The Devil's Excrement

Of things said by Venezuelan Government officials and Fidel Castro today and my first two instictive answers to these statements:

—Vice-President Rangel: “Venezuela is Latin America’s most stable country”

1) Allende and Pinochet used to say the same thing about Chile

2) Does he know Costa Rica is in Latin America?

—Head of Corpovargas: “The Comptroller’s Office has revised and intervened (?) all of the finances of the Corporation without finding any corruption”

1) The Comptroller’s Office has not found any corruption in Venezuela in the last six years.

2) Somebody is not doing their job.

—President of the CNE: “I think it would be difficult to hold recall referenda against National Assembly Deputies”

1) It would not be the fist time you violate the rights of the voters

2) Didn’t the Supreme Court cancel the vote; doesn’t the law say you have to hold them after 92 days of gathering the signatures?

—Fidel Castro: “Still not enough Doctors In Cuba”

1) We have some Cuban doctors in Venezuela we could send you, but maybe they are not even Doctors!

2) What if we send you Venezuelan Doctors instead of all that oil? Our Government simply does not want to hire them.

You know, it used to be that Hugo Chavez would say that PDVSA workers were over privileged, they made so much more than the average Venezuelan. Well, it is now six years of the Chavez Government and:

–I find out the President of the Venezuelan Supreme Court just retired with a monthly salary of US$ 10,000 adjusted anytime the Court’s salaries are adjusted.

–And former Vice-Minister of Finance Bermudez tells a US Court that he made US$ 146.666 in 2002, which I thought not even Chavez made that much.

–And from PDVSA’s budget I discover that the average PDVSA worker makes today US$39,000 a year, versus US$ 30,000 before the strike.

All of this despite the fact that the currency has devalued from Bs. 700 per US$ to 1920 per US$ in the last three years.

Thus, I have to wonder, poverty is up but the salaries of the privileged Government workers are up significantly in real terms since Chavez got to power. Something is wrong with this picture, no?

I still remember, the former Head of the budget office Guiacaipuro Lameda in 1999 (he later became head of PDVSA) talking about the fact that he was bothered by the fact that he was making Bs. 2 million a month as  a General and Head of OCEPRE, while so many people went hungry in Venezuela. He said every time that he had to make a budget decision he thought about this dichotomy and how unfair it was as a way of deciding on the issue. I understood exactly what he meant. Why did Chavez drop people like Lameda from his side?

You know, it used to be that Hugo Chavez would say that PDVSA workers were over privileged, they made so much more than the average Venezuelan. Well, it is now six years of the Chavez Government and:

–I find out the President of the Venezuelan Supreme Court just retired with a monthly salary of US$ 10,000 adjusted anytime the Court’s salaries are adjusted.

–And former Vice-Minister of Finance Bermudez tells a US Court that he made US$ 146.666 in 2002, which I thought not even Chavez made that much.

–And from PDVSA’s budget I discover that the average PDVSA worker makes today US$39,000 a year, versus US$ 30,000 before the strike.

All of this despite the fact that the currency has devalued from Bs. 700 per US$ to 1920 per US$ in the last three years.

Thus, I have to wonder, poverty is up but the salaries of the privileged Government workers are up significantly in real terms since Chavez got to power. Something is wrong with this picture, no?

I still remember, the former Head of the budget office Guiacaipuro Lameda in 1999 (he later became head of PDVSA) talking about the fact that he was bothered by the fact that he was making Bs. 2 million a month as  a General and Head of OCEPRE, while so many people went hungry in Venezuela. He said every time that he had to make a budget decision he thought about this dichotomy and how unfair it was as a way of deciding on the issue. I understood exactly what he meant. Why did Chavez drop people like Lameda from his side?

The Venezuelan Central Bank announced that GDP went up 17.3% in 2004, the highest such increase recorded by the Central Bank. The increase in oil activities was 8.7% and 17.8% in non-oil activities, while the public sector grew by 11% and the private sector by 18.6%.

This is a very good bounce off the 2003 low and is needed if the standard of living of Venezuelans is to rise significantly. We hope growth continues, although such a high pace is clearly not sustainable. This growth was driven by higher oil prices and strong Government spending. Construction led the growth with 32% increase, after some terrible years of -19.8% in 2002 and -37.4% in 2003.  This is by far the best economic year, in terms of GDP growth, for the Chavez Government which has had the following track record, but it only takes the economy back to the levels of 1997 and below the highest year of economic activity which was 1998:

1999          -6.1%

2000          +3.2%

2001          +2.8%

2002          -8.9%

2003          -9.4%

2004          +17.3%

The Venezuelan Central Bank announced that GDP went up 17.3% in 2004, the highest such increase recorded by the Central Bank. The increase in oil activities was 8.7% and 17.8% in non-oil activities, while the public sector grew by 11% and the private sector by 18.6%.

This is a very good bounce off the 2003 low and is needed if the standard of living of Venezuelans is to rise significantly. We hope growth continues, although such a high pace is clearly not sustainable. This growth was driven by higher oil prices and strong Government spending. Construction led the growth with 32% increase, after some terrible years of -19.8% in 2002 and -37.4% in 2003.  This is by far the best economic year, in terms of GDP growth, for the Chavez Government which has had the following track record, but it only takes the economy back to the levels of 1997 and below the highest year of economic activity which was 1998:

1999          -6.1%

2000          +3.2%

2001          +2.8%

2002          -8.9%

2003          -9.4%

2004          +17.3%

It is indeed very sad, after seen how the Government paid homage to murdered prosecutor Danilo Anderson for political reasons, to see that the tragic death of Venezuelan Olympic medalist Rafael Vidal has not earned even a mention by any Government official.

Vidal won a bronze medal in swimming in the 1984 Olympics in Los Angeles, the only swimming medal ever by a Venezuelan. A Florida paper had this to say about this terrific individual:

“Rafael Vidal, the pint-sized Venezuelan who shocked the swimming world by winning the bronze medal in the 200-meter butterfly in the 1984 Los Angeles Olympics, died Saturday in a traffic accident in Caracas. He was 41.

Vidal was possibly the greatest swimmer in the world for his size. I detailed his Olympic effort in an August 2004 column, and feel fortunate to have met him a few times while I lived in Caracas. He was a good guy.

According to news reports, he was killed when a drag-racing Hummer struck his sedan.

It was unclear if anyone else was hurt in the wreck.

Vidal, a University of Florida graduate who worked as a radio and television sports commentator, leaves behind two small children.”

Vidal did what he did, through his own personal efforts and very hard work. After swimming he had a professional career and had a radio program on sports and individual efforts. He was a true hero, killed by irresponsible kids drag racing in a Hummer. His Corolla was dragged 40 yards by the speeding Hummer, killing him instantly. His death is a true loss for Venezuela, a man of values in a country with so few of them

The Minister of the Interior and Justice Jesse Chacon said today that the Government would audit the funds used for the reconstruction of Vargas state. Chacon also argued that the funds used in the reconstruction were cut, which explained why all of the public works were not completed. I must say that I am truly disappointed by these statements by the Minister. It simply sounds too mild and simplistic to talk about audits when what the Government should be doing is a complete, full and immediate investigation of the misuse of funds. Moreover, arguing that the budget was cut sounds like a lame excuse for what I consider to be one of the most corrupt executions of a public works project in the history of Venezuela. In fact, I am concerned that this simply indicates that the Government is getting ready to cover up the corruption associated to the reconstruction of Vargas.

First of all, there is no evidence that the budget was truly cut, the two most important sources of funds for the reconstruction projects were international contributions which were not cut and the US$ 1 billion approved by the National Assembly which could only be cut by that body, which was never done either. So if Chacon’s statements are true they refer simply to the smaller amounts in the table I showed a couple of days ago.

The truth is that not only have huge amounts of funds been squandered on these projects, but this led to loss of life and material property of people from all levels of Venezuela’s life, poor and rich alike. Even today, a week after the rains, towns in Vargas have no water and the people living there are going through a living hell. Many people may not know it, but Venezuela has one of the most advanced legislations against corruption,  where it is not only a corrupt act to steal, but also to not act on time cut corners or be negligent. Problem is, we have too many laws and not enough enforcement.

Nobody can deny the level of corruption, inefficiency and negligence associated to the Vargas reconstruction projects. Only yesterday local newspaper Tal Cual (by subscription) carried an interview with an Austrian engineer that I think is worth translating partially, since it is the words on a foreign expert that actually participated in the design stages of the project, as well as its evaluatiosn after they were built.

 Josef Hopf is an Austrian engineer who worked for 43 years at the Austrian office for Torrents and Avalanches. In 2000, he approached various Austrian organizations to fund a visit to Venezuela after the Vargas tragedy. He came with three colleagues that participated in the projects. Hopf had been in Venezuela in the 70’s where he was an invited Professor at the University of the Andes. He came back once again in 2003 when the Ministry of the Environment held a Conference on the subject.

He participated in 2000 in the evaluation of the design of the systems for the control of torrents, specifically those for two of the 23 rivers in Vargas state. What he found in 2003 was that while some of the public works had been built and some preventive measures had been taken, the projects recommended by the experts in 2000 were not completed or changed.

According to Hopf, the use of stone and metallic mesh, instead of concrete with steel was contrary to the recommendation of the international visitors. In general, says Hopf, the projects developed by the commissions and international advisors were not taken into account.

Hopf syas that the international missions made projects for nine of the twenty three torrents, which were the most important ones in Vargas state; the estimated costs at the time were US$ 57.7 million, of which US$ 18.8 were for the two torrents studied by the “Austrian commission”. Only three of the nine were built and concrete was never used!

Hopf continues: “The projects presented by the Austrian team were designed to resist large scale events, like what happened in 1999. The problem with the type of structure used is that they can not withstand the expected kinetic impacts, even if they are well built.” He adds: “That is part of the disillusionment of many of the specialist that participated in the projects”.

Note the type of negligence that this implies, the nine most important torrents could be controlled, according to Hopf, with “only” US$ 57.7 million, using what he considers to be very expensive structures. Instead, there is not only no explanation for where the US$ 1.6 billion of the two largest contributions went to, but the dams were built using much cheaper designs in the three cases in which the work was actually completed.  

It always amazes me how some of these Government figures can express their outrage at political trivialities, but when outrageous acts of corruption and negligence take place, they can use such bland words or be as evasive as Chacon was today.

I must say that when Chavez won the 1998 election I actually naively believed that corruption would be one of two areas in which he might accomplish something, given his popularity and his military background. I am still amazed how this issue has not even been addressed by the President, as he could have used the fight against corruption as an extremely powerful issue to increase his popularity.

Instead, this Government has been responsible for creating quite a few incredible sources of corruption, which stand out even to the untrained eye:

-Public deposits in the banking system have increased from 5% of all deposits in 1998 to 40% today, as banks pay commissions for official deposits, making bankers, intermediaries and Government officials extremely rich in a very short period of time.

-The exchange control office (CADIVI) has become another huge source of corruption as over US$ 4 billion have been approved for the payment of foreign debt of private companies. On the previous two exchange controls systems in the 80’s and 90’s, which were quite corrupt too, funds were never approved for external debt due to the difficulties establishing the veracity of the debts and their true ownership. Similarly, the Government has approved via CADIVI, foreign currency at the official exchange rate for imports that either never took place or are outrageous. All of this is obviously obtained by the payment of commissions to intermediaries and CADIVI offivials.

-The Vargas reconstruction funds

-The sale of Government debt in non-transparent fashion.

-The Bolivar 2000 projects. Even the Comptroller (who sometimes is not clear whether he is alive or not)found corruption in these cases, but none of the Generals was ever charged or convicted for it.

There are many others, but I think I made my point. The problem is that this seems to be an ever increasing problem that I don’t think would be solved by changing Governments.

It is my impression that the ethical levels of the average Venezuelan from the very poor, who believes it is entitled to Government handouts or to take private property from others, through Government officials that charge commissions or steal money outright, to the people in the private sector that pay commissions or partner with Government officials to make money without doing very much, is an all time low in my beleaguered country.

And I really don’t see any way out of this. The attitude is simply too prevalent at all levels of our society. People are so dependent for their livelihoods on this, that anyone trying to fight it openly would risk his/her life trying to get rid of it. This was truly Chavez’ lost opportunity in 1998, when he won the Presidency. He had the goodwill, the popularity and the mandate to reduce corruption. But he did nothing about it. In fact, when the first corruption scandals of his administration broke, he chose to get rid of the accusers and not of those being accused.

As a Venezuelan this is very sad. The moral decomposition of a society may take decades to recover from. And given the lack of leadership on this issue and the lack of interest on the subject from all sides of the political spectrum, I am not sure we are even close to starting to discuss the need for such a recovery plan as a modern society.

The Minister of the Interior and Justice Jesse Chacon said today that the Government would audit the funds used for the reconstruction of Vargas state. Chacon also argued that the funds used in the reconstruction were cut, which explained why all of the public works were not completed. I must say that I am truly disappointed by these statements by the Minister. It simply sounds too mild and simplistic to talk about audits when what the Government should be doing is a complete, full and immediate investigation of the misuse of funds. Moreover, arguing that the budget was cut sounds like a lame excuse for what I consider to be one of the most corrupt executions of a public works project in the history of Venezuela. In fact, I am concerned that this simply indicates that the Government is getting ready to cover up the corruption associated to the reconstruction of Vargas.

First of all, there is no evidence that the budget was truly cut, the two most important sources of funds for the reconstruction projects were international contributions which were not cut and the US$ 1 billion approved by the National Assembly which could only be cut by that body, which was never done either. So if Chacon’s statements are true they refer simply to the smaller amounts in the table I showed a couple of days ago.

The truth is that not only have huge amounts of funds been squandered on these projects, but this led to loss of life and material property of people from all levels of Venezuela’s life, poor and rich alike. Even today, a week after the rains, towns in Vargas have no water and the people living there are going through a living hell. Many people may not know it, but Venezuela has one of the most advanced legislations against corruption,  where it is not only a corrupt act to steal, but also to not act on time cut corners or be negligent. Problem is, we have too many laws and not enough enforcement.

Nobody can deny the level of corruption, inefficiency and negligence associated to the Vargas reconstruction projects. Only yesterday local newspaper Tal Cual (by subscription) carried an interview with an Austrian engineer that I think is worth translating partially, since it is the words on a foreign expert that actually participated in the design stages of the project, as well as its evaluatiosn after they were built.

 Josef Hopf is an Austrian engineer who worked for 43 years at the Austrian office for Torrents and Avalanches. In 2000, he approached various Austrian organizations to fund a visit to Venezuela after the Vargas tragedy. He came with three colleagues that participated in the projects. Hopf had been in Venezuela in the 70’s where he was an invited Professor at the University of the Andes. He came back once again in 2003 when the Ministry of the Environment held a Conference on the subject.

He participated in 2000 in the evaluation of the design of the systems for the control of torrents, specifically those for two of the 23 rivers in Vargas state. What he found in 2003 was that while some of the public works had been built and some preventive measures had been taken, the projects recommended by the experts in 2000 were not completed or changed.

According to Hopf, the use of stone and metallic mesh, instead of concrete with steel was contrary to the recommendation of the international visitors. In general, says Hopf, the projects developed by the commissions and international advisors were not taken into account.

Hopf syas that the international missions made projects for nine of the twenty three torrents, which were the most important ones in Vargas state; the estimated costs at the time were US$ 57.7 million, of which US$ 18.8 were for the two torrents studied by the “Austrian commission”. Only three of the nine were built and concrete was never used!

Hopf continues: “The projects presented by the Austrian team were designed to resist large scale events, like what happened in 1999. The problem with the type of structure used is that they can not withstand the expected kinetic impacts, even if they are well built.” He adds: “That is part of the disillusionment of many of the specialist that participated in the projects”.

Note the type of negligence that this implies, the nine most important torrents could be controlled, according to Hopf, with “only” US$ 57.7 million, using what he considers to be very expensive structures. Instead, there is not only no explanation for where the US$ 1.6 billion of the two largest contributions went to, but the dams were built using much cheaper designs in the three cases in which the work was actually completed.  

It always amazes me how some of these Government figures can express their outrage at political trivialities, but when outrageous acts of corruption and negligence take place, they can use such bland words or be as evasive as Chacon was today.

I must say that when Chavez won the 1998 election I actually naively believed that corruption would be one of two areas in which he might accomplish something, given his popularity and his military background. I am still amazed how this issue has not even been addressed by the President, as he could have used the fight against corruption as an extremely powerful issue to increase his popularity.

Instead, this Government has been responsible for creating quite a few incredible sources of corruption, which stand out even to the untrained eye:

-Public deposits in the banking system have increased from 5% of all deposits in 1998 to 40% today, as banks pay commissions for official deposits, making bankers, intermediaries and Government officials extremely rich in a very short period of time.

-The exchange control office (CADIVI) has become another huge source of corruption as over US$ 4 billion have been approved for the payment of foreign debt of private companies. On the previous two exchange controls systems in the 80’s and 90’s, which were quite corrupt too, funds were never approved for external debt due to the difficulties establishing the veracity of the debts and their true ownership. Similarly, the Government has approved via CADIVI, foreign currency at the official exchange rate for imports that either never took place or are outrageous. All of this is obviously obtained by the payment of commissions to intermediaries and CADIVI offivials.

-The Vargas reconstruction funds

-The sale of Government debt in non-transparent fashion.

-The Bolivar 2000 projects. Even the Comptroller (who sometimes is not clear whether he is alive or not)found corruption in these cases, but none of the Generals was ever charged or convicted for it.

There are many others, but I think I made my point. The problem is that this seems to be an ever increasing problem that I don’t think would be solved by changing Governments.

It is my impression that the ethical levels of the average Venezuelan from the very poor, who believes it is entitled to Government handouts or to take private property from others, through Government officials that charge commissions or steal money outright, to the people in the private sector that pay commissions or partner with Government officials to make money without doing very much, is an all time low in my beleaguered country.

And I really don’t see any way out of this. The attitude is simply too prevalent at all levels of our society. People are so dependent for their livelihoods on this, that anyone trying to fight it openly would risk his/her life trying to get rid of it. This was truly Chavez’ lost opportunity in 1998, when he won the Presidency. He had the goodwill, the popularity and the mandate to reduce corruption. But he did nothing about it. In fact, when the first corruption scandals of his administration broke, he chose to get rid of the accusers and not of those being accused.

As a Venezuelan this is very sad. The moral decomposition of a society may take decades to recover from. And given the lack of leadership on this issue and the lack of interest on the subject from all sides of the political spectrum, I am not sure we are even close to starting to discuss the need for such a recovery plan as a modern society.