Archive for August 29th, 2010

Government corruption in three different Venezuelan styles

August 29, 2010

(Comptroller: I feel very comfortable in my position)

Criminal Corruption: There is an interesting interview with Carlos Machado Allison in today’s El Universal. But what caught my attention was the side note on the milk that was imported by Pudreval with melamine from China.

The milk contaminated with melamine was a scandal in 2008 of contaminated milk found in many countries. What is interesting is that Machado Allison, a food expert, says that Venezuela was not among the recipient countries of the tainted milk exported from China.

What this appears to imply is that the milk was purchased in the secondary market at a cheap price, after the scandal broke. Thus, there was not only an act of corruption, the milk was imported as if it was good quality milk, but lower prices were paid for it, but high prices were charged to PDVSA. But the biggest and most criminal act of corruption is that this milk endangered Venezuelan citizens, particularly children. This is simply unacceptable and should be looked into and investigated, but where is the People’s Defender when this things happen?

Truly criminal corruption

The lucky winner style corruption: When  a big infrastructure project comes up for bids, companies make a special effort to bid low, simply because once a subway system project or training gets built by a company, the technology is so locked in that if you win the initial bid, you will have recurrent revenues from the project in the future. Such was the case of Caracas’s Metro where the French locked in the original contract and have continude to receive the contracts for new lines and maintenance.

Until now…

Because this time, the French submitted a bid for US$ 1.86 billion for the overhaul of Line 1 of the Caracas subway (Page A6 El Nacional) for US$ 1.86 billion.

And watch the dates now, Chavez approved US$ 1.86 billion on February 13 2008.

June 13 2008: A Spanish “consortium” presents its bid for US$ 1.856 billion

August 4th. 2008. The “consortium” is approved as the “winner”

September 25th 2008: The “consortium is legally registered for the first time

October 3d. 2008: Contract is signed!!!

There you have it, the Government negotiates with a non-existent consortium for months and only after it has been “approved” is the consortium legalized and registered.

This violates everything single bidding law, regulation in Venezuela and then some…

It was all “pre-arranged” , they were just the “lucky winners”, even if they did not exist. Let’s hope the French subway cars learn to speak Spanish technology…

And the missing funds type of corruption: The head of the union of CVG (fomerly a member of Chavez’ PSUV party) wrote a letter to Minister Giordani asking about the now famous or infamous US$ 500 million sold against future shipments of Aluminum. It is a strange story. Russia’s Gazprombank paid the money into its Lebanese affiliate

Supposedly the money would be used to improve the infrastructure of the Aluminum plant.

But the money is nowhere to be found. It was transferred to the Ministry of Finance. However, the Minister for Basic Industries says it was used to pay suppliers. Even an Argentinian-Venezuelan that is involved in the 15% commissions says the money was used to solve the electricity problem.

The problem is that 4 years of aluminum exports were sold and without the money, the plants will not be able to produce it. It’s robolutionary Catch-22…

Money was obtained for one purpose, but in the mismanagement of the revolution, it is used somewhere else. Under Venezuela corruptions laws, this is illegal and punishable with jail. Except that nobody is going to go after Giordani, Sanz or any of those involved.

That’s the way it is, if you are with Chavez you have a magic shield, if not, you are screwed, even if you did nothing…

But it is corruption, nevertheless.

How the poor in Venezuela are the largest victims of homicides

August 29, 2010

After writing this post about how homicides affects the poor most, with only one figure, I added another one showing absolute levels for the incidence of homicides across all social strata at the request of some readers. I had made a mistake, so I reposted the corrected figure. But sine not everyone caught that figure and because the fuiure is so important I thought I would show it again.

This is the absolute rate of homicides derived from the INE report per 100,000 people in each of the social strata, where 1 is the top and 5 is the bottom:

This data has been derived from the INE report, which is a poll, not precise crime statistics. INE derives the data from the poll and reaches the conclusion that in Venezuela there were 21,132 homicides in 2009, which somehow gets adjusted down to 19,113 homicides.

In order to calculate what is the rate of homicides per 100,000 people, we need to know how many people there are in Venezuela. Since I can’t find that number in the INE report, I look elsewhere in the INE website and find that for 2009 the projection was 28.8 million inhabitants, which gives 66 homicides per 100,000 inhabitants in 2009.

The chart above was obtained from a Table on page 70, where INE calculates the number of homicides per social strata based on its poll. However, the number of people is based on the sample size of the poll which is 1.8 million, not 28.8 million, so I had to correct for this factor to obtain the chart above.

The numbers are clearly horrific for the poor, the bottom strata of the population, as defined by INE, is the victim of 239 homicides per 100,000 people, almost four times larger than the national average. Those in the next lowest level have 110 homicides per 100,000 inhabitants, almost twice the national average. Curiously, the rich have more homicides per 100,000 inhabitants than the national average at 77. It seems you want to live in the middle class and lower middle class areas where in strata 2 and 3, the rates of homicides are a developed-country-like 9 and 19 homicides per 100,000 inhabitants respectively.

Even more surprising, according to the INE report (page 68) not all homicides get reported, despite the legal requirement that a person dying a violent death has to be autopsied. Clearly, people know the implications of their relatives having to go to the morgue and simply avoid it, likely by asking or bribing the medical doctor that certifies the death, not to specify that it was a violent one. For homicides, INE concludes, 15.% of homicides don’t get reported, which goes up to 36% for sexual abuse, 68% for robbery and 38% for kidnapping. Which shows the lack of trust and confidence Venezuelans have for the police.

Not a pretty picture…