The contractor Miguel Ángel Castillo Lara, younger than forty years old, owner of the company Castillo Max, Oil & Max, achieved the top of the Venezuelan oil company in 2016, but his triumph was ephemeral. A year later, the Bolivarian Intelligence Service (Sebin) detained him during 90 days to investigate supposed payment of bribery, with which he gained contracts with Oils of Venezuela (Pdvsa).
Before this event, Castillo Lara was distinguished with an international award such as “future leader”, He offered lectures about innovation to businessmen and his company couldn’t be better. Its financial operations, which started locally in 2013, changed radically in January 2016 when six mooring buoys were sold to the refinery’s project the Bolivar’s Supreme Dream in Nicaragua.
“The system was built in 20 weeks by a multidisciplinary team of Venezuelans: engineers, electricians, mechanics and welders. Working in this project became an opportunity which allowed the organization the entry to the international business. Exporting the buoys demonstrated the quality that works done in Venezuela have”, Castillo Lara’s company said in its website.
The complex had been measured as the gem of the Venezuelan cooperation initiatives in central America and the Caribbean if the official promises were considered real: the deceased president Hugo Chávez in 2007 when attending the starting of the construction he mentioned an estimated investment of 4,000 million dollars for a work that would include an oil plant storage, a refinery to cover the domestic demand and exports to neighbor countries and a petrochemical complex.
Everything should be developed in a term of four or five years, but it wasn’t. The only idea that was finally turned up was the fuel plant, with its sea facilities. Originally, a budget of 283 million dollars for the storage plant was introduced. But it was finished in 2017 with additional 227.7 million dollars.
The business was enough so contractors from Nicaragua, Venezuela, France and Peru were interested. Among those who participated there were companies with clean records, but also others which were part of Pdvsa’s favorite contractors. They were pointed out of corruption during contracts with the Venezuelan state corporation, according to accusations which were known after their participation in Nicaragua.
One contractor was Castillo Lara’s company, which had never done an exportation like the one contracted. It was investigated due to a supposed fraud during installation in Venezuela of similar equipments to the ones sold in Nicaragua. The other one is the gigantic Chinese constructor CAMC Engineering Ltd. which two years after finished the Nicaraguan complex was accused in Andorra principality for also paying millionaire bribery for contracts with Pdvsa. In 2016, in the middle of the development of the work in Nicaragua, this same company was involved in a scandal of supposed traffic of influence, in which an ex-president Evo Morales’s girlfriend would have participated.
The role of Alba de Nicaragua, S.A. (Albanisa), the work developer, was key in contracts for the oil complex. The company, managed by Chávez and Daniel Ortega governments, became a corruption symbol due to their interests in the oil, wood, financial and power generation sectors. All protected by the Venezuelan cooperation, locally administrated by the presidential family without institutional controls or transparency.
The case is an example of how the binational relationship was handled with millionaire affairs, friend companies and political yields for the presidents. In 2007, when Ortega came to power in Nicaragua, he signed with Chávez the international agreement which added the country to the Alianza Bolivariana para los Pueblos de América (ALBA). It became in the next nine years a generous oil credit of USD $3,721 million. This loan registered in the statistics of the Nicaraguan Central Bank, opened a phase of government characterized by the privatization of the cooperation from State to State managed in practice as a parallel budget to the state one. And it ended up beneficiating the close circle of the Nicaraguan government, according to its critics.
In January 2019, Albanisa was sanctioned by the United States, after the punishment previously imposed to Pdvsa, main shareholder of the company. Francisco López Centeno, vice-president of the company registered in Nicaragua and functioning as Ortega’s treasurer since decades ago, was also sanctioned a year before. It is about a character criticized in the local press due to his enrichment, deviation of funds to help a relatives’ company and unusual hobbies like having a tiger as a pet, that his workers used to walk around his residence in Managua.
From Venezuela’s side, the businesses gears were handled by Pdvsa’s top, owner of the 51 percent of Alabanisa’s shares. At the beginning of the agreement, all the control was handled by a Chávez’s cousin, Asdrúbal, who even lead Alabanisa when the project began at the refinery. Today, he is the president of the Venezuelan oil state company. Later, with Bernardo Álvarez, already dead, who was the great Venezuelan operator in the Caribbean and Central America from the branch PDV Caribe with Rafael Ramírez, who was Minister of Energy and also Pdvsa’s president, was pointed out for assumed events of corruption.
Everybody is part of an inventory of persons of interest identified at the project Chavismo INC., which tracked information in 69 countries. A database was created, which shows an unprecedent case about relationships of people and entities related with Chávez and his successor, Nicolás Maduro’s governments.
The initiative was the result of an alliance between Transparencia Venezuela, local chapter of Transparencia Internacional, the Latin American platform of Journalism CONNECTAS and the Rebel Alliance Investigates (ARI). Journalists and researchers from Venezuela, Argentina, Panama, Spain, The United States, Dominican Republic, Salvador, Nicaragua, Uruguay and Bolivia. Information gathered this way renders account of the magnitude of the Bolivarian capitalism’s connections in the world.
In the case of the Venezuelan help to Nicaragua, the management was signed by reports of abuses with the funds. Pdvsa’s former directive, Gustavo Coronel, who worked for 27 years in that industry, highlights that the Venezuelan regime distributed USD $90.000 million among “friends”, but he assures that “in no country, except for Cuba, the level of waste and corruption was accomplished as it has characterized the relationship with Nicaragua”.
That is why, Coronel considers that the oil agreement never was addressed to fight against poverty, but it pursued that Ortega to stay in power and Chávez to become the regional anti United States leader, known as socialism of XXI century and of which Nicaragua was one of its greatest main characters. “It was a real kleptocratic club”, Coronel says.
From dream to business
Among the biggest businesses and non-transparent was the “Bolívar’s Supreme Dream”. 70 kilometers far from Managua, at the Nicaraguan hot West, in the town of Puerto Sandino, goats can be seen grazing near oil pipelines in June this year. Pandemic has ended up emptying the workers place, who previously went to the hydrocarbon storage plant Miramar. This was the place where the refinery project would be set up, which Chávez and Ortega started in July 2007.
The official data of Nicaragua between 2008 and 2017 show that at the end USD $510,5 millon were invested for the storage tanks, very far from the promised project by the rulers to Nicaraguans.
The plant has a capacity to storage 1,080,000 oil barrels. It supposed an investment of USD $472 dollars per barrel according to calculations done by Chavismo INC. It exceeded, for example, the relationship at the neighbor Salvador where the plant Shafick Handal with a third of capacity was finished with approximately 313 dollars per barrel. Projects done in Dominican Republic and Saint Vincent and the Grenadines leaded the list of investments near the 1,000 dollars per barrel, superior to the Central Americans one.
Albanisa gives little information about contracts. Nonetheless, it is known that Pdvsa tried to boost the contracting of Venezuelan companies for the project in Nicaragua. Susana Manzano had that key function. From the corporative management of National Capital of Formation and from the National Industrial Oil Conglomerate she backed up initiatives like the unknown Castillo Max, Oil & Gas in 2014 when, after a year of founded, looked to enter the business world of the sector.
Accused of paying bribery in his country, Castillo Lara defends himself three years later from investigations against him, accusing of persecution the former attorney Luisa Ortega, today exiled after confronting Nicolás Maduro’s government. The contractor said to a magazine last June 17th that there is not a conclusive act – reference to trial, folder of the case or dismissal-, but he affirmed he has no mobility restriction.
In a work about the judicial case, the journalist Mairbot Petit stated that during his trajectory Castillo Lara cultivated an “image almost perfect of model of undertaking and innovation” but which he supposedly paid public workers for the contracts, even with apartments in Margarita Island, in Venezuela and in Panama, that he denies now. One month after his detention, according to the reporter, there was the possibility that he denounced his partners to get a better treat from the district attorney’s office. Today the contractor assures that for “ethics” he would not talk about the other persons accused.
The investigation was officially opened for embezzlement, association between public worker and contractors and association to commit a crime. In the official documentation are involved West Branch Pdvsa managers with local suppliers.
In the official investigation, it is stated that supposedly two buoys in bad conditions had not been changed at the Terminal José Antonio Anzoátegui, located in Venezuela, more than 500 kilometers far from Caracas, with capacity for daily loading 350 thousand barrels of crude. It was agreed that way in a contract made by Pdvsa for USD $51 million. The investigation indicates that the buoys, brand Bluewater, were over invoiced and besides that, USD $ 25 million were charged to install them, what apparently did not happen.
“I was attributed, but they did not pass to the accusation stage. According to Venezuelan laws if the District Attorney’s Office does not present an accusation 45 days after being under arrest, all the measures are lost. I was 90 days illegally under arrest”, Castillo Lara says.
According to Castillo Lara, he made the job in Nicaragua because he was subcontracted by the Venezuelan consultant Geohidra. Registered since 1979, its file is in the National Contractors Registry of Caracas. Until 2019, the consultant’s shareholders were Yvone Josefina Salas Rodríguez, Luciano Lupini Bianchi and Daniel Rodríguez Rodríguez. Among its greatest customers during four decades of operation, is the Venezuelan oil company and Odebrecht, the Brazilian gigantic constructor investigated since 2016 due to the biggest corruption scheme in the region.
The consultant neither accepted to explain its contract. “Due to confidentiality reasons, we can only manifest ourselves about contracts submitted with our client’s authorization. Therefore, we recommend you contact companies we signed contracts with”, expressed Geohidra in a mail last July 16th.
In 2015, before the exportation to Nicaragua was settled, the oil syndicalist Eudis Girot denounced Castillo Max Oil & Gas for supposed unfulfillments of the contract to purchase and install buoys in the East of Venezuela.
Investigation in Andorra
The main responsible for the construction of the Nicaraguan storage plant was the Chinese company CAMC Engineering Ltd. It has records in a case of payment of bribery to Venezuelan government officials for other investments in the South American country.
A Reuters investigation explained that a judge from Andorra principality looked into in May 2019 the payment of USD $100 million dollars in bribery from the Chinese consultant to grant the contract of a rice project in Venezuela, in Delta Amacuro state. Diego Salazar, cousin of Rafael Ramírez, president of Pdvsa when the investigated transaction occurred, was pointed out as the CAMC’s bribery recipient.
Asked about the point, Salazar’s lawyers did not answer about the point specifically but they clarified the following: “There is no judicial procedure which indicates that exits any bank account related to mister Salazar Carreño, that has received funds from Pdvsa. Nevertheless the above mentioned, there are statements made in social networks and communication media based on conjectures and speculations, but not in documents, testimonies or other means of evidence.
In response to the journalistic research of the agency, the Chinese company stated then in an announcement that “they operate in Venezuela respecting the idea of integrity”. In that country the multinational Chinese earned more than USD $3,000 million since 2003, according to the investigation made by Armando.info.
For the construction of the complex in Nicaragua, Chinese people signed in April 2012 an agreement after a tender for the amount of USD $233 million. After months, Sandinistas worried about creating a special legislation to carry the work out.
According to the special law for development of the proyect in Nicaragua, normally the work would have three phases – the storage tanks, an inter oceanic oil pipeline and a petrochemical industrial complex – but in November 2017, Albanisa handed out a document of final acceptance of the work only for the first stage.
Ortegas’ treasurer did not answer the three information requests we sent by email to know about the Venezuelan cooperation. Neither did the president of the National Port Company, Virgilio Silvia, who traveled in January 2016 to Puerto la Cruz, in Venezuela, to certify the quality of the buoys sold by Castillo Max, Oil & Gas.
Venezuelan auditors, who supervised Nicaragua, are also in the shades. An example is Carolina Torras, treasury inspector of the operations that came up from the agreements financed by Alba Caribe, who only showed up in a public event where Ortega granted 200 thousand stoves to people from her party on October 25th, 2008.
Torras in her social networks’ timelines defines herself as fan of Barcelona soccer team, traveler and an employee of a company named Aquahome7, specialized in offering options to improve Venezuela’s water quality. She did not answer to a request to contact her. The goal was to investigate about what she saw in Nicaragua, what was not known publicly.
The former guerrilla major, Dora María Téllez, a former Ortega’s mate fighting Somoza’s dictatorship, and today she is one of his critics, she has no doubt about the complicity between Venezuelan and Nicaraguan leaders.
“Ortega has been unconditional to Venezuela because politically he has a debt: He owns his capital and his stability in power by having those economical connections”, she says.
The Sandinist oligarchy
Hotel Seminole’s purchase in 2009, where Albanisa’s former manager Rafael Paniagua lived for a year until he revealed channel 8’s purchase using USD $10 million from the cooperation – which motivated his sudden removal- it was a sample of the multiple businesses connected under the protection of power. In less than a decade, since the arising of Ortega to power, an important economic group was consolidated.
“They have interests in energy generation, in trade, in services, advertising, in communication media where (the Ortega Murillo group) has created a monopoly”, Téllez states.
Corruption scandals made the presidential family to be under the magnifying glass. During these years of government, Juan Carlos Ortega managed channel 8 and he controlled an advertising company beneficiary of the State.
Three more Ortega’s daughters and sons -Camila, Luciana and Maurice – began to manage channel 13. It is unknown where funds came from to found it. The wife of oldest Ortega’s son Rafael at that time, Yadira Leets Marín, administrated a net of gas stations which resulted a great business: Nicaraguan Oil Distributor.
At an institutional level, Albanisa accomplished to generate 30 percent of the energy of the whole country in a scheme of business that mix political, financial and Ortega relatives’ interests and what is considered by The United States as illegal. Three leader’s son – Rafael and Laureano and also Juan Carlos – have been sanctioned, as well as the Corporative Bank where the Venezuelan funds were.
Manuel Coronel Kautz, a diplomat remembered by calling ‘devil’ an ambassador when he served as a vice chancellor, is conducting the Nicaraguan Oil Company, a job for which he was named after Ortega’s treasury, was also punished by Americans. He defends the aid’s administration.
“Venezuelan cooperation is a blessed to Nicaragua. It is an invent about the (raising of a new) oligarchy, completely absurd, (the aid) has been used for the country’s sake”, Coronel Kautz said.
However, the voracity to do business was visible since the beginning. The expert in hydrocarbon César Arévalo remembers when he was employee of ESSO and that the company was pressured – using the judicial power and the institutions – from the investigation of two spills on and a penal accusation due to a supposed tax evasion. The goal was to control the oil imports at the end of the day.
“At that moment (beginning of government) they wanted to corner ESSO to accomplish a great negotiation. In September that year they agreed that Albanisa was going to be ESSO’s oil and derivatives supplier”, Arévalo explains.
They added later in 2009 the gas stations business administrated by Ortega’s daughter in law and acquired with Venezuelan funds, so at the end structuring a duopoly with Puma Energy since 2012. It has allowed them to earn USD $45 million in over prices from the sale of fuel until 2019, Arévalo states. Chavismo INC. sent a consult to Puma about it, but they did not answer.
Consequences of the administration of the Venezuelan funds worries the economist Adelmo Sandino who indicates that, even in its report on February 2020 the International Monetary Fund mission catalogs Albanisa’s debt absorption as low risk, “its balance at the end of 2021 is estimated in USD $2,5 billion dollars, equivalent to the 20 percent of the Gross Internal Product. Its recognition would generate a high destabilizing impact in public finances which will take many years”.
“If it is true that part of that credit was used to finance a couple of programs of universal social kind (such as transport allowances, energy, salary bonuses, among others), they had low economical durable impact on the economy as a whole. Promises of big projects of infrastructure never became real and soon it was evident that big part of the cooperation was used to get profit in a dark environment and with no explanations”, Sandino explains.
At the end of April 2019, after the operations closure of Banco Corporativo due to the north American sanctions, another big question appeared about fund trusts that the entity administrated for Caruna, R.L, sandinista’s cooperative through which Venezuelan funds were handled. It was about USD $2,407 million, according to Fundación Económica para el Desarrollo Social (FUNIDES), thinking center of the private sector, that published an explicative note in March 2018, quoting the auditing firm Grant Thorton.
Trusts were for USD $1,540 million for the institutional credit recovery, USD $432 millions in private cases, USD $3 millions correspond to a housing program and then two more trusts “under the concept of administration and funds recovery”: one for USD $176 millions and the other for USD $259 million dollars.
“Due to the resurgence of sanctions to Pdvsa by the US government, Albanisa was under surveillance, so threatening the managerial connections of the leader family and its servants. They ran looking for front men, transpose properties and create new companies to hide them. They were so desperate that they transformed the Public Register in an illegal register”, the economist and former deputy Enrique Saénz wrote in an article from Confidencial to go deeper about Bancorp case.
Relationships with the private sector
Another Ortega’s political goal was to improve relationships with the private sector. Venezuelan aid allowed entrepreneurs to do business with Venezuela sending food for USD $2,409 million between 2009 and 2017. Main products were meat, sugar, live cattle, beans, milk, among others. They were bought by Albanisa.
Enrique Zamaro Llanes, ex-president of the Association of Producers and Exporters of Nicaragua (APEN) and one of the greatest members of the private sector, states that they always asked for a Free Trade Agreement with Venezuela instead of a relationship based on the South American country’s political will.
“Due to Venezuela political situation itself and the accelerated damage of its economy, also Chávez death, it was weakening the economical relationships with its political allies and increasing the battle Venezuela- USA up to the sanctions to Venezuelan oil companies in The United States”, Zamora Llanes remembers.
Delivering food by other company of the powerful group – Alba Alimentos de Nicaragua, S.A. (Albalinisa)- was so much that the company became an exporter leader in the country in 2015, eight years later of Chávez’s agreement with Ortega.
Documents signed with Venezuela, checked for this report, indicate that those foods were accepted as a mechanism to compensate the oil’s invoice. There were complaints of sale with over prices as revealed Petrofraude,’s investigation, headed by Connectas in alliance with regional communications media, in which was documented the purchase of chavistas backups in the area. Besides inconsistencies in export and import data we have to add products triangulation, they sent it as Nicaraguans to Venezuela when they found them in other places of the region as showed by Confidencial at its time.
Albalinisa never declared about what happened in that sense, on the contrary. authorities from both countries kept in public a unity with no cracks. In April 11th, 2018, Adán Chávez, a brother from the deceased Hugo Chávez, was declared beloved son of the cities of Masaya and Matagalpa under sandinista’s control. He introduced himself as Bolívar and Sandino’s son.
In 2018, when thousands of citizens asked for Ortega’s resignment, Maduro supported his political ally. Venezuelan internal economic crisis ended up shutting the key to dollars from oil, with which Ortega fomented populism and worship to his personality.
Claudia Marieta Medina, a 50 year old lawyer, resident in Somoto, 218 kilometers from North Managua, is perhaps a good way to understand what happened. She was cooperative Caruna R. L’s partner, where she used to ask credits at low interests from the cooperation funds. Then crisis came and she could not withdraw the accumulated funds in her account.
Thousands of clients around the country asked, as her, in 2019 their money due to the cooperative branches’ closure in Nicaraguan North, West and Caribbean. The Venezuelan aid, which allowed to enrich the elites from both countries, showed then its worst face: affectation to the most poor people.
(with Lisseth Boon’s collaboration from Caracas).