Venezuela A defalcation with global branches

A defalcation with global branches

Prosecutors and parliaments of 21 countries have initiated or concluded 86 investigations about corruption cases linked to Hugo Chávez and Nicola´s Maduro governments. Chavismo INC. examinated each one of those cases and found a plot of bribery, privileged contracts and money laundering that allowed millionaire flows of money from Venezuela to spread around the world

At the first sign we have to do something” sentenced Hugo Chávez, president of Venezuela, when referring to suspicion that a Venezuelan United Socialist Party (PSUV) delegate or from his government was acting corruptly. It was Sunday, December 06th, 2009, and during the first Extraordinary Congress of PSUV, celebrated in Maracay (central region of the country) the leader was frowning and raising his voice to give emphasis to his orders: “This party has to tighten the moral belts. Party and Government have to give an example of transparency, honesty above all and beyond”.

Minutes before, Chávez was dedicated to explain that if a PSUV delegate with a small Volkswagen and an apartment in a low middle class neighborhood came up overnight with several trucks, airplanes, moved to a mansion in an upper class neighborhood, wear expensive clothes and go to private clubs, the party and government should turn the alarms on and act consequently. “Anyone who wants to make money cannot even be at the rear end (government’s rear end), he added”. His words remained recorded by the State channel, Venezolana de Televisión, which transmitted the show Aló Presidente 345.


Hugo Chávez’s speech against corruption did not stop the deviation of resources.

From the front row, the main government officials then were listening to him. Elías Jaua, Minister of Agriculture and Lands; Diosdado Cabello, Minister of Public Works and Housing; Aristóbulo Istúriz, Deputy to the National Assembly and Cilia Flores, who led Parliament. She was already Nicolás Maduro’s partner at that time, and he is the head of power in Venezuela now. Chávez was getting close to half of his third presidential period and although there were still no visible signs of cancer, the one that consumed him and put an end to his life three years later, there were clear signs of scandalous cases of corruption, which gnawed the Venezuelan institutions, and pushed the country to an abyss never seen before.

Eleven years after that speech among the most important leaders of PSUV, former officials from revolutionary government, friend contractors, front men and foreign dignitaries who negotiated with Venezuelan funds, there is a large amount of people who accumulate luxury real estate valued in hundreds of million dollars, gigantic farms, private jets, fleet of exclusive vehicles, high range watches and bulging accounts in fiscal paradises. Chavismo INC.  investigation kept track of persons of interest, natural and legal, given the direct and indirect relations that they had with Chávez and Maduro’s governments. In the findings there are 751 people of interest, with around 3.919 relations with hundreds of companies, institutions and agents in 61 countries.

The information was obtained and processed by Chavismo INC.  in order to track judicial, parliamentary and executive investigations, besides public company and property registers related to Chavismo in 69 countries. With this information it was possible to build a data base showing a patrimonial approximation and the relationship with these characters. The transnational investigation initiative from Transparencia Venezuela, local sectional of Transparencia Internacional, the Latin American Platform of journalism CONNECTAS and Rebel Alliance investigates (ARI) gathered information that tells about the magnitude of Chavismo operations inside and outside of its country: the gears of Bolivarian capitalism in the world.

The systematization of data revealed that 182 Venezuelans have been sanctioned by 57 countries. Prosecutors and parliaments of 21 nations in America and Europe have opened 86 investigations related to corruption on Chávez and Maduro managements. Only on 52 of those causes, the compromised Venezuelan public patrimony ascends to USD $30.087 million, an absurdly high amount for any country, except for Venezuela, which received over a billion dollars in oil sales in only a decade. Despite that, the country accumulates six years of an economic catastrophe at levels never seen before in a Latin American nation, where the hyperinflation overpassed the 1.000.000% in 2018. An economic and political crisis that led to an humanitarian one: lack of food, medicine, currently gas and other essential goods also led to an unprecedent migration of 5 million Venezuelans, it is the country with more deaths for malnutrition: 3,7 million of citizen had malnutrition in 2018, according to the Organization for Food and agriculture (FAO).


One of the protest marches against Maduro in Venezuela, where 3,7 million people have malnutrition according to FAO | Photo: Alexcocopro.

The investigation Chavismo INC. evidenced the corruption patterns, the way how Venezuelan’s money was captured, moved and hidden: payment of bribery to key government officials in State Organisms in exchange of multimillionaire contracts, such as the one of a national treasurer that received USD $1.000 million to benefit companies with currency exchange operations; the assignment of great projects to friend companies from allied governments, as registered in Haiti and Argentina; and creation of complex financial networks to launder money resulting from the illegal operations like the case of a former vice-minister requested by USA justice.

Most of cases have been made public before the USA justice, a country that has had terrible diplomatic relations with Chavismo, but that ironically ended up being the favorite destination of government officials to keep the money obtained illegally. In view of the inventory made by Chavismo INC., North American prosecutors have opened 38 investigations in which there would have incurred in a patrimonial damage to Venezuela of approximately USD $16.049 million, mainly coming from Oils of Venezuela (PDVSA), the most important state company in the country. 44 people have plead guilty for those cases.


Drawing the scheme

Payment of bribery to obtain public contracts was common in almost every dependance of the Venezuelan State during Chávez and Maduro’s management, but it was specially prominent in services for oil area, financial operations, home construction and importation of foods and medicines, while a severe scarcity overflowed the malnutrition cases in the country and deaths due to lack of medicine.

In the USA, Spain, Ecuador, Brazil, Mexico and Colombia, 25 cases were officially tracked, in which it was proven or investigated the payment of bonuses to Venezuelan government officials in exchange of granting contracts with Oils of Venezuela (PDVSA) and its branches, the National Treasury Office, Caracas Electricity Company and the Unique Corporation of Productive and Alimentary Services. There are 137 persons (natural and legal) of interest pointed and identified in these accusations.

One of the most representative cases in this corruption scheme is a fraud committed at the National Treasury Office in Venezuela and investigated by District Prosecutors of South Florida, USA. As part of this case, Alejandro José Andrade Cedeño, former treasurer of Venezuela between 2007 and 2011 admitted to have received USD $1.000 million in bribery from Raúl Gorrín, owner of Globovisión news channel, in order to benefit his companies in money exchange operations, which turned out to be extremely juicy in the midst of an strict currency control ruling in the country.

¿How did this mechanism work? The National Treasury Office had to get the necessary bolivars so the government could cover their expenses, to do that, they went to Gorrín exchange houses and sold him bonuses in dollars at a preferential exchange rate, much lower than the currency quotation in the real market. Therefore, the businessman’s exchange houses delivered few bolivars and earned huge amounts of dollars. In this case, Andrade Cedeño was condemned to 10 years of jail and the USD $1.000 million were confiscated, besides mansions, vehicles, horses, watches, airplanes and bank accounts. A written questionnaire was sent to Gorrín for this series of works but there was no answer to the closure of this edition.

The analysis of the cases done by Chavismo INC. evidences that the collection of bribes non only worked for the assignment of contracts: it also prepared the ground for façade companies to present invoices of goods acquired with prices way over their value in real market, with nobody to complain about it and to make believe that there were goods that entered the country, but that never actually arrived, according to the gathered investigations.

Payment of bribery to security officers, custom employees, supervisors and managers in charge of importation of all goods in Venezuela allowed, for example, that Colombian businessmen like Alex Saab and Álvaro Pulido could be able to charge the Venezuelan government several times for the arrival of one cargo of materials for construction, according to the Federal District Prosecutor of South Florida. The accusation sustains that between 2011 and 2015 the Colombians paid to Integrated National Service of Customs and Tax Administration, of the National Commission for Foreign Exchange Administration workers and national guards so they take photos from different angles to a single shipment and simulate that there were various shipments.

Thanks to fraudulent importation of construction materials, Saab and Pulido allegedly earned around USD $350 million, according to the United States accusation. But this is only a small part of the businesses that have been done with the Venezuelan government. An Investigation of communication media reveals that the Colombian duet also had contracts for thousands million dollars in oil, mining, health and food areas, specifically on importation of food boxes with the lowest quality for the Local Committees of Supply and Production (CLAP), a flag program for Maduro.

Due to the United States accusation and the Interpol red alert emitted by that country, Saab was detained on June 12th, 2020, just landing in Cape Verde, an island located in the Atlantic Ocean. His extradition to USA was approved. Nicolás Maduro’s administration, who avoided to refer to Saab for years, now defends him and states that he is a Venezuelan citizen and that he is also a government agent, they qualified his detention as illegal and arbitrary.

From the High Spheres

From tracking of legal cases made by Chavismo INC. it is shown another corruption pattern with Venezuelan funds executed by allied governments. When reviewing the performance of different funds created in occasion of the energetic cooperation agreements stablished by Chávez and Central America, South America and Caribbean governments, it is visible that there are assignment of big projects to companies property of the same government officials, their relatives, or people related to them, even when not necessarily they appear as part of the directive boards.

In Haiti, Argentina, Uruguay and El Salvador 14 investigations have been opened, all of them related to the handling of those money flows, as result of Venezuelan hydrocarbon sales that ended up being shadily invested and landed in the pockets of local leaders or the businessmen related to them. After tracking the main characters of these cases, it was possible to identify 117 persons involved, natural and legal.

In august of the present year, for example, the Superior Tribunal of Administrative Accounts and Disputes of Haiti, delivered the third and last auditing report made for alleged acts of corruption in the handle of Petrocaribe agreement funds, through which Venezuela supplied oil with preferential credits. On the documents, the conclusion is that there was favoritism and misuse of funds in projects such as the one assigned to Agritrans, a company that was under the control of Jovenel Moise before he won Haiti’s presidency. Among the irregularities described, it also refers to the creation of a network of officials inside the government, which allowed to obtain contracts for friends of Ex-president Michel Martelly and first minister Laurent Lamothe.

II Extraordinary Summit ALBA-TCO and Petrocaribe, held in Caracas, 2013. Photo: Fernanda Lemarie.

#Petrofraud, a journalistic investigation published in January 2019, also showed that with Venezuelan funds, businesses of Dominican senator Félix Bautista were privileged, also business groups and families connected to power in the island of Hispaniola. The money route pointed to the social work of Leonel Fernández, former president of Dominican Republic and campaign financing for presidential candidates like Alejandro Toledo, former president of Peru, who tried unsuccessfully to return to power in 2011 elections.

Other investigations that evidence this pattern are the ones opened by Argentinian justice. In 2019, a General Trustees of that Nation report was published, which confirmed the irregularities committed on a trust fund created in 2004 by presidents Hugo Chávez and Néstor Kirchner. It was agreed that Venezuela sold fuel oil to Argentina and the payment for those supplies was going to go to the fund from where some companies, providers of supplies and goods for Caracas were paid. But the companies selected for exports made triangulations, triple the price of goods, falsified shipments, charged freights and transportation several times, among others, according to the cases that are still in open. The company owners have been linked to Kirchner and Julio de Vido, former minister of Planning in Argentina and who acted as a kind of supra – ambassador in businesses with Venezuela.

The money fountain that flowed on those cooperation agreements during the oil price boom turned out to be a challenge for the control system on those countries and a temptation for those connected to whom took the decisions. Despite of the evidence shown till now, Venezuelan justice has not informed of any investigation related to handling of resources on those cooperation agreement funds or the alleged favoritism on the assignment of contracts. 

Erasing the trace

People involved on corruption cases with Venezuelan funds, identified in this investigation, tried to erase their money traces, as referred in the analysis of ongoing processes in prosecutor offices and parliaments. Creation of complex financial networks has been evidenced, with the aim to launder money from payment of bribery or juicy earnings left after taking advantage of the exchange differential, overprice charges on imports or falsification of shipments.

In most of cases documented by Chavismo INC.  there is proof of connection between the underlined characters and façade companies in Panama, Belize, Bahamas, Virgin Islands and Malta; With the opening of bank accounts in Switzerland, Andorra, Spain, Portugal, Puerto Rico, Bulgaria and United States; With the purchase of financial institutions with the aim to launder money in Dominican Republic, Guatemala and Liechtenstein; and with the acquisition of luxury properties distributed in cities like Madrid and Miami.

A pragmatic case is the one of Nervis Villalobos, Vice – minister of Energy and Mining of Venezuela between 2003 and 2006. He has connections with 61 other people from the data base made for Chavismo INC. This former government official is wanted by USA justice since 2017, accused of participating in a network to launder money from bribery payments, in order to grant contracts to oil and electricity companies. This process came up to light again on march 26th, 2020, when General Prosecutor of USA, William Barr presented charges for drug traffic and corruption against 14 members of the revolutionary government and offered USD $15 million for Nicolás Maduro’s capture.

Villalobos is being investigated by justice in United States, Portugal, Andorra and Spain, pointed in cases of laundering money from bonuses to grant contracts with PDVSA and Electricity of Caracas, among others. Just the inquiries carried out by the Spanish prosecutor show that the former government official laundered more than 50 million through a network of companies in Edinburgh, Cyprus and Northern Ireland. He also acquired a whole luxury neighborhood in Marbella, with more than 40 villages. Villalobos declared himself innocent of all “barbarities” he was accused of, in an interview offered to the diary El Mundo of Spain. 

On the open causes against Villalobos, as well as on other judicial processes tracked by Chavismo INC., the presence of bankers and financial operators considered as professionals of money laundering repeats. Those were hired to help erase the real origin of the Venezuelan funds subtracted in an irregular way.

Another example is Matthias Krull, a German residing in Panama. He was ex – Manager Director and Vice – president of Swiss bank Julius Baer, and in October 2018 was sentenced to 10 years of jail after pleading guilty of participating in a conspiracy to launder USD $1.200 million from misappropriated PDVSA funds. The case denominated Money Flight is one of the biggest investigated by USA Justice in which there are also 21 other people involved, officials of the state company, briefcase businessmen and professional money launderers. Among the pointed in this investigation, 9 have been officially identified and accumulate 99 interactions on the data base built by Chavismo INC.

To launder money in this case, and according to the official information, sophisticated schemes of fake investment were used, such as promissory notes and bonuses designed for non-compliance or default, especially in south Florida and Cayman Islands. Briefcase companies were created to transfer funds and luxury properties were acquired. In the middle of this plot, we can find, for example, apartment 2205 in Porsche Design Tower, of approximately 3229.17 sq. feet and priced in USD $5,3 million. This confiscated property was under the name of Paladium Real Estate Group LLC, a company whose director is Carolina Croquer de González, a relative of José Vicente Amparán Croquer, identified as one of the money launderers in this network.

Bruce Bagley is another professional who they recurred to, to launder money from Venezuelan corruption. He is an American citizen, university teacher, author of books about money laundering and frequently interviewed in communications media. On June 01st, 2020 he plead guilty of two money laundering charges before a district judge in USA, accepted having used his own bank accounts and from a company he created in Florida to launder more than USD $2 million in earnings from a bribery network. It is barely a fraction of a defalcation enabled by the great corruption in Venezuela.

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