Tag Archives: venezuela

Arevenca end game? González jailed in Venezuela (Updates on everything #1)

Yes, this blog is mostly shut down, as I am now working full-time. I’m just updating some old stories. Please note that this is just my personal research and thoughts, no connection to my employer.

Maybe you remember Arevenca. It’s mostly a guy named Francisco González, with a few colleagues and family members. Using the name of a defunct sandlot on the coast of Venezuela, Arenera de Venezuela CA, he pulled a series of big, long cons over the last decade. They include:

I first covered Arevenca here and I wrote about it in Vice and CJR.

As you can read in the Vice story, González and a string of accomplices — some of them apparently themselves victims of the deception — hit a home run with the Díaz family in Puerto Rico, extracting US$7.8 million for a nonexistent shipment of asphalt. The Díaz family has been going after him for years in Aruba, Puerto Rico and Spain. A month ago, after González failed to show up to court in Spain too many times, the court issued this arrest warrant:

Screen Shot 2016-04-14 at 11.04.05 PM.png

Soon, Venezuelan authorities arrested him for possible extradition to Spain.

After a few relatively quiet years, González had just recently popped up again. First, the Arevenca Bank website was redesigned.

Screen Shot 2016-04-15 at 7.18.07 AM.png

And then there was this letter to Venezuelan Trade Minister Jesús Farías, offering Arevenca’s British Virgin Islands corporation as a source of US$10 billion in financing for food imports to Venezuela.

Screen Shot 2016-04-14 at 11.06.58 PM.png

In addition to all of this, González is also facing legal processes in the USA. And Aruban authorities auctioned off his helicopter.

Whether González ever goes to trial, however, is an open question. Article 69 of the Venezuelan constitution says “Extradition of Venezuelans is prohibited,” and the Venezuelan justice system isn’t exactly a model of efficiency. But in any event, this guy seems to be nearing the end of his run.

Colombia, Venezuela get opportunity to overcome oil addiction. You’ll believe what happens next.

Venezuela and Colombia, where I’ve been hanging out for the last couple weeks, are terminal oil junkies. Both countries have built economies so oil dependent that with the current low price of crude, people are freaking out.

Of course crisis=opportunity and all that, so what better way to stimulate the local economy and set the countries up for the next cycle than invest in renewable energy? Good time to build some wind farms and microhydro projects, you might think. Good time to lay some solar panels onto reservoirs, you might think. Well, that’s not what’s happening.

In Venezuela, the government is bragging that it’s reactivating mature oil wells. And as the government faces the country’s worst financial crisis since at least the 1990s, it continues to give away gasoline to anyone who can take it. Free. Seriously. Younger people with dollar signs in their eyes are now investing their cash into oil, too. The folks behind Derwick Associates, led by Alejandro Betancourt, have spent about $250 million on shares of Bogota-based oil company Pacific E & P (formerly known as Pacific Rubiales), while their pal Francisco D’Agostino is part of a group that is putting more than $30 million into Harvest Natural Resources, a Texas oil company. Everybody’s betting on oil.

Here in Colombia, I heard Finance Minister Mauricio Cárdenas address an oil conference. He told the crowd that his country is committed to maintaining oil output at 1 million barrels a day or more, despite the fall in oil prices. “That’s why it’s important for the hydrocarbons sector to have all the stimuli, all the incentives, so that in this low-price scenario, it can invest, it can explore, and most of all, increase production. This is fundamental for the national economy, and indispensable for the public finance of the country.” (Link to story about his speech here, but the quote is from my own recording.)

The same day that he spoke, August 26, this report came out:

The consequences of global sea level rise could be even scarier than the worst-case scenarios predicted by the dominant climate models, which don’t fully account for the fast breakup of ice sheets and glaciers, NASA scientists said today (Aug. 26) at a press briefing.

What’s more, sea level rise is already occurring. The open question, NASA scientists say, is just how quickly the seas will rise in the future.

So you have these two tropical, coastal countries, facing the loss of their coral reefs and atolls, not to mention their glaciers and the unique alpine moors called páramos. Two countries that depend on a robust, constant hydrologic cycle for their energy supply and their basic survival. And their reaction to a crisis in the oil industry is to keep investing in oil.

Humanity! Never change.

The lighter (heavier?) side of devaluation

Screen Shot 2015-07-08 at 12.45.25 PMTurns out it can be a good thing to have your biggest banknote worth only USD 0.20. That way nobody can carry a significant amount of money. Just too damn heavy.

Thieves in Caracas today hit a bank at the very moment when its vault was open, allowing them to get the unusually large haul of BSF 2.4 million, newspaper El Nacional reports. However they abandoned a sack with almost 1.8 million bolivars in it outside the bank, and got away with only 647,000. That’s about USD 1,440 at the market rate.

 

Odebrecht — Just a Brazilian issue?

Marcelo Odebrecht, head of Brazil’s biggest engineering and construction company, is in jail in Brazil on allegations of kickbacks in the procurement of oil industry materials to Petrobras. Without prejudging his guilt or innocence, I think it’s fair to say he isn’t doing himself any favours with e-mails like this:

Brazilian police said on Wednesday they intercepted a note from the jailed chief executive of Odebrecht SA to his lawyers asking to “destroy email,” after he became the highest-profile executive arrested in Brazil’s largest ever corruption investigation.

The handwritten note, reproduced by Federal Police and posted in court documents online, says “destroy email drilling rigs.”

Marcelo Odebrecht, head of Brazil’s largest engineering and construction conglomerate, was arrested Friday in a sweeping investigation into a kickback scheme at the state-run oil company Petrobras. [ID:nL1N0Z50JB]

Dora Cavalcanti, a lawyer for Odebrecht, called the publication of the note “an act of extreme bad faith by the police,” and said there was nothing criminal about its contents or Odebrecht’s intent.

“That phrase ‘destroy email’ meant ‘explain’ or ‘refute’ the allegations about the email,” Cavalcanti told Reuters, adding that it was one of seven points in Odebrecht’s notes for his plea for habeas corpus, or release from unlawful imprisonment.

Yes, clearly, he was only saying that the e-mail needed to be destroyed metaphorically. I’m all for metaphoric destruction. When you growl “I will destroy you” of course you don’t mean that you will put someone in a meat grinder. Rather, you mean you will harm the person’s reputation. Something Mr. Odebrecht is learning all about, now that I think of it.

Joking aside, the question is, does Odebrecht have operations in other oil-producing countries? With an ostensibly weak compliance regime in Brazil, might there be something to investigate in other countries? Happily, the answer is no. Because Odebrecht operates only in strictly controlled, low-corruption jurisdictions:

Odebrecht Oil & Gas offers integrated solutions for the upstream oil and gas industry in Brazil, and selectively, in Angola, Venezuela, Argentina and Mexico, both during the investment as well as the operations phase.

Oh good, nothing to worry about.

Update a few minutes later: I see the NY Times does Angola today:

Corruption Is Killing Children in Angola

This is a video report that I’ll never be able to do again. It’s about Angola, an oil-rich and fabulously corrupt country that also happens to be thedeadliest place in the world to be a child.

Angola, naturally, doesn’t welcome journalists. It took me about five years to get a journalist visa to get into Angola, and after my reporting I doubt I’ll get another visa as long as the current regime remains in power. So at The Times, we poured a lot of time and effort into the story of what corruption does to a country.

For me, the most compelling moments are those of rural Angola, the villages where people live without any access to doctors or dentists. We simply drove down a highway for hours, and then twice took small dirt roads quite randomly to see where they would lead, and then stopped in villages and chatted with people. It’s pretty heartbreaking to see kids suffering untreated from disease and unable to attend school, or to meet a mom who has lost 10 children — and it’s not just sad, but infuriating when you see it in a country that is rich with oil and diamonds. Then you remember that the Angolan president’s daughter is a billionaire, that Western governments are buddying up to the president — and, well, you feel you owe it to the villagers you met to tell their story in their own words. So we shot some videos to run with my columns. May this add pressure on the government to spend its oil wealth not just on Porsches and Champagne for the leaders, but also on health and education for ordinary Angolans.

Go watch Kristof’s video if you can stand it. And don’t worry about Odebrecht because I’m sure they had nothing to do with any of this.

Venezuela coin scam update

Hannah Dreier, the wonderful AP correspondent in Caracas, reports that coins have disappeared there. And yet the Venezuelan mint says it continues to produce them (Excel sheet).

Here are the number of pieces in circulation over the past couple years:

Venezuela Central Bank pieces in circulation

Thanks to the miracles of Excel, I was able to use that table to calculate a minimum number of how many pieces have been minted in the past two years, past year, and past month. (Note that this is net of any coins intentionally taken out of service, but that number is probably very small.)

Continue reading

Important crime news

That’s right, very important, right here.

Nice-Pak Products, Inc., a manufacturer of wet wipes, will stop advertising moist toilet tissue as flushable unless it can substantiate that the product is safe to flush.

That’s under a settlement between the company and the Federal Trade Commission.

nicepak

Nice-Pak was represented by Trenton Norris of Arnold & Porter in Washington, D.C.

Nice-Pak will no longer claim that its moist toilet tissue is safe for sewer and septic tanks unless it has substantiation for those claims.

Nice-Pak will also stop providing trade customers, such as retailers, with information to make such unsubstantiated claims.

Oh wait, no. That’s not the important one. This is.

Y en español también.

h/t quico

UPDATE. But seriously. Can you all please take your triumphalist “ooh la la here comes the collapse of el rrregimen” and just shut up and think for a minute?

This all is not especially good news. Find me an example of a country where the US has taken out top members of the government and things got significantly better within a decade. If this is really the way things are going, then it’s where things are going. But please don’t pretend that this is good news. This is horrible news. If the US moves on Cabello and/or other top members of the Venezuelan state, we are probably looking at a long period of extreme instability. Not fun.

And forget about Diosdado and friends. What about all these scumballs who are turning state’s witness? You think these are some sorts of charmers? Why do you suppose that the US has never brought charges against the many people whose criminal activity has been decently described on this website, and even more on those of Alek Boyd or Caracas Gringo? These are not nice people. These are assholes who have stolen, quite often, hundreds of millions of dollars from the people of Venezuela. And since they are able to give a bit of chisme on Diosdado Cabello, they get to live out their days in fancy suburban homes and send their kids to fancy universities and live happily ever after, while Venezuela falls ever deeper into a pit.

It’s a disaster, it’s a mess, and the people who should be doing something about it are the people of Venezuela, especially the relatively well off, literate and networked expatriates. But the extent of their organizing is to retweet Nelson Bocaranda once a day and then go back to the pool.

ANOTHER UPDATE: What the Devil says.

Derwick Associates has a very good day

Derwick-300x225

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. Continue reading

Gold Reserve cases vs Venezuela tick on

Get all the background from Reuters’ story today.

For some reason they didn’t include the current legal situation. Court had declared that Venezuela lost the case on default a few weeks ago, on the basis that Gold Reserve said service of process was successful in January and Venezuela never responded. This led to all sorts of gnashing of teeth, especially by a Twitterer named Federico Alves, who has 50,000 followers who like to retweet him. He was going on and on about how this was the worst thing that had ever happened to his country. I told him to chill, that this isn’t a debt default and the case would go on. I am no expert in these things, but the experts I talk to say it will be a while yet before any assets get attached, at least from the US case.

Yesterday, the court agreed with me:

Screen Shot 2015-04-16 at 11.32.01 PM

 

So now you know, watch that court in early June. Anyone want to make odds on how long the case drags on? I am starting to think Luxembourg and France are going to go faster.

The most remarkable thing about this whole arbitration situation in Venezuela is that there are now more than $3 billion in well adjudicated claims against Venezuela (Gold Reserve’s $750-odd million, Owens Illinois at around $450 million, ExxonMobil at about $2 billion, plus a bunch of smaller ones), all of them already smaller than the original claims, and it is taking a long time to seize assets. For all the worries by people like me about the possible problems of an international system in which companies can sue countries, it looks like states still have the upper hand. (As Noel Maurer likes to point out.)

US offers actually helpful energy aid for Caribbean

The US is offering to pick up where Venezuela’s PetroCaribe has left off, by offering financial aid for Caribbean nations that want clean energy. Solar and wind resources in the Caribbean are huge, and unlike cheap oil, they are likely to last for the next few million years.

Here’s a note just posted by the White House (hat tip to Boz, who tweeted it and is probably writing a more insightful note on the topic at this moment):

Today, President Obama met with Caribbean leaders in a U.S.-CARICOM Summit in Kingston, Jamaica… Discussion focused on the importance of improving energy security, reducing energy costs, and fighting climate change… Initiatives:

Clean Energy Finance Facility for the Caribbean and Central American (CEFF-CCA): The United States will launch a $20 million facility to encourage investment in clean energy projects…

Clean Energy Finance: In January, OPIC formed a dedicated financing and insurance team to advance development of the Caribbean renewable energy sector. OPIC is in advanced talks to finance a 20 MW solar farm in Jamaica, and has already committed financing to Jamaica’s largest private-sector wind farm, a 36 MW facility in Malvern, St. Elizabeth Parish. OPIC is actively looking for opportunities to support solar and wind energy projects in Jamaica and throughout the broader Caribbean region…

Clean Energy Economy Transition: The Department of Energy assembled U.S. and Caribbean stakeholder working groups to look at opportunities ranging from clean energy, efficiency, diversifying electricity generation, clean transportation and energy education, at the Caribbean Clean Energy Technology Symposium, held in St. Thomas in March…

Greening Tourism: … Caribbean Hotel Energy Efficiency and Renewables (CHEER) initiative, which supports projects to improve energy and water efficiency as well as the exchange of best practices in the hotel and tourism industry. USAID is launching a complementary project focused on the Eastern Caribbean that will develop new financing tools for energy efficiency and renewables.

I am skeptical of PetroCaribe because I don’t like anything that encourages poor people or countries to increase their fossil fuel dependence. Oil is likely to get more expensive over time and even if it doesn’t, burning oil and gas contributes to climate change and increase dependence on global trade, both of which are especially risky for small island countries.

I know the US is doing this out of self-interest, both trying to get brownie points with small countries that have votes at the UN, OAS, etc. and also trying to expand markets for big solar and wind companies. I’m sure there will be criticism of the program because it’s not altruistic, while PetroCaribe arguably is/was. But if that’s the best criticism of this project, bring it on. A world full of that sort of problems would be a world I’d be happy to live in.

In a way, this is the best possible result of PetroCaribe. I can’t prove this, but I suspect that if it weren’t for competition for regional loyalty from energy-rich Venezuela, I doubt the US would be doing this right now. But the competition is there, and this relatively interesting program is born.

This is part of why it is so sad that the Venezuelan revolution was so laden with hypocrisy and corruption. The basic idea of a “mundo pluripolar” is sound.

Nervis or El Mundo? Hard to decide whom to trust

Screen Shot 2015-03-20 at 3.21.20 AMWho 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.