Venezuela’s rampant corruption

By Alek Boyd - Tax Justice Network

This guest blog from Alek Boyd explores what happens when oil, offshore financial secrecy and populist politics combine to corrupt the hopes of an entire nation.

When the International Consortium of Investigative Journalists published leaked HSBC data provided by Hervé Falciani in February this year, something rather odd became public: Venezuela had the third largest amount of money ($14.8B) held in HSBC accounts.

When Banca Privada D’Andorra (BPA) was singled out, in March this year, by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) as “a foreign financial institution of primary money laundering concern” Venezuela popped again: FinCEN claims “BPA processed approximately $2 billion in transactions” in relation to a money laundering scheme in which Petróleos de Venezuela (PDVSA) participated.

When the FIFA corruption scandal broke in May, former president of Venezuelan Football Federation, Rafael Esquivel, was among the arrested.

Also in May, the Wall Street Journal reported that U.S. authorities were:

“investigating several high-ranking Venezuelan officials, including the president of the country’s congress (Diosdado Cabello), on suspicion that they have turned the country into a global hub for cocaine trafficking and money laundering”.

More recently, the U.S. Drug Enforcement Administration arrested, during a sting operation in Haiti, Efrain Antonio Campo Flores and Franqui Francisco Flores de Freitas for “conspiring to import cocaine into the United States.” In case the names fail to ring bells, these are a nephew, and a godson, of Venezuela’s current First Lady, Cilia Flores.

Then, Reuters informed that U.S. authorities were “preparing to unveil drug trafficking charges against the head of Venezuela’s National Guard…” adding “Nestor Reverol, the former head of Venezuela’s anti-narcotics agency and a long-time ally of late socialist leader Hugo Chavez, is named in a sealed indictment pending in federal court in Brooklyn, New York”.

The above may come as a surprise to some. In the last few years, Venezuela increased media profile had been largely focused on Hugo Chavez’s charisma and his poverty alleviation programs. Alas the gargantuan corruption that his administration brought about, of an unprecedented scale even in a country as corrupt as ours, is hardly played in the world’s media.

While anti corruption advocates the world over seem incensed, for instance, by Sepp Blatter’s shenanigans, his actions and those of his associates are children’s play next to what has happened in Venezuela since Chavez came to power. Venezuela has become so corrupt that not even Russians are putting up with it.

It is not a coincidence that Venezuelans keep popping up in about every major scandal around the world. Locally, a totally subservient Supreme Court, whose judges have no qualms in publicly siding with the chavista revolution, has created an environment where impunity is the norm.

Given the phenomenal amount of income that this oil rich nation has gotten in the last 15 years, it is not a stretch to conclude that Venezuela sits, comfortably, as the undisputed leader in corruption in Latin America.

Most regrettably, Venezuelan black money is welcomed by the pinstripe brigade all around the world. No questions about origin are ever asked. For instance, a rather small investment firm in London was behind the acquisition of the largest newspaper conglomerate in Venezuela. Ultimate controlling parties involved were, almost certainly, politically exposed persons whose wealth lack any vestige of legitimacy. Yet, the illegal deal proceeded without glitch.

Another London-based agent involved in Venezuela-related scams made news not long ago, though when I informed and alerted authorities no action was taken.

Corruption illegally deprives countries of much needed resources to develop. It is about time anti corruption advocates started analyzing what goes on in Venezuela.

@alekboyd has been researching and exposing corruption in his native Venezuela since 2002.