Archive for April, 2008

How to get rich if you have contacts within the exchange control office CADIVI

April 13, 2008

Because there is no transparency, it is not possible to look at the details of transactions within the exchange control office CADIVI. Lately new journal Sexto Poder has been somehow getting information from within and has been reporting some amazing ripoffs in CADIVI. This week they showed how a request denied twice by previous CADIVI administrations, because they did not qualify at all, was magically approved when the new President of CADIVI was appointed.

But the case I liked the most because it is so easy to understand is the one above from a company called Henglobal. Henglobal apparently operates from within the La Carlota military base in Caracas and while normal companies have to wait over 100 days for approval.

But not Henglobal. Their requests for residential intercom systems are approved in seven days and they submit from 10 to 15 a month. Besides this anomaly, notice that these intercom systems, which typically cost about US$ 25,000 for a large building in Caracas, are approved for US$ 965,000. Thus, the owners get this amount at Bs.2.15, but most of it is profit because it only costs US$ 25,000. Assume ten a month, twelve months every year and this gives the company a tidy profit of around US$ 112 million.

In previous exchange control systems in Venezuela there were independent verifying companies that would check prices with international sources before approval. No such thing was done this time around. Thus, the pretty robolution finds ways to steal everywhere, which explains in part how come the large windfall the country has enjoyed has not produced the minimum results you would expect.

There are dozens of stories like the one above, this one is just the simplest scam you can find. More as they show them.


Eduardo sends some good ones

April 12, 2008

Two vies of a very nice Venezuelan Coryanthes Macrantha

Clearly Eduardo had a Mossiae semi-alba indigestion last month. Truly stunning!

A nice Shomburgkia Superbiens alba

Country drifts as Governemnt goes into bizarro overdrive

April 12, 2008

You have probably noticed I have not written much lately, I could say I was busy with the young baseball season or the orchid exhibit this week, but reality is that there has been so much going on making this country truly bizarre. Meanwhile,  the so called opposition was nowhere to be seen as they seem more concerned with their November campaigns than with remembering those that died on April 11th. 2002, whose killers remain at large and 19 deaths and hundreds of injured have disappeared under the veil of Chavista injustice. And Chavismo has no shame in celebrating today (Do they know how to count?) as the Day of Dignity because Hugo Chavez happened to return to power 4 years and 364 days ago.

Only NGO Vive commemorated such a dark day properly, showing up with 19 coffins in front of the Prosecutors office asking for the Justice that has not been achieved, while Chavismo in its usual immorality was at Puente El Llaguno, where former Minister of Defense Garcia Carneiro used the occasion for politics attacking retired General Raul Baduell, calling him a “traitor hero” for his role that day and his later defection from the Chavista ranks.

Meanwhile the man in charge of all the injustice and the fraud to the country’s Constitution, former Prosecutor Isaias Rodriguez, was trying to deflect the accusations against him from his former star witness in the infamous Anderson case. Given their track record, I don’t believe Rodriguez or star witness Giovanny Vazquez, as they both have shown to have a vivid and shameless memory to manipulate the truth according to obscure and amoral purposes. (The word amoral has come up a few times in the last few days with some friends in different discussions. What is going on here can no longer be labeled as immorality, amorality represents a better definition of the lack of scruples, ethics and morals that has taken over Venezuela in the last few days)

And we go from one amazing act or statement to the next. Perhaps none reflects as well the ability of the Government to be bizarre, that Chavez’ statements that the country needs to be ready to greet the “hundreds of thousands of refugees” that will come to Venezuela to flee from the misery and the poverty created by George Bush in the US. I mean, where does he think he live? Has his isolation increased so much? Has he seen the garbage, lack of sewage, poverty, misery, malnutrition and crime that permeates Venezuela from one end to the other, with little change since he became President more than nine years ago? Has he noticed the exodus in the opposite direction at all?

But rather than spend money in solving these same problems, Chavez spends his days not only spending money at random, but destroying institutions. He is nationalizing Sidor just because and on Friday, they added seamless pipe factory Tavsa to it, just because its plant is on the same land as Sidor. What’s another billion here or there for his whims?

And they even think those that will be expropriated may want to stay as their partners as if their track record at destruction and mismanagement was not there for all to see. Rumors have it that CANTV has not paid all salaries to their workers, only months after being nationalized. Billing problems, dialing problems and ADSL problems that did not exist befiore, have begun to surface as the number of workers in the company has jumped, much like those in PDVSA that has gone form 40,000 employees pre-strike to 77,000 five years later, despite lower production, huge accounts payable increases and profitability that is only due to a five fold increase in oil prices.

Meanwhile, some bureaucrat in the Land Institute decides to upgrade the land in Valled Del Turbio to class I (the most fertile) and sugar producing farms in full production are militarized and the Government wants to take them over just to guarantee further sugar shortages in the future. (Funny, one of the farms threatened was one given to some farmers by the Chavez Government, now they want to take it back. I guess they found a succesful case and wanted to get rid of it, it sets a bad example)

And to end it all, I find out that the new school program that has created so much controversy that Chavez withdrew the proposal, removes computers from the curriculum as a subject matter other than it should be used in an unspecified and diffuse manner in all courses.

And the opposition? I don’t know, I have not seen them talking about any of these topics, maybe they care about human rights or economic well being as little as the Chavez Government. Instead, rather than devote a little time to criticizing any of the actions above by the Government, they seem to be running for office all over the place. I do hope they have a plan, other than getting elected.

Thus the country drifts into this sort of bizarro vaporous oblivion of nonsense under the leadership of Hugo Chavez who has gone into this nationalization rampage which is accompanied by frequent and long nationwide TV addresses. Today he did not create much goodwill by interrupting the NY Mets game just as Venezuelan superstar Johan Santana was pitching, which is certainly not going to endear him with the Venezuelan baseball fan population.(Even if he lost)

But such is the isolation of Chavez today that he no longer cares about what used to be “his favorite team from his youth”, a lie he was caught on when someone realized he was no longer a kid when the expansion team the Mets was created.

But Chavez has lost his old touch with the common people and his popularity drifts down daily as he acts in grandiose fashion to attempt to prop it up. He forgets that his best moments have been precisely when he has set aside his grandiose economic and political projects and focused on the problems facing the people.

But the country drifts into a nutty economic model and nobody seems to care or say much, as everyone seems to go about their daily lives.

And I worry…

If it is Wednesday it must be Chavez’ day to nationalize steel

April 9, 2008

Today the Vice-President Ramon Carrizales said exactly the
opposite he stated yesterday and the Government announced that steel company
Sidor would be “renationalized” and taken over by the Venezuelan Government
from Argentina’s Ternium. Ternium is composed of a Mexican, Argentinean and
Venezuelan steel producers, which found the synergies or joining forces and
important factor in their success. Sidor was privatized in 1998 after decades
of losses and an investment of more than 15 billions dollars.

Chavez had so far resisted nationalizing Ternium so as not
to offend his Argentinean friends the Kirchners. Last year Nestor Kirchner sent
a high level and personal emissary to negotiate prices for Sidor’ steel prices
in Venezuela when Chavez first threatened to nationalize the company who
apparently thwarted the effort.

But last night Huguito seemed to have a temper tantrum
when Sidor’s board refused to accept the demands of the steel union, SUTISS,
which has been creating trouble for the Government for the last two weeks.

What are another two and half to three billion for a rich
autocrat like Chavez? Thus, Chavez added to what is now a remarkable US$ 21
billion in payments which the country will have to make in the next couple of
years when you combine the heavy crude projects, cement companies and now
Sidor. Given that Government assets including Fonden, Bandes and international
reserves are estimated at US$ 57 billion, the numbers are no longer as comfortable
as they used to look which may explain the fact that Venezuela has the highest
risk of any emerging market at this time.

Of course, since they can no longer argue that Sidor is
charging prices that are too high, this time around the arguments are that
Sidor was “exploiting” its workers, submitting them to a form of “semi-slavery”
and while the company has not violated the law, its behavior is “anti-ethical”
and “inhuman”

This “inhuman” behavior included accepting the unions
demand that all of the workers belonging to contracting companies be hired as
regular workers, which increased the payroll by 600 people, a salary increase
of 130% which has to be added to those announced by the Government every year
in May and is thus much, much larger than anything the “human” Government of
Hugo Chavez has ever granted any workers.

A Sidor worker would make after this increase, more than a
Full Professor from a Venezuelan University or ten times the minimum
salary. But you know, most of
those intellectuals are oligarchs anyway, while a majority of Sidor’s workers Chavez
believes are in his favor. They will, only if they need him.

We have yet to hear from Chavez Kirchner’s friends, who
much like the French before the Lafarge nationalization, believed that they
were immune to Chavez’ tantrums and antics. Chavez will have to give something
up in return to Kirchner’s friends to be forgiven. But politicians in Argentina
are not likely to be convinced and this may turn out to be the end of Venezuela’s
Mercosur application.

And then there is the complete freeze out by Venezuela’s
corporate sector, which now will absolutely refuse to make any investments. Why
bother if you don’t know who will be next?

And that as the talk of the town today as people wondered
whether it would be Polar, Sivensa and all or someone in the banking sector.

The amazing thing was that the
opposition’s ignorance on economic matters made them stay on the sidelines as
none of the “leading” opposition politicians seemed to be comfortable enough to
even dare criticize the Government for its recent takeover announcements.

But to me the math is very
simple: Every dollar spent in taking over perfectly functioning companies is a
dollar away from helping hospitals in a country with a decaying heath
infrastructure, or from helping someone avoid malnutrition, or from creating a
job in a country with 50% informal sector employment or buying equipment to
fight crime in a country with 100,000 homicides since Chavez became President.

It should not be that hard to
figure which all in all represents a tribute to the mediocrity of our
politicians both Government and opposition.

A bit of everything

April 9, 2008

On the left a hybrid of Cattleya Intermedia with Blc. Morning Glory. This flower won second prize at the recent Natural Sciences orchid exhibit. On the right, a Cattleya Mossiae semi-alba, which unfortunately has a funny shape.

On the left, a Cattleya Giga from Colombia, huge flower! On the right a hybrid of Cattleya Walkeriana with Blc. Morning Glory.

My faithful Cattleya Violacea. I took it today to the orchid exhibit of the Venezuelan Orchid Society and someone I respect a lot was very impressed with the size, shape and number of flowers. I thought it was an unusual plant, but I am no expert on Violaceas.

What is strong is the looting by Teodoro Petkoff in Tal Cual

April 9, 2008

I must say that when the Electricidad de Caracas bond was sold in what was clearly a blatant corruption scam, I was appalled that a US$ 100 million scam could go unnoticed like that. In some sense it is part of the climate of fear created by Chavez and his hoodlums in which many segments of the media are afraid to speak up for fear of retaliation. But I have been extremely happy to see others reporting the case. From Reuters, to Reporte Diario de La Economia to Ana Julia Jatar, the story is coming out and even though I do not expect this amoral Government to investigate anything, the record is there for all to see.

Today, Teodoro Petkoff covered the issue and it was clear that he had all of the data. But I would like to note one part of his Editorial that may go unnoticed: There is no reason for the Government to create this second part of the foreign exchange market using bonds other than to insure that some people will make so much money just in case Chavez disappears from the Venezuelan political scene anytime soon. Thus, if we saw corruption before, you ain’t thing anything yet! It is also interesting that Petkoff uses names, naming a person that had been acting in the structured note market/scam and now magically appears as an adviser to the Minister of Finance on these matters.

I wonder now where all of the cheerleaders of Chavismo are. They used to come and say so and so was corrupt and now that Venezuela has the most corrupt, unethical and immoral Government in its history they are quiet but still supporting what may be the most aberrant and corrupt Government in the country’s history.

And as Petkoff suggests, either Hugo Chavez knows exactly what is going on or he is an bumbling and incompetent fool. And by now, it is not the latter…

What is strong is the looting by
Teodoro Petkoff in Tal Cual

The looting of the country is
frankly reaching apocalyptic levels. What happened with the Electricidad de
Caracas bonds reaches new levels on matters of illegal enrichment. The
operation is as follows: Electricidad de Caracas, now in the hands of the
State, announces the issuing of a public debt bond. Amount: 650 million
dollars, ten years maturity and with interest of 8.5%. The buyer will acquire
them with a premium at a price of 105%, that is, for each one thousand dollars
in face value he will pay 1,050. While denominated in dollars the bond will be
paid in Bolivars at the official exchange rate of Bs. F. 2.15 per dollar. Up to
here the procedure follows that steps in the placements of other securities
which insure dollars at the official rate of exchange, later sold in the parallel
market and the profit is split between those that distribute it and those that
share it. But in the case of the electrical bonds, the buyer will have to
forcefully sell his bonds to an unidentified buyer, who will pay in dollars.
The repurchase price fluctuates between Bs.F. 3.42 per dollar to bs. F. 3.6 per
dollar, because the “repurchase “ price is with a discount at 62.7% and 66%.
That is, for each one thousand dollars of the bond the holder will receive 627
or 660 dollars, according to the discount.

But here is where the “kikirigüiki”*
is, the average price of the Venezuelan bonds in the secondary market is of 83%
over its face value. Thus the repurchasers, still anonymous but we can presume
who they are, will make between 170 and 200 dollars for each 1,000 of the bonds
“repurchased” with the discounts mentioned earlier.

You bought at 62 or 66 and you
sold at 83. The full issue (650 million dollars) would produce “earnings”
between 110 and 132 million dollars.

Is this what they nationalized Electricidad
de Caracas for? To transform it into a “corporate agent” of thefts to the
Nation and enrichment of the Government officials and financial operators of
the regimen? We are no longer going to ask if the President knows about this or
if this is being done behind his back. Because it is not only impossible that
he does not know of the enormous frauds that are talking place with the
placement of public debt bonds, but we can presume that having been convinced
by Moris Beracha that the mechanism to be sued to get rid of, without leaving a
trace, the structured notes, which incurred in a patrimonial loss to the nation
over US$ 3 billion, he is taking his time to personally monitor the development
of the operations.

And we have yet to establish a dual exchange rate. When that happens, the orgy
of corruption that will fall upon us will leave as only chicken thieves the famous
operators of Recadi. The moral decomposition of this regime is touching bottom,
the bottom of the pan that they are scraping given the perspective that Chavez
has an expiration date.

*kikiriguiki, slang for shenanigan

Planning in the revolution

April 9, 2008

Ramon Carrizales, Vice-president of Venezuela April 9th. 2008: “The nationalization of steel company SIDOR is not in the plans of the State”

Ramón Carrizales, April 10th. 2008, less than 24 hours later: “Venezuela will renationalize steel company SIDOR”

This is what is called long term planning under the revolution

Chavez shows off new cement technology

April 9, 2008

Chavez showing off the new technology he invented that he will use to improve the productivity of the Cemex, Holcim and Lafarge plants. He claims not only will the plants be more productive, but he will be able to give jobs to all men in Venezuela and about one third of those in Colombia to move around with this hi tech system 8 million Tons of cement a year. He may be right…

The almost next to last look at the cement nationalization story

April 8, 2008

I thought I had cemented the whole issue of the nationalization of the
cement industry, but the level of improvisation and ignorance is so
high that I have to revisit the issue maybe for the last time.

First, as I mentioned in the earlier post, President Chavez said
yesterday that he was only going to nationalize those cement companies
that used to be owned by the Government and were privatized. Except
that oops, that leeaves no company to be nationalized, as none of the
three companies in foreign hands was ever owned by the Government. The
only company that was ever in Government hands was Cementos
Andinos, which was nationalized last year. So, Government officials had
to backtrack a little today, without clarifying that Chavez never knew
what he was talking about,

Then, the President’s ignorance was matched by that of the Minister of
Energy and Mines and the man now in charge of food, oil, cement and
what have you, Rafael Ramirez. Ramirez said that the Government would
like to have a “minimum” of 60% of the cement companies, which is as
nonsensical as they come.

First of all, I doubt that any of the foreign companies that control
these cement companies in Venezuela would like to remain as partners
with a Government with little experience with the cement industry, but
Ramirez seems to ignore a small part of the equation: The Law, in this
case the Capital Markets Law.

You see, in order to protect minority shareholders, the Venezuelan
Capital Markets Law establishes that the entity trying to take control
of a public company, in this case the Government, has to tender for 100%
of the shares of the company. Thus, it is not up to Ramirez, Chavez or
the Government to decided they want a minimum of 60% or not, they have
to tender for all the shares and the people will decide whether they
hand them over or not, you can’t force them.If only 52% tender, tough luck, it’s the law.

But of course, nobody wants to be partners with companies of a “social”
nature, managed by an incompetent Government and Cemex and Lafarge (the owners of the two public companies)
are likely to tender their 80%+ stakes in their companies and most other
minority shareholders are likely to do the same.

The problem is that Rafael Ramirez in his ignorance wants to make
grandiose nationalistic statements that collide with Venezuelan
legislation, but he does not now better, he just has a limited
experience with PDVSA and his failed policies of the last years. So,
you can’t ask for much more.

Al of these statements are so confusing and contradictory, that in any
other country if the Government were a private company, it would be
fined by regulatory authorities for misleading and confusing statements
that hinder the ability of investors to make rational decisions and may
have induced some to lose money in the process.

But ignorance rules in Venezuela since 1998 and such matters, as the
rights of investors or citizens for that matter are simply irrelevant.

The revolution is above it all, including knowledge and people’s rights.

Santos sends a bunch of pictures, evne of people!!!

April 7, 2008

Santos sends pictures of species, hybrids and even of la Gran Sabana and even people!!!

Two pictures of what Santos considers to be his best Cattleya Lueddemanniana

Left: Cattleya Lueddemanianna Coerulea, Right Cattelya Lawrenceana concolor Diana, both Venezuelan

Cattleya :oddigessi color on the left and alba on the right

Pescatorea Dayana, a Colombian species

Pescatorea Dayana on the left, Rincholaelia Digbiana on the right

Vanda on the left, orange hybrid on the right.

Quebrada Jaspe (Jade Brook) in Gran Sabana on the left and Eriopsis Biloba in situ in the Gran Saban

On the left Santos’ family in the Aponguao. Epidendrum in the Gran Sabana, in situ