The Devil's Excrement

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 google.com.

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!

As I noted in the next to last post, there is now more information on the website of Fonden on the details of the projects funded. After spending a day looking at “tools” that would allow me to manipulate the data, I gave up. So, I began doing the task by brute force, I went to “Todos Los Proyectos” above and copied project by project into an Excel spreadsheet, hoping to find some of the “missing” US$ 29 billion or so. You can find the Excel spreadsheet here.

The quick conclusion?

All of the projects added up to September 6th. 2011 on the webpage of Fonden add up to only US$ 27.22 billion, far from the US$ 69 billion of the earlier report to the National Assembly.

The difference?

Projects of the Ministry of Defense and Cuba are not described at all in the Fonden webpage (On purpose, I imagine). Thus, if we add the US$ 4.88 billion from Defense and the US$ 6.06 billion from Cuban projects, we reach the total of:

US$ 38.158 billion, some US$ 30 billion short (Still!) of the US$ 69 billion the fund has received and the total provided by the Finance Ministry to the National Assembly.

Thus, all the work did not yield much, except that by doing it brute force, I read every single project in the website in detail and will have more to say about them later. For now, we still have some US$ 29 billion “Unaccounted for” based on the information provided to the National Assembly, as well as combining the projects in the Fonden website on Sept. 6th. 2011 plus those missing from it in the report to the Assembly.

Small change for the revolution…

In a very interesting development, all of a sudden there seems to be a rush to have information about Fonden out in the open. For example, after the public absence of any financial statements from the fund since 2007, as if by magic, you can now find 2009 and 2010, as seen below here:

Notice however, that in the rush to complete the information, they somehow either missed or did not have the Financials for 2008, and the information jumps from 2007 to 2009. Two weeks ago, all that was available was up to the 2007 financials. Clearly, there is an attempt, probably in reaction to Deputy Ramos’ accusations, to add information and then say it was there all along. Pity I did not save a picture two weeks ago, but there is more..

Another “new” feature is that what used to be a list of projects without any content, now has a full description of each project, who is executing it, like for example, this rice project:

Where you now can see the information of how much was given to whom, who is executing the project, how much has been disbursed. The contractor is not named, just the Government organization that is in charge of execution. But this is the type of information that was not available before and now “magically” is on the web page.

In fact, you can search for the information in different ways, you can find all of the projects, you can find them by state or you can find it by organization executing the project. Funny thing is that in the rush to provide more and more information, the last list is simply a list of all Government organizations, even if they are not executing projects or maybe the information has yet to be updated.

For example, in this page you find a list of institutions “executing” projects:

Curious about seeing a list of projects executed by the Fondo Nacional de Ciencia Tecnologia e Innovacion, I clicked on it and despite the fact that I know there are projects in that area, there is no information:

So, either this is a comprehensive list of institutions or they are still upgrading the information. I suspect it is a combination of both.

While I have not studied the details, there are more than the 140 projects here than the list given by Minister Giordani to the National Assembly. That list seems to be a global list of projects, this list has the detailed information. More work to be done, help will be welcome!

Seems like there is an attempt to make the information public and claim it has been there all along and make Deputy Ramos look bad or make noise about it, but these pages will show at least the evidence of what happened in time.

You all know about Fonden, the “development” Fund that Chavez created and uses as his sort of petty cash fund for immediate needs. I was reading something or other the other day and found that Deputy Carlos Ramos had sent Minister Giordani a questionnaire about Fonden.

Naive that I am, I looked up this Deputy who I don’t know, and lo and behold, I found out he is an Economist, has a masters in Political Science, has been a Deputy before and has been budget Director of Merida State and General Manager of the Alcaldia Libertador. Better yet, he even has a webpage.

Naive that I am, I believe in democracy, open information and stuff like that, I got Deputy’s Ramos’ email from his website and wrote to him telling him I am interested in Fonden, saw his press conference and was wondering if he could send me the material he talked about, promising I would let him know if I found anything interesting. (And that I would write about it in my blog, of course)

Within a couple of hours, I had a response and a promise that the material would be sent to me. The next day, his Assistant sent me all but the Minister’s response, which I am promised would be sent soon.

I really haven’t found anything earth shaking yet. Certainly nothing as significant as the US$ 29 billion discrepancy between what the fund has assigned to projects and what has been disbursed to 140 projects, but the Fund certainly does not have such a large amount of money today. That’s Chavista math for you, a US$ 29 billion discrepancy.

So, as I await for Giordani’s response on this “small” US$ 29 billion discrepancy, I find that 12% of the development investments have gone to Defense, essentially buying weapons, 11.6% to projects of the IXth. “Mixed Cuban-Venezuelan Commission”, 19% in PDVSA projects* and half a billion Bolivars to Bandes projects and drinkable water around the Nation.

Now, I really don’t know, or understand, what that “mixed” Cuban-Venezuelan Commission has to do with Venezuelan Development, or why there is this circular relationship in which PDVSA gives money to Fonden and then part of it gets sent back to PDVSA for unnamed projects. It sounds to me as illogical as most things Chavismo does.

To say nothing of fancy weapons being part of “development”, but I guess you have to keep the military happy and satisfied with new toys like Russian Jet fighters (US$ 2.5 billion) or a bunch of helicopters (Only US$ 483 million).

But the juicy story seems to be in the “missing” US$ 29 billion, equal to the country’s international reserves, for which I will have to wait for the Minister’s response and hope there is a Chapter II to this story.

And, of course, thanks Deputy Ramos!