Archive for July 10th, 2005

PDVSA can not be audited

July 10, 2005

recently as May 25th., a Deputy from Chavez’ MVR stated
that the proof that things were back to normal in PDVSA was that the company was going to submit its
financials to the SEC on June 30th., only twelve months late. The next day the President of PDVSA and Minister
of Oil said he had hired a former Superintendent of Banks to insure the
financials would be handed in to the SEC on time. Well, June 30th.
went by and the financials were not only not handed in to the SEC, but
reportedly the Government informed the SEC that it will not do it. Apparently

become simply unauditable according to today’s El Nacional. The auditors, a
local subsidiary of KPMG was simply unable to complete its work and has yet to
receive any response to the many requests for information. Things are not only
not normal, they are simply absurd, the company’s numbers are unknown and this
simply confirms the many lies we have been hearing about the company’s
production. Moreover, it is perhaps an ironic end to Chavez taking over PDVSA
that his main complaint was always that the company was not transparent, that
the technocrats did not tell the “people” what or why they were doing with the
most important asset the country had.

inability of the auditors to complete their job shows the mess the company is
in. Whether there is corruption or not within PDVSA can not even be determined,
since the whole financial structure and supervision of the company is simply
non-existent. Among other pearls, the audit determined that of Cuba’s debt of
US$ 584 million, $478 million was past due, only 30 of the 49 buyers of crude
have confirmed their balances are correct, there are $266 million inn accounts
receivable, $163 millions in unknown receivables, accounts overdue amount to
US$ 874 million, debt with fired employees is unknown, no shareholders meeting
has been held since 2002 and on and on…

result is that we “the people” have no clue as to how the company is
being run.
The “promises” of completed financials is well overdue and simply the
can not borrow funds in the international markets. What a way to
mortgage the
future of all Venezuelans! PDVSA belongs to the Chavistas, not to the
and in essence what is being done is to kill the golden goose.
Unaccountability is the name of the game for the Chavistas, but they
don’t even care.

It is easy
to find all of this irrelevant when oil prices are reaching all time highs. But
much like the 2000 stock market bubble burst, so will the rise in oil prices. Economic
cycles are here to stay, the US has been doing well for a while, so has China,
oil inventories are near all time high, but speculators seem to have taken over
the oil markets. It is just a matter of time for us to see $35 per barrel
again, “this time it is different” is always said just before the end of
bubbles. You heard it here first, lower oil prices will be here before the end
of the year. At that time, PDVSA will need funding, but it will simply not be
able to get it. What a sad end for the revolution, they simply did not know what
to do with the flag they waved for so long. History will never forgive those
that turned PDVSA into a black hole and have turned it into a useless carcass.

Venezuelan problem solving

July 10, 2005

Upon arrival at the airport last night, two things reminded me of the strange ways in which problems are sometimes solved in Venezuela:

–The Government has recently built a new arrivals hall at the international airport. The new hall is right above the old one, which now sits there empty, dark and unused. The new hall is very luxurious; the new baggage carrousels work well and the whole thing is very well organized, for now. The same was the case of the old one when it was first opened up in 1980. The problem was there was little maintenance since then, just enough to keep things running. The solution was typical of Venezuelan Governments, past and present: throw a lot of money at a problem building a new hall from scratch, rather than fix what was there. The old conveyor belts could have been fixed and the old hall fixed up. The arrivals hall at Kennedy airport is still the same one that I used to arrive at when I was an undergraduate. And that, my friends was a LONG time ago


–As you exit customs your luggage has to go through an x-ray machine. This applies to everyone. There was a line of maybe 20-25 people waiting to do this. I was maybe in the middle, when four guys with luggage carts went straight to the head of the line “aided” by some customs officers and ignoring the line. I could not stay quiet and started shouting that there was a line for everyone and these people were bypassing it and please they should go to end of the line. The Venezuelan solution to the problem: Easy, get rid of the complainer! A customs lady approached me and led me to a second machine way at the other end of the Hall that had nobody in line, while the four guys went ahead of the first line anyway.

Back to blogging and the real world

July 10, 2005

After truly disconnecting from the world for three weeks I am back and I can not say ready to blog on Venezuela yet, my mind is still somewhere else. My vacation was a blast, has a fantastic time including the coincidence of a lifetime in finding that the first week of my vacation was shared with my thesis advisor, one of my favorite people in the world. This made the vacation three times better.


Thanks to Jorge for his work and contributions as well as the other contributors to this pages during my absence. A blog is a very personal thing and is hard to fill for others and is a responsibility I dumped on Jorge without mercy. Thanks again! The software acted up in my absence and is still doing it; I have no clue as to what the problem is. This excellent post on race differences in Venezuela by Jorge, for example, shows up in the Venezuela section, but fails to appear in the home page for reasons that completely mystify me.


As to events in my absence it seems to be more of the same. The Government refuses to acknowledge any responsibility for its errors. From 1958 to 1998 when Chavez assumed power, Presidents were in charge for five years and then their administrations became the “Gobierno Anterior” (Previous Government) which was blamed for everything. Well, Chavez has been in power for seven, thus, he has become the “Gobierno Anterior”, but his Government continues to blame things on previous Governments, such as the horrendous murder of the three engineering students by hooded policemen raiding a barrio. Besides murdering the students the cops tried to hide evidence, remove the corpses and in general cover up what they had done. But it is all the fault of the previous Government because this was “usual practice” by previous Governments. In fact, the murder rate in barrios is up three fold since Chavez took over and the death of acquaintances is so common that just days before the murder of the three students a fellow local blogger reported the death of a coworker killed simply so that they could steal his briefcase.


And in the meantime, a new Penal code was approved, Sumate continues to be persecuted in this country which some still claim is a democracy and reporters are held by pro-Chavez’ hoodlums in a clear intimidation attempt. And none of these things used to happen during any of the previous Governments which were not very good, but certainly were more democratic than this one. If not, look at all of the tricks being pulled by the Electoral Board.


So my friends I am back, but except for being a bit more relaxed, things have changed little over here and I have little hope that they will in the near future. But I will continue recording the acts of this outlaw Government. It is the least I can do.