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.

7 Responses to “Government corruption in three different Venezuelan styles”

  1. Roberto N Says:

    So I have had conversations with one of the “state banks” that wants to give me money to invest in my business.

    When I asked them why they wanted to give me the money, why not start their own thing or go somewhere else they replied that “95% of the projects we have financed have gone nowhere, the money is gone and there’s nothing to show for it. Only 5% of the projects we have financed do get off the ground and run as planned”.

    Seems they like to finance incompetence (doesn’t make me look good, does it?)

    Imagine how those 10 billion Yuan are going to get spent, ay papaito!

  2. Roy Says:

    I would imagine that, in all of these deals, the money gets shared around a wide swath of official Chavismo. So, maybe Saab got cut out of the deal or got screwed out of what he thought his cut should be.

    When the game is finally up, I think we can count on these hyenas turning cannibal in an orgy of tit-for-tat incriminations.

  3. Gordo Says:

    One should distinguish corruption from desperation! Corruption is when some thieves are pocketing the money…. desperation is when the government steals from Peter to pay Paul.

  4. Maria Says:


    The company that imported that milk from China is called Exim Brickell, property pf Rogelio Salges. He is now suing Bariven for, I think, something close to 70 million dollars for failure to pay. Maybe Saab has a beef with Salges.

  5. concerned Says:

    Nobody mentions the radioactive Chernoble Belarus milk anymore that was purchased at “special” prices and distributed to the children of Venezuela.

    Usually, the cheapest price is not the best when it comes to food items. But that doesn’t really apply to Venezuela when it pays the full price or higher, depending on the level of corruption, for the cheap, discounted, tainted, polluted, etc….

  6. amieres Says:

    According to Ultimas Noticias there are 1386 containers with a total of 34.650 tons of milk in Jose for which they paid BsF 354.648.951 to two chinese companies.

  7. amieres Says:

    This thing with the contaminated milk is really strange and it all revolves around Tarek William Saab governor of Anzoategui.

    When the first containers were discovered in Pto. Cabello everyone in the government followed the usual procedure: ignore it, deny it, minimize it. Everyone excep Saab. For some reason and without anyone asking him he immediately revealed that there were 120 containers in the Criogenico de Jose full of contaminated milk.

    Interestingly enough you can see them via google and in fact there are actually 600 containers:

    He also mentioned that the Procuraduria was going to sue the chinese company that provided the milk, but he hasn’t revealed which company is this.

    Now the strange part is this:
    – What was eating him that he had to spill the beans so fast?
    – Why is the governor of Anzoategui talking about this issue and not someone from Pudreval?
    – Why did those containers end up in Anzoategui and in Jose in the first place?
    – What is his involvement in all this?

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