The Devil's Excrement

Yesterday
I went to the presentation of the documentary “La Lista: Un pueblo Bajo
Sospecha” (The list: A people under suspicion”) sponsored by Ciudadania Activa, an ONG focused
on defending people’s human rights, particularly against discrimination.

The
documentary tells the story of the Tascon
list and its successor, the Maisanta
database, and how the Government used the first to discriminate and fire
civil servants and the second one to control its own supporters. To do this,
the documentary tells the story of the origin of the list, starting from the
introduction of the recall referendum into the new Constitution by Chavez,
through the three requests for a recall vote by the opposition. It reminds
everyone, those that lived through it and those that did not, the details of
how the first two requests were denied on technicalities and how the third was
blocked by having the Electoral Board create new rules after the signatures had
been gathered and increase the reasons for rejection for a signature from 8 to
39. This allowed 45 out of every 100 signatures to be rejected, but a new
process, the “reparo” was held and people actually went and ratified that their
signatures were approved and the recall referendum was held.

In my
opinion, the documentary is very well done, combining clips from the news, from
Chavez’ many speeches and his Sunday program Alo Presidente, with interviews
and testimonials with politicians and those that were directly affected by the
use of the list.

I
particularly liked the clip which shows Chavez in his more “democratic” days
talking about the recall being introduced in the Constitution and saying:” If
in three years you don’t think I am doing a good, job you can get rid of me”,
but then, later, when the recall becomes a possibility, he actually says:” Even
if they get 90% of the vote in the recall referendum, I am not resigning”

It also
documents well how the Tascon list was not an accident but a very well planned
program to discriminate and repress. First you see Chavez saying (which is repeated
throughout the film): “Those that sign against Chavez, their names will be left
there registered for history, because they will have to put their first names,
their last names, their signature, their ID number and their fingerprint”

Then you
see Chavez saying that he signed the paper requesting a copy of every single
petition and the corresponding signatures from the Electoral Board and asks
Deputy Luis Tascon, who was present that day on his program, how that is going.
Tascon says that it’s going well and that “by the end of the week we will have
all of the copies and see the true face of this fraud” (referring to the
signatures, which at the time the Government claimed were fraudulent)

It also
shows a clip of Chavez on his Sunday program talking about the list, laughing
about how it has created fear in people and telling everyone on his program to
go and check it on Tascon’s webpage, actually giving out the link.

Some of
the testimonials are heartbreaking, because it shows people from all levels
being fired for signing the petition and talking how it has affected them and changed
their lives. It also shows the President of a Government institution saying
that they have not use lists in any way, only to later show an actual paper
list in which every single person was classified according to how much time
they signed in the three petition attempts. Over 120 of them were fired by the
same cynic denying anything at the beginning…

It also
shows the more candid Chavistas, like the Minister of Health, saying anyone
that signed has to be fired and a Deputy saying that every civil servant that
did not vote in December should also be fired.

Finally,
it shows Chavez himself saying that the list “should now be buried”, and how
“it played its role in his time”, showing no regrets or remorse about the use
of this discriminatory tool against the people. After that, many Government
institutions joined in the condemnation of the list, but never before, proving
that they have no personality of their own and no conscience and they totally
depend on what their leader says or doesn’t say can be done.

It is a
great compilation of the history of a discriminatory process used by a fascist
Government which claims to be democratic. How it has destroyed lives for
political gain and never showed regret or remorse for it. How it compiled a
list to discriminate the opposition and then it extended it to a database to
control its own supporters. It is proof of fascism and discrimination in the
XXIst. Century, under the eyes of the whole world and even the support of those
that claim to defend human rights but are so fanatical that they don’t want to
see the warts in the fake revolution they so admire. Everyone should buy it and see it, because it
is “Prohibido Olvidar” (To forget is forbidden). It also represents another
document to be shown over and over, the day this nightmare is over. It should never
happen again and those that collaborated with it should one day pay for their crimes.

A version
in English is being worked on and should be out in a couple of months.

Hugo Chavez has had a bad week. Everywhere he went, he found protests, except this time they were all protests by his supporters, not by opposition groups. And much like when the opposition held protests against him, Chavez showed his intolerance towards dissent, telling them to shut up in the name of the revolution and respect for him.

As farmers posted themselves all week in front of the Presidential Palace in protest, Chavez went around the country only to find the same, more protests. In Zulia, it was people asking for homes. The protetsers held placards asking to talk to him. But all they found was the President‘s ire. He told them the “leader” was talking and asked them to shut up. The scene occurred twice more during the week. Once he threatened to leave if people kept protesting. During the other, students protested and Chavez told them, once more, to shut up or he would simply leave.

Meanwhile, in the pro-Chavez area of Catia, in the West of Caracas, public transportation stopped for a full day, as drivers protested the death of another driver by criminals. As the President of the National Assembly accused the CIA of generating the protests, the head of the Catia public transportation union, said he did not know anyone from the CIA and challenged the President of the Assembly to even walk in Catia without bodyguards, guaranteeing that he would be robbed.

The problem is that Chavez promised too much but has delivered little. Direct handputs only go so far. At the same time he has managed to give the impression that none of the problems are his fault, but rather that of his collaborators. Thus, people are simply trying to get close to him to ask for what he promised, but nobody seems to be able to deliver. There is simply no accountability.

In some sense, Chavez’ own attempt to control every Government institution and eliminate the rule of law is working against him. There is little follow up to all of the plans and projects that the President announces and unless he asks what happened, nobody checks the progress of the new projects he announces daily. Chavez’s style is to go around the country announcing plans, programs and projects. Curiously, he seldom goes to inaugurate plants, facilities or new building or roads, which is what President’s have always done in Venezuela on election years. There is apparently very little that has been completed.

A case in point has been the sugar plant in Chavez’ own hometown in Barinas state. This project is a showcase of the inability of the Government to do anything as well as the unchecked corruption at all levels which simply blocks anything from getting done and the fact that there are no control mechanisms that work.

The sugar plant is emblematic of how money is being stolen hand over fist. This project was supposed to be the showcase of the military establishment working for the people. The President and the Comptroller have known about the corruption in it for over a year and half, but little was done. Only the publication in a pro-Chávez newspaper of the case in January has opened that can of worms, which has shown a mafia-like organization on the part of the military to simply steal most of the money assigned to the project. Meanwhile, the Minister of Agriculture admitted in his testimony that he had covered up the corruption in the case because elections were coming up. He is still Minister despite admitting to this and neither Chavez, nor the Comptroller nor the Prosecutor General have opened their mouths in the face of what is simply a  cover up, which is a flagrant violation of the anti-corruption law.

Remarkably, the corruption charges being investigated talk about some Bs. 3 billion (US$ 1.4 million missing), but the scale of the graft is surely orders of magnitudes higher. So far, the Government has spent Bs. 596 billion or US$ 277 million at the current exchange rate in the project. Last week, the National Assembly approved an additional Bs. 216 billion more (US$ 100 million) because the project is out of money. But today El Nacional has picture of what has been built so far and US$ 277 million has been used only on cleaning the land and putting a skimpy steel structure in place, since it is being built on Government land and thus no money was spent on real state. And they used soldiers to clean the land, so it seems to me that the money, some US$ 277 million simply evaporated into the pockets of the military officers in charge of the project. But nobody seems to point this out, the investigation is for less than 0.5% of the total funds allocated, while the pictures below shows a structure that woudl cost less than 10% of the total in the worst case. That is why people call this the robolucion.

This may also explain why it is that despite record oil prices and revenues for the country, the Chavez Government has so little to show for it. It has always amazed me how, despite corruption and inefficiency, there was so little evidence of the Government doing anything. in terms of public works, creating infrastructure and generating employment.

Everywhere one looks it is the same, no accountability, no supervision, no follow up. The National Assembly does very little these days in terms of supervision. The Government currently holds US$ 18 billion in the two discretionary funds, the Bandes and the Fonden, which only report to Chavez and nobody knows how the money is used, spent or even if it still there. They report to nobody, it is the President’s petty cash fund.

PDVSA is very much the same. One of Chávez’ themes while campaigning for President in 1998, was the lack of transparency at the Government’s oil industry. All plans then had to be approved by the National Assembly, the financial statements of the company were published yearly, a “shareholder’s meeting” was held every year at the end of which the financials would be distributed to the press. Now, we have financials which are delayed for years (the 2003 was handed in October 2005 and the 2004 financials were promised for February, but time is running out). But today, the Minister of Energy says they will no longer file with the SEC after this report, which will close the only window we have into what is happening to the main industry of the country. In any case, these audited financials only tell us numbers, which is the only thing the auditors can check, and we can’t still confirm how much oil the country produces.

Meanwhile, PDVSA is signing contracts right and left without Assembly approval. It also forced the service agreements on thirty two oil projects, which had been approved by the old Congress, but the new contracts and commitments and costs to the country are unknown today, almost sixty days after the conversion. So much for increased transparency. Does Venezuela really make more money now under the partnerships? How much will PDVSA have to contribute to become a partner in these companies? Where will this money come from? Will foreign oil companies have or not rights over the reserves of each oil field? None of this is known or has been approved by the National Assembly or has been explained to the Venezuelan people. So much for any transparency.

The same with the harebrained gas pipeline to the South. Simple estimates based on the volumes the Government claims it will sell with this pipeline show that it will require from three to four times the available free gas reserves of the country. But in any case, at the cost of the pipeline, without talking about the environmental problems, gas would have to go up a factor of four or five in order to make the pipeline profitable. But nobody knows the details, nor do they appear ready to give them to us. Or to anyone in the country, the Brazilians and Argentineans seem t know more than us.

That is why Chavez is trying to bring the US into the electoral debate. He needs external factors to explain away his incompetence to choose collaborators and execute projects. To distract the attention from these. But the common Venezuelan could care less. They will protest more and more and they will see Chavez’ intolerance day after the day. And the more protests there are, the less he will go out in public for fear of confrontation with his own supporters.

That is why the opposition has a great chance if it can get a candidate and unite behind it, because a good candidate will bring all of these issues to the forefront and Chavez will not be able to avoid talking about them.

From El Universal, thanks William for finding the link, I couldn’t!

PEPwatch Venezuela:
Beware of government-controlled private corporations (Part III)

By Ken Rijock

We have
previously discussed the threats posed by private corporations owned by
individuals who front for governments or national leaders, and by the dangers
of governmental minority ownership of closely-held companies. In this, our
final segment, we cover the private corporation that operates as a de facto government agency, and whose
primary activities aid in the implementation of government policy, but in whom
both legal and equitable ownership is privately held.

Skim milk masquerades as
cream.

Where it suits national
policy, private corporations are convenient and anonymous instruments that can
perform commercial acts deemed necessary by government. In the intelligence
field, such controlled companies are frequently known as proprietaries. They
often perform covert or illegal operations, such as money laundering, where the
government does not care to be linked to either the activities, or their
consequences. Such companies also are utilised in a combination of both overt,
traditional and legal business, and “black” operations, but both varieties
serve the same master. Today’s analysis of one such organisation is instructive
in both understanding the tactics and strategy typically employed, and the
investigative tradecraft that is necessary to unmask such a company’s true
nature. As we have previously stated, the inability of compliance to timely
identify government-controlled companies can be ultimately fatal to one’s
institution. In the last article, we identified the Lebanese Muslim Khalil brothers
as close associates of Venezuelan national Ricardo Fernandez Barrueco. The
brothers own and operate an organisation dedicated to supplying Venezuelan
government agencies with seafood, high-technology and military equipment. As we
shall see, their operations clearly fall into the de facto government agency category.

Compliance officers please
note:

– Khaled Khalil Majzoub,
born Galed Khalil Massub, on 26 August 1965, Cedula No. 6290182, sometimes
incorrectly shown as 6290185. The validity of his identity document was an
important issue in the past with a large North American multinational firm,
which terminated its relationship with a firm when Khaled purchased it. Was he
really born in Lebanon
? We cannot say, but his birth certificate was not filed until 1970, one day
after his brother’s was registered. Khaled is a reputed radical Islamic
fundamentalist, and the communications director of Sheikh Ibrahim Bin Abdulaziz
Mosque in Caracas
.

– Majed Khalil Majzoub,
born Massed Khalil Massub, on 23 April, 1970, but incorrectly appearing upon
his birth certificate as 23 January, 1970 . His Cedula No. is 13526338. He
enjoys close relationships with pro-Chavez politicians and the military.

The benefits of preferred
status.

The Khalil brothers, like
their comrade, Ricardo Fernandez Barrueco, emerged from obscurity during the
early years of the Chavez government, which has favoured certain companies with
major contracts, easy access to loans, and tariff-free import licenses. Such
preferred companies are assisted in placing their products in the local market
through government-funded social programs, through entities such as CASA, the
Agricultural Service Program, and PROAL, the Strategic Food Program, both of
which bought from the Khalil organisation. The Venezuelan government has also
assisted, or conspired with certain preferred companies in tax evasion and
customs crimes. We note that the Khalil companies are believed to evaded large
amount of taxes, notwithstanding their many lucrative businesses

Evidence of the incestuous
ties between the Khalil companies and the Venezuelan government:

– They purchased the Eveba
Group, a major seafood provider, from the Castro Iglesias family, a transaction
that reportedly was facilitated by Diosdado Cabello Rondon, born 15 April,
1963, Cedula No. 8370825. Sr. Cabello, was formerly Venezuela ’s Vice President, and
Minister of Infrastructure, and is presently the Governor of Miranda State . He
is one of the most powerful men around Chavez. Also linked to the sale was Adan
Coromoto Chavez Frias, born 11 November, 1953 , Cedula No. 3915103. The
President’s brother, he is currently Venezuelan Ambassador to Cuba .
Distribution of Eveba products is currently being conducted by Molinos
Nacionales C.A, a/k/a Monaco
, owned by Mexican agro-giant GRUMA, whose recent sale of part of their
enterprise to Ricardo Fernandez Barrueco was detailed in our last article. This
but another demonstration of the close ties among the New Bolivarian Elite.

– They shipped computer
equipment and, reportedly, sophisticated surveillance equipment, to Venezuelan
military and intelligence agencies. Majed Khalil, who is said to have a close
relationship with Francisco Rangel dating back to the period when Rangel was a
general officer, is alleged to have outfitted the situation room, in the
basement of the Miraflores presidential palace, with electronic espionage
equipment.

– Their organisation was
reported, by Venezuelan media, as having supplied Maiquetia Simon
Bolivar International
International Airport
with new radar, communications and navigation equipment. It is also believed by
Venezuelan media to be supplying Venezuela ’s military with weapons
and other hardware.

– Rumours abound of
involvement of the brothers in money laundering, counterfeiting, drug
trafficking and contraband smuggling, in concert with corrupt Venezuelan
politicians and military officers.

Companies associated with
the Khalil brothers are:

In Venezuela:

RIGOMAR AGENTES ADUANALES C.A
HARDWELL TECHNOLOGIES C.A. a/k/a GRUPO HARDWELL TECHNOLOGIES C.A.
QUALCOM TELESISTEMAS C.A.
EMPAQUE VENEZOLANO DE BACALAO, a/k/a EVEBA
AGROINDUSTRIAL PROEBA
PRODUCTOS PISCICOLAS PROPISCA S.A.
DUSTRIBUIDORA AGROMAR C.A.
ANCHOAS DE ARAYA ANDARSA S.A.
RECUPERADORA CASTRO IGLESIAS
AGROFORESTAL BARIMA C.A.
ALIMENTOS DELTA a/k/a ALIDELTA
INVESSIONES OVINOY S.R.L.
RIGOPLAS C.A.
SARDIMAR C.A. NUEVA ESPARTA
PRODUCTOS PISCICOLAS PROPISCA
DESAROLLOS SERFOCA C.A.
GRUPO JARBOL C.A.

In the United States :


HARDWELL COMPUTER INC.
ORINOCO ENTERPRISES, INC.

In the Republic of Panama :

GENERAL TRADING COMPANY,
S.A.

As we have shown, though
these companies may appear to be privately owned, their acts and deeds are
clearly governmental in nature. Money laundering reporting officers and
compliance officers must practise enhanced due diligence when considering
account relationships with any company located in a jurisdiction where covert
governmental ownership is probable, or where recent events suggest the possibility.
Compliance vigilance is made even more urgent by the realities of the post 9-11
world, where nuclear, chemical, or biological agents may be on the hidden
agenda of the government-controlled company or its masters.
Government-controlled companies are wisely avoided as unacceptable high-risks.
Watch out for them.

Remember how the fascist Head of the Electoral Board gloated saying that 47% of the ballot boxes would be audited but not live, but in five weeks we would know the comparison? With a sraight and cynical face he said this was good, this was perfect, how could people not like it? How could they compalin? So transparent! This guaranteed the integrity of the ballot box or some BS like that.

Well, today, that subversive group called Sumate went to the Venezuelan Supreme Court asking that Court to force the Electoral Board to reveal what the hell happened to those virginal audits, because it has now been eleven weeks and the Electoral Board has yet to release the results.

I guess the Sumate people are just impatient, 11 weeks is only off so far by a little bit over 100%, what else did they expect from an incompetent revolution? But hey! If Jorgito were running the Haitian elections Aristide would have won that country’s elections runnning away, even if he was not a candidate. In fact, by law, all election material could have been destroyed by now, according to Venezuelan regulations. That must be why the Chavistas want him back.

What is wrong with this picture:

Funding for the Maiquetia Airport: Bs. 60.2 billion or US$ 28 million

Highway Plan financed by PDVSA for all of Venezuela: Bs. 120 billion or US$ 59 million

Four possibilities:

-a) They want the airport efficient so that their enemies can leave the country without problem
-b) They ride airplanes and helicopters and could care less about the people and the highway infrastructure.
-c) Small minds, small budgets.
-d) They have no clue

All four?

In the latest cynical and
dishonest move by the Chavez Government, the country awoke this morning to
dozens of billboards like the one above (This one from Carabobo state, sent by
a reader) in which President Chavez attempts to steal (rob might be a better word) the credit for the country’s
victory in the Caribbean Baseball Series a week and a half ago.

This is really stooping
quite low, because the Venezuelan representative to the Caribbean Series was a
team, the Leones del Caracas or Caracas Lions, which is part of a private professional
baseball league. What makes the whole thing more irksome is that Chavez has
actually ignored the victory for a variety of reasons, refusing so far to even
do the customary invitation of the team to go to the Presidential palace.

The reasons for this are
many. First of all, Chavez is a baseball fan who used to go to games during the
first two years in office. But as people turned against him, he began to be
booed (and worse!) which forced him to stop going to games. Second, Chavez is a
fan of Magallanes, the baseball team from Valencia which was eliminated in the
playoffs by the Leones and which has performed very poorly ever since Chavez
became President, leading some to blame it on the President.

Third, the Government
actually tried to create a parallel baseball league to compete with the private
one, robbing players from the team and spending at the time some Bs. 4 billion
to set it up. The league lasted all of three games. In the first one, the game
began something like two hours late, because they were waiting for Chavez to
arrive. There was a second one that was played and in the third game the
uniforms did not arrive on time and that was the end of that league (and the
money). The Government also hurt the professional league by prohibiting that
beer companies sponsorship be shown on the player’s uniforms, which eliminated
a very important source of funding for the league, in which the weaker teams
barely make money.

Finally, the Caracas Lions
is owned by Venezuelan billionaire Gustavo Cisneros who is supposed to be
Chavez’ arch-enemy, even if sometimes rumors float around that they have some
sort of silent pact on something or other.

Thus, if anything Chavez
and his Government have been working against the success of Venezuela’s
professional baseball teams, which make it absolutely. In fact, it is not only
absurd for Chavez to attempt to take credit any part of this victory, but it is
cynical, unethical and despicable.

It also makes you wonder,
if the man is so popular, why does he need to try to steal what is clearly
somebody else’s victory?

PEPwatch Venezuela: Beware of
government-controlled private corporations PART II

By Ken Rijock We continue our
series on how compliance officers can ascertain whether a private company
seeking to become a bank client is indeed a government-controlled corporation
that is a politically-exposed organisation requiring enhanced due diligence and
heightened Source of Funds analysis. Our previous article detailed how a
government-controlled company may have special access to financing, or even
grants, how its officers and directors may be fronting for its real ownership ,
and how its ability to obtain public funds without accountability may make it a
high-risk, or even unacceptable, client. Today we examine a more dangerous variety
of government-controlled company: where its ownership is but a portion of the
total shares of stock. While identifying nominee owners of 100% of a company as
fronts for government beneficial owners, record holders of minority interests
are often overlooked, or disregarded entirely in due diligence investigations.

Recognise that the laundrymen know your policies.

As a compliance officer, I
was instructed by bank counsel to ignore owners of less than 20% of a company.
I later ascertained that potential clients were routinely advised to set
company ownership at exactly 19%. Their agents obviously knew where our enquiry
threshold was , so we quickly abolished the arbitrary benchmark , and checked
out anyone whose holdings were just under the formerly used figure. Why is it
difficult to recognise companies where government ownership is less than a
controlling interest ? Let’s examine the general corporate landscape where a
quiet transfer of partial ownership has occurred:

– Officers and directors
generally are unchanged; however, there may be direction from behind the
scenes, reducing the officers to figurehead status.

– The company, previously
known as private and closely-held, has no legal obligation to disclose its new
situation. Indeed, corporate records are usually only available to
shareholders.

– Certain benefits may
inure to the company by virtue of the new owner that it does not want the
commercial world to know about. ( e.g. contracts, new business, new raw
materials and/or facilities made available.)

Why be concerned ?

Over and above the
obvious, there are clear and important potential dangers when a financial
institution handles a government-controlled company where the private and
public sector share ownership. Some important things to be aware of:

– Covert governmental aims
and goals, whether diplomatic or economic, may cause serious reputational
damage to your bank when publicly disclosed in the media.

– The company may be
immune from civil, or even criminal action, by virtue of its hidden
governmental control. Can you be the banker for organised misconduct, or
criminal elements ? Obviously, no.

– Intelligence or
espionage activities may be conducted, either domestically or abroad, by agents
using the company for these operations. The linkage of such ‘dirty tricks’ as
the Watergate break-in, or the Nugan Hand scandal, can be fatal to the
existence of a financial institution.

– Goverment-sponsored
money laundering may be part of the company’s operations.

A frightening case study.

An illustrative company
should help explain the nature of the beast, and why it could be compliance
suicide to knowingly allow a government-controlled corporation to bank with
you. Last week the world’s largest corn flour and tortilla manufacturer,
Mexican agrarian giant, Grupo Maseca, also called GRUMA, announced that it was
selling a 40% share of one of its Venezuelan subsidiaries, known as Molinos Nacionales, CA,
to Ricardo Fernandez Barrueco, for $65.6m. But do the Mexicans really know who
they are doing business with ? Readers who absorbed the first installment of
this series will recall that Sr. Fernandez Barrueco emerged from penury and
obscurity to become a major owner of Venezuelan companies closely aligned with
the immediate family of Venezuelan President Hugo Chavez Frias. Fernandez has
such power that his “friends” in government and the military succeeded in
quashing a major law enforcement investigation into his suspected smuggling
operations.

More suspect comrades.

We have already covered
Fernandez’ “colourful” background, and his shady associates, but perhaps it is
best to mention two additional individuals who are his frequent traveling
partners on his Bell 206 Ranger helicopters. They are the radical Lebanese
brothers Khaled Khalil Majzoub, born 26 August 1965, Cedula 6290182, and Majed
Khalil Majzoub, born 23 April, 1970, Cedula 13526338.

Believed to have
improperly transferred prohibited advanced technology from the US to Venezuelan government agencies using a Miami company called Hardwell Computer, Inc., their US visas were
revoked in 2004. The Khalils appear to be the preferred contractors of the
Venezuelan armed forces, and are allegedly linked to Venezuelans involved in
laundering money siphoned off from public contracts and from other illicit activities.
Like Fernandez, their companies appear to be involved in tax evasion and
customs schemes. Fernandez and the Khalils are linked to the same customs
agency, TMB Aduanas.

Financial pirates looting funds at public expense.

Fernandez is also considered
to be a member of the New Bolivarian Elite, the Venezuelan inner circle, all of
whom, by the way, clearly rate PEP status due to their ready access to billions
of dollars of Venezuelan oil revenues diverted by Chavez from the public
treasury, and used to promote his radical political agenda in Latin
America. Rotch Energy Holdings, the Fernandez company that
controls the other half of DAMASECA, GRUMA’s other subsidiary, is a registered
PDVSA broker. Energy brokers purchasing petroleum products from Venezuela are
regularly forced by PDVSA to send a large portion of their commissions to
powerful Venezuelan PEPs, often in tax haven countries. Would you like to see a
client of your bank named as a funding source of criminal organisations ? The
bank would surely run afoul of US anti-terrorism financing laws, or worse, in
today’s strict regulatory enforcement climate.

Is Fernandez the worldwide laundryman for Chavez?

The is an additional, more
dangerous, red flag: Fernandez’ businesses, which are strictly agrarian, and
are domestic in focus, cannot be reconciled with his dozens of personal
overseas bank accounts, many of which are in the unreformed active tax havens
of the Caribbean and Europe. A partial list impresses even this old veteran of
the “ banking republics. “

Compliance officers
note well how he has accounts at both the London
offices as well as the tax haven branches of some of the world’s largest
international banks, including Barclay’s . Such inter-branch transfers rarely
incur enhanced due diligence, as the receiving compliance staff assume the
client’s transaction has already been vetted. Such multiple accounts at many
branches of the same bank allows virtually foolproof layering enroute to a
final destination, as investigators rarely would be allowed access to internal
transfer information between branches that have bank secrecy laws in effect.

Do you really want to be
moving suspect funds for a company with a hidden, governmental agenda, run by
the right-hand man of the family of the president of Venezuela , and whom may be a
master laundryman ? That’s just one risk one takes when banking
government-controlled companies. As the foregoing aptly demonstrates. Getting
involved with clients who may be a government-controlled company is not just a
PEP problem, it may indeed result in a financial infection from which your bank
may not recover, They should only be allowed under strictly controlled and
monitored circumstances, and if a link to hidden government ownership is shown
regarding a present client, steps should be taken to terminate the relationship.

It is with an almost sense of frustartion or despair that I watch and read the news these days in Venezuela. There is a sense of total disarray on the part of the Government, the rule of law seems to be more irrelevant every day, and the lack of scruples on the part of Government officials from Hugo Chavez down is such, that they can deny saying something that was said days ago with a straight face. It is not a matter of what to write about, it is a matter of having so much to write about, but at the same time it is the same junk day after day: lies, corruption, inefficiency, lack of honesty and decency have now become such a way of life that the headlines on their own are a source of outrage.

The last two days have been particularly dense in content, dense in outrage, dense in despair. Can all of this be happening? Can people care so little? Is this any way to run a country? Is this any way to treat a country? These are questions that I ask myself daily as events continue to unfold that never cease to outrage and amaze me. Each of the following could be an article on their own, but why bother? There is no need to explain, detail or or extend myself on any of these, they all speak for themselves:

-In his testimony on the Barinas corruption case in front of Congress yesterday, the Minister of Agriculture said that “he held up the case…due to political circumstances…but once the results of the regional elections were known, he made Chavez and his father know what had happened”. I mean, I knew that in this Government politics takes priority over corruption, but to confess it like that should be enough for public outrage to force this man to resign simply out of sheer decency. Is he stupid or what?

-In the same case, the level of corruption was simply outrageous, proving that our military are by now experts on such matters. I related in the previous post how the military itself was supposed to execute the construction of the sugar plant but instead hired other companies to do it. Well, the details are obscene; they hired other companies owned by other military or family members to do the job. These companies in turn used soldiers as laborers, but they created a phantom payroll to rip off the money. Additionally, they paid for work never performed, paid for the use of machinery never rented or used and paid companies a bribe to hide all this. As if this were not enough, the land where the plant is being built, was covered with oak trees, which the soldiers cleared and the military officers sold on their own for personal profit. This is organized crime, racketeering, mafia-like behavior by the Venezuelan military on which the shoulders of which this revolution sadly “rests”.

-Meanwhile, Chavez is asking the Venezuelan Central Bank for an additional US$ 4 billion for Fonden, while Government officials tell foreign analysts that Fonden will likely only invest US$ 2.5 billion in 2006 due to lack of “capacity” (Do they mean due to incapacity?) and will likely have US$ 13 billion in it by the end of the year. A country with disintegrating infrastructure, unemployment, insufficient health facilities and a deficit of two million housing units has the luxury of putting US$ 13 billion into the President’s discretionary piggy bank. Long live the revolution! (And the headlines alone, below left and right say it all, even pro-Government Ultimas Noticias reports in the sub-headline on the right that two “parts” of the Sucre highway collapsed in yet another failure of the country’s infrastructure.

-And the large headline is just as bad. General Baduel claims the Nation is threatened, he claims it is from the oustide, I think it’s from the inside, he and his lot are our enemies. These guys are spending 4.5% of GDP in buying military toys and useless guns that will likely only be used to kill other Venezuelans. Yes. Gral. Baduel, we agree on this, except our reasons are different. You can’t have a fourth generation war with second generation brains!

-Meanwhile, reading the silly statistics I like to read, I find a press release by Cadivi in the paper saying that the number one country receiving dollars from the foreign exchange control office for personal aid, which is a small allotment each Venezuelan may send to their family members abroad every month, is Colombia and the number two country is…Ecuador? Nope. The US? Nope. Dominican Republic? Nope…It is none other than China!!! Yes, the huge Chinese population of Venezuela (??) sends so much money to support their relatives that they sent the second largest total abroad of any country. (Almost 200,000 Venezuelans live in South Florida alone). Of course, nobody but me seems surprised by this, but I certainly smell a rat there.

-While US$ 13 billion are saved in Chavez’ piggy bank, the Minister of Habitat with his newfangled fancy name, finds it incredible that the private sector is complaining that the Government will fund only 30,000 housing units in 2006, which he considers a “very high investment”. Small minds, small goals.

-And speaking of the development fund Fonden, it received US$ 6 billion from foreign reserves according to a special bill passed by the Chavista Assembly last year which said that Fonden could spend the money only in foreign currency for projects. Now Fonden uses the money to buy Argentinean sovereign bonds, which it then turns around and sells to local banks in exchange for Bolivars! Seems to me the law has been violated. But nobody says anything least of all the Comptroller who said yesterday that nobody was untouchable, he probably meant nobody in the opposition was untouchable. The other headline, below right, is quite specific, 6 billion Bs. in pensions for the elderly dissapeared, but does the Comptroler even know about it? Those guys are truly untouchable!

-And the Prosecutor General speedily says categorically that he will continue the prosecution of Sumate for receiving US$ 31,000 from the National Endowment for Democracy, but has not prosecuted any of the pro-Chavez groups, including Deputies, who regularly have received funds from the NED, but all of this happens on the same day that the anti-corruption Court in Spain is holding an audience to determine the jail term for the Directors of Spanish Bank BBVA who illegally gave US$ 1.5 million to the campaign of Hugo Chávez and his candidates to the Constituent Assembly in 1998 and 2000. Somehow, the smaller Sumate case, which did report the donation, is more important than the bigger Chavez case, which never reported the campaign contribution, as well as the fact that it was illegal. But the Prosecutor General cares little about Justice and a lot about political revenge and persecution.

-And yes, as expected the superior Court ruled that censorship of the media, be it TV, radio or press is allowed, when it refused to consider an injunction against the gag order by the Judge in the Anderson case, because the media was simply showing what a mockery of Justice the whole Anderson trial and its witnesses were. Make my day!

Indeed, we live in a corrupt autocracy. But we have known that all along.

Happy Valentine’s Day, in a Scroogy sort of way!

About a
month ago, I
reported how a local newspaper wrote about a corruption case in a sugar
plant in Chavez’ Barinas state where all of the money was gone and nothing had
been built. That day a “startled” and “outraged” Hugo Chavez said “If I
could shoot somebody this will be the case”. Well, Chavez acted that day
like this was news to him, acted outraged, but it turns out he was simply
acting, lying if you wish, or in the words of Elaine in the famous mango
episode of Seinfeld: “fake, fake, fake”.

You see, as
reported in today’s El Nacional, while Chavez made everyone believe that he
had learned about the case that day, it turns out that he found out about it
almost a year and a half earlier. On November 1^st. 2004, Minister
Antonio Albarran told the President about the case and promised to give him the
supporting material later, which was done the next day. In fact, ten days later
on November 10^th. 2004, Chavez’ own father, who is the Governor of
Barinas state, sent his son copies of the whole file corruption about this
corruption case. The whole affair was discovered when a local newspaper started
to wonder in October 2004 why the project was going so slow, which led some
peasants to protest to no avail.

This was
no ordinary project. Not only was the sugar plant located in Chavez’ birthplace,
but it was one of his pet projects. You see, the sugar plant was supposed to be
a sort of pilot project of some of Chavez’ dreams: it would combine Cuban
advisers with the execution of the 62^nd. Regiment of Engineers. The
President himself had asked that all of the construction be done by the
military.

As it
turns out the project became more of a pilot project for corruption and
diversion of funds. First, the military officers in charge of the project
decided to use private contractors to build the plant. Second, some of the companies
that were hired belonged to other military officials, while others where
phantom companies, they did not even exist. Finally, with the excuse that the
workers could not be paid with checks because there are only two banks in the
town, a Mayor involved in the project would take large amounts of cash in his
car, ostensibly to pay the workers.

In the
end, the plant was not built, it was supposed to be finished in 2004 and as I
reported two days ago, the National Assembly approved last week an additional
US$ 100 million for the project.

An investigation
was opened by a both civilian and military prosecutors on the case. The
military officers in charge are still active, but have no assigned
responsibilities. They have not been discharged because, guess who, Hugo Chavez
himself does not want them discharged. The National Assembly will start its own
investigation tomorrow, despite the fact that the case had been brought to its
attention long ago. Who is in charge? Deputy Pedro Carreño, a former military
officer himself. Carreño said this week that there was an order to have the
suspects jailed. However, this was issued a year ago and does not include
General Gomez Parra, who was in charge of the 62^nd. Regiment of
Engineers. According to the investigative police, the order to capture the
suspects was “lost on the way”. Way to go!. A total
of 17 people are being investigated

Meanwhile,
Chavez once again announces that the sugar plant will be ready by late this
year, only three years late, as the Venezuelan military, the cornerstone of
the revolution, proves, once again, not only how incompetent they are, but how
they continue to be the most corrupt group in Venezuelan society. Except that for
the last seven years they have enjoyed protection from the very top. That’s why
they call it the robolucion.