Archive for February 28th, 2008

The biggest corruption scam in Venezuela’s history continues to thrive under the robolution

February 28, 2008

The Government has once again begun under the new members of the economic Cabinet to sell structured notes into the swap market in order to pressure that exchange rate into going down. So far, in three weeks the Government has sold about US$ 450 million into this market, going back to the non-transparent days of Nelson Merentes.

As I reported then, basically Fonden sells these dollar denominated notes to “friendly” banks at the officials rate of exchange and these financial institutions tun around and sell the notes in the international market at a lower price than they purchased it for, but they are then able to sell the dollars at a much higher rate in the local swap market, using other securities, making a juicy profit.

The effort has been successful, the swap rate has gone down, but once again the issues of transparency, efficiency and corruption are being raised. What is most interesting is that the media is being a little more aggressive this time, questioning more openly the sale of these structured notes to only a selected few who make a lot of money from it.

In the previous batch of sales of these notes, few media outlets questioned them, I can only recall Tal Cual (who called it XXIst Century Robbery) and Ultimas Noticias doing it, but two different newspapers sharply attacked them yesterday.

You see, in the first batch of notes sold in this round, the swap market was at a value in local currency about 25% to 30% higher than the price at which the Government was selling these notes to the friendly financial institutions. Thus, if the Government sold you a certain amount of notes, say US$ 20 million, your profit could be as high as US$ 6 million. Except it isn’t because you only get them because you are willing to pay back some of those same profits to the intermediary that brought you the deal. It is my understanding that the profit is split 40%/60%, with the financial institutions getting the 40% side…

So, you can calculate what profits have been like so far if the Government has sold US$ 450 million in these notes. The notes are not sold at 100%, because the underlying securities make them worth something like 60% on the low end ones. Thus, this says that they have obtained at least US$ 270 million and if profits are 25%, then the juicy deal has given both sides as much as US 67.5 million. Only in the robolution can people make so much money so fast without doing anything.

Two newspapers were sufficiently annoyed this time around to say something yesterday. First, there was Reporte Diario de la Economia which came out with a very aggressive headline “Financial mafia continues to operate structured notes in the country”. This is a translation of part of what they wrote:

A group of individuals fully identified …has been showing up at local financial institutions and supposedly in the name and representation of high Government representatives, they negotiate a percentage for being assigned structured notes and those not in agreement with the “toll” will not have a right to be assigned any…some bankers used to accept this, but have decided to confront this financial operator with initials M.V…Now they are not only charged 40% , but now they are charged 15% for M.V.

Separately, Economist Orlando Ochoa in page 6 of the “Strategy” section of El Nacional gives an interview, which was given the headline: “There is corruption in the assigning of structured notes”. I commend Ochoa for his statements and El Nacional for daring to publish it in this rarified atmosphere under Chavez’ Government. Among his charges:

“This means that the resources that y Law have to be used for social development are being destined to foreign exchange gain transactions”

“It is like giving away a margin of 20 to 30% profit to those that receive them, the Minister and the Treasurer decided who gets them”

“One has to ask whether Chavez knows about these operations…”

“The gains are shared between the Government, the bankers and the intermediaries (comissionists). The assigning of structured notes is the biggest corruption case of our history…and this takes place under a Government that calls itself revolutionary and socialist…”

“they are giving a privilege to those that have access to the dollars and they enrich themselves with it”

“Instead of financing equipment for hospitals, build schools, they invest in structured notes”

I understand Ochoa gave names to El Nacional too, but the paper decided not to print them

Some of these things you have read before in this blog (here, here, here), but I can only be happy that more and more people are actually saying it publicly and hope others will join the chorus and stop what is truly the biggest corruption scam in Venezuela’s history by any Government.

The Muzzle by Teodoro Petkoff

February 28, 2008

And to those that claim there is still freedom of the press in Venezuela, Petkoff’s tells us what the reality is, referring to Chavez’ attack on the Editor of Ultimas Noticias, a position Petkoff held until the Government forced the owners of that paper to fire him:

The Muzzle by Teodoro Petkoff in Tal Cual

The most impressive thing about the scolding that I,the Supreme gave Diaz Rangel, Director of newspaper Ultimas Noticias and of the inconsiderate references to the Capriles family, has been the silence of some prominent figures of officialdom-that in other times would charge with lance in their hands against the dragons of censorship-not to mention the silence of the offended person himself. It is particularly surprising the silence of Jose Vicente Rangel, a columnist of the same paper, and a close friend of the Director. We waited until Monday to see if in his column in the paper directed by his friend, Rangel would feel obligated to say something. It was useless. He was silent. Perhaps he does not want to ruin things with his pathetic complaint, so that he may be called again to the Government.

But much like this man that likes to show off, there are others that prefer not to risk their source of funds. Their silence is explained mostly on the basis of fear. That is the part that foreign correspondents that come to Venezuela or the “revolutionary tourists” like for example Jack Lang or Naomi Campbell don’t see. There is freedom of expression, certainly, but those of us that exercise it do not fear I, the Supreme, nor his temper tantrums. Paradoxically, freedom of expression seems to be over for the supporters of the Government. From those, Chacumbele, expects unconditionality, that is, silence. Chavez said it himself when he whispered it to Diaz Rangel: “I do not care” about the opinion of my adversaries, implying clearly that he does mind that of “his people”, as long as they don’t criticize him. If they do it, they know that the same destiny of Diaz Rangel awaits them, up to now, the pampered reporter of the regimen. The remainder of the intellectuals and politicians of officialdom have a very clear picture: if that was done to a heavyweight like Diaz Rangel, what can people in lower divisions expect? That is why their tongue remains stuck where the sun does not shine.

We extend a hand of solidarity to our friend Diaz Rangel and the owners of Ultimas Noticias, but we can’t fail to mention that we no longer recognize Diaz Rangel. The man we used to call the “Czar” in our political party MAS, for his frontal and uncompromising character, who his pupils respected for his severity in the face of the improvisation of others, the same one that wrote books against abuse of power and that now responds timidly, explaining only the origin of the headline of Ultimas Noticias that caused his disgrace, omitting all allusions to the ridiculous lesson in “ethics” that I, the Supreme attempted to give him, of that guy, we wonder where he went, whatever happened to him. Even more, after the unacceptable and rude aggression that was made by that other guy who is just taking care of himself, attempting to show himself as being more Chavista than Chavez, Diosdado Cabello, who accused Diaz Rangel of being nothing more than somebody that infiltrated Chavismo on behalf of the IVth. Republic.

There was no response to that either. Fear is the worst instrument of repression.

Pro Chavez groups take over Archbishops Palace, threaten media

February 28, 2008

Today, a group of Chavez’ supporters took over the Archbishop’s Palace where Cardinal Urosa lives and other than having notoriety, it is unclear why they picked that target, as the group spoke mostly about defending socialism and the revolution, explaining that this was a “peaceful” takeover.

Of course, once again we see the discrimination between opposition and pro-Government groups as the police was nowhere to be seen. Recall in November how the police and the National Guard repressed the truly peaceful student march to the Electoral Board, when they tried to chain themselves to the stairs. The cops and guards, used tear gas and hit students violently, while today the Chavista groups were allowed to roam freely and even were able to kick the workers of the Archbishop’s Palace out of it, while the invaders held court for the media.

And then, staunch Chavez supporter Lina Ron showed up and you can see the video with her words here:

If you don’t understand Spanish, Ron is saying that they only accept Chavez as the leader of Venezuela and she repeatedly threatened TV station Globovision, telling it to shut up and lower its profile or they would take whatever action they deemed necessary. They demanded from the Minister of the Interior and Justice that he stop raiding the areas where the group that placed the bomb at Fedecamaras lives and instead he go and raid the areas where the oligarchs live. She even accused some parts of the Government to jointly organizing the raids, calling on the telecom and media regulator Conatel to act against the media outlet.

She called the man that died trying to plant the bomb on Sunday a “martyr” of the Chavez revolution, comparing him to assassinated prosecutor Danilo Anderson. Ron said that bombing Globovision would be a personal decision for any revolutionary. Curiously, there were organized protests tonight in front of there Globovision headquarters.

It is not clear what the precise objective of these actions is. While it would seem to be an attempt to gain support for the Government shutting down Globovision, these anarchist (and yes terrorist!) acts would not seem to benefit the Government much at this point in time, when the people are blaming Chavez for the everyday problems they are facing. It would seem as if the Government has allowed all these groups to be armed and roam around the city at will and now it can’t reign them in. As crime and shortages are hitting the people daily, these type of unnerving and confrontational actions by pro-Chavez groups, would seem to be the last thing the Government needs at this time.