As Venezuelan Congress Investigates Contract, Williams F1 Appears Concerned

November 19, 2011

As reported by Alek Boyd, Venezuelan Congressman Carlos Ramos has opened an investigation over the contract between PDVSA and Williams F1, a huge contract awarded by PDVSA to Williams F1 by order of Hugo Chavez without approval by Congress, as required by law. The contract is much larger than all of the money devoted to soccer or any other national team.

The letter from the Congressman was received on November 18th. at Williams F1 and what is interesting is that Williams F1 appears to be concerned about it if their visits to at least two Venezuelan blogs are any indication. At least two Venezuelan blogs, Alek’s and yours truly, have received persistent visits from the company in the last two days, even if the Devil had yet to cover the subject. Williams F1 may be facing a PR disaster by its eagerness to receive the PDVSA/Venezuelan money and they seem to be truly concerned about it.

About time…

15 Responses to “As Venezuelan Congress Investigates Contract, Williams F1 Appears Concerned”

  1. César Says:

    In F1 there are three types of drivers: the ones paying to drive, out of their own pockets, the ones getting paid by the sponsors they bring, and the ones that get paid by the team hiring them. The first ones are fortunately few, and historically they have usually been not that good. The third type is also uncommon because they are the superstars, the Ayrton Senna, the Michael Schumacher, the Sebastian Vettel, the Fernando Alonso… They are so special that top teams fight over who gets to pay them their astronomical salaries, and even so, many of them still bring sponsor money (Senna used to have sponsorship from Brazilian company “Nacional” and Alonso brings the mighty Banco Santander, to name but two examples). The vast majority of F1 drivers are of the second type. They have to bring their own sponsors, who support them and also the team.

    Then there are the teams. Mr Coronel says that Williams behaved like a whore because they accepted PDVSA’s money. I disagree. F1 teams live, eat, and work out of sponsorship money. That is the very definition of today’s F1, whether we like it or not. Ever since the Lotus team decided to paint their car in the colors of the Gold Leaf tobacco company, in 1968, F1 cars are in the business sense basically very fast and very loud billboards.

    In this case there are three parties involved: Williams, Maldonado, and PDVSA. The only one doing wrong is PDVSA. The Williams team has no way of judging whether PDVSA’s money is wrong or not. For all they know, it’s money from a legitimate State owned company, and from a democratic State. They have no way of judging the morality of PDVSA’s decision to fork out that much money, and it’s not their business to do so. Maldonado is just an innocent bystander, despite being the most notorious of the three, simply because by virtue of being the 2010 GP2 champion (the stepping stone to F1), he is the only Venezuelan with any F1 possibility, and thus the only one who could have benefited from PDVSA’s money.

    Finally, for those who insult Maldonado and criticize his driving, anyone who understands F1 knows that no driver, not Fernando Alonso, not Michael Schumacher in his prime, not Ayrton Senna risen from the dead, could possibly drive this year’s Williams consistently into the points. I am totally indifferent to Maldonado and to all the hoopla about him being a Venezuelan F1 driver, but let’s be fair about all this.

    Oh, and for the record, I’m against PDVSA’s involvement in F1 and in the Williams team. It is not only immoral and ridiculously wasteful, but it makes no business sense because PDVSA does not compete in motor oil and fuel retailing, like Shell, BP, and others, so it stands to gain nothing from the publicity. It’s just another stupid deal from a stupid government.

  2. island canuck Says:

    F1: Maldonado’s Venezuela backing in danger – report

  3. Kepler Says:

    The guys also visited my blog some months earlier when I wrote about, some information about the millions appeared back then in the Russian press.

    I don’t care who likes car racing. It is a waste of money and a crime for the government of a poor country – and Venezuela is a poor country – to be spending money in such a “sport”.
    Not even a country such as Norway would see fit to waste such amount of money in such a niche thing.
    There are no thousands of young people actually doing sports out of this, there is no technology developed by such a team in the supporting country, it is just a waste of money.
    Only such countries as Nigeria or Venezuela could do such a thing.

    • El Rebelde Says:

      “Not even a country such as Norway would see fit to waste such amount of money in such a niche thing.”

      Niche thing? It’s the second most watched sport on the planet!

      Leading from that, you totally fail to realise the purpose of sponsorship. Do banks and insurance companies sponsor F1 in order to get people to do motorsport or in order to develop technology they can use? Of course not. It’s about image. Having their name and driver appear in F1 improves Venezuela’s global image… or at least it did before this blew up.

      Finally, Maldonado has done a reasonable job in a poor car this year. Venezuelans should be proud of him irrelevant of how he got into F1.

  4. CharlesC Says:

    Chavez likes to “have it both ways”-a. either the racing is sponsored by’
    PDVSA or the racing is sponsored by Venezuelan government.
    It is not a matter of splitting hairs. This is an example of the underpinning
    of all of Chavez spending. Who in the goverment decided that a racing
    team should be funded by Venezuela? Or, who in PDVSA decided a racing
    team should be sponsored by PDVSA? Does it all go back to Chavez?
    Then, Chavez again broke the laws. But, when it happened 4 years ago- nobody in Government and neither did anyone in PDVSA utter a word about “Is this legal?”
    All had to have known from the start that it was illegal as with so many other spending projects…

  5. Gaston Says:

    While I do have my reservations about PDVSA’s deal with Williams F1, like bobthebuilder I don’t think this scandal has much mileage. First, I have been trying to find anything that actually supports the claim by Carlos Ramos that the contract had to be approved by the National Assembly. The only thing that I found was Article 33 of the Ley Orgánica de Hidrocarburos, which says that the establishment of “empresas mixtas” and their conditions have to be previously approved by the National Assembly. However, since this deal is definitely not a empresa mixta, I don’t see how it is applicable. Furthermore, the PDVSA statutes say that the authorization of contracts is a responsibility of the company’s board of directors (which makes sense).

    On the other hand, even if the contract is indeed somehow illegal under Venezuelan law, I fail to see how Williams is accountable for PDVSA’s and Chavez’s lack of transparency. If I were Claire Williams, I would just say that none of the information requested can be disclosed (as most likely there are confidentiality clauses somewhere in there) and that any concerns should be directed to PDVSA instead. Which, this being Venezuela, would end up in nothing. But again, Williams is not responsible for the shoddy governance.

    • Alek Boyd Says:

      “Furthermore, the PDVSA statutes say that the authorization of contracts is a responsibility of the company’s board of directors (which makes sense).”

      PDVSA’s board has to approve a budget. Expenditure of this sort has to be included there. The budget needs to be sent to Congress, and Congress has every right to discuss/disapprove expenditure that does not make sense.

      The contention that Ramos’ claim has “no mileage” is ridiculous. Unless, of course, Gaston here can show us the deal referred to, and approved by, in the budget by PDVSA board and then Congress.

      As per Williams arguing confidentiality, that’s precisely what Claire Williams argued in her reply. Her company’s position is, of course, laughable, for PDVSA is a fully owned, State company, open to any and all manner of scrutiny by the Venezuelan State and its institutions, and which under no circumstance can be agreeing to confidentiality clauses with any company, anywhere.

  6. HalfEmpty Says:

    Marc in Calgary….

    The young man in question is PAYING serious money for a ride. The cash is from PDVSA to (LOL) Sir Frank Williams. It is immaterial if Pastor is being paid some nominal amount.

    Put another way, Fernando Alonzo is actually paid to drive.

  7. bobthebuilder Says:

    I’m not sure this ‘scandal’ has too much mileage. Chavez may well have not followed due process, but as long as there is no dodgy soliciting going on surely Williams can’t be held to account for the decisions of a head of government? And PDVSA do sell the product which Formula 1 advertises, so being associated with the brand could arguably make good business sense. Other oil companies like Shell have been involved for years. Nevertheless, I concede that Williams’ PR people making contact over this seems to be bizarre.

    The cynic in me wonders whether this is story a convenient little distraction away from oil production figures & generous oil deals…

  8. marc in calgary Says:

    Gustavo has summed it up well, “Williams, facing financial difficulties has behaved like a whore”

    Venezuela gets nothing from this exercise of Hugo’s publicity, Frank Williams gets the cash he desperately needed, but nothing new in his trophy display case.

    Announcement of William’s IPO here:
    It seems to me, that once a company goes public they have to start reporting such details like a massive inflow of cash for selling one’s soul, for example, as at some point a dividend may need to be paid out.

    It’s unfortunate that P.Maldonado didn’t sign for a dollar a year + a few thousand for each grand prix point earned, Frank would be miles further ahead in that game…

  9. extorres Says:

    It’s not just the amount of money, it’s that most of it comes from the poor, not the rich: It’s oil money, not taxed money.

  10. CharlesC Says:

    I think it was Venezuela and Europa that noted how morally wrong this was for Venzuela to spend the millions on Formula 1 and not for example on projects that would directly benefit many thousands of Venzuelans.He wrote this backin January.
    However, as ususal- the Venezuelan people showed no moral virtue concerning spending millions illegally. Nobody cared??
    And, many would argue that Formula 1 is good for Venezuela. They like it and are pulling for “their” team…
    Point is, it is a shame that Venezuelan people have awful priorities and a serious
    lack of sense of morality.

  11. Mike Says:

    While I agree with pretty much everything regarding the alledged illegality of the Chavez / PDVSA Contract with Williams F1 and the massive amount of money wasted in a sport that Venezuela can not afford if it had it’s priorities in order, I will have to say however that it is no small feat by Pastor Maldonado achieved with a car that is technologically not competitive (Ford Cosworth engine to start with…) to be the approx. 17th BEST F1 Race Car Driver IN THE WORLD. 

    I would like to see him driving one of the competitive cars: Red Bull Renault, Mclaren Mercedes or a Ferrari. That would show how good he really is. Right now, his teammate, the experienced and proven F1 driver, Rubens Barrichello is also unable to do better than 16th – 18th, when he consistently came in in 2nd and sometimes 1st place driving for Ferrari, in a competitive car and as Michael Schumacher’s teammate several years ago.

    Also, and while I’d love to see some justice initiated by Williams and (hopefully) English Gentlemen, withdrawing from the contract once they find out about the wasps nest of corruption of this mess they got themselves into, I don’t see why we should lay any blame on Maldonado. He is just a young guy who finds himself in Wonderland as his dream to drive in the Ivy League of car races, F1, came true and I tend to believe he just took the opportunity of a lifetime without much thinking about patriotism (except if he is a chavista of course, in a twisted way) or where the money came from. He get’s a fat check from Williams every month, end of story.

    Hopefully the truth will come out, and this whole thing will blow up. It would be a nice shiner for Chavez. As far as Maldonado is concerned, the experts have seen enough of him and if he really has Championship winning potential, another team will pick him up and pay him from the team’s funds, as it should have been in the first place. If that were to happen, I bet that he will abandon the Venezuelan Flag painted helmet in no time. 

  12. Williams has accepted to have Pastor Maldonado as his racer for money, lots of money. A good driver gets paid, does not need a patron. Williams, facing financial difficulties has behaved like a whore.
    Maldonado has failed miserably in all his races. If he had any shame he would quit and put an end to this farce which is costin Venezuela about $200 million in four years. We have Maldonado, PDVSA and Wiliams, acting together to defraud the Venezuelan nation.

    • megaescualidus Says:

      Williams may very well be labeled as behaving like a whore. It just reminded me of another incident with a brit, Ken Livingstone, who accepted oil for London from HC, and later on an adviser job.

      Yes, they’re all whores, but also, how many would let such a great opportunity of a fool like HC knocking on their door with a fistful (trunks, rather) of petrodollars?

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