How to lose $45 million in the robolution

July 27, 2006

This is a tale of what is going on
behind the scenes in the robolution. It is emblematic of the lack of
transparency in the Government’s finances, how millions slosh around from one
side to the other without anyone checking where they are, how they went from
here to there or why they were moved. This is the tip of the iceberg of the
stories we hear about daily, except that the details are never known. In fact,
this case is known only because someone was killed. And even then, the Government
has revealed very few
of the details of the case. After all, it is just US$ 45 million that went
missing, while they are used to talking in hundreds of millions if not billions
and people are getting very rich in the process as these funds move around.

It all began in 2001 when the insurer of the local bank’s deposits FOGADE, sent US$ 45
million to French bank BNP for investment. Apparently, nobody seemed to follow
up what happened to this minuscule amount until May of this year when
supposedly US$ 2 million in a CD was due. Except that at BNP nobody knew
anything about the US$ 2 million, let alone the original US$ 45 million and the
proceeds from investing it.

When BNP was asked about the funds all they could say was that the money had
been transferred to an institution called CLBS, which had been the one
providing FOGADE with updates and the statements, not BNP. How the money moved
from one to the other or why, has yet to be revealed.

CLBS was made to appear to be a foreign company, but in reality it seems that
it only had a single office, the Caracas
office from which a local broker managed money for various institutions.
Problem was, the man who ran that office and who was apparently associated with
BNP at one point, was gunned down in the Las Mercedes area of Caracas
in April by two men in motorcycles in what was clearly a gangland style hit.
Since then, the office of CLBS has been closed and reportedly the associates of
the broker who ran it have all left the country.

Besides the ease with which the money was moved, there is also an apparent
connection to the bankruptcy of Refco where many local institutions had custody
of their instruments because of the very generous conditions that company gave
them when lending them money against their holdings. In fact, the murder of the
broker and the FOGADE funds may simply be unrelated, even if all the funds may
be in the Refco accounts under bankruptcy proceedings.

So now, the same Superintendent of Banks who told us in non chalant fashion that the
Refco bankruptcy would have no impact in the country’s financial institutions
has initiated an investigation. Will we ever know? How many other cases are
there? The truth is nobody knows as money is being shuttled around in the
billions with no transparency. In fact, FOGADE had stopped working with BNP in
2000 as the then President had heard rumors of monkey business with the local representative.
As a new Head of FOGADE was appointed the new account with only US$ 45
million was opened.

This is no isolated case, this is
the case that was discovered, but as I said in the previous post, the
development bank Bandes exchanged US$ 1.5 billion in 2004 and 2005 via the parallel
market benefiting their friends, including some that were involved in the
FOGADE transaction. The new development bank Foden is given the central bank’s
reserves which it uses to buy US$ 3.1 billion so far in Argentinean bonds, of
which US$ 2.5 billion has been sold in the parallel market at an average rate
of Bs. 2370 per US$ by the Government to their friendly financial institutions.
While the Minister claims fake profits of US$ 200 million, it is the friends
who are making a bundle. And these transactions have been rumored for months
but were only confirmed recently by the Minister himself.

These are the obscure ways of the robolution. The inner circle and friends are making millions if not billions and only once in a while we get only a peek at the edges of the transactions. And some fools are still silly enough to believe in this farce.

One Response to “How to lose $45 million in the robolution”

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