The Devil's Excrement

There is so much information floating around that it is really hard to make sense of it all. But I will give it a try, because there are a lot of confusion and complex facts surrounding the murder of Danilo Anderson and its aftermath. Writing them helps understand things.

The Murder:

The bomb that blew up Anderson’s car was made out of 250 grams of C-4, reportedly the smallest size in which that explosive is available. Even if C-4 is not commonly available, it is mostly used by the military; sufficient amounts of it are missing from Venezuelan military facilities that anyone could have made the bomb. The police have been contradictory about where the device was placed. The first report talked about two devices or two timers which has never been mentioned again. After that, various police spokesmen have talked variously about a bomb on the outside of the chassis of the car and a bomb underneath the driver’s seat. In either case, the bombing was carried out with “military” precision, Anderson was killed and the car burned.

People are making a big deal out of Anderson’s cell phone surviving intact, but there may be any explanations for this. I think it was weirder that a high Government official had been murdered and a bunch of other Government officials showed up without any bodyguards, standing around publicly in an area where ten minutes earlier a bomb had exploded. There could have been other devices around. Are they that stupid?

The whole style smells like a military operation, not a police operation, but sometimes police members come out of the military anyway. However, as we will see below all of the “suspects” to date have been more police related than military and are connected by their love of guns.

The Reaction:

The Government acted with the outrage that the situation merited, but that it never exhibited with the over 170 people that have died in political acts during the last three or four years. The opposition unanimously condemned the murder. The Minister of Interior and Justice initially acted with caution. The same could not be said of the Vice-president and some Deputies of the National Assembly.

The Vice-President accused Cuban-Venezuelan activists in Miami and called on the US to expel some of them. This was prompted in part by irresponsible statements by TV personality Orlando Urdaneta that said the problems of Venezuela could be fixed with one well placed shot.

National Assembly member Iris Varela blamed Colombian paramilitary in association with former police members of the Metropolitan police in Caracas. Initially one of them was jailed for the case only to be later charged for the murders of April 11^th. 2002.

The Attorney General said that Danilo Anderson was killed because he could not be bought, but never clarified who was trying to buy him or why.

Anderson’s funeral turned into a political act. The Government took advantage of it to make him look like a martyr with some of his biggest enemies showing up to carry the casket. One of the biggest mysteries was the apparent presence of one of the murderers of Altamira Square the day after the recall referendum, who was right at the front, quite close to the attorney General. Here are some blow ups from both the funeral and the pictures I posted on August 17^th. of the murders. While the identification is not conclusive, the resemblance is quite strong. What is bothersome is that this man is supposed to be in jail. In fact, his lawyer today said he was in jail, leading everyone to question what he was doing at the funeral if it was him:

Side Story # 1: At this point it is important to point point out that one of Danilo’s best fiends Councilman Carlos Herrera began accusing the Vice President of being involved in the murder, saying Rangel was pressuring Anderson to remove some people from the list of those being charged for rebellion by being at the presidential Palace on April 12^th.

Side Story #2: The man in the pictures above is supposedly of Colombian origin (not Cuban like many have said) and had lived in the Petare area of Caracas for years. He has claimed to work for Rangel’s son and said he was protected by the Vice-President.

Side Story #3: Some people in the list of those that went to the Presidential Palace that day have been reportedly blackmailed for up to US$ 500,000. One of them reportedly went to Rangel and told him that he refused to pay and would go public and make accusations about it. Maybe this explains #1, Rangel called Anderson and Anderson felt pressured enough to tell his friend.

The initial reaction of the Government to the murder suggests that it had nothing to do with it. However, much like the opposition, the Government is not a monolithic front that acts as one block and there are certainly radical fringe groups within it as capable as doing something that horrific, in the same manner that there are fringe groups in the opposition also capable of doing it.

At first sight, it is difficult to imagine what the Government could get out of it. On the contrary, the murder opens a can of worms that may lead many of those that are part of it to leave, out of fear the jobs they occupy which are badly paid. Moreover, if it was sanctioned by the Government it could only be known by a small group which would generate suspicions and backstabbing within it. Thus, the only reason to murder Anderson would be to make the opposition look bad and that would imply having planted evidence ahead of time to accuse certain groups which does not appear to be the case so far. But the death also opens a dangerous Pandora’s Box, showing both sides that such killings are indeed possible.

The opposition also gets nothing out of it, but its fringe groups who field cornered are certainly capable of it and Anderson certainly was very symbolic of persecution and intimidation to make him a symbol. The same could not be said for a Government sanctioned murder.

The Government Suspects

Sometime early this week, there was a confrontation between police and lawyer Antonio Lopez Castillo. Lopez Castillo was driving his girlfriend’s car when an unmarked Toyota tried to pass him and block his way. Lopez accelerates as the other car overtakes him, two heavily armed men get out of the car and Lopez runs over one of them. As Lopez gets out of his car with a weapon, he is shot numerous times and killed.

According to the Government, they were following Lopez as they suspected he was involved. However some suggest the cops thought they were following General Gonzalez Gonzalez, one of the leaders of Altamira square, who is in hiding. Below the picture of Lopez on the left and Gonzalez Gonzalez in two different shots, one taken by me at a mach in 2003.  They are both quite bald and have similar features. Witnesses say Lopez never managed to shoot and Lopez was shot many times and was given a last shot on the Head as he was lying on the ground.

The Government claims Lopez was an explosives expert. He was certainly a gun collector, but according to the head of the law firm where he worked he had little interest for politics. The Government claims he took a CIA course and had a diploma from it, which is really funny. I understand he took a private course on explosives. Lopez’ work as a lawyer had nothing to do with political cases. Lopez was a member of the shooting Club Magnum where many ex-cops and ex-military hang around. That may be as far as his involvement in this case goes.

For the Government this was however a problem, they had a dead body and no apparent reason to kill the suspect. Thus, they show up at Lopez’ parents house both of whom held important positions in the Caldera Administration in the 70’s and his mother was a social Christian Senator for many years.

Intelligence police showed up to search the house illegally, as they had no orders from a Judge. Later they claim there was a phone order, which is simply illegal. They immediately claimed to have found explosives all over the house as well as weapons, shown below, some of which Lopez’ mother said she had never seen. Reportedly, there were C-4 packages stuck to the underside of the kitchen table. One of the maids of the house said that she had never seen those explosives and the cops went straight to where they “found” them. Lopez’ parents where handcuffed and taken to jail and publicly mistreated. Even Vice-President Rangel said that they were not treated properly.  Ironically, the Head of Lopez’ law form was the Minister of Justice in 1959 who had to deal with the prosecution of the Dictators’ goons and hatchet men then.

Separately, another cop was killed in Barquisimeto yesterday and three other ex-cops have been detained on the case, one of them the Head of the Magnum club where Lopez used to practice. Separately the Minister of Justice continues to use a lot of innuendo, suggesting Anderson was being followed, according to videos from a shopping center, but has yet to show any of this evidence and how it relates to the suspects.

So far, I am not very convinced. I think the case points to military and all of these suspects, jailed and killed are unrelated to the case but somehow the Government could care less if they are guilty or not. Going after these cops with little evidence and shooting on sight is certainly not the way to go to clear the case. It may be too early to reach conclusions, stay tuned for more developments in the next few days. We might be able to see clearer then.

While I have been around reading your posts, things have been too hectic and connections too brief to even attempt to comment and respond to what has been said or to what has happened in Venezuela in the last three days.

This is a very dangerous time for Venezuela and Venezuelans. Both sides should try not to make mistakes. A mistake by either side could take a country into a dangerous and terrible path that nobody wants. Maybe only a few even understand it.

Thursday’s terrible murder should not happen again, but it may. This was the first major assassination in Venezuela of a terrorist nature since 196,7 when Government official Iribarren Borges was killed. That case was never cleared up and those responsible were never identified. We should be so lucky if the Danilo Anderson’s assassination had no repercussion’s like that case.

I have to confess that I had been proud of Venezuelans because something like this had not happened before in the last five years. The Chavez Government had pushed and cornered too many people to the breaking point. Despite this, Venezuelans had held their cool, nobody had had the reaction of cornered animals that you would expect. But now they did and the future holds too many horrific dangers. Neither side should blink. Everyone should keep their cool. But will they? Do they understand the terrible and profound effects that the Danilo Anderson case may have on this poor country?

 So far I would say yes and no. The Minister of Justice Jesse Chacon appears to have at least a good feeling that this is no time to rush to judgment and has been remarkably cool and discreet. The same can not be said about the Vice-President and the Minister of Information. To accuse some people because they have said stupid things on the radio is irresponsible. To ask the US to investigate these cases is to skirt responsibility. When a Government undermines institutionality and the independence of powers, it is at times like this when they are most needed. And currently they are. Right now, what the country needs for the sake of both sides is a credible investigation of the assassination. Not rumors, not silly accusations. Not one mistake at assigning blame. What is uncertain is whether this is possible.

It is almost impossible to assign blame at this case by conjecture. Danilo Anderson was no heroe as some want to suggest and have suggested in this blog. He was a tool of the impunity and repression that has ruled this country for the last five years. In fact, he prosecuted the El Llaguno shooters who were in the end freed. He jailed Henrique Capriles Radosnky for months and in the end the Judge that freed him said that the crime that Capriles supposedly had committed did not even have a jail sentence in our penal code. But he did spend four months in jail anyway because Anderson manipulated the legal system. He also prosecuted the Sumate leaders (THIS IS INCORRECT!) and, according to the Supreme Court only last week, he denied them their right to due process and the defense was not a le to present evidence in favor of the defendants. Anderson even tired to have them jailed on top of this incinsistencies. He was no hero. But he did not deserve and nobody deserves this ending either.

Perhaps the answer to who killed him lies in the case that he was prosecuting against more than three hundred people who went to the Presidential palace on April 11th. 2004. He was going after everyone that showed up that day. He was accusing of rebellion those that signed the Carmona decree as witnesses, as well as those that signed into the Palace. Too many people from all walks of life. Too many military and former military accused of rebellion, a crime that Venezuelan law requires you to hold a weapon against the recognized Government for anyone to be charged with.

This case involved too many people, too many active and former military, most of which are used to violence, obedience and intolerance. And the case also ignored those that are in Government today or have been in the past. The key witness, retired General Lucas Rincon whose famous words “And he accepted” still resonate in the minds of all Venezuelans, was not even called to testify once and nobody has been sentenced for the twenty people that died on April 10th. 2002.

And there is too much intolerance today on both sides. But the same way you can not accuse everyone that support Chavez of radicalism, you can not accuse everyone in the opposition of being capable of this horrific crime. In fact, only a few can possibly be considered to reach these extremes at this time. And it is not a time for the extremes to prevail. It is not a time for the middle ground of the country to embark on a path that nobody wants and that can bring nothing positive for all of us. The opposition has expressed only outrage about the assassination, which the Government and its leaders never showed for the many victims of the state sponsored violence seen in the last three years.

It was wrong for Government supporters to invite “the people” to demonstrate against the assassination at the same time that they were accusing the opposition of causing it. It would be wrong for the opposition to question the results of a serious investigation. It would be wrong of the Government to use this as an excuse to persecute and intimidate. This is not a time to rush to judgment. This is not a time to improvise.

 This is not a time for empty promises. What is at stake is too important for everyone. When people feel trapped, oppressed or persecuted they may react in unexpected ways. Governments do have the higher responsibilities than everyone else. In this case, they are higher than have ever been.

Last night, I made the post below right before going to bed about an explosion in the car of Prosecutor Danilo Anderson. At the time, I was surprised at the high level Government officers present at the site, but none of them even suggested that there was a body (maybe they did not know). It turns out that there is a body presumed to be that of political prosecutor Anderson, but the remains have yet to be iodentified.

Anderson (above left) was originally an enviromental Prosecutor who began being used for political cases by Prosecutor/Attorney General Isaias Rodriguez. He led all political sensitive case, including the charges hat led to the prison of Capriles Randonsky, Sumate and the more than 200 opposition figures that went to the Presidential Palace in April 2002. He was also the Prosecutor in the Puente El Llaguno case, where the shooters that were seen on live TV were freed and eight policemen remain in jail to this date. Only two days ago, the Venezuelan Supreme Court reprimanded the Prosecutor in the case against Sumate.

One can speculate, but this is a case that needs to be investigated and solved. There can not be impunity if it is a terrorist act. It can not be used as an excuse for even more political prosecution. This presents a severe test to a Government not used to solving cases. It is a dark day for this country. Let us hope that this is not the beginning of even darker times ahead.

-The economy grew 15.8% in the third quarter when compared to the same quarter last year.

-A bomb reportedly exploded in super political prosecutor Danilo Anderson’s car.

-I will be going away to visit a sister for a few days, will update by e-mail till Thangsgiving.

The Chavez Cabinet sounds like a game of musical chairs. Here is what is being rumored, announced and suspected:

-The Minister of Health will be replaced by General Baduell’s sister.

-The Minister of Finance Tobias Nobrega will be replaced by the Treasurer Captain Carmen Maniglia, who happens to be the wife of the General who is the Commander of the Army. Nobrega will reportedly become President of the Central bank in January.

Technically, Nobrega is way better than Maniglia. Reportedly the move was pressed by Minister of Planning Giordani who is no an economist but has his very own economic ideas. Giordani is honest and well meaning but he was in charge of economic policy and it was a disaster as his policies were inconsistent. He also promoted his lifelong dream of the Orinoco-Apure river axis, in which US$ 500 million was spent, but nothing came of it.

Nobrega on the other hand, had the technical knowledge to fix short term problems, but never seem to address the many distortions in the economy. Moreover, many transactions were leaked ahead of them or questioned and many profited which led many to question the ethics of his office.

-Ali Rodriguez will become the new Foreign Minister. Anything is an improvement over the current one.

-Minister of Energy of Mines Ramirez will reportedly become both President of PDVSA and hold his current job. I don’t think anyone is competent enough to hold both jobs at the same time, least of all Ramirez. I think PDVSA should be run as a for profit corporation in order to run it efficiently and provide the highest return for the country. That job alone is a tall enough task for anyone. The Ministry should devote itself to set country wide policy and establish guidelines for PDVSA, no more, no less.

As Minister, Ramirez has shown to be too politically involved and doe not appear to have the technical know how needed. His explanations of the reasons for the cutbacks in Orimulsion, increased royalties for heavy oil projects and oil production demonstrate that he does not know enough about oil in my own personal opinion.

-Reportedly Minister of education Aristobulo Isturiz will also be replaced. He had been a fixture in the Cabinet ever since he lost the union elections as a candidate for Chavez’ MVR, only six months after publicly stating that Chávez appeared to have smoked an egg roll with his actions and speeches.

Personally, I would have named former Minister of Finance Rojas, who is in the Finance Department of PDVSA as Head of that corporation. Nobrega is probably a better choice at the Central Bank that at Finance, but having Giordani and Maniglia in the Planning/Finance axis is very bothersome. Neither has the depth and technical expertise for the jobs. Moreover, Giordani has some very peculiar economic ideas. Baduell’s sister is at least a veteran of the Health Ministry, a career civil servant from even before Chavez came to power.

In the end, Chavez’ new, new Government looks the same.

The Chavez Cabinet sounds like a game of musical chairs. Here is what is being rumored, announced and suspected:

-The Minister of Health will be replaced by General Baduell’s sister.

-The Minister of Finance Tobias Nobrega will be replaced by the Treasurer Captain Carmen Maniglia, who happens to be the wife of the General who is the Commander of the Army. Nobrega will reportedly become President of the Central bank in January.

Technically, Nobrega is way better than Maniglia. Reportedly the move was pressed by Minister of Planning Giordani who is no an economist but has his very own economic ideas. Giordani is honest and well meaning but he was in charge of economic policy and it was a disaster as his policies were inconsistent. He also promoted his lifelong dream of the Orinoco-Apure river axis, in which US$ 500 million was spent, but nothing came of it.

Nobrega on the other hand, had the technical knowledge to fix short term problems, but never seem to address the many distortions in the economy. Moreover, many transactions were leaked ahead of them or questioned and many profited which led many to question the ethics of his office.

-Ali Rodriguez will become the new Foreign Minister. Anything is an improvement over the current one.

-Minister of Energy of Mines Ramirez will reportedly become both President of PDVSA and hold his current job. I don’t think anyone is competent enough to hold both jobs at the same time, least of all Ramirez. I think PDVSA should be run as a for profit corporation in order to run it efficiently and provide the highest return for the country. That job alone is a tall enough task for anyone. The Ministry should devote itself to set country wide policy and establish guidelines for PDVSA, no more, no less.

As Minister, Ramirez has shown to be too politically involved and doe not appear to have the technical know how needed. His explanations of the reasons for the cutbacks in Orimulsion, increased royalties for heavy oil projects and oil production demonstrate that he does not know enough about oil in my own personal opinion.

-Reportedly Minister of education Aristobulo Isturiz will also be replaced. He had been a fixture in the Cabinet ever since he lost the union elections as a candidate for Chavez’ MVR, only six months after publicly stating that Chávez appeared to have smoked an egg roll with his actions and speeches.

Personally, I would have named former Minister of Finance Rojas, who is in the Finance Department of PDVSA as Head of that corporation. Nobrega is probably a better choice at the Central Bank that at Finance, but having Giordani and Maniglia in the Planning/Finance axis is very bothersome. Neither has the depth and technical expertise for the jobs. Moreover, Giordani has some very peculiar economic ideas. Baduell’s sister is at least a veteran of the Health Ministry, a career civil servant from even before Chavez came to power.

In the end, Chavez’ new, new Government looks the same.

There will be no recall vote on opposition Deputies on Dec. 5^th. because according to the CNE Board member Jorge Rodriguez “in this way the will await the decision by the Supreme Court”. I simply don’t believe it, the Court also had a number of cases before the recall vote that it never issued an opinion on and the recall vote was not suspended. In fact, the same CNE Director said repeteadly the recall vote will go on unless the Court ruled otherwise. What is different in this case? The likely reason was more that they probably were not ready for it. I doubt they will now take place this year.

Today, there are rumors that the President of PDVSA Ali Rodriguez will be removed from the post and appointed as Minister of Foreign Relations. While this is being denied by the Foreign Minister “por ahora”, the rumors appear to be true. Coincidentally I was going to talk about Rodriguez in the context of an excellent article about him in Descifrado by Mery Mogollon, entitled “Ali is naked” which I was going to comment on, adding my own information.

To understand what Mogollon is saying, it is important to place yourself in the proper context. Rodriguez, “Commander Faust” when he was a guerilla member has a curious past, to say the least. He was in the guerrillas for so long that he still lived in the mountains in 1983, when only him and Gabriel Puerta of Bandera Roja (now in the opposition!) were fighting a guerilla war in Venezuela.

Rodriguez, a lawyer, gave up his weapons to no one in particular (there was nobody looking for him) and managed to get elected to Congress in the 90’s, where he specialized in oil and oil policy. When Chavez decided to run for President, it was Rodriguez that tutored and advised him.

Chavez’ and the MVR’s campaign was based on a three tier strategy, questioning the “oil opening” strategy, which they said was unconstitutional, calling PDVSA a “black box” which had no accountability to the Government or the people and saying the strategy of expanding production to six million barrels a day was demential. The oil opening was a mechanism found to turn over unexplored or old oil fields to foreign companies to exploit, under a profit sharing agreement. These fields were sold at auction and the Government received over US$ 2 billion simply for the right to have the fields.

The black box charge was more difficult to fight. At first, Chavez named a PDVSA manager to lead the company, but quickly replace him by Hector Ciavaldini who had been fired from the company from a fairly low level position. Ciavaldini promised Chavez that he would hold union elections and the Government would win, but failed to deliver. He was then replaced by Gral. Guaicaipuro Lameda, he Head of Chávez’ Budget Office for the first three and a half years of his Government and a close confidant at the time.

Lameda arrived at PDVSA ready to question everything and everyone. Unfortunately for him, he realized quite quickly that PDVSA was in fact an institution where mystique and meritocracy were the main drivers. In fact, he even decided to focus more on these values explicitly defining the core values of the company and creating a campaign to make the industry’s workers aware of it. Within months, Lameda the outsider, became Lameda the insider, ready to defend the “black box” and its people at every instance. For Chavez, this was not why he appointed Lameda to PDVSA; he was not getting rid of the yuppies, engineers, scientists and technocrats. It was time to act and get rid of Lameda the traitor.

And act he did. In late February 2002 Chavez named a new Board for PDVSA led by a bunch of dinosaur academics led by Gaston Parra Luzardo, who had no corporate experience and removing most of the veterans of the industry from it. Lameda and his former Directors led a fight against setting aside the PDVSA merit system. Workers went on strike, Chavez himself fired some of the PDVSA managers live on TV, the strike grew and popular support for the strike led to the march on April 11^th. Chavez resigned, came back and that is a whole other story.

Upon his return, a contrite Chavez named Ali Rodriguez as President of PDVSA to make peace within the oil company. Rodriguez was then President of OPEC and as Minister of Energy and Mines had developed an image as one of the few efficient and effective Ministers of Chavez’ early Cabinets. People were forgetting his radical and devious past.

Upon his arrival at PDVSA Rodríguez was conciliatory, but nevertheless called for the same exhaustive audit of the black box that would reveal all of the ills of PDVSA to the country and the world. We are still waiting for audit #1.

He also promised an audit of the profitability of the PDVSA assets abroad such as CITGO, Veba oil and a Swedish lubricant company. None of them have been sold or restructured and we are still waiting for audit #2.

When the 2002 December strike broke, it was supposed to be a three day event. On the third day, the National Guard gassed protesting oil workers, guaranteeing its continuity. A week later, an assassin killed three and injured twenty seven at Altamira square and the strike had no turning back. Within two months Rodriguez had fired 20,000 of the 43,000 oil workers of the industry. From messenger boys, to laborers, secretaries, engineers and managers, they all had to go.

During the strike, gasoline was delivered at gas stations without payment, oil was traded without any records and tankers left port without authorization. Rodriguez promised an audit of these transactions. We are still waiting for audit #3.

In April of 2003, PDVSA had to submit audited financial statements to satisfy US SEC requirements since the company had issued debts in the US markets. Since the company had not only fired its outsourcing company, a joint venture with US SAIC, but also 95% of its IT workers, it was difficult to reconstruct the month of December 2002, without the SAP system. It all had to be done manually. The audited financials were promised for the end of May. Then June. Then July. Then October. They were actually handed in October. Rodriguez fulfilled the promise of audit #4 even if a tad late.

In September 2003 Ali Rodriguez said the country wanted to expand production to five million barrels of oil a day. With this statement, one of the main criticisms of the pre-Chavez PDVSA had been reversed. Giusti had to feel vindicated.

In May of this year, once again, there were promises of audited financial statements for April. Then May. This time around it was more difficult to get them. Besides the fact that much of 2003 was still done manually, it would not be an easy task to get any international reputable audit firm to sign off the financials of a company with unknown production levels and a labor liability that could be in the billions. After all, none of the thousands oil workers fired had been paid their severance and their own private pension funds have been confiscated to this day. Moreover, Venezuelan labor laws do not allow massive firings; people can only be fired individually.

May, June and July came and went and no financials. But there was a problem: the newly enacted Sarbanes-Oakley act made the members of the Board of Directors of PDVSA individually responsible for failing to file or inaccuracies in the filings. A perverse and irresponsible solution was found, no filing, let’s buy back all of the US$ 2.7 billion in PDVSA debt to save the behinds of the members of the Board. No debt, no requirement to file, as easy as that. The information was leaked, many profited handsomely ahead of the news, PDVSA had to pay even higher prices and yields that it would need to pay to issue new debt. International reserves went down by US$ 2.7 billion to save the revolutionaries. So much for a black box, this was turning into a black hole. Screw the people, save the leaders!

It is now almost December and Rodriguez has yet to come up with audit #5. It may not matter anyway, he is leaving…

Meanwhile, for the last year and a half, OPEC and the US Energy agencies were saying that PDVSA was only producing 2.-2.5 million barrels of oil a day, while the company insisted it was producing 3.1 million barrels a day and promising 3.6 for 2005. Last week, Rodriguez had to testify in front of Congress and he said he would hire an international firm to audit the country’s oil production. We now await audit #6.

Even worse, Baker Hughes says that only 54 oil rigs were currently drilling in Venezuela out of 108 in 1998. The Venezuelan Central Bank says that oil production and price figures do not match what PDVSA says and at the Venezuelan Geophysics Congress it is stated that as many as 16,000 oil wells with lower production and high maintenance are currently not in operation. International reserves do not rise with oil prices. From black box to black hole in only five years!

Criticism number two of the pre-Chavez era is now moot too, the new PDVSA wants foreign companies to come in and provide the oil production that the company can not provide. Thanks to Giusti’s much-maligned oil opening, they already provide more than a million barrels of PDVSA’s current production.

My contacts in the inside tell me PDVSA is currently a royal mess. Political groups fight it out inside the company, attempting to control it. Rodriguez’s PPT currently predominates over Chávez’ MVR. The father of Chavez’s son in law General Prieto was finally left aside after becoming a power within the power at the company. Former Minister of Finance Jose Rojas appears to be the only voice of organization and reason within PDVSA. Personnel turnover is the highest ever, as groups fire their opponents whenever they can. Corruption is simply rampant.

Thus, Commander Faust has left a sorry and very unrevolutioabry trail at the company. PDVSA is now truly a black box. Even more it has become a black hole that sucks everything into it. There is no transparency. Nobody even knows how much oil is even produced by the country. Or how much gas. Or how much gasoline.

A US$ 30 billion for profit company has now had five different Presidents in almost five years. All of this while undergoing trauma year in and year out. No longer a black box, if it ever was one, but a black hole. All in the name of the revolution. All in the name of the people. And the three big criticisms of the previous administration of the company have now fallen by the wayside. Where are “the people” in all this? Where is the “revolution”? Rodriguez is indeed naked. Maybe he should have stayed in the mountains. At least there, he was true to himself and his ideals.

Today, there are rumors that the President of PDVSA Ali Rodriguez will be removed from the post and appointed as Minister of Foreign Relations. While this is being denied by the Foreign Minister “por ahora”, the rumors appear to be true. Coincidentally I was going to talk about Rodriguez in the context of an excellent article about him in Descifrado by Mery Mogollon, entitled “Ali is naked” which I was going to comment on, adding my own information.

To understand what Mogollon is saying, it is important to place yourself in the proper context. Rodriguez, “Commander Faust” when he was a guerilla member has a curious past, to say the least. He was in the guerrillas for so long that he still lived in the mountains in 1983, when only him and Gabriel Puerta of Bandera Roja (now in the opposition!) were fighting a guerilla war in Venezuela.

Rodriguez, a lawyer, gave up his weapons to no one in particular (there was nobody looking for him) and managed to get elected to Congress in the 90’s, where he specialized in oil and oil policy. When Chavez decided to run for President, it was Rodriguez that tutored and advised him.

Chavez’ and the MVR’s campaign was based on a three tier strategy, questioning the “oil opening” strategy, which they said was unconstitutional, calling PDVSA a “black box” which had no accountability to the Government or the people and saying the strategy of expanding production to six million barrels a day was demential. The oil opening was a mechanism found to turn over unexplored or old oil fields to foreign companies to exploit, under a profit sharing agreement. These fields were sold at auction and the Government received over US$ 2 billion simply for the right to have the fields.

The black box charge was more difficult to fight. At first, Chavez named a PDVSA manager to lead the company, but quickly replace him by Hector Ciavaldini who had been fired from the company from a fairly low level position. Ciavaldini promised Chavez that he would hold union elections and the Government would win, but failed to deliver. He was then replaced by Gral. Guaicaipuro Lameda, he Head of Chávez’ Budget Office for the first three and a half years of his Government and a close confidant at the time.

Lameda arrived at PDVSA ready to question everything and everyone. Unfortunately for him, he realized quite quickly that PDVSA was in fact an institution where mystique and meritocracy were the main drivers. In fact, he even decided to focus more on these values explicitly defining the core values of the company and creating a campaign to make the industry’s workers aware of it. Within months, Lameda the outsider, became Lameda the insider, ready to defend the “black box” and its people at every instance. For Chavez, this was not why he appointed Lameda to PDVSA; he was not getting rid of the yuppies, engineers, scientists and technocrats. It was time to act and get rid of Lameda the traitor.

And act he did. In late February 2002 Chavez named a new Board for PDVSA led by a bunch of dinosaur academics led by Gaston Parra Luzardo, who had no corporate experience and removing most of the veterans of the industry from it. Lameda and his former Directors led a fight against setting aside the PDVSA merit system. Workers went on strike, Chavez himself fired some of the PDVSA managers live on TV, the strike grew and popular support for the strike led to the march on April 11^th. Chavez resigned, came back and that is a whole other story.

Upon his return, a contrite Chavez named Ali Rodriguez as President of PDVSA to make peace within the oil company. Rodriguez was then President of OPEC and as Minister of Energy and Mines had developed an image as one of the few efficient and effective Ministers of Chavez’ early Cabinets. People were forgetting his radical and devious past.

Upon his arrival at PDVSA Rodríguez was conciliatory, but nevertheless called for the same exhaustive audit of the black box that would reveal all of the ills of PDVSA to the country and the world. We are still waiting for audit #1.

He also promised an audit of the profitability of the PDVSA assets abroad such as CITGO, Veba oil and a Swedish lubricant company. None of them have been sold or restructured and we are still waiting for audit #2.

When the 2002 December strike broke, it was supposed to be a three day event. On the third day, the National Guard gassed protesting oil workers, guaranteeing its continuity. A week later, an assassin killed three and injured twenty seven at Altamira square and the strike had no turning back. Within two months Rodriguez had fired 20,000 of the 43,000 oil workers of the industry. From messenger boys, to laborers, secretaries, engineers and managers, they all had to go.

During the strike, gasoline was delivered at gas stations without payment, oil was traded without any records and tankers left port without authorization. Rodriguez promised an audit of these transactions. We are still waiting for audit #3.

In April of 2003, PDVSA had to submit audited financial statements to satisfy US SEC requirements since the company had issued debts in the US markets. Since the company had not only fired its outsourcing company, a joint venture with US SAIC, but also 95% of its IT workers, it was difficult to reconstruct the month of December 2002, without the SAP system. It all had to be done manually. The audited financials were promised for the end of May. Then June. Then July. Then October. They were actually handed in October. Rodriguez fulfilled the promise of audit #4 even if a tad late.

In September 2003 Ali Rodriguez said the country wanted to expand production to five million barrels of oil a day. With this statement, one of the main criticisms of the pre-Chavez PDVSA had been reversed. Giusti had to feel vindicated.

In May of this year, once again, there were promises of audited financial statements for April. Then May. This time around it was more difficult to get them. Besides the fact that much of 2003 was still done manually, it would not be an easy task to get any international reputable audit firm to sign off the financials of a company with unknown production levels and a labor liability that could be in the billions. After all, none of the thousands oil workers fired had been paid their severance and their own private pension funds have been confiscated to this day. Moreover, Venezuelan labor laws do not allow massive firings; people can only be fired individually.

May, June and July came and went and no financials. But there was a problem: the newly enacted Sarbanes-Oakley act made the members of the Board of Directors of PDVSA individually responsible for failing to file or inaccuracies in the filings. A perverse and irresponsible solution was found, no filing, let’s buy back all of the US$ 2.7 billion in PDVSA debt to save the behinds of the members of the Board. No debt, no requirement to file, as easy as that. The information was leaked, many profited handsomely ahead of the news, PDVSA had to pay even higher prices and yields that it would need to pay to issue new debt. International reserves went down by US$ 2.7 billion to save the revolutionaries. So much for a black box, this was turning into a black hole. Screw the people, save the leaders!

It is now almost December and Rodriguez has yet to come up with audit #5. It may not matter anyway, he is leaving…

Meanwhile, for the last year and a half, OPEC and the US Energy agencies were saying that PDVSA was only producing 2.-2.5 million barrels of oil a day, while the company insisted it was producing 3.1 million barrels a day and promising 3.6 for 2005. Last week, Rodriguez had to testify in front of Congress and he said he would hire an international firm to audit the country’s oil production. We now await audit #6.

Even worse, Baker Hughes says that only 54 oil rigs were currently drilling in Venezuela out of 108 in 1998. The Venezuelan Central Bank says that oil production and price figures do not match what PDVSA says and at the Venezuelan Geophysics Congress it is stated that as many as 16,000 oil wells with lower production and high maintenance are currently not in operation. International reserves do not rise with oil prices. From black box to black hole in only five years!

Criticism number two of the pre-Chavez era is now moot too, the new PDVSA wants foreign companies to come in and provide the oil production that the company can not provide. Thanks to Giusti’s much-maligned oil opening, they already provide more than a million barrels of PDVSA’s current production.

My contacts in the inside tell me PDVSA is currently a royal mess. Political groups fight it out inside the company, attempting to control it. Rodriguez’s PPT currently predominates over Chávez’ MVR. The father of Chavez’s son in law General Prieto was finally left aside after becoming a power within the power at the company. Former Minister of Finance Jose Rojas appears to be the only voice of organization and reason within PDVSA. Personnel turnover is the highest ever, as groups fire their opponents whenever they can. Corruption is simply rampant.

Thus, Commander Faust has left a sorry and very unrevolutioabry trail at the company. PDVSA is now truly a black box. Even more it has become a black hole that sucks everything into it. There is no transparency. Nobody even knows how much oil is even produced by the country. Or how much gas. Or how much gasoline.

A US$ 30 billion for profit company has now had five different Presidents in almost five years. All of this while undergoing trauma year in and year out. No longer a black box, if it ever was one, but a black hole. All in the name of the revolution. All in the name of the people. And the three big criticisms of the previous administration of the company have now fallen by the wayside. Where are “the people” in all this? Where is the “revolution”? Rodriguez is indeed naked. Maybe he should have stayed in the mountains. At least there, he was true to himself and his ideals.

Today, there are rumors that the President of PDVSA Ali Rodriguez will be removed from the post and appointed as Minister of Foreign Relations. While this is being denied by the Foreign Minister “por ahora”, the rumors appear to be true. Coincidentally I was going to talk about Rodriguez in the context of an excellent article about him in Descifrado by Mery Mogollon, entitled “Ali is naked” which I was going to comment on, adding my own information.

To understand what Mogollon is saying, it is important to place yourself in the proper context. Rodriguez, “Commander Faust” when he was a guerilla member has a curious past, to say the least. He was in the guerrillas for so long that he still lived in the mountains in 1983, when only him and Gabriel Puerta of Bandera Roja (now in the opposition!) were fighting a guerilla war in Venezuela.

Rodriguez, a lawyer, gave up his weapons to no one in particular (there was nobody looking for him) and managed to get elected to Congress in the 90’s, where he specialized in oil and oil policy. When Chavez decided to run for President, it was Rodriguez that tutored and advised him.

Chavez’ and the MVR’s campaign was based on a three tier strategy, questioning the “oil opening” strategy, which they said was unconstitutional, calling PDVSA a “black box” which had no accountability to the Government or the people and saying the strategy of expanding production to six million barrels a day was demential. The oil opening was a mechanism found to turn over unexplored or old oil fields to foreign companies to exploit, under a profit sharing agreement. These fields were sold at auction and the Government received over US$ 2 billion simply for the right to have the fields.

The black box charge was more difficult to fight. At first, Chavez named a PDVSA manager to lead the company, but quickly replace him by Hector Ciavaldini who had been fired from the company from a fairly low level position. Ciavaldini promised Chavez that he would hold union elections and the Government would win, but failed to deliver. He was then replaced by Gral. Guaicaipuro Lameda, he Head of Chávez’ Budget Office for the first three and a half years of his Government and a close confidant at the time.

Lameda arrived at PDVSA ready to question everything and everyone. Unfortunately for him, he realized quite quickly that PDVSA was in fact an institution where mystique and meritocracy were the main drivers. In fact, he even decided to focus more on these values explicitly defining the core values of the company and creating a campaign to make the industry’s workers aware of it. Within months, Lameda the outsider, became Lameda the insider, ready to defend the “black box” and its people at every instance. For Chavez, this was not why he appointed Lameda to PDVSA; he was not getting rid of the yuppies, engineers, scientists and technocrats. It was time to act and get rid of Lameda the traitor.

And act he did. In late February 2002 Chavez named a new Board for PDVSA led by a bunch of dinosaur academics led by Gaston Parra Luzardo, who had no corporate experience and removing most of the veterans of the industry from it. Lameda and his former Directors led a fight against setting aside the PDVSA merit system. Workers went on strike, Chavez himself fired some of the PDVSA managers live on TV, the strike grew and popular support for the strike led to the march on April 11^th. Chavez resigned, came back and that is a whole other story.

Upon his return, a contrite Chavez named Ali Rodriguez as President of PDVSA to make peace within the oil company. Rodriguez was then President of OPEC and as Minister of Energy and Mines had developed an image as one of the few efficient and effective Ministers of Chavez’ early Cabinets. People were forgetting his radical and devious past.

Upon his arrival at PDVSA Rodríguez was conciliatory, but nevertheless called for the same exhaustive audit of the black box that would reveal all of the ills of PDVSA to the country and the world. We are still waiting for audit #1.

He also promised an audit of the profitability of the PDVSA assets abroad such as CITGO, Veba oil and a Swedish lubricant company. None of them have been sold or restructured and we are still waiting for audit #2.

When the 2002 December strike broke, it was supposed to be a three day event. On the third day, the National Guard gassed protesting oil workers, guaranteeing its continuity. A week later, an assassin killed three and injured twenty seven at Altamira square and the strike had no turning back. Within two months Rodriguez had fired 20,000 of the 43,000 oil workers of the industry. From messenger boys, to laborers, secretaries, engineers and managers, they all had to go.

During the strike, gasoline was delivered at gas stations without payment, oil was traded without any records and tankers left port without authorization. Rodriguez promised an audit of these transactions. We are still waiting for audit #3.

In April of 2003, PDVSA had to submit audited financial statements to satisfy US SEC requirements since the company had issued debts in the US markets. Since the company had not only fired its outsourcing company, a joint venture with US SAIC, but also 95% of its IT workers, it was difficult to reconstruct the month of December 2002, without the SAP system. It all had to be done manually. The audited financials were promised for the end of May. Then June. Then July. Then October. They were actually handed in October. Rodriguez fulfilled the promise of audit #4 even if a tad late.

In September 2003 Ali Rodriguez said the country wanted to expand production to five million barrels of oil a day. With this statement, one of the main criticisms of the pre-Chavez PDVSA had been reversed. Giusti had to feel vindicated.

In May of this year, once again, there were promises of audited financial statements for April. Then May. This time around it was more difficult to get them. Besides the fact that much of 2003 was still done manually, it would not be an easy task to get any international reputable audit firm to sign off the financials of a company with unknown production levels and a labor liability that could be in the billions. After all, none of the thousands oil workers fired had been paid their severance and their own private pension funds have been confiscated to this day. Moreover, Venezuelan labor laws do not allow massive firings; people can only be fired individually.

May, June and July came and went and no financials. But there was a problem: the newly enacted Sarbanes-Oakley act made the members of the Board of Directors of PDVSA individually responsible for failing to file or inaccuracies in the filings. A perverse and irresponsible solution was found, no filing, let’s buy back all of the US$ 2.7 billion in PDVSA debt to save the behinds of the members of the Board. No debt, no requirement to file, as easy as that. The information was leaked, many profited handsomely ahead of the news, PDVSA had to pay even higher prices and yields that it would need to pay to issue new debt. International reserves went down by US$ 2.7 billion to save the revolutionaries. So much for a black box, this was turning into a black hole. Screw the people, save the leaders!

It is now almost December and Rodriguez has yet to come up with audit #5. It may not matter anyway, he is leaving…

Meanwhile, for the last year and a half, OPEC and the US Energy agencies were saying that PDVSA was only producing 2.-2.5 million barrels of oil a day, while the company insisted it was producing 3.1 million barrels a day and promising 3.6 for 2005. Last week, Rodriguez had to testify in front of Congress and he said he would hire an international firm to audit the country’s oil production. We now await audit #6.

Even worse, Baker Hughes says that only 54 oil rigs were currently drilling in Venezuela out of 108 in 1998. The Venezuelan Central Bank says that oil production and price figures do not match what PDVSA says and at the Venezuelan Geophysics Congress it is stated that as many as 16,000 oil wells with lower production and high maintenance are currently not in operation. International reserves do not rise with oil prices. From black box to black hole in only five years!

Criticism number two of the pre-Chavez era is now moot too, the new PDVSA wants foreign companies to come in and provide the oil production that the company can not provide. Thanks to Giusti’s much-maligned oil opening, they already provide more than a million barrels of PDVSA’s current production.

My contacts in the inside tell me PDVSA is currently a royal mess. Political groups fight it out inside the company, attempting to control it. Rodriguez’s PPT currently predominates over Chávez’ MVR. The father of Chavez’s son in law General Prieto was finally left aside after becoming a power within the power at the company. Former Minister of Finance Jose Rojas appears to be the only voice of organization and reason within PDVSA. Personnel turnover is the highest ever, as groups fire their opponents whenever they can. Corruption is simply rampant.

Thus, Commander Faust has left a sorry and very unrevolutioabry trail at the company. PDVSA is now truly a black box. Even more it has become a black hole that sucks everything into it. There is no transparency. Nobody even knows how much oil is even produced by the country. Or how much gas. Or how much gasoline.

A US$ 30 billion for profit company has now had five different Presidents in almost five years. All of this while undergoing trauma year in and year out. No longer a black box, if it ever was one, but a black hole. All in the name of the revolution. All in the name of the people. And the three big criticisms of the previous administration of the company have now fallen by the wayside. Where are “the people” in all this? Where is the “revolution”? Rodriguez is indeed naked. Maybe he should have stayed in the mountains. At least there, he was true to himself and his ideals.