Archive for January 2nd, 2007

In Venezuela Long Live corruption!

January 2, 2007

And French newspaper Le Monde rehashes a lot of what you read here regularly about the moral decay and disapearance of ethics in Venezuela, under the title : In Venezuela Long Live corruption! This reporter certainly was not fooled by the official stance on the matter of corruption. Good job!

Au Venezuela, Viva la corrupcion! by Paulo Paranagua in le Monde

Before checking out, the guests appear in the reception of the Hotel Caracas Hilton, headquarters of the supporters of president Hugo Chavez. The employee, Sergio, counts the wad of bills, so thick, that he can barely grasp them with his hand. The guests have just paid their bills in cash.

In Venezuela there is a lot of money that circulates that way, liquid. Numerous beneficiaries of the social programs of president Chávez receive subsidies in fresh money. After all, since the price of the barrel of oil rose, is it not the custom of the Chief of State to travel abroad with his valises full of petrodollars?

In Caracas, the informal economy provides precarious occupations that allow half of the active population to escape unemployment. Since four years ago Mr. Chávez has multiplied parallel budgets that combine a good part of the income of the public company Petroleos de Venezuela (PDVSA) and of the reserves of the Central Bank.

Thus, FONDEN, The National Development Fund, “is a not identified financial object, an OFNI (play on the word for UFO in Spanish), a great piggy bank whose destiny depends exclusively on the President of the Republic and the Minister of Finance”, stresses a diplomat based in Caracas. And as the national budget rises to 60 billion dollars, Fonden and other similar funds have 22 billion dollars, confirms the Minister of Finance, Nelson Merentes. “Fonden does not have well-known rules nor an obligation to publish its income and expenses, emphasizes economist Fernando Vivancos. It awakens suspicions of corruption”. This opinion is shared by those that favor of Chávez. “An organization like Fonden stimulates corruption”, recognizes Eleazar Diaz Rangel, director of the newspaper Ultimas Noticias, whose editorials endorse the president of the Republic.

From the arrival of Chávez to power, official statistics and public accounts are in a mist, whereas corruption indicators have exploded. “Venezuela is among the most corrupt countries of Latin America, at the level of Paraguay, Nicaragua or Panama, reminds us Mercedes de Freitas, director of the nongovernmental organization International Transparency. Moreover, the barometer of corruption of International Transparency locates at the top in the regional ranking, just after Haiti”.

“Corruption has reached levels without precedents”, points former- – parliamentary Felipe Mujica, leader of the Movement towards Socialism (MAS, Social Democrat) that supported Chávez for his first election in 1988. “The generalization of mixing business and politics and the enrichment of government officials has generated a new elite of chavistas, notes Mujica. Corruption comes from the way Chávez governs. The execution of the budget and the Administration are no longer subject to controls. He has discretion on the use of PDVSA resources that have turned it into a black box. The reserves of the Central bank arbitrarily were put at a ceiling of 30 billion dollars; the excess, between 7 and 10 billion dollars is at the disposition of the president of the Republic”. Public spending beats records. “The laws of the market are determined by the presidency of the Republic, says with irony Argenis Martinez, vice-president of the newspaper El Nacional, emblematic of the Venezuelan press. Here, all the fortunes have their origin on oil income. The new rich people are buying sumptuous residences in Country Club. The import of cars such as BMW’s and other luxury products have gone through the roof”.

This did not start now. “Corruption was endemic before Chávez”, recognizes Social Democrat Teodoro Petkoff, ex- – guerrilla and ex- – minister, and at the moment director of the afternoon opposition paper Tal Cual. “Venezuela is Petro State – the same way as Nigeria or Saudi Arabia. But Chávez has doubled the number of ministries, which often are superposed, while at the same time multiplying the budget, outside all control. The budget of the social programs is opaque and its use is to create political allegiances”.

Corruption touches all the areas and levels of the State and all the sectors of the society. To obtain a passport costs 600,000 bolivars (240 euros). The commissions and payment-under-the-table, that the Venezuelans pudically call “surcharge”, have increased by 30%. A percentage confirmed by industrialists and which the president of their supervisory organization, Fedecamaras, Jose Luis Betancourt, “cannot deny”. “The absence of independence in the justice system and impunity, constitute a fertile land for the increase of the corruption”.

“Corruption is not a congenital characteristic to Venezuelans”, alleges Mercedes de Freitas, in charge of Transparency International in Caracas. “The problem is the weakness of the institutions. We have cooperated in the matter of prevention, with the municipalities of all political tendencies, but beyond that level the doors close. Barely 15% of public contracts are officially registered. Of them, 95% are granted without bidding, under the pretext of urgency. The possibilities of fraud and corruption are multiplied”.

The consequences directly affect oil giant PDVSA. For the first time after the oil nationalization in 1976, the public company does not publish its monthly, quarterly and annual results nor their bulletins. The minister of Energy, Rafael Ramirez, a frenetic chavista, accumulates in addition, the title of PDVSA president, which has lost, consequently, all autonomy.

According to the Central Bank, the money transferences that PDVSA declares to have made to it in 2004 and 2005, really do not correspond with what it really received. The difference reaches several billions of dollars. In Caracas, they talk about this with another modest term: “evaporation”. On the other hand, PDVSA resorts frequently, for the export of its oil, to intermediaries, who receive fabulous commissions. The absence of precision about the destiny of the exports allows cheating with the cost of the transportation of the oil. An ex- director of PDVSA, Luis Pacheco, calls all this “a party with dim lights and with quiet music”.

The Exchange control is a sort of financial manipulation. “With an official dollar at 2,150 bolivars, while one exchanges in the black market at 3,400 bolivars, it is impossible to avoid corruption”, assures Pedro Palma, ex- – president of the Venezuelan-American Chamber of Commerce. “The temptation is irresistible and gives rise to great fortunes”.

On the side of the government the answers vary. “Corruption continues to exist”, admits Minister of Finance, Merentes, that invokes the parliamentary control and the comptroller (auditor of the State). “Corruption goes back to Columbus”, responds Vice-president Jose Vicente Rangel, the main collaborator of Chávez. And he swears: “Corruption more was never reduced than it is today”.

Rangel denies the percentage of which we spoke, of 95% of contracts without bidding or 30% of surcharge. He perceives it as “fireworks by the opposition”, who would be themselves, involved in enrichment crimes. “Like the presidential candidate of the opposition, Manuel Rosales, governor of the Zulia State, a former teacher, has he also become rich? ”, Rangel asks. “Why don’t people speak of corruption of the private sector? There is much of hypocrisy in the irresponsible charges by the press”.

Chávez’ government always has maintained tense relations with the media. According to the Penal Code, “to affect the reputation of the government officials”, could cause three years of prison. In March of the 2006, journalist Ibeyise Pach
eco was condemned to nine months of prison for the supposed defamation of a colonel. In contrast, they are all still awaiting a sentence for corruption since Chavez had himself elected under the promise of battling that curse

A picture is worth 10,000 words #14: Registered Students in the educational system

January 2, 2007

As promised, below is the breakdown of the number of students registered at each level of the Venezuelan educational system from pre-school to university. Curiously, the strongest growth since Chavez became President is at the University level. The more things change the more they stay the same, but it makes sense, if you created a Ministry of Higher Education, it somehow follows that the sector will get more resources. There is little that is “revolutionary” about the chart, but as John said: “We all want to change the world”, but it seems easier to make people believe you are actually changing it!

Source: Luis Bravo Jauregui, La Educacion en tiempos de Chavez, Editorial El Nacional, Caracas (2006)

The secrecy around the ever dwindling gasoline production at PDVSA

January 2, 2007

It is truly ironic that Hugo Chavez and his cohorts used to make such a big deal about the lack of transparency at the country’s oil industry. In the “old” day of the bad IVth. Republic, financials were handed in on time, PDVSA sold its oil with no intermediaries, nobody questioned the country’s oil production and contracts and agreements were signed with prior approval of the National Assembly, called then Congress.

Not anymore…

Now, we have no clue as to how much oil production is, PDVSA now sells oil via intermediaries who have a profit margin known only to the men at the top, Ramirez and his cronies negotiate the country’s oil in secrecy and privacy and nobody knows what is happening to the country’s gasoline production.

It is more of an involution that a revolution…

As I reported earlier, the country’s gasoline consumption has now become a mystery. Veneconomy’s analysis of the 2005 financials as published n the local press by PDVSA are simply incomprehensible. Domestic consumption was supposed to be 506,000 barrels a day in 2005, up only 4% from 2001, despite the fact that some four hundred thousand cars cars were added to teh roads from 2002-2005. Even stranger, when you subtract exported gasoline from production, which should give you consumption in Venezuela, you get 281,000 barrels, suggesting that something very strange is going on in PDVSA’s numbers. Indeed, from those numbers, the only possible conclusion is that the country is now importing gasoline to satisfy it’s own needs as its refining capacity seems to be in real trouble.

Well, last Thursday, reporter Edgar Ang of Reuters reported that Venezuela simply paralyzed its exports of gasoline to the US in October, according to the data from that country’s Energy Information Administration. Ang reports that due to the operational problems at the country’s refineries no ships have been seen leaving for the US from Venezuela carrying gasoline, after September exports to the US were 480,000 barrels. According to the report Venezuela only exports gasoline to Caribbean countries.

In 2000, Venezuela’s exports of gasoline to the US reached 2 million barrels a month, but were below one million a month until the suspension in October.

The main problem seems to be with the Amuay refinery, which had to be stopped for two and a half months and is reportedly only producing a fifth of its capacity.

Thus, the “roja, rojita” PDVSA is not only incapable of producing sufficient gasoline to supply Venezuela, but higher margin exports have now been lost. But what is worse is that the ever dwindling gasoline production of the country is being treated as a state secret, much like the financial data of the country and the negotiations and information about oil and gas joint ventures. More remarkably, the local media seems to make no reports about it.

Another lie by the fake revolution.