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  HOME | Opinion (Click here for more)

VenEconomy: The Tip of the Iceberg in Venezuela

From the Editors of VenEconomy

After President Nicolás Maduro announced he had declared a relentless war against corruption, the Government (Oh, what a big surprise!) realized there were at least two important sources of corruption, even though it keeps turning its blind eye to cases of greater impact.

The first one is about an embezzlement case against the Chinese-Venezuelan Fund for some $84 million, where would be allegedly involved officials of the fund itself and Bandes, an economic and social development bank, who would be members of opposition party Primero Justicia, according to a “report” by Maduro (he has no evidence and has not given names, only has made accusations with tons of malice).

Some $66 million are added to this embezzlement case, which literally vanished amid alleged fraudulent negotiations through overpricing in bond purchases in the international market.

Even Maduro wanted to get the credit for denouncing this fraud, the truth is that who uncovered it was the U.S.’ FBI by arresting Bandes’ Executive Finance Manager and Funds Administration as well as two stockbrokers in New York. This means that Maduro had no choice but to accept it after the arrests by the FBI.

Even more shocking is the uncovering of a deep and continued corruption – denounced several years ago – at Ferrominera del Orinoco, a state-run mining company, where, among other corruption practices, sponge iron was being sold at $25 per ton to a middleman who resold it afterwards obtaining scant profits. According to some calculations, fraud at Ferrominera would exceed $1.16 billion. Several people have been arrested, including the CEO of the company, Radwan Sabbagh; Yamal Mustafá, an entrepreneur linked to the governor of Bolívar state, who appears involved in almost every corruption case related to basic industries along with Juan Carlos Álvarez Dionisi, a colonel from the National Guard (GN). The latter had been deputized back in 2011 by Military Intelligence Director Hugo Carvajal to investigate irregularities at the miner, but he ended up extorting the corrupt people there. For instance, he allegedly asked Sabbagh $20 million to let him go scot-free.

However, all these sources of corruption that has unexpectedly caught the eye of Maduro would only be the tip of the iceberg from the entire apparatus of the State.

This is because the diversity of corruption cases in different public entities that have been denounced countless of times through various means, but remain in the doldrums of institutions that have requested to start an investigation on them such as the cases of PDVAL (the social grocery store network), the pension funds from state-run oil company PDVSA and SITME (an alternative method to get dollars for imports through bonds) allocations to “briefcase” companies, among others. There are also cases of sudden enrichment with no trustworthy information on the origin of the new fortunes such as the case of Lieutenant Alejandro Andrade, who has held several positions during Hugo Chávez’s government, the late president, who they say he was his friend and confidant. The local press is bursting with stories on Andrade’s lavish lifestyle, which includes ownerships of thoroughbred horses, farms in the U.S., and also he allegedly is one of the new co-owners of Globovisión, an opposition-biased TV station.

All this make us think that there is an entire “revolutionary” world with no transparency yet to be discovered.

VenEconomy has been a leading provider of consultancy on financial, political and economic data in Venezuela since 1982.

Click here to read this in Spanish


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