Posts Tagged ‘rafael ramirez’

PDVSA and its Hong Kong Exchange Plans: Ignorance or Deception?

March 12, 2012

Once the Venezuelan press began writing about the intention of Chavez’ Government to place shares of part of PDVSA in the Hong Kong Stock Exchange via the sale of stakes in joint ventures to China’s Citic, as reported here and in Setty’s blog and Caracas Chronicles, the Government went into denial mode, having been caught rojo-rojito-handed with the fingers in the privatization till.

First, there was a curious Bloomberg story, in which a company official anonymously confirmed the story, but denied that this was strictly a privatization, “as shares will be offered in a holding company created to manage PDVSA’s stakes in the joint ventures and not in the state oil company itself”.

Jeez, these people really must think we are stupid,as the share of a company that just manages PDVSA’s stakes, can’t be worth as much as the stakes themselves. But, Mr. anonymous, pardon me, selling any company owned by PDVSA is a privatization, no matter how much you like or dislike euphemisms.

But that explanation was not noted much by the local press, so that none other than the President of PDVSA and Minister of Energy and Oil Rafael Ramirez, declared not once, but twice, that PDVSA was not planning to sell shares of any part of the company, because PDVSA has “never done much in the Hong Kong Stock Exchange and the idea is to negotiate, via Citic, any sort of transaction, but mainly bonds”

And you have to wonder, whether this statement reveals the absolute ignorance of the Minister or just another incredible attempt to lie and deceive about the true plans of PDVSA with its Citic sale.You see, if you take Minister Ramirez words at face value, PDVSA has never had anything to do with any Stock Exchange in the world, as far as I know, except the Caracas Stock Exchange. This is the only exchange where its bonds have ever traded.

The reason is simple: Bonds rarely trade in exchanges, they are usually traded by professionals “over the counter” and PDVSA’s bonds are no exception, so the explanation is extremely suspect. The reasons for this are many, you can read most of them here, but basically, bond issues are small, many bonds are fairly illiquid, they are affected by slow moving news like changes in credit quality and interest rates, so they move slower than stocks. But in the end, brokers have no vested interest in making their markets more transparent. It is a good business.

And the Honk Kong Stock Exchange is no exception, while some bonds are issued and registered in it, they trade rarely. For example, you can see here , that of the bonds registered in that exchange only, one, uno, traded in all of January 2012 , a Government of Hong Kong bond maturing in 2014 . And December 2011 was not much better. So, Mr. Ramirez, there is no true opportunity in doing what you said. You hear!

The question then boils down to whether this was simple ignorance or just another attempt to hide the true intentions of PDVSA and the Chavez Government to do whatever they want or feel with our country and its resources.

Once again, the idea of selling these pieces of the joint ventures is not a bad one, PDVSA needs money, but somehow it would seem as if Venezuelans should have a priority, no? Imagine, for example, getting US$ dividends on your Petropiar shares under the current exchange controls.

That’s how you distribute wealth…away from the Government.

But clearly, this plan to sell Petropiar shares was never meant to be made public. Only the revolution was privy to it.

What else is new?

Receiver of Illarramendi Funds Sues A Former PDVSA Executive For Receving US$ 35.7 Million In Bribes

February 6, 2012
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I wrote a few posts last year about the Ponzi scheme set up by Francisco Illarramendi and his MK funds, which involved money invested from PDVSA’s pension plans (One, Two, Three). Our friend Setty has also devoted a few posts to it, here is one, there are many others. The jist of this case, was that Illarramendi, a former PDVSA adviser and  consultant, set up some investment funds that  did not work out well and then were involved in a series of complex transactions to hide the losses, which included using PDVSA funds as investments, but also using PDVSA to make transactions. PDVSA pension funds/Savings Plans lost US$ 475 million or so, if my memory serves me right, in the process, but somehow nobody in Venezuela was responsible, as both The Board of PDVSA and the Venezuelan National Assembly found that there was no responsibility for the loss within the company, exonerating every one.

Only in Venezuela and the revolution can there be so much irresponsibility, US$ 475 million missing and it was nobody’s fault.

But today, the receiver for the MK Funds, the funds that were involved in the Ponzi scheme, the man who is in charge of trying to recover the investors money, brought suit in US Court in Connecticut against “Juan Montes, corporate manager of finance, investments and property insurance at PDVSA and its pension funds” for receiving bribes and other fraudulent transfers in the amount of…drum roll…US$ 35,744,561. Yeap, you read it right thirty five million dollars…in bribes…in only five transactions.

Only in Venezuela…

Just to make it clear and put it in black and white: The PDVSA funds lost almost half a billion dollars and just one PDVSA official, functionary, whatever, received bribes in the process for US$ 35.7 million dollars. Pocket change, no? No wonder investigators found nobody responsible.

Such are the ways of the Chavez revolution.

I will not go into all the details of the accusation, you can read the document above, it reads like a detective  story, but essentially, Illarramendi is accused of using fake emails and ID’s to have Montes help him in investing the money and setting up the transactions, so that the funds could make money and hide or try to hide the huge losses in his investment funds. Montes took the fifth amendment on all the charges. The case may go to a jury trial.

Other people are mentioned, but not accused, of helping Illarramendi funnel the bribes to Montes through their banks/companies/structures. It does not sound like the case or the story ends here. Stay tuned.

At this point, let me clarify something. In the above document, the receiver, not an expert on Venezuelan financial affairs, mentions the “permutas” made by IIlarramendi’s funds with PDVSA to make money to cover its losses. But these were not “permutas” in the traditional sense, from what I have been able to gather. In the now forbidden “permuta” market, you would swap a bolivar denominated  security for a dollar denominated security. But in the defunct “permuta” market, the difference between the “buy” and the “sell” prices was typically small Bs. 0.05 or Bs. 0.1 at most.

But what the receiver seems to be saying is that PDVSA sold dollar securities for Bolivars to Illarramendi’s funds at the official rate of exchange and Illarramendi’s funds resold those dollars at the parallel rate of exchange, essentially arbitraging the Government via PDVSA. The difference was as much as Bs. 4, 5 or even Bs. 6 per dollar depending on when these transactions took place. Just recall that when the Government banned the permuta market, the “official rate” was at Bs. 2.6 per dollar , while the parallel rate was near Bs. 8 per dollar.

And this is where these bribes apparently came from, from the huge difference between the two. Buy a million dollars with Bs. 2.6 million, sell the dollars for say, Bs. 8 per dollar, the difference (8-2.6)=Bs. 5.4 million was pure profit. 207% profit to be more precise.

And we are to believe nobody else knew about this at PDVSA? Only Montes knew? He could have access to “official dollars” with nobody knowing?

Yeah, sure…

If The Revolution Can’t Do Something, It Just “Substitutes” Words To Make It Happen

January 22, 2012

The ability to lie and twist is legendary for the Chavista revolution. From illiteracy to oil production, facts are changed, twisted and  massaged in order to fit what Chavez and the Government want to say they achieved, even if complete lies have to be said.

The latest is the new euphemism the Government has found for what constitutes building a new home. Given that the country’s problem is the shortage of housing, estimated at over 2.5 million housing units, a new home should be a newly built unit, until Chavez decided he wanted to build 150,000 housing units in 2011.

It was an impossible task from a Government that has never built more than 80,000 housing units in one year and given the fact that his “Mision Vivienda” was announced in April. But by the end of the year Chavez was talking about completing 94% of the goal and the year ended with an official number of 146,714 units built by the Government.

The number has been repeated so many times, that it has become the truth, even if nobody believes it. But this week, Minister of Oil and Energy Rafael Ramirez explained the “miracle”, Chavismo simply changed the definition. How? It now includes among new housing units built all rancho (shacks)”substitutions”.And it says that a whopping 45% of all the “new” units, were actually “substitutions”.

From what I have been able to understand, a “substitution” is the definition for a rancho (the type of elementary housing you see in the hills of Caracas) that has been upgraded in the materials that are used in its construction. Which means we have no idea what it really means.

Which also implies that we have no clue what it really meant when the Government claims to have built only 80, 692 new housing units, its best number in thirteen years, but still above other estimates.

So, maybe next time you drive by a barrio, look up and if you see a freshly painted rancho, you are seeing one such “substitution”. Not much change beyond that.

Another way of hiding the revolutions inability to do anything, just change the definition and the goal has been accomplished and Chavez is certainly pleased.

As it should be.

Another Lie, Another Cynical Day For PDVSA’s President Rafael Ramirez

January 15, 2012

Today the direct, straight lie, like Chavez feeling offended by having MCM calling him a “thief”, which he is, comes from the Minister of Energy and Oil, Rafael Ramirez:

With a straight face, only a Bible missing from the scene, Ramirez tells us:

In the new projects of PDVSA with foreign companies, in none of them we will never establish that we will renounce our sovereignty. International arbitration does not exist in any of these new projects”

Funny, that he only mentions “companies”, because when it comes to countries, Chavez and Ramirez seem to have no problem in selling the heart, the soul and that same sovereignty of the country, as shown by the Devil himself a while back.

Indeed, in the contract between Bandes, the Chinese Oil Company, PDVSA (yes, the company Ramirez happens to be President of) and the China Development Bank whereby China lends Venezuela a gizillion dollars, guaranteed by barrels of oil sent by PDVSA. (Ramirez does not sign the contract, Asdrubal Chavez does it)

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In page 6, it clearly states in point 10:

All disputes, controversies or claims arising out of or in relation to this Agreement,including the validity, invalidity, breach or termination thereof, shall be settled exclusively by arbitration in accordance with the UNCITRAL Arbitration Rules (“Rules”) in effect atthe time of the arbitration, except as such Rules may be modified herein or by mutualagreement of the parties:
the arbitration shall be administered by the Singapore International ArbitrationCentre (“SIAC”) in accordance with its practice rules and regulations;
the place of arbitration shall be Singapore;
the language of the arbitration shall be English;
the number of arbitrators shall be three (3) to be appointed as follows;
the claimant shall appoint one (1) arbitrator in the request for arbitration.If there is more than one (1) claimant, all claimants shall jointly appointone (1) arbitrator in their request for arbitration. If they cannot agree ontheir choice of arbitrator, any claimant may request the SIAC in writingto appoint the arbitrator for them and the SIAC shall appoint thearbitrator for them as soon as practicable following receipt of suchrequest;(B)
the respondent shall appoint one (1) arbitrator within thirty (30) days following the service of the request for arbitration upon the respondent.If there is more than one respondent, all respondents shall jointly appoint one (1) arbitrator within thirty (30) days following the service of the request for arbitration upon the respondents. If at the end of the 30-day period the second arbitrator has not been appointed, the Chairman or Deputy Chairman of the SIAC shall appoint the second arbitrator as soon as practicable.
the two (2) arbitrators thus appointed shall choose the third arbitrator who will act
as the presiding arbitrator of the tribunal. If within thirty (30) days of theappointment of the second arbitrator, the two (2) appointed arbitrators fail toappoint the presiding arbitrator, the Chairman or Deputy Chairman of the SIACshall appoint the presiding arbitrator.10.1.6
the arbitral award shall be in writing and shall be final and binding on the Parties.The award may include an award of costs, including reasonable attorney’s feesand disbursements. Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over party against which the award is entered or its assets;
during arbitration, all the Parties shall continue to fulfill their respectiveobligations under this Agreement and the other Transaction Documents; and
the Parties agree to waive, for purposes of arbitration pursuant to this Clause 10(Dispute Resolution), any right of application to determine a preliminary point of law or appeal to any court of law on a point of law which may be available to it under any applicable law.


So much for “sovereignty”, so much for “never again”, it is the usual gray line, these guys give away sovereignty, the Republic and whatever is needed for their political means,  whenever it is needed. They are cynics, they are liars and they do it all with a straight face.
Or, is Singapore in Venezuela? Not that I know of.
That is how cynical and liars these guys are. Just like their boss.