In Venezuela, Hugo Chávez was the architect of a diplomatic protection plan for his regime through Petrocaribe. This strategy was implemented for many years by Rafael Ramírez, one of Chavez´s strong men, but it was eventually inherited by Nicolás Maduro, who ended up serving other governments such as Daniel Ortega and his wife Rosario Murillo in Nicaragua./ FERNANDA LEMARIE, ECUADOR MINISTRY OF FOREIGN AFFAIRS.
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The key to the international support that Nicolás Maduro's regime in Venezuela still maintains and that helps him avoid complete isolation has its own name: Petrocaribe. An energy and cooperation plan that has injected more than 28 billion dollars to 14 countries, but in practice has served to buy diplomatic endorsements. Thus, the resources of Venezuelan people cornered by shortages and with an inflation of one million percent last year, in some cases, strengthened local power groups in several countries, and in other cases, it resulted in corruption and hunger.

Three of the most complex realities in Latin America are intertwined hundreds of kilometers by a common factor: Venezuelan oil. On the one hand, in Venezuela, the country with the largest reserves of oil in the world, its people live a humanitarian emergency while the government that denies it is considered illegitimate by a large part of the international community. On the other hand in Haiti, its inhabitants are increasingly having more angry protests claiming for the whereabouts of billions of dollars that came as cooperation to guarantee a different life after the earthquake of January 2010 that left more than 300,000 dead and millions homeless, but on the contrary it has translated into deepening their miseries. Meanwhile, in Nicaragua, the Sandinista regime of Daniel Ortega has been twelve years in power, strengthening its strong hand against the rights of those who criticize him, after losing stability, he had for years, because of the reduction of the flow of funds that came from Venezuela with the drop in oil prices.

Venezuela, a country with the largest oil reserves in the world, has suffered from shortages of food and lack of supply in recent years / RAYNER PEÑA, EL PITAZO VENEZUELA

It was Hugo Chavez in the strengthening of his Bolivarian ideology for Latin America who devised this strategy with the oil boom with which he would seek the consolidation of his socialist policy.  In 2005, at the summit at Puerto La Cruz, Venezuela, in which Petrocaribe was created, he ratified the vision with which he publicized the energy agreement. In his words, the projects to be carried out should "empower the rights of the communities of the beneficiary countries, helping to overcome poverty "and guaranteeing the" availability and accessibility to health, education and micro-financing of cooperatives, small and medium size industries", among other objectives.

For this investigation carried out by #Petrofraude, a journalistic team of five media, reviewed in detail the available information of the ambitious program in the 14 beneficiary countries and carried out fieldwork in Nicaragua, Haiti, the Dominican Republic, El Salvador, Guyana and Venezuela. to contrast what the manna that came from the hand of the charismatic ruler has become, the same person that during the days of opulence prided himself on walking the road to defeat inequality in his country and to trace the path for the rest of the continent, showing Petrocaribe as a model without a history of international solidarity relations.

However, the investigation of #Petrofraude shows that these purposes were not strictly followed and from the beginning, the strategy was different: to ensure diplomatic support in international forums and to seek the regional expansion of Venezuelan Bolivarian socialism. The strategy has even allowed Nicolás Maduro to resist a growing international isolation that had its most recent expression when a majority of 19 governments in the region, ignored his new term as president of Venezuela, because these governments considered the elections that allowed him to be re-elected for six years, to be fraudulent. In this context, a group of Caribbean and Central American countries beneficiaries of the agreement, were part of the block of countries who recognized his legitimacy, or refrained from questioning it in the meeting of the Permanent Council of the Organization of American States of January 10, 2019, date coinciding with the taking of power to begin his second term.

It was found in different official documents that the Venezuelan Foreign Ministry described the block of beneficiaries of the oil credits as part of an international protection barrier. "The strategic conception of Venezuela's external action towards the region went through the definition and reinforcement of the geopolitical protection rings consisting of ALBA and Petrocaribe as the first ring," as was mentioned in the Report and Account of the Venezuelan Ministry of Foreign Affairs in 2015. During this same year, then-US President Barack Obama, cataloged Venezuela's executive order as a threat to his country's national security.

The strategic conception of Venezuela's external action towards the region went through the definition and reinforcement of geopolitical protection rings consisting of ALBA and Petrocaribe as the first ring," — as was mentioned in the Report and Account of the Venezuelan Ministry of Foreign Affairs in 2015

As second and third rings with the same purpose "the defense and guarantee of national sovereignty" other organizations such as the Union of South American Nations (Unasur) and the Community of Latin American and Caribbean States (Celac), were mentioned. Such instances were also driven by Venezuela. The metaphor of the rings, very typical of military language, reflects the vision of the Caracas government regarding the geopolitical importance of oil cooperation and explains the steps of its diplomacy.
(See map: "Security rings")

With the passing of Chávez and the arrival of Nicolás Maduro to power, far from suspending the plan, it remained at all costs under the guidelines that had already been established. This included the commitment with local leaderships that could be related to the socialist cause and the compensation system in which Venezuela's large volumes of oil were traded in exchange for food, on one hand, and on the other hand, under payable credits in maximum 25 years with rates that did not exceed 2.5 percent per year.

The cascade of money, which involved the injection of approximately 28 billion dollars, of which about half were transformed into loans with payment convenience, implied a challenge for the transparency of the regional institutions that did not pass the challenge. The management of the funds, according to evidence compiled by #Petrofraude, was done in an environment of cloudiness with respect to the controls applied inside and outside the platform designed for the money to flow, which facilitated the emergence of schemes for the diversion of resources, and those schemes benefited the consolidation of other political regimes that are now news, as in the case of Ortega’s supporters in Nicaragua.

In that case, Chávez had in his sights to give support to Daniel Ortega with these funds when he was still a candidate for the Presidency of Nicaragua during the presidential elections held in 2006. The former commander of the Sandinista National Liberation Front (FSLN) had held the presidency of Nicaragua between 1980 and 1990, but had not been able to return to office after three attempts. Seven months before the November elections, he was the guest of honor of Chavez at the presidential palace of Miraflores in Caracas during the signing of an agreement that allowed the shipment of 82,000 gallons of diesel to Sandinista mayors, who distributed it to transporters, farmers and breeders four weeks before the elections. From that moment, the resources that came freely from Venezuela, became the hallmark of the governability that Ortega achieved, even with the most traditional businessmen of his country and of the Central American elite, that while there were resources they did not question the president. (See note: "The assistentialism that bolted allies in")

The late President Hugo Chávez, his successor and former chancellor, Nicolás Maduro (left) and the former president of PDVSA, Rafael Ramírez (right) / EFRÉN HERNÁNDEZ, EL NACIONAL VENEZUELA

The example of Nicaragua is far from being an exception in the region, where Venezuelan oil credits helped to catapult or consolidate Chávez and Maduro's political allies in power, but likewise the weakening of international oil prices has then put them in trouble. In fact, the crisis of the Central American country in the hands of Ortega is largely associated with the weakening of the local economy after Venezuelan aid being reduced.

In light of the inventory made by #Petrofraude, the diplomacy of Nicaragua, St. Vincent and the Grenadines and Dominica appear as the most consistent in the line of the support given. The case of the Central American country stands out for the reciprocal endorsement offered in 2017 and 2018, when political protests in both countries were repressed and having approximately 500 dead in total, and accusations against Maduro and Ortega of applying even lethal force through paramilitary groups allowed by both governments. The block of those who have "aligned" with the regime in power in Venezuela also include countries such as Antigua and Barbuda, Belize and Grenada among others that, despite being very small in territory and population, have votes with the same value in the numerous international forums, especially in the OAS, where the "ring of protection" of the governments of Venezuela has fully complied with its purpose.

Rafael Ramírez, former oil minister, former president of PDVSA and one of the promoters of the agreements while serving Chávez, did not avoid the issue during an interview with #Petrofraude journalists. “We turned around to our geopolitical natural space. We made a differentiated policy for countries that are very small, very small islands, but at the end they are sovereign countries. That gave us an extraordinary geopolitical presence? Yes, of course. And why not doing it, if every country does it? The United States do it, the British do it, the Mexicans do it in their own geopolitical spaces, "he said.

The former official, required by the justice system in the framework of a strong confrontation with Maduro, states that the volume of oil dispatched was relatively small for PDVSA and it allowed to capitalize a multiplying effect in international relations.  Officially, this is a topic that officials of the promoter country and of the beneficiaries countries usually deny openly with vehemence. (See note: "Oil for votes")

However, Petrocaribe's resources had destinies beyond the "differentiated policy" advocated by Ramírez.  Billionaire resources ended up bulking the pockets of local leaders or businessmen friends.  One of the prominent cases is that of Felix Bautista, senator of the ruling party in the Dominican Republic. The parliamentarian was sanctioned by the United States Treasury Department  under the Global Magnitsky Act for alleged money laundering from Petrocaribe. His companies were among the most favored ones with contracts for Haitian reconstruction and, according to the documents examined in this investigation, they were also part of complex financial movements from which contributions for electoral campaigns and political figures in various countries came out. Among them foundations such as the one of Leonel Fernández, former president of the Dominican Republic for three periods, or contributions denounced to individuals such as Alejandro Toledo, former president of Peru, the former vice president of Guatemala Roxana Baldetti, and Ricardo Martinelli, former president of Panama. These last three are prosecuted in their own countries for different corruption offenses.

Among all, the situation in Haiti is precisely the most aberrant. There you can see how the hope of development of one of the poorest countries of the continent was literally stolen. The 2010 earthquake became an opportunity to further demonstrate solidarity and to help rebuild the devastated country for which more than $2.1 billion were budgeted. But the result is an inventory of inconclusive projects that have provoked protests in the streets that are becoming more violent and that had already seven people dead. In their slogans, Haitians shout in Creole "Kit kób Petrocaribe a?": Where did Petrocaribe's money go? "Because they know that resources for homes, markets, hospitals, schools and other projects with more than 400 items, in which resources were allocated arrived, but a good part went to private pockets.

When public challenges were evident, the Venezuelan diplomats replied that the government of Nicolás Maduro was pleased with the execution of the projects in the Caribbean country and it was even pointed out that audits conducted by Venezuela had yielded satisfactory results.

Local parliamentary investigations involve the former presidents of Haiti, Michel Martelli and René Preval, for making decisions without major technical support to assign public contracts in a hurry. They also point out the current president Jovenel Moïse, for not being firm in promoting an investigation and because as a businessman before reaching the presidency he also took advantage of this situation. According to these inquiries, the great embezzlement involves more than 40 people among ministers and directors of other state entities. Even the son of former President Martelli, is mentioned as one of the key links in the contracts questioned. "We call the arrest of all thieves," says one of the songs repeated by Haitians protesting in the streets of Port-au-Prince. (See note: "The ghost works that oil paid to the powerful").

In El Salvador, Petrocaribe resources have been administered with the leading role of the Farabundo Marti National Liberation Front (FMLN), a political group that emerged from the extinct guerrilla group in the Central American country and which, after being the opposition party of the left, became the first political force with moments of majority in the Congress and during two consecutive periods with control of the Presidency of the Republic. This was seen during the last decade, coinciding with the flow of money given by Venezuela.

The investigation of #Petrofraude reflects that behind the scenes, the main architect in the path in which the labyrinthine financial management of  thousands of millions received has been structured, is José Luis Merino, one of the FMLN's key leaders. The transactions that include hundreds of drafts deposited into off shore accounts to companies whose beneficiaries are not known, have a particular situation because of speculative real estate transactions within the same country and which have been revealed in the present work.

For example, one case is the piece of land where a gas station operates with the Alba Petróleos flag. After the original owner and nearby employees exchanged the property with each other in two transactions, the land was acquired by a company that is part of the corporate octopus set up in El Salvador to manage Venezuelan oil. In four months, the property went from a price of $85,500 to 1.3 million dollars, that is, 15 times its value. #Petrofraude documented similar situations in a hundred of buildings. In practice, the company that has managed the billionaire venezuelan aid, operates mainly as a financier who has spared no effort in offering loans, in some cases with mortgage guarantees, for 500 million dollars to 90 natural individuals and  companies that were handpicked. The losses have been the common sign in a management that seems not to seek profit but quite the opposite.. (See note: "The deviation of petrodollars")

José Luis Merino, leader of the FMLN and senior adviser to Albapes, is identified as a key figure in the management of Venezuelan cooperation in El Salvador / LA PRENSA GRÁFICA EL SALVADOR

But the most widespread form of corruption has been in the so-called compensations, the scheme in which countries paid part of their debts with food products. On paper, this idea not only guaranteed food safety in Venezuela, which on the contrary has had shortages as one of its main hallmarks in recent years, but also to strengthen the national industry in each debtor country. However, the journalistic investigation of #Petrofraude, demonstrates how this mechanism lent itself with triangulations, billings with surcharges and even repurchase of products from countries as far away as New Zealand. 

The lack of control allowed some few to have an unexpected bonanza thanks to the resources of Venezuela, which in many cases paid for products with very low quality, and with prices high above international prices of what first quality products would cost.

For example, in one of the unpublished documents revealed by #Petrofraude, there is one of the comments in the handwriting of President Nicolás Maduro: "Very urgent to finalize plan with Nicaragua", right next to his approving signature. This document approved an offer of imports of several products in which it was accepted to pay prices above market references or prices that exceeded the average of recent decades for the country. Among the different issues we can name beef at almost $5,690 per ton, when in the previous 20 years the best export averages had not exceeded $5,000, according to official data from that country.

The operation approved by Maduro was part of a pattern. #Petrofraude, documented payments for 145 million above market prices in the purchase of coffee of dubious quality sold by Nicaragua between 2009 and 2013. "They knew what quality they were buying, but twho is going to complain in Venezuela?" Confirmed Joaquín Solórzano, president of the Association of Coffee Growers of Matagalpa, where most Nicaraguan coffee is produced. Federico Argüello, president of the Association of Coffee Exporters of Nicaragua confirms that the Venezuelan market was especially attractive for its prices: "They paid a differential above New York." According to data from PDVSA to which #Petrofraude had access, under the compensation scheme more than 2,700 million dollars would have been exported through a binational company managed by the governments of Venezuela and Nicaragua. Many of them had price differentials that favored intermediaries that were close to power.

Featured: “They knew what quality they were buying, but who is going to complain in Venezuela?"— Confirmed Joaquín Solórzano, president of the Association of Coffee Growers of Matagalpa, geographic area were most of the Nicaraguan coffee is produced.

While in Nicaragua the producers benefited from the oil manna, their Venezuelan colleagues suffered from controls that condemned them to losses and  contributing with the depression of the business against the advance of imports. "Prices controlled by the government were always below production costs," says Vicente Pérez, coffee grower and member of Fedeagro, Venezuela's leading producer federation. "Nicaraguan coffee was paid at premium prices but it was of low quality." This is one of the situations that confirms how far it was in practice, what ended up being key components of this ambitious cooperation plan that would supposedly help to overcome poverty.

A trend similar to that which occurred with commercial compensation occurred with Guyana, the second largest beneficiary of the system. While the Party called Progresista del Pueblo managed the power in that country, with which Venezuela maintains a border dispute, the party received a privileged treatment. The organization is related to Chavismo and lost power in 2015, which caused the contracts to be suspended. During six years, more than one million tons of white rice and paddy were shipped to Venezuela in exchange for oil loans. In 2010, for example, Caracas accepted the price of 700 dollars per ton, while buyers from the European Union acquired the same amount for 224 dollars less.

This was the path used to have hundreds of millions of dollars of  Venezuelans to be wasted, and it is a paradox, that today Venezuelan citizens have it very difficult to have in their pantry the most basic products. (See note: "The business that emptied the pockets of Venezuelans")

A report carried out by the Inter-American Development Bank, published in 2016, is perplexing because it shows the Venezuelan authorities' disposition to negotiate a high-value product such as oil, under similar conditions for a less valuable product such as rice. "The greatest benefit for Venezuela does not seem to be economic," said the text, which suggests that the biggest gain was obtained in the diplomatic field.

The greatest benefit for Venezuela does not seem to be economic" —Inter-American Development Bank 2016 on exports of Guyanese rice in the framework of Petrocaribe

No current PDVSA spokesperson in Venezuela responded to requests for information that were presented in advance for this project, nor did direct stakeholders such as Merino, Bautista or Francisco López, Ortega's right-hand man, the one managing the oil cooperation in Nicaragua.  On the other hand Rafael Ramirez, denied irregular handlings or lack of transparency during his management while working as head of the company between 2004 and 2013. "Everything is audited," said the former official. "Our efforts were always investigated. If the Comptroller General of the Republic detected any inconsistency, they called us. If our internal audit presented inconsistency, they called us. If our tax auditors detected an inconsistency with something, I did not sign. "

However, one of these audit reports show that the commercial mechanism, in which more than 3.7 billion dollars were traded, lacked proper follow-up protocols since they were established a decade ago. The document, dated April 2017, states that the Corporate Management of International Finance, which is at the core of the scheme, did not formulate effective rules to control the processes.

The conglomerate of companies on the Venezuelan side in charge of the compensation has been handled mainly by the military. Asdrúbal Chávez has been among the key people working with the direct management of these operations. He is the cousin of President Chávez, and he was appointed as Minister of Oil; and the late Bernardo Álvarez, who at the beginning was the general secretary of Petrocaribe and Caribe, a PDVSA subsidiary that is a partner of 12 binational companies related to the execution of oil agreements in the same number of countries in the region, and he was later appointed as ambassador to the OAS where he became president of its Permanent Council.

Bernardo Álvarez was one of the key figures for the deployment of the Venezuelan petro-diplomacy in the continent / JUAN MANUEL HERRERA, OAS

The sanctions to be given to those responsible for such gigantic fraud are still to be seen. However, it is only now that the complex tangle of payments made without much control is exposed in a broad manner. So far, the only clear thing is that this Venezuelan export model of socialism is drowning, and with a drought due to the current low capacity to continue injecting dollars freely, it will start revealing the weaknesses of a model that was based largely on billionaire resources of oil, belonging to the people of Venezuela that today suffer from hunger.