Venezuelan state oil company PDVSA is known for overpaying for some of its purchases, for two reasons. One is that many companies are sick of dealing with PDVSA’s late payments, and prefer to now deal with middlemen. The other reason is that PDVSA workers like to overpay if they can in turn receive kickbacks. It’s win-win for buyer and seller, with the only one being screwed the Venezuelan public. El pueblo, as it known locally.
Today, Gustavo Coronel posts a masterful deconstruction of the apparent overpayment for the Aban Pearl, a semisubmersible offshore drilling platform that PDVSA rented in 2008. The nice thing about investigating drilling contracts is that the machinery is so expensive that it is conventional for the owner of the equipment to disclose the day rate, or daily rental price. In the case of Coronel’s investigation, the price that PDVSA said it was paying was much higher than the price that the ship’s owners said they were getting. Money was disappearing somewhere along the way. He has been looking into it for years, and his results are very interesting.
Five things now appear to be factual:
- One, that the barge was contracted by PDVSA to an intermediary company, not to its owner. This is, in the best of cases, inefficient and a potential cause of corruption.
- Second, that the barge was contracted to the intermediary company by an amount of money that seems to be twice as large as that paid to the owner, suggesting that a considerable amount of money remained in the pockets of this intermediary company.
- Three, that the intermediary company formed in Singapore and owned by a Panamanian registered company was incorporated solely for the purposes of this transaction and received the contract from PDVSA without bidding.
- Four, that the Panamanian company owning the Singapore intermediary company has a capital of only $10,000, totally insufficient to be responsible for a $1.3 Billion contract.
- Five, that the owners of the company contracting with PDVSA were established contractors of PDVSA in Venezuela.
Every day I hear of more scams like this. Misión Mi Amigo Contratista seems to be getting a lot of money. One non-corrupt contractor told me recently he thinks that corruption is accelerating ahead of the elections and President Chávez’s illness. I can’t judge that, but if it’s accelerating from this sort of hundreds-of-millions-of-dollars level of fraud, that’s pretty serious. Go look at Coronel’s piece.