The Chavista continental disaster involving Venezuela's money

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The Chavista continental disaster involving Venezuela's money

The key to the international support that Nicolás Maduro's regime in Venezuela still maintains and that helps him avoid complete isolation has a name: Petrocaribe. The energy and foreign aid plan has injected more than 28 billion dollars into 14 countries, but in practice it has served to buy diplomatic endorsements. Thus, the resources of a Venezuelan people crushed by shortages and coping with an inflation of one million percent last year was used in some cases to strengthen local powerful groups in several countries, and in other cases, it resulted in corruption and hunger.

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Security rings

In 2015, the Venezuelan Foreign Ministry defined the Petrocaribe member countries as part of the "first ring" of the "geopolitical protection" aimed at Venezuela's "defense of sovereignty."

The energy agreement, conceived by the late Hugo Chávez and maintained by his successor Nicolás Maduro, benefited 14 Caribbean and Central American countries with the supply of more than 346.31 million barrels of oil between 2006 and 2016.

The amount was equivalent to more than 28,000 million dollars. These figures do not include Cuba, beneficiary of a bilateral agreement that reserved privileged treatment, although it is formally part of Petrocaribe.

Between Venezuela and Guyana, there is a dispute over the Essequibo Territory.

* Hold the cursor over the name of the country to see more information

01. The Business that Emptied the Venezuelans’ Table

After a decade of Venezuela leading energy agreements with 14 countries delivering millions of barrels of oil, Venezuelans needs are growing. Payments, meant to be in kind, in many cases was translated into a fraudulent overpriced and fake delivery system to benefit regional political alliances and local corruption instead of Venezuelans.

Main findings Read investigation

Venezuela exchanged oil for overpriced food

The governments of Hugo Chávez and Nicolás Maduro gave more than 28 billion dollars in oil loans with deferred payments to 14 countries in Central America and the Caribbean throughout various agreements, among which Petrocaribe was highlighted. The debtors could pay the credits with goods, mainly food, through the so-called compensation system in which no less than 3,700 million dollars were traded and of which the Nicaragua from Daniel Ortega was the biggest beneficiary. The #Petrofraude investigation documented that Venezuela lost millions of dollars for accepting overpriced goods in the exchange, and in many cases of food of very low quality. The oil agreements have been presented internationally as models of fair trade, but were infringed with practices contrary to that spirit, and such practices helped to empty the table of Venezuelans.

1.- More expensive products. Nicaragua, Guyana, the Dominican Republic and El Salvador were the main players in the compensation system and Venezuela accepted overvalued assets from each of those countries. The investigation was able to document, for example, coffee shipments made from Nicaragua and rice shipments from Guayana whose prices had a cost overrun that could reach 245 million dollars.In March 2015, Maduro, in the midst of the fall of oil prices that has affected the critical Venezuelan economy, ordered to rush an agreement for overvalued products offered from Nicaragua.

Guyanese rice was among the most expensive products paid by Venezuela in the Petrocaribe framework/ANDREW FLECMAN

2.-Compensation without control. An internal audit of Petróleos de Venezuela (PDVSA), the state corporation that dispatches the oil and manages the compensation system, revealed that the exchanges were made without the application of adequate follow-up protocols by the subsidiary PDV Caribe, in charge of the energy agreements with Central America and the Caribbean. There is a report sent by a team of auditors to their superiors in 2017, stating that the public company had never issued invoices, nor quality reports of the products and no accurate landings data are available. All of these generated a million-dollar chaos in the scheme.

3.- Numbers that do not match. The data of PDVSA and of the Ministry of Food of Venezuela on volumes and values of imported products through the compensation system present gaps and inconsistencies. #Petrofraude identified contradictions between the information of those institutions and with the information declared by the Venezuelan statistical authority, which bases its reports on the customs manifests, and information offered by official sources of the other countries involved. For example, just in the case of beef sent from Nicaragua, it was found that between 2009 and 2013, PDVSA declared receiving approximately 149,000 tons, Venezuelan customs accounted for just over 129,000 tons and Nicaraguan authorities declared close to 169,000 tons. The differences in value oscillate between 80 and 160 million dollars, according to estimates carried out during this investigation.

4.- Officials sanctioned or investigated. Key actors of oil and food derivatives exchanges between Venezuela and Nicaragua have been investigated or sanctioned by the US Treasury Department for different cases that have the same backdrop: the presumption that they have incurred in corruption and money laundering. Among them we can name Nicaraguan Francisco López, Daniel Ortega's right hand man, and a Military General from Venezuela, Carlos Osorio, who used to be the czar of food imports from the South American country.

5.- Privileged businessmen. Lucrative transactions favored companies linked to important officials of the governments of the continent favored by the oil agreements. Some of these operations under the compensation system were executed without the least public scrutiny. Companies related to government ministers from the Dominican Republic and Suriname are among those that shipped products to Venezuela for millions.

02. The deviation of petrodollars

Under the energy agreement promoted by Venezuela, allied governments of this country had carte blanche to discretionally and without major controls manage the funds obtained thanks to oil loans. Part of the money was used for private investments, failed projects, the money was trapped in a tangle of companies linked with the region's rulers. Some of the characters involved are in the spotlight of investigations for money laundering.

Main findings Read investigation

Dark business networks and inexplicable buying and selling diluted the aid

The oil cooperation allocated by Venezuela to Central America and Caribbean countries had the objective of supporting social policies in the region. However, millionaire funds of the energy agreements were discretionally managed in beneficiary countries by governments that promoted the uncontrolled purchases of assets, of loans given to companies linked with important individuals related to the groups in power, the financing of companies that only gave losses and the creation of networks of state companies that turned out to be bureaucratic monsters, according to the investigation carried out by #Petrofraude. The management of money had no supervision and had no transparent audit system and the national comptroller's offices barely contributed to the monitoring of the money despite the fact that investigations begun to occur due to the deviation of the capital originated in Venezuela.

1.- Real estate speculation. Alba Petróleos de El Salvador (Albapes), entity that executes the Petrocaribe agreement in the Central American country, has become a great lender, and around this entity a pattern of real estate speculation took place. The company benefited with mortgage loans companies and individuals that buy properties that suddenly rise in price before their acquisition and then they seize the properties for lower values. This is just one of the consequences of the loans given by the company controlled by the Venezuelan government and the Farabundo Martí National Liberation Front, the party that holds the Salvadoran presidency. Connected to receiving financing, there are some companies, some of them owned by other companies off shore, whose owners are relatives of the strong man of El Salvador, José Luis Merino, adviser of Albapes investigated in the United States for money laundering.

A scheme of real estate speculation was created in relation to properties linked to Albapes in El Salvador. The operations included land where service stations were built/ MELVIN RIVAS, LA PRENSA GRÁFICA EL SALVADOR

2.- A bureaucratic monster. The million dollar Venezuelan cooperation was managed in Nicaragua by the government of Daniel Ortega as a private loan but paradoxically allowed the expansion of an emporium of companies related to Alba de Nicaragua (Albanisa), a company controlled by Venezuela's state oil companies and Nicaragua. The means that allowed the handling of money with such a level of discretion were explored by the late Hugo Chávez and Ortega before the Sandinista commander returned to the presidency in 2006. The result of the drift is described by a former manager of Albanisa, who states that the company performs without economic logic and that the largest audit that was done to the company in Nicaragua was rigged.

3.- Limited follow-up. The Petrocaribe audit mechanism, according to the organization's public documents, only worked to monitor a minority of the resources involved in the energy agreement promoted by Venezuela. The results of the accounting audits that took place are unknown by the citizens.

4.- Darkness in the region. The authorities of the Comptroller General's Office and of the inspection office of the continent, including those of Venezuela, have shown hardly any document that can clarify how the flow of funds that was injected in the region through oil loans was managed. In most cases, according to the exam performed to public reports, there have been no scrutiny carried out to the accounts, the audits have shown satisfactory results, despite the complaints and evidence suggesting irregular handling or of the authorities that have concealed attempts to whitewash accounting according to the documents examined by #Petrofraude.

5.- The greatest inquiries. Only the anti-money laundering police of Guyana and the Senate of Haiti have instructed to carry out inquiries related to the use of the funds originated in Venezuela. In the first country those involved deny their responsibility, but are accused of performing operations that were not recorded in the books. In the second country, a large fraud is being investigated in the works that were part of a project to rebuild the country after the catastrophic earthquake..

03. The ghost works that oil paid to the powerful

The payment Petrocaribe made for inexistent infrastructure filled up the pockets of at least three Presidents, several senators, and wealthy corporate groups in the region. The plan to rebuild Haiti after the devastating 2010 earthquake is the best sample of how corruption wounded twice citizenships who placed their hopes in these funds.

Main findings Read investigation

Works converted into a monument to corruption

Most of millionaire resources of oil cooperation delivered by the governments of Hugo Chávez and Nicolás Maduro in the Caribbean and in Central America were used to invest in infrastructure. The performance in that line was blurred by corruption in the execution of works that occurred in the worst case documented, that one of Haiti. For the reconstruction program after the devastating earthquake of January 2010, 2,119 million dollars of Petrocaribe were budgeted and its execution ended in a scandal of abandonment of works, collection of surcharges, diversion of money and inquiries by legitimization of capitals and favoring construction companies linked to powerful political leaders.

1.- Investigation with drones. #Petrofraude visited works that were financed with Petrocaribe funds and obtained unpublished images that confirm the state of abandonment of structures that should be used to help recover collective life in one of the poorest countries of the continent and which had been affected by one of the greatest natural catastrophes in its history. Markets, housing complexes and hospitals are on the list.

Original aerial photographs of projects related to the reconstruction of Haiti confirm the status of backlog, abandonment or misuse of the works / IMAGES DRONE, DENNIS RIVERA

2.- Powerful relationships. Construction and engineering companies with links to the governments of Haiti and the Dominican Republic were the main beneficiaries of deviations in public works contracts. Among the most favored ones there is a leader, who is very close to former Dominican President Leonel Fernandez: The Senator Felix Bautista, who was sanctioned by the US Treasury Department because of the Petrocaribe case. Documents compiled by the present investigation, show the route of the funds of the senator to finance the presidential campaigns in two countries of the continent and also about the social work of Fernandez.

3.- Venezuelan indifference. The allegations of the scandal were made public in Haiti since 2014. When public challenges were evident, the Venezuelan diplomats replied that the government of Nicolás Maduro was happy with the execution of the projects in the Caribbean country and they even pointed out that audits conducted by Venezuela had yielded satisfactory results.

4.- Cultural impact. The corruption with funds coming from Venezuela has been of such a scale that some Haitians have created an expression to describe the abandoned works: the term refers to the red fences that are usually deployed to cover the unfinished structures.

5.- Works to follow. #Petrofraude made an inventory of more than 230 construction works and programs on the continent. Some of them, like the refining project Gran Sueño de Bolivar in Nicaragua, involved mega-investments but were half-executed. Others, such as Belize's infrastructure plans, have been at the center of the opponents' audit requests.

04. The assistentialism that bolted allies in

Funds received in several countries enabled exporting the so-called 21st Century Socialism and the creation of political parties that were served with questioned social programs. Despite the multimillion resources spent, sustainable benefits were not gained and with oil prices drop, the vulnerability of the model was evidenced.

Main findings Read investigation

The friends who took advantage of Venezuela

The oil credits given in Central America and the Caribbean by the Venezuelan governors Hugo Chávez and Nicolás Maduro served to promote social programs for the benefit of leaders and parties related to the Bolivarian socialism that governs from Caracas. With resources originated in Venezuela, organizations were endorsed as well as candidates who previously had failed in their attempts to gain elections, and also campaigns of individuals aspiring to enter into the election or re-election were empowered, and for sure they could have not honored their promises to the voters without the power aid. In official Venezuelan documents compiled in #Petrofraude, show that eight years ago they were mentioning the deviations from programs that did not fulfill the aims of promoting development, the formal objective of the financing.

1.- Boosting platforms. Cases like those of Nicaragua, El Salvador and Saint Kitts and Nevis are among the examples that confirm how Venezuelan aid empowered candidates and related organizations. The Petrocaribe agreement was activated in 2006 with mayors of the Nicaraguan Sandinista National Liberation Front and the Salvadoran Farabundo Marti National Liberation Front when both political forces were not controlling the presidencies in their respective countries, and this agreement allowed them to have resources to boost their political projects and even to address their campaigns. A decade later, Team Unity came to power in Saint Kitts and Nevis with the promise of addressing a social demand that was met with a million dollar contribution from Venezuelan cooperation.

Timothy Harris (fifth from left to right) led the party Team Unity and managed to become Prime Minister of Saint Kitts and Nevis in 2015. During his campaign he made promises that he was able to honor thanks to the Venezuelan cooperation/ Saint Kitts and Nevis Photo Strea

2.- Budget to be consolidated. Daniel Ortega was a privileged person who received loans for more than 3,760 million dollars that allowed him to promote social programs and subsidies that he used without shame to maintain loyalties to extend his stay in power in Nicaragua. Allies of the governments of Caracas in the Caribbean also used oil support to consolidate the social management that has contributed to their long terms of office as prime ministers, including Roosevelt Skerrit from Dominica, Ralph Gonsalves of St. Vincent and the Grenadines and Dean Barrow of Belize, all at least one decade in their positions.

3.- The burden of assistance and opacity. After five years of operation of Petrocaribe, in documents of Petróleos de Venezuela (Pdvsa), the state corporation that supplies hydrocarbons, it was raised among the management obstacles that the social programs financed did not lead to the overcoming of poverty, and that on the contrary they were diluted in "traditional welfare policies" and that the beneficiary countries did not show goodwill for the funds to be audited. Still in 2015 the commercial commissioner of Pdvsa announced that a review was being made on how the money was used in the programs financed through the initiative.

4.- A regional inventory. The investigation identified at least 139 social programs that were financed by oil agreements with Venezuela in Central America and in the Caribbean. These programs included, among other concepts, distribution of food, breeding animals, distribution of free domestic gas, payments of subsidies for the elderly and the unemployed, delivery of computers to students and even disbursements for discretionary use.

5.- Oil dependence.Energy subsidies and social programs associated with Venezuelan aid tended to disappear with the fall of oil prices and with the crisis of the Venezuelan industry. This was mainly the case with Nicaragua. Petrocaribe and the energy agreements that spilled over to some countries also with the dependence on the hydrocarbon market.

05. Oil for votes

Venezuela was able to secure a regional diplomatic protection mechanism thanks to the multi-million-dollar injection of funds given to many countries of the region of the Petrocaribe agreement. This is a mechanism that activates Venezuela’s interested allies, every time violations of human rights of the Maduro regime are condemned.

Main findings Read investigation

The diplomatic power of Venezuelan oil

Venezuelan presidents Nicolás Maduro and his late predecessor Hugo Chávez managed to leverage their international management in the continent with the help of oil financing given in the Caribbean and in Central America. According to the evidence gathered in the #Petrofraude investigation, countries that owe millionaires resources for the loans received have aligned their diplomatic positions with Venezuelan interests, especially in the Organization of American States (OAS), which sometimes helped Maduro to get away from the continental scrutiny in relation to the respect of democracy and human rights.

1.- Alignment in the OAS. . The examination of more than 800 minutes of meetings of the institution led to the identification of 12 sessions held between 2014 and 2018 and in which the votes of the countries benefiting from the oil loans had high coincidence with the positions most favorable to Venezuelan interests. . The organization put under voting during that period issues mainly related to the presidency of Maduro.

First as chancellor of the government of Hugo Chávez and later as president, Nicolás Maduro has been one of the axes of the oil diplomacy of the Bolivarian socialism/JUAN MANUEL HERRERA, ARCHIVO OEA

2.- Coincidences at the UN. In the Universal Periodic Examinations to which Venezuela has been submitted at the United Nations, the delegations of countries favored with the energy agreements avoided touching sensitive points related to the respect of human rights in Venezuela. A study conducted by professors from the University of Texas and the Institute of Higher Studies in Administration concluded that the votes of the beneficiary nations also showed coincidences with Venezuelan interests in the UN General Assemblies.

3.- Diplomatic shield. Although the foreign ministries linked to the energy agreements officially deny the impact of the debts on the diplomatic agendas, an official report of the Ministry of Foreign Affairs of Venezuela declared in 2015 that the Petrocaribe member countries are part of the "first geopolitical protection ring" for the ruling regime in the South American country.

4.- International Reciprocity. Prime ministers and foreign ministers of Antigua and Barbuda, Dominica, Saint Kitts and Nives and Granada, for example, have exchanged expressions of political and diplomatic reciprocity with ambassadors, foreign ministers and even with President Maduro. The expectations of social projects related to energy agreements are usually dealt with in the same bilateral sessions in which the positions adopted in forums such as the OAS and the UN are discussed.

5.- Millionaire renegotiations. Under the presidency of Maduro, the Venezuelan government advanced negotiations that allowed to reduce the debts of countries benefiting from oil agreements: most of those favored with these deals are among the strongest international allies of the so-called Bolivarian socialism.

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