Archive for September 10th, 2011

The Fonden Papers Part VII: Some musings (a rant?) and observations!

September 10, 2011

I had a colleague, who will remain nameless, who left Venezuela almost three decades ago for a job in a multilateral organization. Years later, I found him again, working for a foundation. Miguel, he said, “I have the best job in the world, I read proposals from the best scientists in the world, I recommend to the Board the best ones, and they mostly go with my opinion.I basically decide how a few billion dollars are spent in the most exciting areas of of research in biology”

The story comes to mind, because according to the Fonden website, US$ 40 billion ( I have subtracted the missing US$ 29 billion or so) are decided by a “Directorio: (Board), composed of two people: Jorge Giordani and the Executive Secretary, someone named Claudia Garcia Guillen, whose CV is empty in the Fonden pages, and I have been unable to find much about her in

My friend would (or should) be envious!

Thus, mhewas wrong, there was a better job, imagine having the power or the ability to influence how million and billions of dollars are spent, even if you know little about the field, and steer Venezuela’s “development” with the money.

Except, that I am not sure about how these projects were approved. Was it Giordani who had the last word? Or was it Hugo himself? In the end, after reading all of the projects (I would take a test on my knowledge!) the whole thing makes little sense, when you look at the details of all the projects.

Let’s look at the biggest headache of Chavez Government in the last few years: The Electric problem. The root of all problems was Guri dam. The lack of maintenance forced the Government to stop almost half the turbines. This meant halting almost 50% of the main contributor to the country’s power generator. But, as you can see in row 113 of the spreadsheet, a scant US$ 64 milliom was assigned to this problem.

What gives?

There are 300-plus projects and this one does not even rate being in the top 80. They spent over 500 million dollars in at least 12 projects, US$ 100 million in at least 65 projects and Guri, barely got US$ 64 million.

But then, if you are distributing money right and left in the millions, why do you even bother to write down, consider or even give US$ 2,783 to overhauling the “Recrational Los Lagos El Encanto” Park (row 28). For God’s sake, give them US$ 3,000 out of petty cash and don’t even ask for receipts!

Remember, Fonden was supposed to be spent in foreign currency. All dollars. But you have things like liquidating INAM (row 134), the National Institute for Minors, which I am sure only required local currency.

But there are many like that. Take row 139, US$ 33 million to indemnify people who lost their homes in Lake Valencia, you certainly can’t justify paying them in foreign currency, no?

Or row 274, US$ 74 million to buy homes in the “secondary market” for those that lost their homes in the floods in Caracas. Did these people really get paid in US$ dollars. If not, how did Fonden exchange the money. Did they go to the central Bank and say: “Hey, remember the dollars you used to create Bolivars when PDVSA gave them to you and then you gave to me? Well, I want Bolivars for them now. Get it? If they did that, it would be giving someone Bolivars twice for the same dollars! Talk about being irresponsible!

How about row 230? 42 million dollars to build housing in the city of Caracas. Sounds good, no? Except the organization in charge of execution of the project is none other than the Ministry of Culture.

Hello! I know the Minister of Culture was an architect, but what does culture have to do with building housing?

I could go on and on, like 100 plus million on building ten new universities (Really, how crummy can they be?). Or the Metrocaribe Mariche, which received US$ 49 million (row 119), but can anyone near Mariche tell me if anything has been built? Or all the money invested in agriculture, what happened to it?

The point is that Fonden has been like a petty cash fund on steroids, used without planning, even random in topics and amounts. It is as if the revolution has no priorities, just throw money at stuff, hope something works.

But nothing seems to work.

And it all goes back to the same man, Jorge Giordani, the non-economist, obscure academic in charge of the economy for ten of the last twelve years. In charge of continued and soaring inflation. In charge of this boondoggle of a development fund, called Fonden, where money has been misspent, wasted, some US$ 29 billion somehow missing, and where the word “result”, “priority”, “evaluation” and the like seem to be absent from consideration.

And thus, I promise with this musing (or rant!) I will stop writing about Fonden unless new information becomes available. It should be a scandal, it should be a source of outrage. It is for me. We are talking US$ 25,000 for each person in Venezuela, spent without impact, without control and without accountability. To say nothing of how much of this money has been sent to Cuba.

Enough said!