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Venezuela: The eight armies behind Maduro

With a vested interest for the status quo,

According to Otero, there are eight armed groups that make up the Maduro administration’s muscle:

  • Armed civilian militias that are uniformed and trained by the army
  • The Bolivarian National Guard (Guardia Nacional Boliviariana — GNB)
  • The Bolivarian National Police (Policía Nacional Bolivariana — PNB)
  • The Bolivarian National Armed Forces (Fuerza Armada Nacional Bolivariana — FANB)
  • Cuban military advisors surrounding Maduro
  • “Colectivos,” the pro-government paramilitary organizations that operate throughout the country
  • The Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia — FARC)
  • Colombia’s National Liberation Army (Ejército de Liberación Nacional — ELN)

Read it at InSight Crime,

In other Venezuela news,
Venezuela has just announced an election — and it’s terrible news for democracy

Colombia evicts over 200 homeless Venezuelans from sports field squat

How Much Worse Can it Get for Venezuela’s State Oil Firm PDVSA?
Venezuela’s Most-Wanted Rebel Shared His Story, Just Before Death

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I’m getting over a flu. Juliette filled in for me yesterday at DTGB, Who Can Investigate the Investigators?

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Venezuela: Goldman Sachs bought PDVSA bonds

$2.8 billion worth:

Goldman Sachs Bought Venezuela’s State Oil Company’s Bonds Last Week. Sale comes as embattled government of President Maduro struggles to raise funds

The New York-based bank’s asset management division last week paid 31 cents on the dollar, or about $865 million, for bonds issued by state oil company Petróleos de Venezuela SA in 2014, which mature in 2022, according to five people familiar with the transaction. The price represents a 31% discount on the trading Venezuelan securities maturing the same year.

The investment comes as Mr. Maduro’s detractors lobby hard to block Western financial institutions from doing transactions that support the cash-strapped government, which has been accused by the U.S. and other countries of widespread rights abuses.

Apparently GS is betting that a change in government would double the bonds’ value.

Good luck with that.

This move is peanuts in GS’s $40 billion emerging markets amount out of the $1.3 trillion the asset management branch manages, but Frank Muci at Caracas Chronicles calls it Meth Finance: “It’s like ripping out the electric wiring from the walls of your own house to sell the copper and get your next crystal meth fix.”

The Wall Street Journal’s Kejal Vyas and Anatoly Kurmanaev report that Venezuela’s Central Bank struck a financing deal so bad last week it makes PDVSA’s swap and Fintech’s repo look harmless by comparison.

The government raised $865 million cash by selling $2.8 billion in previously untapped PDVSA bonds held by the Central Bank. The central bank got just 31 cents on the dollar for the bonds from Goldman Sachs’s asset management arm.
. . .
in return for $865 million now, the government committed to dishing out a total of $3.65 billion through 2022, split between $2.8 billion in principal and $756 million in interest. It’s unbelievable. The government now has to fork up the $865 million three times over by 2022 to make good on the $2.8 billion in bonds —and has to pay a crippling $756 million interest on top of that.

The deal has an “internal rate of return” of 48%. That means this is equivalent to taking out a loan at 48% interest… in dollars!

As long as someone is willing to be part of the debt pyramid scheme, it’ll continue. Let’s hope it’s not the U.S.

Previously, the plan by Venezuela and Syria to circumvent Western sanctions on the Middle Eastern nation and ship its crude oil to Aruba to refine it and then market it internationally, including in the U.S., didn’t work.
As you may recall, Caracas, Syria and Iran had secret flights without passport controls, flight manifests and other documents for years among the three countries. It’s unclear whether the flights ceased. Venezuela continued to issue official passports and visas to Syrians and Iranians.

Still, some of the money ends up in Miami,
Controversial Venezuelan tax collector enjoys luxury life in Miami. Numerous ex-officials of the Venezuela’s socialist government have set up businesses and residences in the United States, despite repeatedly blaming Washington for the country’s current political and economic crisis. Ten years ago Jose Cedillo played a major role in targeting opposition TV stations.

UPDATE

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Venezuela hacks Hanke

Johns Hopkins professor Steve Hanke has been studying the Venezuelan economy for years as part of his Troubled Currencies Project. Last January Hanke ranked Venezuela as #1 in the world misery index for two years in a row,

Venezuela holds the inglorious spot of most miserable country for 2016, as it did in 2015. The failures of President Nicolas Maduro’s socialist, corrupt petroleum state have been well documented over the past year, including when Venezuela became the 57th instance of hyperinflation in the world.

Venezuela’s government oil monopoly company PDVSA is mortgaging its jewel in the crown, Citgo, which means the country is in big trouble.

How big?

Hanke’s team got hacked while researching PDVSA’s numbers. Monica Showalter reports,

A Johns Hopkins University professor found that Venezuela’s ruling Chavistas really, really don’t want anyone with knowledge of economics doing that.

On Thursday, they dispatched a cyberthug team to deny acess to the PDVSA state oil company website to all of Johns Hopkins University’s computers, after Steve Hanke, a professor of applied economics there, wrote extensively about the country’s failing currency and its economic mismanagement at PDVSA. Hanke told American Thinker in a phone conversation that his academic assistant had been burrowing through the muddy and obscure details of PDVSA’s financials for hours recently. For him, the ACCESS DENIED code to the page came with a rider not seen on the rest of the university’s blocked-off computers: REPEAT OFFENDER.

Hanke tweeted a screenshot,

Chavismo tries but can’t hide the facts. And the facts show the ruinous reality of 21st Century Socialism.

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Venezuela: Duncan, Sires Send Letter Urging Protection of U.S. Energy Security

In the U.S.,
Duncan, Sires Send Letter Urging Protection of U.S. Energy Security

Chairman Jeff Duncan (SC-03) and Ranking Member Albio Sires (NJ-08) of the House Committee on Foreign Affairs’ Subcommittee on the Western Hemisphere sent a letter to the U.S. Department of the Treasury urging immediate attention to a potential threat to critical U.S. energy infrastructure as a result of a recent asset transfer between Venezuela’s PDVSA and Russia’s Rosneft. This development impacts PDVSA’s U.S.-based subsidiary, Citgo, and vital U.S. national security interests.

Here’s Russ Dalen’s testimony to Congress on Venezuela’s Tragic Meltdown.

As you may recall, Venezuela’s Supreme Court granted Nicolás Maduro the power to bypass the National Assembly and approve new joint ventures with foreign oil companies. Late last December, Venezuela’s PDVSA Mortgages US Refinery Citgo to Russia’s Rosneft.

Stratfor (subscription only) analysis: The government is scrambling to find money to help the national oil company meet its debt payments and avoid a disastrous default

Standing in the way of the government strategy to ride out a default is the United States. Any moves Caracas makes to further delay elections or crack down on the opposition — necessary actions to rule a one-party state — could invite further U.S. sanctions. Venezuela’s rulers, alert to this threat, have tentatively reached out to Washington. In March, a Stratfor source said the Venezuelan government was planning to open a back channel of communication with the United States. As part of its outreach to Washington, Maduro instructed Foreign Minister Delcy Rodriguez and Venezuelan Oil Minister Nelson Martinez, the chairman and CEO of PDVSA’s U.S. subsidiary Citgo, to explore the possibility of further opening Venezuela’s energy market to U.S. corporations.

This tracks closely with media reports that emerged Monday claiming that business executives close to Donald Trump Jr., son of the U.S. president, had discussed with National Security Council officials the possibility of loosening sanctions on Venezuelan officials in exchange for business opportunities in Venezuela. The intent by Venezuelan officials appears to have been to buy them some time to decide how to proceed with regional and presidential elections. Still, the offer, made in early February, did not prevent Washington from sanctioning El Aissami that month. There also have been indications that the Trump administration may be willing to enact additional sanctions against Venezuela.

Frank Muci writes about How Chavismo Mágico is Swallowing PDVSA

In Venezuela, a college student was shot dead during anti-government demonstrations:
Venezuela clashes leave one man dead, dozens arrested in Caracas

College student dies during Venezuela protest

Youth shot dead during protest against Venezuela President Maduro

Venezuela confirms young man killed during anti-Maduro protests

Over at the National Assembly,
Venezuelan lawmakers avoid military blockade to start recall of pro-government justices

Venezuela’s national legislature Wednesday began the process of removing pro-government justices on the constitutional branch of the Supreme Court, after opposition lawmakers gathered before dawn to avoid a National Guard blockade

The opposition majority in the National Assembly, some of whose deputies were injured Tuesday in attacks by government agents, also approved a declaration that Venezuela is suffering a coup d’etat and demanding the release of all political prisoners. It also urged the Venezuelan armed forces to listen to the people’s demands for democracy.

In other news,
Liliana Tintori met with Enrique Peña Nieto in Mexico

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Venezuela: Bleeding the country dry

Four headlines:

1. El Aissami goes at it:
Venezuela Arrests Opposition Lawmaker, Allegedly Finds Weapons in Vehicle. The arrest of Gilber Caro of the Popular Will party was one of the first actions by an anticoup command unit led by Vice President Tareck El Aissami.

Mr. Caro’s detention came one day after Venezuela’s opposition-controlled legislature approved a resolution declaring Mr. Maduro in abandonment of his duties. The leftist leader, polls show, is blamed by most Venezuelans for the country’s punishing economic crisis and a homicide rate that is among the world’s highest.

Mr. Maduro in turn blames his country’s problems on his political rivals. His recent naming of Mr. El Aissami, a hard-liner in the ruling Socialist Party, to the nation’s No. 2 post has been seen by analysts as a radical turn by his administration as it looks to fight off a recall drive.

2. ConocoPhillips Sues Russia’s Rosneft & Venezuela’s PDVSA for Fraud in CITGO Transfer

The Houston, Texas-based ConocoPhillips claims PDVSA fraudulently transferred 49.9% of Citgo Holding Inc. as collateral for a loan from Russia’s Rosneft PJSC, according to a lawsuit filed in federal court in Wilmington, Delaware. While the suit alleges the loan was for $1.5 billion, Venezuela has declined to confirm the amount.

LAHT has the originating complaint at the link.

3. Eight have plead guilty by now: 2 More Guilty Pleas in USA to Venezuela’s Billion Dollar PDVSA Bribery Scheme

Juan Jose Hernandez Comerma, 51, of Weston, Florida, pleaded guilty in federal court in Houston to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and one count of violating the FCPA.

Charles Quintard Beech III, 46, of Katy, pleaded guilty to one count of conspiracy to violate the FCPA.
. . .
BIG PICTURE

Venezuelan businessmen Roberto Rincon and Abraham Jose Shiera were arrested in Houston and Miami, respectively, by the U.S. authorities on charges of fraud and money laundering involving Venezuela state-owned oil company PDVSA in December of 2015.

Shiera resided in Coral Gables, a rich suburb of Miami, Florida, and Rincon lived in a $5 million mansion in The Woodlands in the metropolitan area of Houston, Texas.

According to a court order in the case, from 2009 to 2014, more than $1 billion was traced to the conspiracy, with $750 million linked to Rincon.

Rincon’s arrest has a symbolic importance for the U.S. due to his alleged closeness to former director of the Venezuelan military intelligence, Gen. Hugo Carvajal, who is wanted in the U.S. for drug-trafficking offenses related to the FARC and who was arrested in July 2014 in the Dutch island of Aruba.

The Dutch authorities subsequently released Carvajal, owing to his diplomatic immunity as a consul of the island, and he returned to Venezuela where he received the backing of Venezuelan President Nicolas Maduro, who called the incident a “kidnapping.”

In October, the U.S. also arrested and charged former Venezuelan police officer Pedro Luis Martin Olivares, another alleged collaborator of Carvajal, according to the Attorney General’s Office of the Southern District of Florida.

Rincon and Shieras pled guilty to the indictment which said five PDVSA officials, whom it did not name, received hundreds of thousands of dollars in bribes made principally in the form of wire transfers but also through mortgage payments, airlines tickets and, in one case, whiskey.

4. Thor Halvorssen describes How Venezuela’s corrupt socialists are looting the country to death

I sued a group of Venezuelan criminals, accusing them of corruption in a Florida courtroom. The defendants starred in the most notorious case of sleaze inside Venezuela: the Derwick Associates case.

Imagine a group of 20-something American-educated Venezuelans who have never had any experience whatsoever in government contracting, let alone building power plants.

In 14 months, they obtained 12 contracts to build electric power plants for the government. They hired an American company to build nonfunctioning plants and then overbilled Venezuela’s government by more than $1 billion. These “Chavezkids” (Bolichicos) shamelessly bribed government officials.

And what did they do with the stolen money? They used US, Canadian and Andorran banks to launder and conceal the cash.

Read the whole thing.

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Venezuela: Crystallex Sues Russia’s Rosneft & PDVSA Bondholders Over CITGO

Back in 2011, Hugo Chávez unlafully experopriated Canadian gold mining company Crystallex’s Las Cristinas mine.

Following Venezuela’s acknowledging that it had mortgaged Citgo to Russia’s Rosneft, and Owed $1.4 Billion by Venezuela, Crystallex Sues Russia’s Rosneft & PDVSA Bondholders Over CITGO

After an investigation by Redd Intelligence and the Latin American Herald Tribune uncovered Venezuela’s secret mortgage of Citgo to Russia’s Rosneft, Crystallex has launched a suit against Rosneft and PDVSA’s bondholders to get CITGO back.

Canadian Gold miner Crystallex — which is owed $1.4 billion by Venezuela for the 2011 unlawful expropriation of its Las Cristinas gold mine project — on Wednesday launched suits against both Russia’s state controlled oil company Rosneft and PDVSA’s bondholders for the “fraudulent receipt” of Venezuela’s U.S. refiner Citgo in U.S. Federal Court in Delaware.

The addition of Rosneft and PDVSA’s bondholder collateral trustee GLAS Americas to the lawsuit comes after an investigation by REDD Intelligence and the Latin American Herald Tribune exposed the secret Russian transaction late last month.

A 49.9% stake in the three refineries and the extensive U.S. pipelines owned by Citgo was “used to raise new financing”,PDVSA admitted in a defensive statement after the potential Russian ownership of strategic oil and pipeline assets in the United States made front page headlines around the world.

LAHT has the Crystallex v PDVSA – USDC Del – Amended Originating Complaint Including Rosneft & GLAS – 4 Jan 2017 document.

Read the full article here, and don’t miss the part regarding possible action from the Committee on Foreign Investment in the United States (CFIUS).

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Venezuela Admits Mortgaging Citgo in the USA to Russia, Goes on Attack

Following up on the story that PDVSA mortgaged to Russia refineries located in the U.S.,


Venezuela Admits Mortgaging Citgo in the USA to Russia, Goes on Attack

After an investigation by Redd Intelligence and the Latin American Herald Tribune uncovered that Venezuela has mortgaged Citgo to Russia’s Rosneft, PDVSA came out swinging, defensively confirming the story and along with Venezuela’s ruling regime, launching an attack on LAHT, REDD and Russ Dallen.

PDVSA’s statement (emphasis added)

did not reveal what they received in exchange for the shares — nor why it was kept secret — but it is believed that Rosneft lent the Venezuelan state oil company $1.5 billion with the above mentioned stake in the Citgo refineries as collateral.

“Citgo is still owned by PDVSA”, PDVSA’s statement begins by saying, but later in the text PDVSA also admits that “in October it used as guarantee a 50.1% of Citgo in a bond swap operation.” If PDVSA defaults, Rosneft and bondholders could end up owning the refineries.

In short, the assets accumulated by previous Venezuela governments over 40 years were liquidated by “chavismo” in less than 10 years and with the proceeds disposed of in a manner not at all transparent.

The article also describes Russia’s expanding energy foothold.

Read the full report.

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Venezuela: PDVSA mortgages US-located refineries to Russia

From LAHT: “The Rosneft filing means that 100% of Citgo Holding is now encumbered and potentially at risk.”

Venezuela’s PDVSA Mortgages US Refinery Citgo to Russia’s Rosneft (emphasis added)

Venezuela has mortgaged the remaining 49.9% of Citgo Holding Inc. to Russia state-controlled oil company Rosneft.
. . .
PDV Holding Inc., owned by Venezuela state oil company Petroleos de Venezuela, S.A. (PDVSA), owns Citgo Holding Inc., which in turn, owns Citgo Petroleum Corporation, which has 3 refineries and pipelines throughout the United States.

The lien means that should Citgo or PDVSA default, Russia’s state controlled oil company Rosneft could end up owning strategically important oil refineries and pipelines in the United States.

Citgo owns oil and gas pipelines throughout the country as well as oil refineries in Corpus Christi, Texas; Lake Charles, Louisiana; and Lemont, Illinois (outside of Chicago). Citgo’s refineries can refine 749,000 barrels per day and the Lake Charles refinery is the sixth-largest refining facility in the U.S.

Read the full report here.

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