ProEnergy document leaker storms out of closet

I’ve spent the last two days thinking about how to write a post on this, and I think the best thing is to let this person speak for himself. If you’re at all interested in the whole drama of ProEnergy Services and Derwick Associates in Venezuela, you need to see this. A leaker, Dan Rosenau, is offering a big cache of documents to anyone who wants to help the world understand the ProEnergy-Derwick weirdness.

Apparently, this leaker was the source of the Tomas Lander documents I linked to a few months ago, and which also gave rise to my story asking questions of Pratt & Whitney Power Systems (now just PWPS). There are many, many more documents as well.

ProEnergy Services didn’t respond to a voice message and an e-mail in which I requested comment and confirmation that the documents are genuine. The company also didn’t confirm or deny whether Rosenau had worked there.

Interesting. Go check it out at Cryptome.org.

Pacific Rubiales takeover situation gets truly weird

I never thought I’d just repost a press release from Orlando Alvarado on my blog. An Orlando Alvarado was at one point CFO of Derwick Associates, according to a lawsuit that company filed in 2012, and Alek Boyd says he confirmed somehow that one of these companies includes in its owners the chairman of Derwick Associates. So, this all looks terribly Derwicky, though the documentation is as yet a bit thin.

And I don’t even know what to say about this. All very strange. Theories and speculation are welcome in comments or in my inbox.

Derwick Associates has a very good day

As they portray themselves

Yesterday was a good day for the guys in charge of Derwick Associates.

Last week, a group of three companies, two in Panama and one in Barbados, disclosed they had bought a bit more than 10% of Pacific Rubiales Corp. The Panama companies were well anonymized, but the Barbados one less so. Alek Boyd said on Twitter April 28 that he got the paperwork for the Barbados company. It belongs, he says, to Alejandro Betancourt, chairman of Derwick Associates. This was a surprise, given as I’ve covered each of those companies extensively and the last we heard, a top Pacific Rubiales executive was saying he didn’t know the Derwick guys.

Derwick Associates takes the show to Mexico

In Venezuela, they insisted they were a construction company. Now, they just “intervene” in infrastructure projects, whatever that means. (My slightly edited Google translation below).

Published on Feb 4, 2015

Ciudad Obregón, Sonora 03 February 2015

Solar farm installation ensures electricity savings in the municipality

With the installation of the first “Cajeme 10M Solar” panel farm in Ciudad Obregón, Mayor Rogelio Diaz Brown Ramsburgh placed the Municipality at the forefront of renewable energy policies nationwide.

That is by establishing a project in which a municipality and a drinking water agency are supplied by solar, starting one of the most momentous development schemes for the region.

“This farm will produce about 70 percent of the energy consumed by the Municipal Government, whether in public lighting, buildings, courts, public spaces, among others,” he said during his speech.

For two years he sought to attract this photovoltaic generation park…

Like other success stories of this administration, with this project, established molds are broken in the quest to become a self-sustaining municipality, he said.

In addition to saving 20 percent in energy expenditure by City Hall, he said, clean energy will be produced for a period of 20 years at a cost below that of the Federal Electricity Commission.

To realize this plan, he stressed, the investment of 25 million dollars from the company Zigor Mexico and Latam, and the intervention of the Derwick company have been necessary.

…

The event was attended by the federal manager Faustino Felix Chavez, the local deputy Rossana Coboj García; the Town Clerk, Antonio Alvidrez Labrado; director of Zigor Mexico and LATAM, Alfredo Garcia de Jalon; and Derwick vice president, Pedro Trebbau López, among other officials.

Good to see Derwick moving on from Venezuela’s empty piñata and finding new business development opportunities.

Bolichico biographic info (partially) unsealed

For those coming late to the party: Washington insider/anti-Communist crusader Otto Reich has been pursuing a lawsuit against a group of young men from Venezuela who are associated (exactly how associated is a matter of debate) with Derwick Associates. Derwick is a middleman company that got some sweetheart deals in the Venezuelan electricity industry around 2010 (just how sweet is a matter of debate). Reich claims that these guys messed with his reputation and income, and he sued them not just for defamation but also for racketeering, fraud, foreign corrupt practices and conspiracy. The court tossed the racketeering and conspiracy charges, while the rest of the case has moved ahead.

The issue currently at hand is whether the court has “personal jurisdiction” over two of the defendants, Leopoldo Alejandro Betancourt Lopez andPedro Jose Trebbau Lopez. Both sides are presenting heaps of evidence to show that these guys were or weren’t connected in legally binding ways to New York. The defendants are trying to show that they have so little connection to New York that a New York court has no right to judge them. The other side, meanwhile, has to share all sorts of facts about these guys in order to show that indeed they are connected to New York. As a result, the court gets to see what the Derwick guys do in New York.

For the past four-plus months, most of the substantive filings were under seal. This was annoying. It was annoying enough that when Reich moved to unseal some documents, I wrote a letter to support that measure. It went into the record March 24. It was probably just a coincidence, but less than three hours later, the judge ordered the sides to convene March 26 to talk about unsealing the docket, and on that date the judge ordered the parties to prepare redacted versions of their filings so that they could appear in the public record rather than being kept under seal.

The redacted documents were released Friday. They lack much of the financial info that some people would like to see. Instead, most of what’s in there is a pretty detailed level of stuff that only a real geek would care about, like:

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.

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.

Sometimes a cigar is just a cigar ($PRE.to, Derwick Associates)

This week I noticed this curious securities filing from US Oil Sands Inc from 2012. It includes the following tidbit:

There’s nothing unusual about these two investment companies buying shares of an oil company. Ice Rose Holdings is controlled by Serafino Iacono, co-chairman of Pacific Rubiales Energy Corp., ID Introduction Ltd. is controlled by Jose Francisco Arata, as shown here. Arata is president of Pacific Rubiales. Oil guys, buying shares in an oil company.

What caught my eye was the address of Arata’s company. Torre Kyra PH-1, where have I heard that address before? That’s right: Derwick Associates. Having spent too many hours studying both Pacific Rubiales and Derwick Associates, without the vaguest sense that they overlapped*, I had to wipe up the shrapnel from my exploding head.

A Pacific Rubiales executive using Derwick’s address in 2012. That would have been pretty interesting.

But as I always like to do, I gave Pacific Rubiales a chance to comment. And in a rare departure, the company responded. A gracious note, too (even though they apparently have me confused with another blogger). Here’s what they say:

As to Derwick Associates, Mr. Arata does not know the company or the people running it and has no relationship with that company.  The address in question was the address in Caracas for companies that Mr. Arata worked for, but the office was sold back in 2009 and has not been used by Mr. Arata since. The filing from 2012 is simply an error, resulting from a failure on our part to update ID Introduction’s corporate address when helping Mr. Arata file the notice of private placement you read.  The proper corporate address is actually in Panama.

Thanks for the heads’ up on this, as we are now checking all our filings to make sure that ID Introduction’s proper address is reflected in all current filings.

So now on to another person using the address of Torre Kyra, PH-1. Mr. Alvarado, I’d love to give you a chance to comment, too, but I can’t find any contact info. Be in touch, let me know how to reach you.

* Unless you count that they both have dealings with David Osio’s financial institutions. But who doesn’t, right?

Leak of Venezuela contractor documents raises questions (Updated)

Tomás Lander

What appears to be a leak of internal documents from Missouri electricity industry contractor ProEnergy Services and Venezuelan contractor Derwick Associates adds to questions about how ProEnergy got deals to sell products made by General Electric, Pratt & Whitney and Rolls Royce to Venezuelan state industries starting in late 2009.

The documents, posted to the website Scribd Nov. 17 by a person using the name “Tomás Lander,” include a proposal dated June 2009 from ProEnergy to Venezuela offering power plants. At the time, Venezuela was suffering periodic blackouts because demand for electricity was growing, a drought was draining hydroelectric reservoirs and the 2008 commodities bust had left the country with limited cash to deal with the crisis.

I haven’t been able to confirm that the documents are genuine. I sent e-mails to Derwick Associates’ press line, ProEnergy CEO Jeff Cannon and ProEnergy chief counsel Scott Dieball, asking them to validate or refute the authenticity of the documents and requesting comment. I haven’t received any response. At a glance, nothing about the documents indicates that they are forgeries. As such, for the rest of this article I will treat them as genuine documents. If ProEnergy, Derwick or anyone else offers any commentary on the documents, I will update this post to reflect their response.

The documents don’t show what happened to that ProEnergy proposal. However, another document shows that two months later, ProEnergy and Derwick agreed to cooperate in seeking work in Venezuela. Their agreement forbids either company from revealing “any and all details regarding transactions between Derwick and ProEnergy, details regarding transactions between a party and third parties, and the payment of fees and commissions.”*

The problem with collaborators (Galt’s Gulch Chile, Argentine dictators, and Derwick Associates, oh my)

Ken Johnson, head of Galt’s Gulch Chile, looks at proposed subdivision map at Curacaví city hall.

I’ve been thinking about collaborators: people who go along with situations where they aren’t comfortable. Resisting or opposing would be hard, or cause legal inconveniences, or burn bridges, or ruin the chance of making big bucks. Some are just afraid. Collaborating with misbehavior, from a petty lie up to a major human rights violation, is normal and human. I probably go along to get along 99% of the time. But anyone who counts on reluctant collaborators is taking chances.

One example is Galt’s Gulch Chile (GGC). This is a proposed real estate development in the suburbs of Santiago, Chile, marketed toward libertarians and others who think the US, Canada and Western Europe are likely to collapse. Among its problems are that its managing partner, Ken Johnson, alienated a lot of workers, investors and buyers. By last November, when I visited the place for a Spring Celebration, some of the big names that were promoting the project were already feuding with Johnson over money and employment conditions. I sensed there were some odd personal dynamics but I figured they were the usual things one would get between a bunch of lone wolves trying to work together. Turns out it was worse. A few people have privately complained about Johnson; then a couple weeks ago, an early buyer went public alleging financial malfeasance. That broke the dam.

Suddenly, the interpipes were flooded with people who had been suspicious, those who claim to have warned buyers against the project, and even promoter-in-chief Jeff Berwick, saying that he was hoodwinked. He now claims he was already disillusioned with the project last August but chose to keep going along to get along so as not to cause other people any problems. Lawyer Erin Gallagly (who has never returned my calls seeking comment), in a now-deleted comment on Facebook, said she “witnessed a plethora of horror” in three months at GGC: failure to pay vendors, withholding pay from employees, threatening employees, financial mismanagement, and demanding that salespeople not share information.