Fausta's Blog

Ralph Lauren Corp., which closed its Buenos Aires shop last year over economic and currency issues (at a cost of US$3million in severance pay and lease expenses), self-reported to the US DOJ and the SEC, and agreed to pay

$882,000 penalty as part of an agreement with the U.S. Department of Justice and $734,846 to the Securities and Exchange Commission

over bribes company employees allegedly paid to

Argentine customs officials with dresses, perfume and cash to accelerate the passage of merchandise into the South American country…
…
The bribes, allegedly paid via a customs broker, were labeled as “loading and delivery expenses” or “stamp tax/label tax” on invoices in order to disguise the payments, according to U.S. authorities.
…
The Justice Department alleged that the bribes were paid in order to improperly obtain the paperwork necessary for goods to clear customs, to permit the clearance of prohibited items and to occasionally avoid inspection entirely.

With a system of rampant corruption, the local employees probably figured it was the only way to get the merchandise to the store. Otherwise the cargo would sit in customs until a substantial part of it went “missing” – and you’d still have to pay off someone.

RLC didn’t admit or deny the allegations in its agreement with the SEC, and this is the first time the SEC has entered a nonprosecution agreement in a Foreign Corrupt Practices Act matter.

“I am shocked, shocked!”
Mega-Rich Withdrew Money From Cyprus Before Looting

The real targets of the “haircut” are businesses, entrepreneurs and the middle class

News that the Cypriot President’s family moved 21 million euros to London days before the bank accounts of his people were looted as part of the bailout deal serves as another reminder that while the media portrays the victims of the Cyprus “haircut” as the mega rich and wealthy Russian oligarchs, the real victims are middle class families and small business owners.

And,

In addition, as Reuters reports, “While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.”

Branches and subsidiaries of Cypriot banks in London and Russia remained open while banks in Cyprus were closed, allowing Russian oligarchs and other wealthy depositors to move their money.

When asked about the amount of money that had exited Cyprus before the bailout deal, German Finance Minister Wolfgang Schaeuble refused to provide figures.

Take it away, Louis!

The UK’s Daily Mail reports,
How Senator Bob Menendez tried to pass a law that would have helped donor whose jet he repeatedly used for trips to the Dominican Republic

he disclosure of the legislation that Menendez wanted to push through- that had incentives for natural gas vehicle conversions- is the latest intersection between the New Jersey Democrat who is the subject of an ethics inquiry on Capitol Hill and the Florida doctor involved in a federal criminal investigation.

Dr. Salomon Melgen invested in Gaseous Fuel Systems Corp. of Weston, Florida, and joined its board of directors in early 2010, according to the company’s chief executive and a former company consultant.

GFS designs, manufactures and sells products to convert diesel-fuel fleets to natural gas. The amount of Melgen’s investment is confidential under rules of the Securities and Exchange Commission, but a 2009 document filed with the SEC showed the company required a minimum individual investment at that time of $51,500.

At the same time, Menendez emerged as a principal supporter of a natural gas bill that would boost tax credits and grants to truck and heavy vehicle fleets that converted to alternative fuels.
The bill stalled in the Senate Finance Committee, and after it was revived in 2012, the NAT GAS Act failed to win the needed 60 votes to pass.

While the bill was under consideration between 2009 and 2011, the former consultant for GFS spent $220,000 lobbying Menendez’s staff and other congressional and federal officials on the act’s provisions as well as other regulatory issues, according to interviews and Senate records.
…
Melgen has been a staunch supporter, giving more than $14,000 directly to Menendez since the late 1990s and, through his eye clinic, donating $700,000 last year to a ‘super’ political committee that supported Democratic Senate candidates. The committee, in turn, spent $582,000 to back Menendez’ campaign.

More:
Web of Influence
Ties between Menendez and controversial donor more extensive than previously thought

Breitbart has the story:
The Manuel Noriega Connection to the Family Behind the Melgen-Menendez Dominican Port Security Deal

But fret not. Everybody’s in a frazzle because government spending’s going to increase only by 8.9%.

David Frum exposes How Hugo Chavez brought Afghanistan to South America. Frum, who’s been to Afghanistan and Iraq, traveled to the world’s most dangerous city: Caracas, and found that

The violence in Venezuela isn’t political, exactly. It is more a reflection of the general breakdown of law in a society where every institution of state has been corrupted and degraded.

The police had long since given up patrolling the poor neighborhoods on the hills surrounding central Caracas. Now they had ceased patrolling the high-rent districts, too — that is, when they were not actively in cahoots with the criminals who committed “express kidnappings”: jumping out at a motorist as he punched the keypad to the locked garage beneath his apartment building, putting a gun to his head, and abducting him for two hours. The ransoms were typically relatively small, a few thousand dollars. The kidnappers made their money on volume.

Frum continues,

For all the talk about Chavez’s “socialist revolution,” his regime rests, caudillo-style, on the backing of corrupt, drug-dealing generals. Henry Silva Rangel, appointed minister of defense in January 2012, was one of four senior Chavez associates named by the U.S. government in 2008 as Foreign Narcotics Kingpins (yes, that’s the actual title). In a 2010 interview, Rangel warned that the army would not allow the Chavez “revolution” to be voted out of office. Rangel maintains a tight working relationship with another Chavez brother, Adnan, who succeeded Chavez’s father as governor of the family’s home state of Barinas.

Despite vast oil wealth, the Venezuelan economy has tumbled into terrible straits. Inflation roars at 25%, unemployment exceeds 8%, the non-oil economy stagnates, electricity flickers on and off irregularly, and basic commodities such as rice and beans have become scarce in the marketplaces and must be obtained as rations from government-controlled stores.

Yet there remains enough cash on hand for the government to open the spending spigots in election years such as 2012, building showcase housing developments amid the slums, and distributing keys to its most proven supporters.

That would be the boliburguesía, the ” enriched inner circle that will attempt to sustain Chavez-style rule after Chavez’s demise.”

With the help of the Stasi-trained Cubans, that is. One needs a little muscle, after all. And kabuki diplomacy, too,

Cuba will not only be the ultimate enforcer of the Pacto de la Habana, but will also try to ensure Latin American diplomatic support for Venezuela’s government when Raúl Castro takes over the Community of Latin American and Caribbean States (CELAC) regional bloc at a ceremony in Chile late this month.

Here’s the situation: As Andres Oppenheimer points out,

Chávez has followed Castro’s model of creating a permanent “state of war” — creating confrontations with the church, the media, the business community or “imperial” powers — to justify his grab of absolute powers.

But Chávez didn’t limit himself to Venezuela; instead, he’s actively fomented a “state of war” by sending money to like-minded heads of state in Latin America – think of Cristina Fernandez’s Falklands saber-rattling – and cozying up to Iran and drug lords (Venezuela’s the #1 shipping point for drugs).

He calls it The War of All the People.

Hugo’s getting away with it because, as Carlos Eire eloquently points out,

covetousness is one key to understanding the pirate empires of Latrine America. The other key is impunity.

Who in the USA is paying attention?

Cross-posted at Liberty Unyielding.

Andres Oppenheimer writes about the most corrupt countries in our hemisphere (emphasis added):

among the world’s 20 least corrupt countries in the world are Germany (13th), Barbados (15th), the United Kingdom (17th) and the United States (19th), followed by Chile and Uruguay (tied in the 20th place). Bahamas is tied with France in the 22nd place.

Conversely, two thirds of Latin American countries are ranked in the bottom half of the list. Venezuela and Haiti are the most corrupt countries in the Americas and among the most corrupt in the world, tied in the 165th place with Chad, Burundi, Equatorial Guinea and Zimbabwe, according to the ranking.

Other countries in the region that fared pretty badly are Paraguay (150th), Honduras (133rd), Nicaragua (130th), Ecuador (118th), Mexico and Bolivia (tied in the 105th place) and Argentina (102nd).

Why are Barbados, Chile and Uruguay less corrupt than other countries in the region, I asked Alejandro Salas, a Transparency International official in charge of Latin America.

Salas told me that it’s mainly because these democracies have powerful systems of checks and balances, with independent judiciaries, assertive legislative branches, and a free press.

“There’s no mysterious formula, other than allowing democracy to work,” Salas said. “That’s why there is such a stark contrast between these three countries and Venezuela, where the opposite is taking place.”

Frequent readers of this blog know that Hugo Chavez controls all the branches of government, and has persecuted journalists who oppose him.

But now that Chavez “delegated” power for health reasons, what’s to come next? Monica Showalter of IBD answers that question,
Venezuela Without Chavez: Chaos The Most Likely Successor

Every critical institution in the country — from the courts, the congress and the media to the central bank, the state oil company and the largest industries — has long been suborned to Chavez’s will. No longer do they function on their own merits.

Much like Iraq under Saddam Hussein and Egypt under Hosni Mubarak, Venezuela is a classic case of what Nikita Khrushchev called a “cult of personality.”
As a result, these institutions are in ruins. The electricity company no longer functions, the oil company is losing production, the currency is poised to crash, industry is on its last legs and some 60% of the country’s oil earnings go to buying imports.

In short, Venezuela is headed for a hard fall, and the current shift in leadership will be — as one local observer put it — like switching bus drivers on a bus hurtling downhill without breaks and a broken steering wheel. The problem’s not just the driver, it’s the entire bus too.

The BBC looks at the issue of succession vis-a-vis the upcoming governorship election, since right now it’s unclear if Chavez himself would even be sworn in on January 10.

Uncertainty reigns in Venezuela.

Over in Bolivia, Sean Penn was at a prayer vigil for Hugo.

Sean ought to be praying for Venezuela.

Cross-posted at Liberty Unyielding.

After spending 9 days in Cuba, Hugo’s back in Caracas, gabbing about his talk with Fidel Castro.

He didn’t specify if the talk took place inside the bariatric chamber, but at least he didn’t need a Ouija board,

@tmaniglia Y sin la Ouija!

— Fausta (@Fausta) December 7, 2012

Last night, in Person of Interest,
Reese: Fidel Castro’s dead?
Finch: And his body double has cancer.

Hugo’s back to “campaign” for the local elections of December 16, but right now he’s King of Corruption:

Waste: Transparency International has named Venezuela the most corrupt nation in the hemisphere, matching Haiti and besting the likes of Paraguay and Nicaragua. With a $1 trillion oil windfall, that’s lots of graft.
Venezuela’s Hugo Chavez ushered in the era of high oil prices in 1998, slashing output and earning the country a cool $1.125 trillion windfall as oil prices shot from $9 a barrel to more than $100.
That’s bizarre, given that Venezuela remains a crime-ridden hellhole, whose vast slums and impoverished people offer not a scintilla of evidence of any spreading prosperity. Other countries, even lousy ones such as Ecuador, have spiffed up their cities using oil revenue.
Not Chavez’s Bolivarian government. Despite claims to have spent $300 billion on social programs, it offers citizens only more poverty.
That raises questions about just where the money went, and the Transparency International Corruption Perceptions Index, which ranked Venezuela at 165 out of 176 countries this week, offers useful clues.
TI reports that bribery, embezzlement, patronage, nepotism, conflict of interest and procurement padding in the public sector are the big sources of corruption.
All of these are crimes committed in the dark, the antithesis of transparency, and Chavez has expanded the public sector more than 25% during his regime.
No wonder so many billions are missing.

Venezuela’s budget is secret, its oil earnings are secret, its electoral mechanisms are secret, and its media are largely under government control. Whistle-blowers are hit with draconian punishments. As for the health of the president, who apparently is dying of cancer — well, that’s a secret, too.

Meanwhile, a U.K. nongovernment organization, Tax Justice Network, reported that about $400 billion in Venezuelan capital has fled to offshore banks

And Assad hasn’t shown up yet.

Brendan Loy is tracking. We’re all worried, of course.

Meanwhile, yet more politics,

Did Barack Obama Intentionally Mislead KUSA’s Kyle Clark About ‘Abound Solar’?

Did Obama Lie About Political Pressure For Solar Abound’s DOE Loans?

Cuban bank assets in a foreign bank system dropped from $5.65 billion to $4.1 billion in three months
The drop of $1.55 billion in the last quarter of 2011 has raised eyebrows

Cuban bank assets deposited in foreign financial institutions that belong to an international reporting system showed a stunning plunge of $1.55 billion, or 24 percent, in just the last three months of last year.

“It’s highly unusual for those deposits to drop so much, especially because Cuba had been building up its liquidity until then,” said Luis R. Luis, a former chief economist at the Organization of American States who first reported the fall.

A Bank for International Settlements report dated June 4 showed Cuban bank deposits in the BIS’s 43 member central banks and financial centers nosedived from $5.65 billion at the end of September to $4.1 billion at the end of December.

Luis, on the board of directors of the Association for the Study of the Cuban Economy, said that there are no confirmed reasons but lots of possibilities for both the growth of Cuban assets in BIS institutions until September, and their plunge afterwards.
…
The government may have shifted the money to financial institutions in countries like China and Venezuela, where the banks are not BIS members, the economist noted, in order to streamline its growing commercial trade with those countries.

Or something. As Alberto puts it,

It did not go to help the Cuban people, and it certainly did not go to pay back the dozens of creditors the Castro regime has stiffed for decades and continues to owe billions to.

It’s out there.

As you all know, Hugo Chávez is in Cuba recovering from his latest cancer surgery or something. Investigating journalist Nelson Bocaranda is in trouble for covering Chavez’s illness. You can follow Bocaranda on Twitter @runrunesweb and @NelsonBocaranda.

Chávez is making a show of pretending to run things from Cuba as news on the disastrous state of Venezuela are pouring out:
WikiLeaks report cites corruption in Venezuela production
Corruption is stifling local production in favor of imports, according to a leaked report WikiLeaks.

The destruction of Venezuelan production in favor of imports is worsening the scarcity problem and creating corruption by those who want to obtain bigger contracts, says a report by the private intelligence firm Stratfor released by WikiLeaks.

The report, which covers part of the more than 5 million emails revealed by the online organization, indicates that officials of President Hugo Chávez’s administration involved in importing food stockpile products to justify new transactions.

According to the report, the loss of thousands of tons of food in ports can be attributed in part to corrupt officials’ practice of not releasing products acquired abroad.

After securing $2billion in Russian loans for armaments, now Chávez outlawed gun shops

Chavez isn’t long for this world. His apparatchiks know it and they appear to be clearing the decks to make it easier to handle any general unrest that could develop when the news finally comes that Pugsley’s assumed room temperature. It’s a lot easier mowing down a crowd of protestors when they’re not shooting back at you.

Tehran intends to build military drones in Washington’s backyard for the Venezuelan military led by Hugo Chavez.

While Joe Biden says that Iran will not be able to use alliances with Latin America to wield significant influence on security in the West, US Congressman Jeff Duncan is introducing legislation with 73 co-sponsors, seeking to

· Establish a strong U.S. posture, policy, and relationship with Latin American countries

· Protect U.S. interests and assets in the Western Hemisphere such as embassies, consulates, businesses, energy pipelines, and cultural organizations, including threats to U.S. allies

· Address the vital national security interests of the United States by ensuring that energy supplies from the Western Hemisphere are free from the influence of any foreign government that would attempt to manipulate or disrupt global energy markets

· Require a secure U.S. border with the U.S. working in coordination with the Governments of Mexico and Canada to prevent Iranian operatives from entering the U.S.

· Counter efforts by foreign persons, entities, and governments in the region to assist Iran in evading U.S. and international sanctions

Congresswoman Ileana Ros-Lehtinen (R-FL), Chairman of the House Committee on Foreign Affairs, pointed out that

This legislation requires the Secretary of State to use existing funds to create a tailored strategy to fight the aggressive activities of Iran and its proxies in the Western Hemisphere, thereby establishing a strong U.S. policy stance and protecting U.S. security interests.

A Panamanian site posted on FRAV – Venezuelan Communist Group – Making Inroads in Panama. The post’s author is skeptical of both the information and the timing of the report,

this “leaked” report is really nothing more than a “we’ve got our eyes on you” trial balloon, to let the Venezuelan recruiters who are operating here know that they are being watched and followed closely.

Another report, by journalist Lázaro González, states that Cuba is mobilizing armed forces go to to Venezuela in the event of Chávez’s death, or Chávez is defeated in the upcoming election. González ends his report by stating that “this information must be verified by US intelligence sources.” In that case, I take it with a grain of salt but will not dismiss it. Cuba is economically dependent on Chavez – not on Venezuela itself, on Chávez himself.

And, at least according to Colombian president Juan Manuel Santos, who was in Cuba visiting Hugo, Fidel and Raul, Hugo’s going back to Venezuela next week.