Derwick Associates wins a round against Otto Reich

In case you’re a wonk, here is the partial summary judgment decision on the motion to dismiss:

Long story short:

Defendants’ [that is, the Derwick Associates guys] motion to dismiss is GRANTED in part and DENIED in part. Claims I and II (RICO) and VII (civil conspiracy) are dismissed.

Defendant D’Agostino’s motion for leave to file a sur-reply is granted.

And yes, this is the part where I note that my initial reaction to Reich’s case was that it was a bit of a reach. Full of interesting claims, ones that I would really like to see demonstrated in court, but boy. He set himself some high legal hurdles.

Update: One reader mails to say I have it all wrong, that the case is going ahead. That is another way to see things. Take it all how you will.

Derwick says Reich’s racketeering case is garbage (UPDATED)

Derwick Associates, which was sued by former ambassador Otto Reich for alleged defamation and racketeering, finally comes to its own defense. As I said at the start, the case doesn’t look like a slam dunk. And Derwick is mounting a vigorous defense. Here’s a letter the Venezuelan electricity contractor’s principals, Pedro Trebbau and Leopoldo Betancourt, filed last week in US court. A few excerpts:

We and Tew Cardenas LLP, on behalf of defendants Leopoldo Alejandro Betancourt Lopez and Pedro Jose Trebbau Lopez (the “Derwick Defendants”), write … to request a pre-motion conference to seek permission to move to dismiss the complaint…

This case is nothing more than an effort by plaintiffs to transform legally insufficient state law tort claims, primarily sounding in defamation, into a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Plaintiffs’ claims fail because:

Who else abuses Wikipedia? You won’t be surprised

Vice and the Daily Dot have reported on a big network of “sock puppets,” or undisclosed related parties on the Internet, who have been manipulating Wikipedia to boost the profile and reputation of companies on behalf of a PR firm. Ars Technica reports today that Wikipedia has now disabled 250 user accounts as part of its investigation.

However, as Daily Dot mentions, there are still many paid editors and sock puppets on Wikipedia. One company that has aggressively used paid editors and socks to first seek to eliminate its page entirely, and later to edit the page to be as positive as possible, is Derwick Associates.

I wrote about Derwick Associates benefits from aggressive reputation management efforts a couple months ago. At the time, a long-time Wikipedia editor wrote me to tell me how Derwick also benefits from someone apparently hiring people to cleanse the company’s Wikipedia page. The person requested anonymity so as to continue monitoring the site unmolested. According to our correspondent, the saga of Derwick’s page went like this:

Forbes gets it wrong, admits it, still needs pushback (Derwick, GE)

Hi friends! How would you like to not learn things? If that’s up your alley, go read this Forbes article (oops, they retracted it! but preserved for posterity at the Chicago Tribune) about Derwick Associates, your friendly neighbourhood electric industry middleman, offering Win-Win Solutions for big industry suppliers and corrupt state enterprises alike!

Stock analyst Hilary Kramer visited her old haunts in Venezuela. I’m guessing her trip included more than one visit to a rooftop bar with 400-bolivar cocktails, and very, very few visits to electricity plants. She picked up a tip (though she says not where) that Derwick Ass ociates is the New Big Thing saving her beloved Venezuela from its long night of blackouts and misery. Thanks, Kramer, for offering this delicious antidote to information.

Here’s the problem. Kramer writes about Derwick Ass ociates as though it were something new that had never before appeared in the press. She blissfully lauds the company and its efforts to build power plants.

That might have been excusable sometime in 2010. But in September 2011, César Batiz of Últimas Noticias ran a story that showed that Derwick and several other companies were unknowns who had received sole-source contracts, overcharged for the products they were selling, and then failed to deliver on time if at all. He wrote again about Derwick in 2012. His reporting has yet to be refuted by facts. Rather, time has showed that the Batiz version was basically right. What have we heard from Derwick? Well, there was this paid advertisement in El Nacional which remains viewable on the El Nacional website as though it were a news article. And there was this press release — oh sorry no, that’s actually a lawyer letter demanding that I take down a blog post. My bad!

Other than that, nothing. To my knowledge, they haven’t released publicly this audit report showing that they are clean of corruption (happy to be proved wrong if anyone wants to send me a copy). They very rarely respond to requests for comment from the press. Their website is barely informative. And most importantly for me, they have benefitted from (and possibly paid for) a massive online reputation management campaign to bury their bad reputation in a heap of banality and bullshit. My reward for exposing this unethical behaviour was that someone created slanderous websites about me with stolen photos of my family. (Hey thanks Google, nice of you to host that site, great way to thank me for cleaning up your search results.)

Enter Forbes. 

Who protects reputation for the Bolibourgeoisie?

Update: This post had some effect in the world, including the disappearance of a bunch of websites. Sorry for dead links. More follow-up here.

Derwick Associates is a Bahamas Bermuda*-based electricity contractor that has had great success selling power plants to Venezuelan state-owned enterprises. Those efforts have attracted attention from the press and, most recently, from former US ambassador to Venezuela Otto Reich, who sued two principals of Derwick for alleged interference with business and racketeering, also accusing them of bribery in Venezuela.

Derwick is the beneficiary of an aggressive on-line reputation management campaign. If you search the internet for terms associated with the company, such as the names of the two principals Reich accused, “Pedro Trebbau Lopez” and “Leopoldo Alejandro Betancourt Lopez,” you will find very few news articles about them. Some search engines, including Bing and DuckDuckGo, give an entire first page of spurious results (see image in upper left). Most of the results are for pages obviously designed to obfuscate, throwing banal dust into the eyes of the search engine and leaving a casual searcher with the incorrect impression that there’s nothing to see here. On Google, the first six results are such fluff. Ironically, one of the first serious articles to appear in these searches is an exposé by blogger Alek Boyd about Derwick’s reputation management.

Everyone has a right to protect reputation online. And I don’t much care if someone wants to spend time and money filling websites with celebrity gossip, sex advice or technology news interspersed with the names of Derwick’s newsmakers. Sure, I could join in the existential pondering about the future of knowledge and the internet itself (and that is a very good article!), but the 3,000 words in this post need no padding. Instead, I invite you to follow me down a maze of on-line clues that for the first time connect a host of Venezuela corruption scandals and hint at the possibility that a highly regarded Venezuelan security consultant may be connected to an online defamation campaign and even to a pair of denial-of-service attacks on blogs.

Otto Reich sues Derwick Associates execs, alleging racketeering

I have an unconfirmed lawsuit in which Otto Reich appears to be is suing three people allegedly connected to Derwick Associates, for racketeering. Will be posting much more on it bright and early. Here’s the suit, in case you’re wondering.

Lawsuit

Also yes, if you are on my e-mail subscription list, you received a teaser of what I’ll be publishing. Sorry for taking it down for now — no sense running a whole analysis of a suit if I’m not 100% sure it’s real. Sure looks real, though, don’t it?

(Updated 31 July 2 pm EDT after confirming suit was really filed in NY.)

Much more detail & analysis here.

Will Rolls Royce scandal touch Venezuela?

A few months ago, Rolls Royce said its sales team may have gotten a bit too enthusiastic in sealing deals in Indonesia and China. Reuters reported at the time:

Aerospace and defence group Rolls-Royce (RR.L) may face prosecution after Britain’s Serious Fraud Office (SFO) ordered it to hand over details of possible bribery and corruption in China and elsewhere, the company said on Thursday.

The world’s second-largest maker of aircraft engines said the SFO had asked it to conduct an internal inquiry into dealings involving intermediaries in China, Indonesia and other overseas markets, which it did not name, and report the results.

“It is too early to predict the outcomes, but these could include the prosecution of individuals and of the company. We will cooperate fully,” Chief Executive John Rishton said.

This story doesn’t mention it, but Rolls Royce has also sent equipment to Venezuela, via some unusual intermediaries. Here’s an article in Spanish. It would be interesting to know why exactly Rolls was willing to sell turbines to middle-men rather than selling for possibly twice as much money directly to PDVSA.

Venezuelan intelligence defends Derwick Associates from the deadly peril of journalism

Hey, remember Derwick Associates? The guys who recently accused me of being part of a global defamation conspiracy because I:

1. Reposted a deleted article about the company, originally posted at DevilsExcrement.com, which mostly rehashed stuff from reporting originally found in an article by Venezuelan reporter César Batiz in the newspaper Últimas Noticias
2. Laughed at the lawyer letter they sent me demanding I take down that page
3. Gave Batiz evidence that the FBI and US Treasury Department had looked at articles about Derwick on this website
4. Wrote a little note pointing out that there are databases out there to show Derwick’s connection to planes that are registered through anonymizing services

I don’t think this is really about defamation, as nobody has yet told me how anything I have said was defamatory. Instead, they just seem very keen on avoiding press attention.

Personally, I find this all pretty funny, as their efforts have been mostly self-defeating. At first I didn’t care much about this Derwick case. But these guys couldn’t just sit there and let the skeptical reporting go. They had to attack. And now, they are looking ever more interesting.

But the laugh riot doesn’t end there. Because now, Venezuela’s “intelligence” police — or someone claiming to represent them — have joined the fun, thereby guaranteeing even MORE attention on this extraordinarily successful company.

Derwick Associates requests censorship, I request details

I couldn’t agree more. Photo I took today in Bogotá.

Derwick Associates is a Venezuelan engineering company that has had incredible success in the three years since it was founded, gaining hundreds of millions of dollars in contracts to procure generating turbines and other materials and to then build electricity plants. Press reports have raised questions about exactly how Derwick got so big, so fast. My colleague Cesar Batiz at Últimas Noticias wrote 14 months ago that the company had gotten very big contracts despite a lack of experience and the relative youth of its managers. He later included Derwick in a larger article about suppliers of electricity equipment that appeared to be overcharging. Both times, he tried to speak with the company, but wasn’t able to get them to reply. Later, the Devil’s Excrement blog ran a piece summarizing Batiz’s findings and adding a curious fact — the company, despite doing such big business, had registered a Florida office that was in a drab office building in a remote area of Fort Lauderdale, by the airport, with neighbors that included US security agencies.

The Devil later took down his post without explanations. I reposted it here, for no reason other than, as I said at the time, I dislike memory holes. I would never have posted it if it seemed that there was anything untoward about the note.

A few weeks ago, I received an e-mail (5 mb PDF) that opened with a letter from Derwick’s lawyers:

I couldn’t agree more. Photo I took today in Bogotá.

The lawyers write about Wiki Anti-Corrupción (WAC), a website I have previously recommended as having a lot of interesting if ill-supported information about corruption in Venezuela. Derwick has sued WAC for defamation in local court in Miami, demanding “not less than $200 million.” They kindly included a copy of their suit (here is the lawsuit on its own, without attachments). They say WAC defamed Derwick and its leaders with claims of money laundering, fuel smuggling, coltan trafficking, and a whole list of other claims. To be clear here, nobody claims that WAC has anything to do with Devil’s Excrement or with me. The lawyers continue, referring to the Devil’s Excrement story I reposted:

The Article — which contains certain of the false and defamatory statements concerning Plaintiffs that appear on the WAC Website and are the subject of the Action — remains accessible on your website.”

But they don’t tell me what those false or defamatory statements might be. They go on:

The original author of the article has removed that page from the [Devil’s Excrement] website after being informed that the page was littered with false and defamatory information about Plaintiffs. Accordingly we request that you also remove the Article.

So there you have the background to my very simple, and I think diplomatic, response:

=======

Mr. Torres:

I received your note of Sept. 21. If you see something on my website that you think is false or defamatory, please identify the problem as specifically as possible and support your position.

We — you and I, together — will then work out how to deal with the problem. A quick correction or a public chance to reply is often a better solution. Deletion is a last resort, and one that often doesn’t work anyway.

So for starters, just send me a copy of the letter you sent to Devil’s Excrement, ok?

Thanks,
Steven
=========

Wiki Anti-Corrupción’s very general response to the case is here.

Venepiramides also weighs in.

For my earlier, rather less diplomatic response, see Twitter.

UPDATE: I hadn’t seen Alek Boyd’s much more complete article about the nice people at Derwick.

Keeping track of website updates (Arevenca/Madasi, Derwick, Ovarb)

One fun thing I like to do is watch when web pages are changed or removed. As I look into possibly untoward behaviour in the oil industry, I keep coming across situations where information disappears from the Internet. I give you three recent examples. Each one is minor, and I don’t want to speculate on people’s motives. I have no problem with privacy. I just don’t like memory holes, where information of public value was public and then disappears. So I am preserving and pointing out a few tidbits.