In which I ask US courts to unseal some documents

I wrote to US District Court to encourage the court to unseal some documents in the case of Otto Reich against the Derwick Associates guys. It’s a bit amusing to see my name on the docket, as I didn’t realize my letter would end up part of the official record, available on PACER and such. But of course turnaround is fair play — my whole point is that open court should be open, and other than some personal data, the public has a right to know what the court is hearing. So, no problem at all.

Here’s what I wrote:

Judge Oetken,

I am a reporter who has been following the proceedings in Reich, et al. v. Betancourt Lopez et al., 13 Civ. 5307. I am writing to support the plaintiff’s motion to unseal documents. The public has an interest in transparency of as much information as possible from this case. I have no financial, political or other interest in the case and my only relationship with the parties is one of journalist-subject.

As the writer of the blog Setty’s Notebook (https://settysoutham.wordpress.com) and occasional contributor to Venezuelan news outlets, Vice magazine, Mother Jones and the Texas Observer, I have been one of the few journalists to keep track of the long international saga of alleged corruption in the contracting for Venezuelan electricity plants since 2012. Readers of many news outlets are interested in learning more about Derwick Associates and its principals, as I can see in the visitor logs to my blog. Aside from the general public, there are also state authorities that rely on the press to help them discover and understand the complexities of Venezuelan business. Access logs show the FBI, US Senate, SEC and US District Court have all visited my blog seeking information about Venezuela in recent months.

Information from the sealed files could help, for example, to accurately report on Banca Privada d’Andorra (BPA), an Andorran bank that the US accused last week of being involved in money laundering. Two people whose names appear in the Reich case, Nervis Villalobos and Javier Alvarado, may have laundered money through BPA, according to Spanish newspaper El Mundo.

It is a challenge for reporters and the public that so much of the world’s business happens in places like Venezuela, Spain, and Caribbean island nations, with their opaque court proceedings and corporate registers. The US’s relative transparency helps people everywhere. When people decide to do business in the USA, they get the benefit of a stable, trusted economic and political system. One of the few “risks” they take is that in case of a dispute, they may have to tell the truth in public court.

Opacity leaves the field open for lies. In Venezuela, where I used to work as a Bloomberg correspondent, some local press responded to the dismissal of part of this case by reporting that Derwick and its principals had won outright. One headline focused on you: “New York judge ratified the honesty of the bolichicos of Derwick Associates.” (See http://www.primicias24.com/nacionales/justicia-norteamericana-ractifica-honestidad-de-los-bolichicos-de-la-empresa-derwick-associates/)

Obviously, there is personal information that should be kept out of public view. I just find it frustrating that so much material is currently being submitted under seal. I was driven to write by an article by the Reporters’ Committee for Freedom of the Press, which said that reporters could sometimes get documents unsealed in the public interest (http://www.rcfp.org/browse-media-law-resources/news-media-law/news-media-and-law-fall-2014/first-step-unsealing-court-re). I hope that you will do so in this case.

Thank you for your time,

Steven Bodzin

Unlike some things I’ve written, I’d say that’s a fine first entry into the records of US court.

Nervis or El Mundo? Hard to decide whom to trust

Who to believe when it comes to $50 million bribes in Venezuela? Do we believe Nervis Villalobos? Here’s what he told this website in 2013:

Nervis Villalobos, a former deputy minister of energy in Venezuela, denies having carried a message offering a bribe from electricity contractor Derwick Associates to Venezuela Oil Minister Rafael Ramirez.

The allegation against Villalobos appears in a lawsuit filed a week ago by Otto Reich against two principals of Derwick and an alleged associate of theirs. Villalobos called in response to my request for comment on the case.

“I know Derwick very well,” he said. Later, he said “they aren’t unknown to me.” He said it was possible that he had flown in a jet belonging to the company, adding that he flies at times on rented jets and that he doesn’t always know who owns them.

He said he “hasn’t had anything to do with PDVSA, the Ministry, or anything like that” since he left government in 2006. He said his government service left him unable to open a US bank account, and that his name has shown up in several news articles, but that the accusations are false. He doesn’t usually respond because “if one starts to defend oneself against every attack, one ends up going crazy.”

Villalobos said his work usually consists of feasibility studies and other consulting work in the Venezuelan electricity industry.

And here’s what El Mundo, the Madrid newspaper, is reporting today:

The Spanish company Duro Felguera paid a fortune to a Chavista leader for his “oral” consulting in the bidding for a huge contract in Venezuela, according to documentation collected by the Spanish investigation at Banco Madrid.

In the dossier from the Executive Service for the Prevention of Money Laundering (Sepblac) it gives evidence of a suspicious contract from Duro Felguera with Nervis Villalobos, a former deputy minister of energy in Venezuela in the Hugo Chávez administration, according to police sources consulted by El Mundo…

Villalobos’ company didn’t have any documentation, but rather was to provide “general oral information, and could also assemble written reports if deemed necessary,”… Investigators consider it unbelievable to pay $50 million for oral reports…

The goal of the contract, according to police sources, was “advise on the possible granting of a public works contract for a combined-cycle thermoelectric power plant of 1,080 MW (Termocentro).” The new contract was dated 12 April 2011, but meanwhile, 4 May 2009, the company managed to score a construction contract for Termocentro to provide Caracas with power, to be completed in 2013, with a value of 1.5 billion euros…

Duro responded yesterday with “this is about a totally normal and legally notarized contract.” They added that “no organ of the state has requested information about this from Duro Felguera, nor have we been object of any investigation.”

…Villalobos moved money at will in the Spanish affiliate of the Andorran bank, where he had on hand 3 million euros in his accounts. In April 2012, he transferred $2 million to another account of his in Miami and in March 2014 got Banco Madrid to lend him 1 million euros to buy a home in Spain, using shares of a Venezuelan company in the Islands as collateral.

Nervis come clear things up, I thought you said you did feasibility studies.

Juan gets the inside scoop on Telesur travails

Telesur English is a clusterfuck, as anyone can see by looking at their Youtube channel, where fully reported and produced TV segments can get single-digit views in a week. 

For comparison, this entertaining autistic weatherman never gets fewer than 1,000 views for his selfie-style storm warnings.

But if you want to know just how bad things are, go read Juan’s latest exposé, with voices from the inside. Really, go read it.

Otto does PREC

A few interesting Pacific Rubiales items recently, picked up by the always attentive Otto at IKN. Go over there, he’s better at this blogging stuff than I am.

For what it’s worth I watched the video he linked there, and I thought it desperately needed an edit. And I hate, hate hate documentaries with looming drama music. But if for nothing else, it’s worth watching the video to see the spectacular video of the Colombian llanos that are being exploited for both petroleum and palm oil these days. Good to know what kind of paradise you’re wrecking every time you fire up the old V-8.

Meanwhile, in New York…

Remember how Otto Reich sued the kids behind Derwick Associates for a bunch of stuff including racketeering? And then how the kids, popularly known as the Bolichicos, said hey, the court doesn’t have jurisdiction, and I’ll prove it by showing my personal data, but I want all that to be confidential? No? Well, anyway, that’s one of the main things that has happened so far in that case.

Well Otto Reich (no longer confused with Otto Rock) has now gone back and requested that the court make all the confidential Derwick details public. In the public interest, and because the Bolichicos supposedly never properly pleaded their case.

There is a very strong presumption in the Second Circuit – based on the First Amendment – that judicial documents (including submissions in connection with dispositive motions) must be available to the public and may not be sealed absent compelling circumstances. The Second Circuit has ruled repeatedly that a paiiy seeking a sealing order must meet an extremely high burden to justify its request, and that the Court may not grant such a request, or order documents to be filed under seal, without making specific findings on the record overcoming that Constitutionally-based presumption. None of the factors or procedures necessary to permit the sealing of documents relating to the Motions has been satisfied here. Accordingly, the Court’s Interim Sealing Order requiring the filing of documents under seal should be vacated, and the parties’ submissions in connection with the Motions, including the parties’ discovery letters, should be unsealed and made available to the public like in every other case in the Southern District of New York…

There is no reason – much less a compelling one – that could justify the Court’s sealing of the parties’ submissions relating to Defendants’ Motions. There are no “higher values” that could conceivably justify preventing public access to this information.

I’m running low on popcorn.

Front page of El Mundo (Madrid): Chavista leaders named in Spain laundering probe

I have rarely been so surprised by a news story as I was by this article in El Mundo, from Madrid. I’ll translate the key portions, but if you can handle a bit of ye olde español please click through and read it there. I’m sure many people contributed to this crackdown but one of the few to put name and face to his criticisms of this group of alleged thieves has been Alek Boyd. Dude, take a bow.

Chavista bigwigs investigated for laundering in Banco Madrid

…Police sources assure El Mundo that a dossier in the hands of the Anti-Money Laundering Commission touches on at least three ex-deputy ministers of Venezuela, the ex-intelligence chief, an ex-executive of the state oil company PDVSA, and a businessman considered close to Chávez, who has handled funds in Spain that allegedly derived from massive bribes in exchange for contracts from the Venezuelan regime.

All these Venezuelan bigwigs appear in the list of clients discovered in the Spanish affiliate of the Banca Privat d’Andorra (BPA), without the entity having taken necessary measures to avoid money laundering, a very grave compliance failure under Spanish law…

The Spanish investigation goes beyond information released Monday by FinCEN, the anti-laundering unit in the USA, and gives specific names showing that at least part of the Bolivarian regime’s power structure took advantage of its position of power to do business for itself, behind the back of the pueblo. The US statement said “BPA facilitated transfers in the amount of $4.2 billion” related to Venezuelan public corruption. It didn’t give names.

According to police sources, among the clients at Banco Madrid were the former Deputy Minister of Energy Nervis Gerardo Villalobos. The Spanish investigation connects him with companies in Madeira and the Virgin Islands and he is considered close to Venezuela’s current UN ambassador, the former president of the giant state oil company, Rafael Ramírez…

According to the investigation, Villalobos received “consulting payments” from the Spanish company Duro Felguera, which was chosen in May 2009 for a 1.5 billion-euro contract to build a combined-cycle power plant to provide power to Caracas.

The president of the company that oversaw the contracting, Electricidad de Caracas, and deputy minister of electrical development, was Javier Alvarado Ochoa… The police sources considered it unheard of that Banco Madrid didn’t communicate with Sepblac [Spain’s anti-laundering organization] nor undertake a special examination of these clients. The board of the bank and the bank itself have been reprimanded for serious and very serious offenses [for failing to report possible money-laundering]…

The insurance businessman Omar Farias also appears in the group… Farias ran the Spanish branch of the company Inversiones Porbónica.

In the Sepblac investigations, Farias appears as a key person with possible B accounts in Banco Madrid related with possible shady foreign dealings of the regime. The Spanish entity managed to block a 13-million [euro] operation realized by Farias, but didn’t undertake any investigation, according to sources familiar with the Sepblack dossier, which was presented last Monday to members of the board of Banco Madrid.

The mix of business and regime contacts is personified by another client of Banco Madrid, Carlos Luis Aguilera Borjas, ex-director of security for the government. In Spain, Borjas administered the company CLAB-Consultoría Inmobiliaria and is also one of the main shareholders and board members of Constructora Girardot 53, one of the companies that was blessed in the last decade with contracts to work on the Metro de Caracas, while Chávez was president.

The Spanish investigation is looking into relations between Aguilera and Spanish companies that received large contracts in the Metro de Caracas. In 2008, the Unión Temporal de Empresas (UTE) formed by CAF, Cobra, Constructora Hispánica and the company Dimetronic managed to receive a contract to remodel Line 1 of the metro in the capital for 1.4 billion euros…

Also from Chávez’s security apparatus is another Banco Madrid client, ex Deputy Minister Alcides Rondón.

It is one of the cases where the bank failed to exercise its required [due diligence]… It’s the same in the case of Francisco Rafael Jiménez Villarroel, ex-representative of PDVSA, also when Rafael Ramírez was in charge.

Yes, among those named are Nervis Villalobos, long alleged to be associated with various companies that overcharged Venezuela for electricity generating equipment; Duro Felguera, partner in one of the biggest gold-plated projects; Javier Alvarado, who aside from being head of EDC and Bariven at times is also father of a Bolichico; and a member of the illustrious Rondón family, which includes Rafael Ramírez’s wife (Beatriz Sanso Rondón de Ramírez) and Venezuela’s most powerful man, Diosdado Cabello Rondón.

Not much to add here except that this humble website did the only interview I’ve ever seen with Nervis Villalobos in which anyone asked him directly about alleged corruption. He denied it. Go take a look. (Read the comments, too.)

Oh also, the El Mundo article makes repeated mention of Otto Reich’s lawsuit in the US in which he specifically said that Alvarado’s son was involved in acts of corruption as part of Derwick Associates, the company that was remarkably successful at negotiating deals with the allegedly corrupt electricity industry in Venezuela. When Reich first sued, I was skeptical about how well his case would do. It’s doing pretty well. Derwick has gotten some charges thrown out, but the case is moving ahead, with lots of discovery. The recent court filings have mostly been a long back and forth of sealed documents. But what’s clear at this point is that someone, somewhere is taking notice of corruption in Venezuela’s electricity sector, and it’s not working out too well for those who collaborated with multi-billion-dollar extractions of Venezuelan wealth.

Joker brokers still snagging suckers

Today I got another mail from a perfectly nice-sounding guy who had been invited into a deal with a shady broker offering oil, which he was going to buy and then turn over to some shady client. I’m amazed that there are still thousands of people out there trying to do this sort of work every day. To make life easier for all of you, here is a flow chart to help you decide whether to accept a “mandate” from some supposed buyer and then use that to buy “oil” from a “refinery” you find on the internet.

 

Thoughts on US-Venezuela relations

After several years of US-Venezuelan relations being mostly a non-issue, they have suddenly blown up thanks to the US’s use of inflammatory rhetoric in the “whereas” portion of an executive order sanctioning seven midlevel officials.

“unusual and extraordinary threat to the national security and foreign policy of the United States”

When you have thousands of nuclear missiles, spy personnel and tech in every country on the planet, a military budget almost as big as the rest of the world’s combined, and an economy apparently invulnerable to external shocks, you have to be deluded to consider a midsized, lowish-income South American country full of baseball-playing, TV-loving, fried-food-eating beach-goers to be an “unusual and extraordinary threat.” It’s like the Dallas Cowboys worrying that their defensive line may be breached by a middle-school field hockey team. A country that does in fact face imminent threats of climate change (which can’t be named), destructive levels of poverty, and gun violence (which also can’t be named) is instead going to focus its state power on…seven midlevel officials in Venezuela. I’m sure everyone in Peoria is sighing with relief, their fears are gone. I hope there is a new military honor for the valiant battle against midlevel bureaucrats in South America.

But seriously. There is more to this move than meets the (sarcastic) eye.

First of all, I don’t like the idea of sanctions on individuals. As far as I’m concerned, they are themselves a human rights violation. If you have information that could justify charging someone with a crime in your country, lay charges and try and get the person into custody. If you don’t have enough info to lay charges — or more likely, if you don’t want to reveal your sources and methods to scrutiny — then STFU. You can’t just impose state power on people without due process, citizens or not. The idea of human rights is we have them because we are born, not because we are born under one legal regime or another.