Venezuelans set to vote on a wholly illegal referendum, but does it really matter?

February 15, 2009

Venezuelans are spending a non-alcoholic Valentine’s day (as required by the electoral law) prior to tomorrows wholly illegal referendum to amend the Venezuelan Constitution, so that Chavez can run for President again in 2012. (And again and again!)

Illegal for too many reasons. From the fact that this was already voted on (Is he a democrat when he does not abide by the voter’s desires?), that a referendum can not take place until after two years after the last one (which was on Dec. 2nd. 2007), or because the question is worded in such a fashion that it deceives voters and finally, because the whole State and its money has been manipulated to promote Chavez’ SI vote.

But Chavez’ revolution is showing increasing signs that it has by now lost all of its scruples, as it lies, intimidates and even twist facts to fit Chavez’ views and needs.

The Government has carried out an overwhelming campaign on all fronts, outspending the opposition by a factor of 7 to 8 (even on the Internet!), using all of the Government’s resources and yes, intimidating and lying to the people about the meaning of the outcome tomorrow.

To me, the most significant impact of this vote may be that for the last two months, the Venezuelan Government has ignored the crisis that is about to hit us in the face, devoting itself completely to the promotion of the Si vote to perpetuate Chavez in power. Because not only have no decisions been made, but the last two months have been spent insuring that the voters don’t feel any sign of the crisis.

But in the end tomorrow’s outcome may not be that relevant anyway. If oil prices continue at current levels and Chavez continues managing the economy with amateurs, his popularity may drop to such low levels that 2012 may seem far away even to the autocrat himself when things get really bad and much higher inflation and shortages hit the people. And  no matter which side wins, Chavez’ international reputation, or what was left of it, has been further damaged by his obsessive abuse of power and his undemocratic ways. Today’s New York Times Editorial is a clear sign that Chavez can no longer fool people into thinking he is a democrat or is even trying to do the best for the people. How times change! And how Daniel says, I certainly feel bloggers have contributed to changing international minds and beating Chavez’ huge resources on international lobbying just with our time and dedication.

And we are now here, ready to vote and sober, and I am sure you all want me to say what I think may happen.

Polls have been rather confusing in the last two months. As Chavez proposed the referendum, all major and reliable pollsters indicated the NO was way ahead. However, withing four weeks and without anything major happening, the SI had recovered significantly, closing the gap in most polls. This has been due mostly the the intense pro-SI campaign by the Government and its focus on the undecided, painting the race between Chavez and a faceless opposition that is about to take everything away from them.

At that point, after the gap narrowed, pollsters that have been rather consistent in prior elections, began to diverge. As of today, of what I consider to be the reliable pollsters, there are differences of as much as 12 percentage points in their final predictions.

Pollsters themselves indicate that there are some strange things in the data. All of them register levels of commitment by the voters that have never been seen in any Venezuelan election and least of all on a referendum, which typically turn off the voters on both sides. Running at 15% on average, abstention may be the key into understanding the final result.

Because in the end, it was Chavista abstention that gave the opposition its victory in the 2007 Constitutional referendum, as three million voters that had cast their ballot for the President in 2006, decided to stay home. The intense campaign of the last two months and the organization of tomorrow’s vote is all focused in guaranteeing that this may not happen again.

Opposition optimists want to interpret the differences in the polls on fear, but pollsters think that this fear may be reflected in who is going to vote rather than how they will vote.

And the Government has loaded the dice to insure abstention is as low as possible. Despite the fact that the law says that voting should end at 4 PM if nobody is in line, the CNE unilaterally decided to bypass it, changing it to 6 PM. This guarantees that if exit polls indicate the pro-Si vote is on the low side of things, the Chavista machinery can go and get the voters at their homes and bring them in.

Up to about ten days ago, I was thinking that the No would win, believing that the violence and intimidation would work against Chavez in the last few days. But after seeing the internal numbers of some of the polls, I have changed my mind. In 2007, Chavez approval rating was down, it is up between 8 to 10 points from that level among voters, even if they say they will vote No tomorrow. That number, combined with the resources of the Government and my belief that there is no major  “hidden” or “fear” vote lead me to conclude that the Si is going to win. Only huge abstention levels or Chavismo blowing the drive to get voters out (like it blew the Si march on Thursday) could turn the tide against Chavez.

Sorry to rain on your parade, that’s the way I see it, even if my “feelings” tell me otherwise.

I will, of course, be reporting during the day, will make my usual spin through the city as soon as I finish voting. I will visit the same centers I did in 2006, 2007 and 2008 which will give us some sense of abstention levels to see if I blew my prediction (Hope I did!). I do hope that lines will be smaller than in the regional elections when it took me all day to take my mother to vote and return for my own. I will update both blogs, but the new version (wordpress) appears much faster than the old version (Radio Userland or Salon.com).

But in the end, this all may be a waste of time even for Chavez. If running the country absorbed his time and effort like elections and referenda do, maybe he will actually have some more accomplishments to show in the last ten years and would not even have to waste so much money and effort on promoting his indefinite reelection.

Posted in Venezuela | Leave a Comment »

Not your usual democratic state: Intolerance in Venezuela always goes against the opposition

February 15, 2009

We have seen weeks of abuse of power as Chavez and his Government have overwhelmed the media and the country with advertising in favor of the SI vote on Sunday’s referendum. This is not new, we have seen it before but never of the magnitude of the last six weeks.

But what is particularly bothersome (and irksome) is how intolerance against the actions of the opposition have become outright discrimination and the slightest excuse is used to create obstacles in not only and unfair way, but clearly undemocratic and in violation of people’s rights:

  • This week, the municipal Government of the Libertador District denied the opposition students permits for two marches in favor of the No vote on the referendum. Marches that favor the Government’s side are never banned or their path corrected, only the opposition’s. But what is worse is the conflict of interest whereby the mayor of the Liberatodor Municipality happens to be Chavez’ Head of campaign in favor of the SI vote Jorge Rodriguez. Rodrigues was Head of the Electoral Board before becoming Vice-Presdient of the country in that nothing-is-a-conflict-of-interest attitude that Chavismo has. Rodriguez was elected Mayor in Novemeber but ahs devoted all of his time since then to his current resposibility of making the SI win tomorrow.
  • A concert by singer Soledad Bravo, “A chant for love” which was supposed to take place today (Valentine’s Day) at Central University was canceled at the request of the union of that University which argued that given that it was an “opposition” concert, this created the possibility that there could be riots (for love?). Of course, if the union says no, that’s it as the workers will not show up.
  • And then of course, Spanish Deputy Luis Herrero was kidnapped and put on an airplane for saying that whiel he was not promoting a Yes or No vote, people were being threatened and you can only vote in freedom. He then said, and this irked the Government: ” Never vote led by the fear that in a premeditated way a dictator is trying to translate into the spirit of the people”. Of course, when Evo Morales, Daniel Ortega and Rafael Correa come and support Chavzea nd particiapte in an election rally, it is fine, but when a Deputy that can see clearly that Venezuela is no longer a democracy speaks, he is “insulting the dignity of the country”. The President of the EuropeanHans-Gert Pottering Parliament called the expulsion “unacceptable” and a disdain towards democratic institutions.
  • And then of course, the members of the Electoral Board (CNE) continue acting as Government agents in overt fashion, it was actually the Head of the CNE that ordered the deportation of the Spanish Deputy and another member of the CNE “challenged” the opposition to give an opinion about what the Deputy said. As if the opposition did not recognize Chavez’ dictatorial tendencies. Of course, Chavez came out and citicized the Deputy insulting him in his customary fashion.
  • And then, of course, Lech Walesa never came to Venezuela despite denials by the Government that it was not stopping him from coming, but it is now twice that the Polish leader has been unable to come due to the intimiadtion of the Veneuzelan Government.

Posted in Venezuela | Leave a Comment »

QUACK!* by Alex Dalmady

February 14, 2009

It’s over. Regulatory bodies have caught on. WSJ just announced that the FBI is investigating. “Duck Tales” is in the hands of dozens of analysts who “get it”, including many with ties to the MSMs (that’s Mainstream Media for you, Toby LOL). The press is flowing more freely. The MSMs have sent guys to Antigua. It’s big. They “get” it. THE EMPEROR HAS NO CLOTHES. Stanford has no answer. “Sir Allen” has been silent since over three days ago, as that spokesman who was beginning to look a lot like Jim Carrey at the beginning of “Fun with Dick and Jane”.

Hope he gets even like Carrey did.

The Antiguan regulators are on it. They made a complete “about face” on Friday, going from “not probing Stanford” to “to quiz Stanford” and “its not a Friday afternoon cocktail anymore”. It’s obvious that someone told them to “wake up and smell the guavaberry”.

They are still in denial, however. A Mr. King says “I know Allen Stanford personally put close to half a billion dollars of his own money to beef up the capital structure of the bank.” Did you see the check, Mr. King?

NO ONE and I mean NO ONE has disputed the facts in my article. The central issue of Show me the money! has not been addressed by Stanford or anyone else. Some MSMs have asked me how I got to my figures and I’ve sent them my dinky little spreadsheet. No questions. Maybe I should pretty it up a bit.

Now comes the ugly part. The Antiguan regulators with perhaps some special “help” are going to go see about those assets. I hope for the best, but I’m afraid for the worst. There may not be much there. If there’s a broker statement showing $2-3 billion in T-bills somewhere, you can be sure it’s false. Better confirm that with the brokerage company, guys. My best guess is that those assets are going to be stuff like eLandia, which Stanford poured like $100 million into, only to lose it. HSSO, which was trying to become “something” by buying EMAG, Transwitch (TXCC), which some guy named “Peabody” on the BW blog turned up. Seems that Stanford, grasping for cash, sold $15 million of short-term notes back to the company for $9.5 million back in December. Talk about “liquidity crunch” (it works to about a very high yield, for those mathematically challenged). I guess then there are the movies, the restaurant in Memphis and other “market-beating” investments. I can imagine the ledger now…one coffee pot: $50,000.00, one helicopter: $500,000,000…one corrupt politician: priceless! The human part is going to hit home really quick. I already had a taste, and my blood is boiling. I’m MAD and I’m SAD. Yesterday, I get a call on my home phone from a lady in Venezuela. She was desperate. She tells me her 99-year-old aunt’s money, the income from which she uses for her medical needs, is in a Stanford CD. “Can you help me, Mr. Dalmady?” What do you say? “Should I redeem, Mr. Dalmady” Yes, “redeem” I said…broke my heart.

It’s becoming painfully obvious that this was in a death spiral anyway and the story was going to blow really soon. Matt Goldstein had plenty of research he was ready to go forward with, as was Allison Fitzgerald at Bloomberg. They were googling for Stanford regularly when my stuff came up. More stuff will come forward anyway. I’d say if not for “Duck Tales” this had maybe a week or two more to go, before it blew itself up (ran out of money) or the press blew it up.

That’s really bad if you think about it. Ponzi schemes live off liquidity. If these guys are strapped for cash, after pulling in $2 billion in fresh money in 2008 and “injecting fresh capital” in December…well. It’s obvious that this isn’t just a product of the 2008 market crash, stuff has been going on for a while. If I had to guess, I’d say this might have been legit until 2000 or at least a “viable model”, since the markets were doing well, but somewhere back it took a bad turn and a little hole grew into a crater. They were filling it in and perhaps trying to build up a business on the side (Stanford Group?). But its just speculation here and we won’t know unless an insider talks.

So…there it is. It’s my 15 minutes. Thanks for lending me your blogs (I really should get my own).

*A simultaneous blogcast exclusive of the Devil and Inca Kola News

Posted in Stanford Bank | 11 Comments »

Post 2 by Alex Dalmady: Confessions of a Reluctant Whistleblower Or how the Blogosphere took on Stanford

February 13, 2009

It started back in October when my long-lost friend Roberto (I’ll save his last name) called wanting me to help him with his portfolio. I said: “sure I’ll look it over”. He commented that he had a good chunk of his assets in CDs at Stanford International Bank.

I knew the Stanford name. I had heard mention of people holding CDs there. The rates were good. Assumed they could do that because as an offshore bank there was no taxes, no FDIC insurance and they could plow the money into T-bills and high-grade corporate paper and live off the spread.

But it was also mentioned in a murkier sense. People in the financial world have been questioning the deposit rates for quite a while. How could they pay those rates?

So when I went over to the bank’s web site, I was stunned. First, it looked so simple, so unsophisticated. The language used wasn’t quite right. I downloaded the financial statements and to my surprise the “business model” jumped out at me: investing in Stocks, Bonds, Hedge Funds and the like. That’s OK if you’re managing a fund, but not a bank, which is leveraging its balance sheet 15 or 20 to 1. Just a 5% drop in the portfolio, completely wipes out any equity.

“Roberto”, I said, “take your money out YESTERDAY”. He did, albeit slowly, but by December he was out. In the meantime, I found myself lured to the site over and over, my browser would wander to the SIBL and Stanford Financial site and I was googling the words “Stanford International Bank Antigua” over and over.

I saw that the SEC had been investigating since July. “How could these guys not be found out by now?” ANY trained pair of eyes looks at that audited report and says “whoa”.

Then the Madoff case blew, and it became obvious. No one was looking at stuff like this. The SEC had its head up its butt. So I dug deeper and put some numbers on a spreadsheet (took me about 30 minutes). It just got worse. Where was the portfolio? What were they invested in? 20%+ returns on their hedge funds? No way. Outperforming the S&P in stocks? No way. With 30% deposit growth (i.e. money constantly coming in)? No way.

I sat down and wrote “Duck Tales” in January. I showed it to my wife, who didn’t like it much, but was more afraid of my naming names. She didn’t want to see me gunned down by the Jamaican mob or something. A banker friend read it and said, “I agree, but if I were you, I wouldn’t publish that”.

So I sent it to Robert (Toby) Bottome, long time friend and ex-partner at Veneconomy. He said “I love it and just in time for our January issue”. “Do you want to sign it or should we just put Veneconomy Editors” “I’ll sign it”, I said.

There was the question. Why me? Putting my name out there in the firing line. It’s scary. I didn’t want a repeat of my Mercantil experience (nothing really happened) and I certainly didn’t want to get sued. However, it was probably the best. I had nothing at stake. I wasn’t a disgruntled employee, I wasn’t looking for business, I wasn’t plugging my website…heck, Toby didn’t even pay me for the article (LOL). I haven’t written for years, after my InvestAnalysis newsletter with some a little Veneconomy on the side and a brief foray online. Still, people in the financial sector in Venezuela remembered me and I had a ton of credibility with those who remembered. Toby, for his part, is an INSTITUTION in Venezuela and doesn’t take crap from anyone, not even Chávez.

Off it went. It took awhile to get the magazine out. Production problems, it seems. So it is with print. In the meantime I caught wind of blog raising some red flags about SIB also. A start-up called venepiramides, run by someone who calls himself Bernardo Madoff (LOL). It was good to see I wasn’t alone and at least had an “imaginary” friend.

But there is also a sense of confidence from something that is solid, on paper and can’t change with a click. I sent an electronic copy to family and a few friends. I was expecting some kind of reaction or outroar from Venezuela. The article was reproduced in Descifrado, a local financial “insider” weekly, and the audience grew.

All along, the feedback was the same; nobody questioned my conclusions or asked but what if? The whole thing just made too much sense.

I really don’t know how things played out in Caracas, but I know the article got around. However, the local press didn’t pick up on it. I presume that more than one “investor” made their way to Stanford’s offices to ask for their money back.

The Duck enters the Blogosphere

While the “The Duck” took flight in Caracas, it really exploded once it hit the blogs. Miguel Octavio’s “Devil Excrement” took up the story on Monday the 9th as did Caracas Gringo. Miguel, of course, is a financial veteran, (ex-kooky scientist, like me) so he understood the gist and the details of the article all too well. He came up with some more evidence of trouble in a company named Elandia, where SIBL had to give up control in exchange for not having been able to fund a $28 million dollar loan commitment.

Miguel’s blog entry was quickly picked up by Inca Kola News, a really fine Latin American blog with a sarcastic twist to it. What I liked about the way Miguel and Inca’s takes was that they said: “Here’s this, look at Alex’s report and look at Stanford’s information…decide”

Both blogs get plenty of hits…here from Inca Kola:

“2) So far today this humble blog has had several visits from major newswires, three visits from the US Federal Reserve and one from the SEC, all using combos of “Alex Dalmady”, “Stanford”, “Madoff” etc as keyword entries*. Not to mention all those people from some island called Antigua and plenty from a company called “Stanford Eagle” in Houston. Hi guys, having a nice day?”

The first mainstream reporter to call was from Businessweek. He apparently was working on a Stanford article already, but more from the angle of the “bank excesses” to show how the bank was rewarding its advisors. Bloomberg was next. Also had been working on a story and had other sources.

The next day a couple of more mainstream US blogs picked up the story and things began to get interesting. Felix Salmon at portfolio.com did his homework, read the article and saw it pretty much the same way I (and everyone else) did. That put the mainstream media on alert as well as the arb traders in EMAG, who briefly crushed the stock (it incredibly bounced back).

What I enjoyed the most was a hilarious blog called “I’m Bernie Madoff”. It ran a spoof with Andy Madoff writing to his dad about the deposit they had in Antigua. They linked my article. “Andy” calls me a “another nutcase like that guy Markopolos”. The next day Sir Allen wrote back to Bernie that I was “more ornery than an porcupine in heat”. I’m still ROFL. Although humorous…the blog was dead-on with facts about SIBL.

That took us to Wednesday. The EMAG deal was supposed to close during the day, but before the open EMAG informed that HSSO was telling them that SIBL wouldn’t fund the deal. How can a bank with an $8 billion portfolio NOT find $62 million –twice! You call up your broker and tell them…send it. You don’t have sell a share (or bond). Eight billion worth of securities is a fine collateral. But we sort of expected that to happen. Previously, I even lurked at the EMAG yahoo message board and posted some links to the elandia deal to see if people would “get it” and not lose more money. It was useless; I was insulted off the place.

Clusterstock at businessinsider.com came out with a summary of Felix’s assessment and an unequivocal “Whistleblower Alleges $8 billion fraud at Sir Allen’s Offshore Bank”. Businessweek’s take was a bit lame asking if “Stanford Financial’s Offer was Too Good to be True?” without naming our report, me, Veneconomy or anything else. Our little write-up was only good enough to validate their previous report. I was disappointed (I used to read BW). They did offer me some props later, though. The calls were coming in now. Bloomberg, Reuters, Forbes. I was talking to everybody. Some of the reporters understood what I was talking about. Others might have been a bit out of place.

Bloomberg broke the story early Thursday. Well-documented, they even had another analyst back me up (or me backing the other analyst up either way, it’s good). It was obvious that the story was “in the works”. The Financial Times story on Alphaville was excellent also. The reporter had called me late Wednesday and you could tell she knew her stuff. As the “Caribbean” reporter she knew the political connections of the bank. I sent her my spreadsheet. Why not? It’s about as simple as can be. Like I tried to tell everyone, this isn’t rocket science…it’s COMMON SENSE. Apparently she was shuttled off to Antigua to follow up.

Stanford had no answer to this. Some spokesperson was saying stuff like “it’s only one analyst” or “our clients trust us”. Sure, but how about “Show me the money!” Nothing. Reporters had found me. Stanford had not. Better by me, frankly. Their best strategy is to obviously ignore the “obvious”. If they make too much noise, people will actually look…and that’s not good for Stanford.

I also received a somewhat disheartening call from David Marchant who runs offshorealert.com. He’s gone deep into Stanford for years and gave me the explanation of how Stanford lost his banking license in Montserrat. It’s obvious this guy has a lot of inside stuff. Why aren’t regulators talking to him and guys like him? But he also told me he had spent over $500,000 just to defend himself against crooked offshore bankers. Ouch. It must be hard to know all that stuff and not be able to say it.

As I write this the story gains traction. A reporter just called from the WSJ. I gave her every thing I had, including my dinky little spreadsheet. She has some Venezuelan roots and apparently knows Miguel and Toby, so there is a ton of credibility right there. Reuters called. They’re calling my home phone now…that’s a bit scary.

As this hits the mainstream media, it’s the in the hands of the lawyers. They can decide what goes and they don’t want to step on any toes. Have they been emboldened by the Madoff blowup or do they still want to go with the “official version” and let Stanford skirt the issues? We’ll see.

You have to wonder how deep the rabbit hole actually goes. I don’t know. There’s Stanford Financial Group and then there’s Stanford International Bank. I only know about the latter. How it relates to the former…not sure. Then there’s politics and philanthropy and cricket. This could go anywhere.

The guy from Reuters asked me if I was going to publish anything further. I don’t want to. I really think that inquisitive reporters and analysts from around the world can put two and two together and take it from here. I think I’ve done my part. But this little journal can help. I can get things off my chest and maybe gain some sympathy for the “little guy”.

I have an idea about how this SHOULD end. In my dreams, Stanford gives up and Jon Stewart invites me to the “Daily Show” (which my kids love) and then I can get back to my work. I have a ton of emails to answer and reports to write.  In my nightmares, I get dragged into court or the FBI shows up at MY door (understand the paranoia…I’m from Venezuela).

My friend just sent me Sir Allen’s letter to the bank’s clients. They are now retorting on Bloomberg.They appear ready to fight this. Money and plenty of influence against some good ol’ common sense. Not an even fight, I’d say and I wouldn’t expect these guys to fight clean.

But Stanford still hasn’t “shown the money” and that has to be the issue. How do you hide an $8 billion portfolio? How can you have an $8 billion portfolio and not enough liquidity for pre-determined deals/needs? Why can’t anyone answer this easy question?

I wonder what the SEC and the like are doing. It’s really hard for me to grasp that they have been at Stanford since July and haven’t come across those financial reports. Maybe they were building a case and just waiting for the right time to pounce. Hope so.

Great. Got that off my chest. Rant.

Posted in Stanford Bank | 5 Comments »

Post I From the Devil:The Stanford International Bank Story: The duck spreads its wings…abroad

February 13, 2009

On Monday I was chatting via email with Duck-Tale extraordinaire, whistle blower, Caracas and Florida-based analyst and it turns out regular visitor Alex Dalmady and was telling him how surprised I was at the little impact in Venezuela of his piece in the monthly Veneconomy on Stanford International Bank, despite the fact that it was reprinted practically in its entirety by Descifrado.

He noted that we all have a friend, relative or acquaintance who has or had an account in it and thus this may be limiting the spreading of the news. And while we were watching inside Venezuela, the whole thing exploded outside. That night I finally wrote my piece on it, not because I was delaying it, but simply because I finally had the time to write it!

And then the whole thing exploded, not here, but abroad. What I had probably not understood is that while the victims of SIB may be located mostly in Latin America and the Caribbean, the wounds and noise of Madoff have set off a race to find new Ponzi/Pyramids/Madoffs wherever they may be. Funny, when Venepiramides first appeared I thought the topic was somewhat narrow, maybe its owners now regret not doing it Enlish rather than in Spanish. They were on the right track and have kept up their great job, but the Venezuelan blogosphere has yet to catch on to the subject.

My post was noted by Inca Kola News (hey! I don’t hate Chavez, I just don’t want him as President!). Soon after a post appeared in portfolio.com written by Feliz Salmon, which was clearly noticed as Seeking Alpha picked it up and then Business Week and the ball started to roll (and then gave Alex and Veneconomy credit).

But in some sense, it did, because Alex Dalmady had a very specific prediction or smoking gun to watch in his Duck Tales article: SIB was supposed to provide financing to Health System Solutions to acquire Emageon by Feb. 11th. and it just failed to do so, suggesting that SIB was indeed having liquidity problems if it was unable to come up with the funds and incurr in a US$ 9 million loss. And SIB failed to do so, pushing Emageon shares down as much as 56% that day. I had earlier found a similar failure for SBI to deliver financing to Elandia, which cost SBI control over the company. That makes two separate smoking guns that liquidity is just not well a the US$ 8.5 billion institution.

By now, the duck is spreading its wings far and wide. Bloomberg broke the story concentrating on the sale of SIB’s CD’s in the US, clearly a no-no. Caracas Gringo interviewed Dalmady, the Financial Times jumped on the story loving the cricket angle, a New York Times blog got into the story and by now the  Associated Press is also into it. (Only Forbes and the WSJ are missing now…)

But still, what the hell is going on at the Duck?

So far, responses to the criticism have been surprising to say the least. “It is just one analysts opinion” simply does not fly well. And then tonight we get a letter (see comments, its veracity ahs been confirmed) from none other than Sir Allen to its employees, which to me raises more questions than answers:

” Although we have not been the beneficiary of any taxpayer money, hard as we try, we are not immune from that crisis”

Funny, all the accusations by Dalmady are based on the Antigua based Stanford International Bank, why should that entity get anything?

“You have heard that regulators from different agencies have visited our offices in recent weeks, as they have been doing to many financial operations around the country.”

Visits all over the country have a different purpose than looking into the sale of CD’s issued by Antigua-based Stanford International Bank to US citizens.

“SIB remains a strong institution, and even without the benefit of billions in US taxpayer’s dollars we are taking a number of decisive steps to reinforce our financial strength. We will take the necessary actions to protect our depositors. I have already added two capital infusions into the bank and we are considering a number of other steps as needed.”

Once again, why should SIB even aspire to receive US taxpayers dollars?

And then, if as reported in the December 17th. letter in its website, things were peachy and the bank had not incurred in any losses, why did SIB had to inject US$ half a billion in capital and “is considering a number of other steps are needed”?

There were very simple questions which were not answered in this letter, like: Where are the assets that generated the wonderful results SBI claims in a year when equities were down 4-0-50% across the world and the bank claimed to have started the year with a 50%-plus allocation to Equities? Why did the bank fail to provide financing to Emageon and Elandia? Are withdrawals being promptly met? Or even why did Sir Allen really withdraw his funding from the 20/20 cricket challenge in December?

But in the end, the strangest aspect of the whole story is that there is total silence in Venezuela. Nothing in the news in the country that gave SIB its initial push, with as much as US$ 3 billion in deposits from Venezuelans. Stanford even purchased a local bank “Stanford Bank” to give some semblance of legality to the sale of SIB products, which is a gray area in my country. Stanford’s reach is so wide, that I am sure that many of the new Boli-bourgeois, have accounts there, after all, it was probably the bank with local presence with the lowest compliance requirements in the market and the most aggressive sales force.

As I said, everyone in Venezuela either knows or is related to someone with money at SIB. In fact, I have been warning people I knew about this for years. And I must say, while some listened to me partially, not a single one of them withdrew all of its savings from SIB. Not one.

Finally, I find it somewhat hilarious that when I wrote about this on Monday, the Duck Tales or El Pato write ups were nowhere on the web, so I decided to post them  at my usual location (www.filesavr.com) where I load up documents that I can’t find on the web. Everyone seems to be unloading it from there…You truly never know where your blog will take things…

But as you can see from the next post, Alex Dalmady is quite amazed…

Posted in Stanford Bank | 1 Comment »

New and parallel Devil

February 12, 2009

Last December, as I was about to write my Christmas post, I realized I had run out of storage. I got out my credit card and paid for extra storage to Radio Userland and the code they sent would not work. I wrote to sales, and customer service and it took about twelve days before someone got back to me and gave me the right code.

As you can imagine, the experience was unnerving. I had resisted moving my blog even if I knew the software was obsolete, because I like the idea of my site being in a single place, it is a permanent database of things that have happened in Venezuela in the last six and a half years. When I mentioned this, Dean suggested he could find some Chinese students that could help me migrate the whole thing at a reasonable cost. At least three readers were generous enough to offer to host it for free in their servers. Thank you all for your offers to give me a hand.

But they key push came from Omar, who wrote that while there is no migration path from Radio Userland directly to WordPress, there is a migration from Userland to LiveJournal and another from LiveJournal to WordPress. And indeed there was, so I began learning my way around WordPress and the first free weekend I had, I moved all of the six and a half years to WordPress and have actually been running the Devil in parallel at https://devilsexcrement.wordpress.com. In fact, I have been posting first at the new site and then later just copying and pasting into the old one.

There are some differences. In Userland I had many categories that could be sort of independent blogs, like my orchids page, where I post my pictures there and, but they don’t appear in the main sections. I can not do the same thing in WordPress, so that I will probably keep posting those pictures in the old blog.

I was not able to move the comments, maybe there is a way, I just don’t know how to do it.

I was planning to announce this next week after the referendum, but then I realized that posts go on the air very fast with wordpress and this will be an advantage on Sunday when people check eagerly for any news.

Thus, I will continue posting in both systems for a few months, it is not much of an effort. Sometimes next week I will redirect the domains devilexcrement.com and devilsexcremnet.com to the wordpress site.

I am not finished with the new site. It has been a lot of work to migrate everything and make it look good, but wordpress does not use html but CSS and I don’t know much about CSS. So, if any reader knows enough CSS, maybe they can give me a hand in inserting a picture in the heading of the new blog and posting the blog award box on the left side. I would really appreciate it.

In the meantime thanks for reading me and if you want to see the posts faster move to the wodpress site and if there is something you don’t like about the new look, let me know, I may be able to change it. I will let you know in a few months when I stop posting in the old site with the old software

Posted in Venezuela | 8 Comments »

Stern Government Warning: Don’t eat your ballot on Sunday or else!

February 11, 2009

And in a bizarro piece of news, General Gonzalez Gonzalez, the same one that held a press conference to deny the undeniable and who is in charge of the voting logistics on Sunday, warned Venezuelan citizens that anyone eating his/her ballots on Sunday’s referendum would be jailed.

Said the General: “They have eaten them. This is an electoral crime”

Clearly the General has the best interests of Venezuelan citizens in mind. Who knows, the ink from the machines may be poison or when they extract it, your vote’s secrecy may be lost.

These guys really have their priorities straight.

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Chavez personally bans Lech Walesa from coming to Venezuela

February 11, 2009

Last year, Polish Nobel Peace Prize winner Lech Walesa was invited to Venezuela to talk to the opposition and there was an uproar when it was reported that the Venezuelan Government had told him not to come. However, the Government said that it had nothing against Walesa, but they had told the Polish leader that they could not guarantee his personal security. The argument was strange, given that Chavez travels under heavy guard and his buddies Evo Morales, Rafael Correal and Daniel Ortega come regularly to Caracas and are given high level protection.

Then this week Walesa gave an interview saying that he was coming to Caracas in response to an invitation from the Venezuelan opposition students and to meet with ONG’s. Walesa said that he would help give students powerful arguments against Hugo Chavez.

Well, lo and behold this time around Chavez had no qualms about saying Walesa was simply not welcome in Caracas. Chavez asked his Foreign Minister to stop Walesa from entering the country.

The Venezuelan President said that he had to defend the dignity (???) of the country and Walesa could say anythng he wanted outside Venezuela but not here. Once again, like in the case of La Piedrita and so many others it is Chavez that gives orders as if this was his private fiefdom and there were no laws and regulations. It also becomes clear what a liar Chavez and his Foreign Minsiter are in that last year they simply used the argument about Walesa’s security to stop him from coming to Venezuela in an elegant way.

Posted in Venezuela | 2 Comments »

Say NO to letting them take away what is yours by Teodoro Petkoff

February 10, 2009

A modest looking lady requests medical attention. The receptionist informs her that now this health care center is private and she has to pay. The voice of the narrator says something like of the NO wins “they will take away your missions”.

This  scene is a TV ad by Chavez’ Government. It is a despicable ad, it represents an indescriptible low point, based on the crudest lie, of those you hope, according to Hitler, that is so exaggerated that it ends up being credible. What in the campaign of officialdom is not based on the figure of Chacumbele (Chávez), its based on the false manipulation of the good faith of the poorest sectors.

The smallest reflection by a victim of this dishonest campaign, will make him realize that this lie lacks any support from what is happening in real life. Or don’t misiones function  in Zulia and Nueva Esparta States where the opposition governs? If in any of these two places its respective Governors had shut down even one Barrio Adentro module, don’t you think the noise form the loud birds of the official channel and from Chacumbele himself would have reached the sky? In Petare the new opposition mayor, Carlos Ocariz, found thirty Barrio Adentro modules completely destroyed and without doctors and he is rebuilding and reequipping them, as well as providing them with doctors. The lie has very short legs.

But beyond these confrontations between lies and facts that refute them, the reality is that in order to protect the social programs what is advisable is to vote NO, because if anyone has been reducing them to their minimum expression is the Government of Chacumbele itself.

According to PDVSA’s report on the subject, between January and September of last year, the contributions of the oil company to social programs were reduced 65.3% with respect to the same period in 2007: from 2.3 billion dollars they dropped to 804 million. According to PDVSA itslef, the misiones most affected by this brutal cut were Barrio Adentro, Mercal and Milagro. For this year 2009, in the budget approved by the national Assembly–even before there was talk of an economic crisis–, there is no increase considered for the misiones. Thus, what was reduced, stays reduced. “Say NO to letting them take away what is your” says the advertising from the Government,don’t let the Government take away what is yours giving away to the Givemesomething Group the money that is needed here. All those cuts were made in a year in which Venezuela’s average price for a barrel of oil was 88 US dollars. So far in 2009, that price has dropped down to 37 US dollars. If having the money in 2008, the misiones received much less financing, what will happen in 2009? Will they continue sacrificing misiones to pay for Russian weapons? Say NO to letting them take away what is yours.

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Observing a possible financial duck close to Venezuela

February 10, 2009

When financial markets experience turbulent times, like those we have witnessed over the last year, institutions with shaky foundations or suspicious business models begin to unravel and it is difficult for those managing them to continue hiding behind high growth or questionable practices. This is what happened with the now well known Ponzi scheme of Bernie Madoff which managed to divert some US$50 billion out of people’s pockets. (For a fairly comprehensive coverage of the Madoff affair check out clusterstock).

Since the Madoff affair, there have been quite a number of smaller cases discovered and in Venezuela it gave rise to fairly entertaining blog in Spanish called Venepiramides, which has been covering this subject in detail.

Then last week, Veneconomia, in its monthly issue (of which I am a collaborator), carried an article called Duck Tales, (in Spanish here) written by our friend and sometimes reader Alex Dalmady in which Alex analyzes Stanford International Bank (SIB), an Antigua based financial institution with some US$ 8 billion in deposits mostly from Latin America and an estimated US$ 3 billion from Venezuelans. Another blog in English, Caracas Gringo, has already reviewed most of Alex’ findings.

What Alex does in a very entertaining style, is to ask what you should ask yourself if you are trying to find a “Financial Duck”, that is, a financial institution which like Madoff, it’s too good to be true, nobody can match what it does, like the Madoff pyramid it is run by a very small group of people and with no single institution having the incentives to uncover the fraud.

After analyzing SIB, Dalmady concludes that SIB has feathers, quacks, waddles and has webbed feet. That is, all of the tests that Dalmady could come up with, point to SIB looking a lot like a financial duck and people should be more careful of not placing their money with something that looks like  a duck.

For many years, I have been hearing stories about SIB. When most banks paid 3% in deposits, SIB paid 6-8%. No amount of digging or understanding would clarify what it was they were doing, much like Madoff did in the US, where he managed to trap some very smart people. In fact, looking at its financial statements, I realized a while back immediately that SIB looked more like a hedge fund (half the banks investments were in stocks every year) where investments were made with depositor’s money, but those taking the risk were compensated with fixed income rates of return. As long as markets were fine and growth continued, nobody would notice, but as Alex analyzed in his report, the question now is how much did the bank lose last year and how can anyone really find out?

In fact, while Dalmady found a transaction between SIB and a company called EMAG that was delayed in December and which may represent a warning sign, I found a second one last week which has already played out: A company named Elandia had an agreement to receive a loan of US$ 28 million but terminated it it last Friday. Because of this, Elandia has canceled 16.5 million of its own shares previously owned by SIB. As a result, SIB has lost control of Elandia. While there may be a reasonable explanation for this, it seems surprising that a bank with US$ 8 billion in deposits would lose control of an investment because it could not deliver US$ 28 million.

Thus, this represents another surprising feature of the taxonomy of this financial animal, which we are all exposed to. In fact, I have found so many people near me exposed to it, that I am simply amazed about how easily people trust their money to financial institutions without much transparency, just because of the promise of more yield. It is in the end greed that drives the whole thing.

The same greed led many Venezuelans in 1994 to deposit their money in the local banks that paid the highest interest. They paid dearly for it. Will they once be caught by another Anatidae financial bird?

Posted in Stanford Bank | 1 Comment »

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