(note: this post was heavily edited at about 1 am eastern time and then I also edited the headline at 640 am eastern to reflect that Montes no longer works at PDVSA)
Well, I guess this starts to answer some questions.
51 weeks ago, I wrote this: “Second, how does PDVSA end up giving a half-billion dollars to someone who doesn’t have that most basic qualification?”
My guess is that the bolivars go back into the PDVSA pension fund, where they can be converted to dollars at the official rate. And the dollars sold for bolivars at the black-market rate, and the bolivars converted to dollars at the official rate. And so on, and so on, and so on. Please note: this is speculation. I have no way of knowing whether this was happening. If it was, it was another “financial centrifuge,” spinning off profits for the funds (and reducing Venezuela’s supply of hard currency) every time money was run through it. It’s a nice idea — and it would have complied with the pension’s duty to its pensioners, if not to the rest of the pueblo. In any case, I have no idea if it was happening.
Good news! Looks like I was right. Actually it’s terrible news, but at least I get bragging rights.
Tonight, the Devil’s Excrement blog digs up a court filing that starts out like this:
…Through this complaint, the Receiverseeks the return of bribes and other fraudulent transfers totaling $35,744,651… Illarramendi made these bribe payments, directly or indirectly, to defendant Juan S. Montes…, a senior pension fund investment manager and official at Petróleos de Venezuela, S.A. (“PDVSA”)…. Montes received these bribes in exchange for his approval of certain bond-swap transactions PDVSA’s pension funds entered into” with Illarramendi’s companies.
As the Devil writes,
But what the receiver seems to be saying is that PDVSA sold dollar securities for Bolivars to Illaramendi’s funds at the official rate of exchange and Illaramendi’s funds resold those dollars at the parallel rate of exchange, essentially arbitraging the Government via PDVSA. The difference was as much as Bs. 4, 5 or even Bs. 6 per dollar depending on when these transactions took place. Just recall that when the Government banned the permuta market, the “official rate” was at Bs. 2.6 per dollar , while the parallel rate was near Bs. 8 per dollar.