The mysterious winners of a $644 million arbitration against PDVSA

CORRECTION 21 October 2015:

I have learned that the billion-dollar contract referred to in this report was not just for ship rental. It was also for the provision of ship crews, divers, and geotechnical engineers, and other professionals for the full project of pipeline mapping, repair and replacement.

AND AN UPDATE: Pdvsa said in its 2014 annual report that it paid this award.

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PDVSA, Venezuela’s state oil company, released financial statements last month. One of the more remarkable items in there was a $644 million loss for an arbitration award in a case that I had never heard about before — and no Venezuela expert I’ve talked to had heard about, either. This is all that PDVSA has ever disclosed about the case:

In November 2013, the award related to the arbitration request filed by Gulmar Offshore Middle East LLC and Kaplan Industry Inc. was issued against PDVSA, corresponding to early unilateral termination of contract by PDVSA. The award established a compensation of $644 million.

That is a tremendous amount of money. I wrote last week in REDD Intelligence (subscription needed to read) about what this surprise means for Venezuela’s country risk. Here, I’m going to focus instead on what we know about the companies that won this money.

I had only heard of Gulmar Offshore as one of a long list of companies with assets that Venezuela expropriated back in 2009. I had never heard of Kaplan, as it was misspelled in the initial announcement (good English analysis here) as “Kapplan.”

Gulmar was, and is, a company that leases vessels for undersea projects in the oil industry. It was later purchased by Oaktree Capital Management (more on them later). Back in 2009, I had a hard time reaching them; for this article the one phone number I found didn’t even ring and Oaktree’s lawyer didn’t respond to an e-mailed request for comment.

Kaplan is more difficult to pin down. Bloomberg said that Kaplan was a gas-cylinder manufacturer from New Jersey. Oops! That’s Kaplan Industries.

Kaplan Industry website, unchanged since 2010

No, this was Kaplan Industry. At the top of its web page, it says it’s “An engineering design firm.” Then in the text, it’s “a leading independent international development consultancy.” The confusion may have come about as the website was thrown together, almost entirely plagiarized from other sites. The home page is from Adam Smith International, some of the “About” page is from Secunda Canada, and the line “Having fun inspires creativity, which rouses fresh ideas that we take to our clients” is from Zain Public Relations. Yes, having fun inspires creativity. And nothing demonstrates creativity like “copy-paste.”

No one answered at any of the three phone numbers listed on the website. Company president Vince Hulan didn’t respond to e-mails sent to the address on the website, including one e-mail asking specific questions about the plagiarism and other concerns raised in this article. Four lawyers connected to the company and its principals also failed to return calls and e-mails.

Lucky Igbinedion mixed up in Arevenca case, gets press in Nigeria

The weirdest case I’ve tracked since I started this blog has been that of Skanga, a little unknown Nigerian company that is suing Petroleos de Venezuela SA (PDVSA) for at least $100 million for supposedly taking part in an advance-fee fraud against the Nigerian company. It’s a long and convoluted story. I wrote up one piece last year in a piece called, “PDVSA faces $100 million lawsuit over ambassador’s alleged con man links.” I also wrote a little piece on the same topic in Venezuela’s El Mundo newspaper at the time. Later, I gave a little update on the Venezuelan ambassador at the center of the scandal.

Today, I see my pal Nicholas Ibekwe has published a story based on the latest filings in the case, which show that corrupt (no “allegedly” needed, he pleaded guilty to money laundering) Nigerian governor Lucky Igbinedion and his brother Bright were the registered owners of Skanga during the period in question. There is more, much more, but for now I want to point people to Nicholas’s story. I have to admit I don’t like the style of Nigerian journalism — I would never write that I “can authoritatively reveal” anything. But I’m happy to see this story getting a bit of play in Nigeria, where most of the weirdness went down. One way or another, the people who took part in this game deserve a bit of publicity. Whether it’s for their cleverness or foolishness isn’t for me to decide. The story link again.

Puerto Rico asphalt company sues Arevenca, Madasi, Miguel Lausell for $13.6 million

Arevenca, the fake oil company long documented in these pages for its deceptive web site and involvement in a failed airline in Aruba, is being sued along with several people who allegedly acted as salesmen for a scam in Puerto Rico. The Betteroads Asphalt Corp. alleges in a suit filed Sept. 4 in the US territory that it bought a cargo of asphalt from Arevenca following a sales pitch by prominent Puerto Rico businessman Miguel Lausell on behalf of local Arevenca representative Madasi Oil Co. The suit accuses Arevenca, Madasi and individuals including Lausell of fraud and breach of contract and demands a refund of $7.8 million that Betteroads spent on asphalt and another $5.8 million in other damages.

Betteroads, according to the complaint and a series of e-mails filed with the court, thought that the $7.8 million it sent to the Swiss bank account of Arevenca would entitle it to a tanker of asphalt, and was disappointed to find that tanker-loads of excuses, lies and delays were wholly inadequate for the task of resurfacing highways and parking lots even in the magical realm of the Spanish-speaking Caribbean. After months spent arguing with various representatives of Arevenca, including company president Francisco Javier González Álvarez, Lausell, and others, Betteroads has turned to the court systems of the United States, which seems to be the end-point of many conflicts involving shady Caribbean and Venezuelan operators.

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.

Who is behind Arevenca? Help me find out.

I recognise Francisco Javier González and Glenbert Croes. Who else is in this picture? Any information will be helpful.

Click for full size

Send tips to settysoutham@gmail.com or just leave a comment on this post. Thanks.

UPDATING: Thanks to Otto, the Devil, Boz, and my sister for pointing out the name tags on the table and/or the names in the video. The problem is that Abraham Reek and Martino Schiera, for example, have so little Internet paper trail that I am unsure if they are using their real names. I’m hoping that people who know these folks will come forward.

Goodbye, Fly Aruba

This is the way Fly Aruba ends, not with a bang but a roar down the jetway.

Thanks again to readers JS and T for keeping me updated on this. Look up the history of this plane and others at FlightAware.

UPDATING: it looks like the flight plan was filed a day early. The plane will go to Brownsville today, according to a newly filed flight plan.

Responding to the comment that “why” is the important issue here, all I can say is yes, of course. But the real “why” may never be known. Starting an airline is an odd thing to do with one’s money. I am starting to think it’s an apt coincidence that Arevenca is in the old Stanford Bank offices in Oranjestad.

Arevenca: Scam continues to unravel

According to our trusty correspondents, a labour case against fake oil company Arevenca began on Friday. The court may seize the company’s furniture and such within a couple months to help pay debts to workers at Fly Aruba, a fake airline that Arevenca started (for reasons that I’m sure will someday become clear — NOT). The workers sued for back wages after not being fully paid for two months, which is apparently a violation of some law or another in Aruba.

Now this, from today’s 24ora:

Pa incumplimento di pago avion di Fly Aruba ta bai bek

Which is to say, Fly Aruba’s one jet is being repossessed for non-payment. The registered owner, according to the FAA database, is “Wells Fargo Bank Northwest NA Trustee.” So Wells, or their client, is doing an international repo.

Up next, I hear another Arevenca victim is in the wings waiting to sue, but then, I’ve been hearing that since February. So we’ll see.

Responding to a mysterious gentleman (Arevenca, Delphi) (Updated)

Content hidden 8 January 2013, because the subject of this post convinced me that it wasn’t fair to have anonymous comments about him posted online. More about it here.

PDVSA Pension Ponzi: PDVSA seems to have forgotten it. You should too.

PDVSA’s annual financial statements don’t appear to mention the company pension fund’s loss of $480-odd million to a US-based Ponzi scheme. I hope someday that such a loss will be an immaterial issue for my accounts.