Thanks to the generosity of my readers, three of which sent me last night the document above, I managed to read the suit that the Venezuelan Central Bank filed against Dolar Today LLC, a Delaware company which supposedly owns the homonymous website and its related apps and channels.
I am no lawyer, but I did find this document remarkable in many ways. Perhaps the most ironic thing to me is that the Venezuelan Government via its puppet Central Bank (which the complaint says is independent), wants to use the US Justice system, daily criticized as unfair and manipulated by them, as a way to exert pressure on this webpage and even more audaciously, to seek “damages” from them.
But I am sure my followers will certainly enjoy the reading of this document full of the same crap that the Government spews out on a daily basis, this time translated into English and presented in legalese. And I am sure that the only intent of the complaint is or was to intimidate those involved with the website and its activities. Here I will refer to what I found ironic, hilarious, stupid, and enjoyable, without intending to be comprehensive. I invite my readers to add their own in the comments for everyone’s enjoyment.
To begin with, the only possible objective of this suit is to harass, intimidate and otherwise distract the owners of the Dolar Today webpages with the complaint. They will have to hire lawyers, spend money, go to deposition and the like.
The second interesting thing, to avoid saying laughable, is that says that Dolar Today is violating Article 1185 of Venezuela’s Commercial Code. That may well be, but the Judges in Delaware could care less about this violation, given that that is the law of the land in Venezuela, but certainly not in the US nor Delaware.
But it has to be laughable to argue that a webpage has created a form of cyber terrorism that has “wreaked, economic and reputational harm on the Venezuelan Central Bank by impeding its ability to manage the Republic’s economy and foreign exchange system.” by “Creating the false impression that the Central Bank and the Republic are incapable of managing Venezuela’s economy.”
Jeez, if a simple quote of a rate can do that and the Government and the Central Bank can do nothing about it, it would seem to me that the problem is not what the webpage did, but how clueless were the Government’s actions in trying to stop it. In fact, most Venezuelans remember multiple announcements suggesting that the Government was ready to “pulverize” the black market rate, but none of the plans were successful and in many cases people wondered what happened to them.
And you have to laugh at statements such as “Much of the world, including numerous members of the International Monetary Fund (“IMF”), engage in something that is both literally and figuratively quite foreign to the United States: the multiple exchange rate system.”
I would love to hear Nelson Merentes tell me the names of these “numerous” countries, assuming that given that he is a Mathematician, he will not argue that numerous means two or three countries. In fact the word numerous means “many” or “great in number”, which is simply false.
And you really have to be a cynic to suggest that the inflation rate in Venezuela is high simply because “it is an expected consequence of the Republic’s policies to promote social inclusion of the poor and economic growth”, when inflation is the worst possible indirect tax on the poor and those not included socially.
And since I am nitpicking, let me take advantage of it by noting that it is not true, as it says in numeral #26 and #43 of the complaint, that Venezuelans trade at the parallel or black rate via exchange houses. Such trades are not allowed at exchange houses and Venezuelans only can do these transactions privately.
Additionally, in the second graph of the complaint, the lawyers show a graph in which the parallel rate closely follows the implicit rate and only starting in October 2014 did the two diverge. In fact, had the Government made a long term plot of that, including the period before the “swap” market was shut down in May 2010, it would have shown that factors of two differences between the two have occurred before. Curiously, this widening of the difference between the two began taking place when oil prices began to drop and the Government no longer had “excess” funds to feed the black market, as an article in this week’s Wall Street Journal suggested was done via PDVSA in order to enrich a few individuals.
But the bottom line is, that the BCV and its lawyers will have to “prove” first, that Dolar Today actually manipulated the rate it published and second, that it used that information to benefit financially, something that I find extremely difficult to show. In the US, in the process of discovery, you have to support your accusations and if what you have is flimsy, the Judge is likely to throw at the case at the earliest stages of the process.
Simply put, how can they prove there was “wire fraud” or that the rate was set in order to to obtain a profit? A profit with respect to what?
And you have to love the fact that a Government that has shut down any possibility of a market for the parallel rate of exchange wold argue that “the DT Rate does not reflect any actual exchange market”. Of course, there are none allowed in Venezuela! The only “market” that exists is the border market in Colombia, which Dolar Today claims to use to set its rate.
In fact, between 2003 and 2010 the “swap” market existed and was legal and one could argue that it gave the rate transparency and liquidity, but it was the actions by the Government to shut it down that created the distortions that the BCV wants now to blame Dolar Today for.
I am also not so sure that you can prove a rate is “fraudulent” as the complaint charges. Even if the BCV could prove there was a transaction, it would prove that someone was willing to pay a particular rate and thus it would be hard to argue it was fraudulent. That is precisely what I tell people that say that the rate is being manipulated: Find me someone that sells them cheaper than that…or you sell it to me, since you can find it cheaper.
I have found no one that wold take me up on it.
I will stop at this, enjoy the reading. But if I could, I would suggest this to the Government: Allow a legal market to function for the parallel rate, I would bet that in time that market would find an equilibrium rate not too far or higher from where it is today. Because in the end that rate reflects the same lack of foreign currency which is causing causing lines, shortages and inflation. And it is the stubbornness of the Government to adjust and use economic theory that has created the distortions, including the anguish, pain and deaths of the thousands of people who can not get medicines or adequate medical care.
But the irresponsible regime of Nicolas Maduro wants to blame a web page…
(Maybe the complaint should be turned around and some Venezuelans should sue the Central Bank for the same reasons, but saying that by not following its Constitutional mandate of independence and monetary stability, it has caused harm on the Venezuelan people)