected, Chavez’ 2000 Bolivarian Constitution is absurd, in that it pretends to introduce the concept of participatory democracy to all levels, allowing all public officials to be recalled whenever a certain percentage of signatures is gathered in a petition. The same would be true of consultative referenda on any issue that the public may feel is important.


While the idea of a participatory democracy like that may be appealing at first sight, it is just too simplistic. In a country like Venezuela, it could be used by the opposition to create constant uncertainty and instability. Imagine this: Every single Monday for a year, the opposition hands in a petition for a recall referendum against one Government official. According to Venezuelan laws, the request for the referendum has to be handled within a certain time frame, forcing the Electoral Board to hold a recall referendum against the Government essentially every single week for the next year. Of course, the Government could counter these actions by the opposition doing exactly the same, creating even more instability. Thus, the country would be constantly immersed  in an electoral carnival, where each side would hail its victories or minimize its defeats every Sunday. This would also be very costly process, consuming time and keeping the attention focused on politics rather than on working for the country (As if politicians needed more distractions).


And that is why these regulations may turn out to be great in the end. Without them, the Venezuelan Constitution would have had to be rewritten sometime down the road, to eliminate the dangers of this misconceived form of democracy. But the way they stand now, each time either the Government or the opposition wants to hold a referendum it has only four days to gather all of the required signatures, which in my opinion will usually be quite difficult. This will require a highly motivated volunteer force, excellent funding and a strong interest on the part of the electorate to recall the candidate or have a vote on an issue.  Thus, the overregulation of the referenda in the end may turnout to be a blessing in disguise, forcing politicians and public groups to think twice about having a referendum and only having one when the issue is extremely important or when the electorate is sufficiently disappointed with an elected official. This is what is happening today. A large fraction of Venezuelans is extremely disappointed with Hugo Chavez, his Government and all their failed promises. Even then, I believe that the hard part will be to get the signatures in only four days and not to get the votes on the day of the referendum. There are simply too many limitations and huge possibilities for intimidation and interference. After gathering the signatures, the recall referendum itself will seem extremely easy.  As usual, this is an example of the true nature of the Chavez revolution. The Constitution was written at the height of Chávez and his MVR’s popularity, nothing could go wrong, their popularity would always be with them, so they created a fantasy democracy, where referenda would be held to expand and extend their control over the country and its political system. Now this is all gone, so these set of terrible, but yet great regulations were introduced, in order to limit the power of what they thought once would be a powerful weapon: participatory democracy.

And how about those PDVSA financials, where are they?

October 1, 2003

From Dow Jones via The Wall Street Journal:

CARACAS — Venezuela’s state-owned oil monopoly Petroleos de Venezuela (E.PVZ) failed to file its annual 2002 financial report to the U.S. Securities and Exchanges Commission before the deadline expired Tuesday and will need at least another month, said a company spokesman late Tuesday.

External audit of the report required more time, said the spokesman. “We now aim to have it ready by the end of October,” he added. The SEC filing is required given the fact several wholly-owned units operate in the U.S. and had to be filed on Tuesday.

PdVSA had already asked for an extension of 15 days after it failed to meet the first deadline, which expired June 30. Extensions from the SEC aren’t uncommon and are usually granted, and financial market participants aren’t likely to worry too much over a small delay. However, the failure to meet the Sept. 30 deadline will raise some eyebrows in the global and domestic financial community.

A loss in credibility in the financial market could make borrowing more expensive while a fine is also possible.

PdVSA asked for the delay in the filing because of the disruption of their accounting system due to a two-month strike that started in December last year. The strike was aimed at the ouster of President Hugo Chavez from office. After surviving the strike, Chavez dismissed about 18,000 PdVSA workers, or about half the staff. While replacement workers, retirees, and those who stayed on their jobs eventually managed to bring operations at the oil fields almost back to normal, some observers note that not all of the company’s units are back up to speed.

About 87% of the 1,400 people who had been employed at the finance department before the strike started have been fired. The government said it wouldn’t hire back any of the workers that were fired due to their participation in the strike.

Now, on July 1st. the Minister of Energy and Mines said that PDVSA had asked the SEC for a thirty day extension. I called him ignorant at the time. It is now 90 days later and nothing has been filed. I bet it will not happen in October either, these audiing companies will not risk their reputation certifying PDVSA’s finances, without being extremely careful about them. Actually, I am very eager to see the financials, I would bet the notes by the Auditors will provide a rare glimpse at corruption and mismanagement at the oil company. In fact, the 2003 financials should be even better if we want to send to jail all the corrupt and incompetent people at PDVSA!

The normal operation of PDVSA

October 1, 2003

Everything at PDVSA is not quite normal as shown by these pictures of a barge burning in front of a PDVSA platform.  Thes type of accidents are now routine, while they were rare before.