Public officials and private individuals close to the president of El Salvador, Nayib Bukele, have been linked to a money-laundering scheme involving Venezuelan state oil company PDVSA, according to a recent report.
According to the report published by Washington DC-based thinktank IBI Consultants, Bukele and his inner circle received up to $2 million in loans, either in a personal capacity or through companies related to Alba Petróleos, a PDVSA subsidiary in El Salvador. Additionally, it states that this money was part of a massive money-laundering scheme carried out in Venezuela, El Salvador, the United States and Panama, among other countries.
Several PDVSA subsidiaries, including Alba Petróleos, were sanctioned by the US Treasury Department in March 2019 under the suspicion that they were involved in “a variety of schemes...designed to embezzle billions of dollars," the same reason given for US sanctions against PDVSA in 2019.
Alba Petróleos, founded in El Salvador in 2006 and financed almost entirely by PDVSA, is a consortium of various companies. On paper, the companies are dedicated to providing services in sectors as varied as aviation, finance and agricultural development. But according to reports from the Salvadoran government, the consortium managed to make $1 billion in profits within just one decade.
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According to the IBI Report, which drew from official financial documents and interviews collected across the region, Alba Petróleos used shady methods to make money, making "$1 billion disappear through ‘offshore’ companies and fraud" from 2007-2017.
“The fact that Bukele and his family companies took some $2 million from Alba Petróleos when it was showing distorted and irrational economic returns calls into question the president’s willingness to engage in even minimal “know your customer” due diligence," it reads.
Just months after Bukele assumed the presidency of El Salvador, investigations began to surface into money he had received from Alba Petróleos. The country's Attorney General's Office has an open investigation into a network of at least 23 Alba Petróleos companies suspected of money laundering, including Inverval S.A. de C.V., from which Bukele received at least $1.9 million under his own name.
InSight Crime asked the Salvadoran Attorney General’s Office about the current state of these investigations. A spokesperson would only comment that the anti-money laundering law prohibits her from providing information at this time.
In addition, IBI Consultants found that Bukele's administration has ties to José Luis Merino. A former Salvadoran guerrilla commander and vice minister of foreign affairs, Merino is accused by the US Congress of “long-standing associations with transnational organized criminal networks [that] are the subject of US criminal investigations.”
According to the report, Merino was a crucial part of Alba Petróleos' management, either directly or through the use of frontmen, since its creation. It states that he wields influence over the Bukele administration, particularly through Erick Vega, an adviser to the Salvadoran president whom IBI identified as an intermediary between Alba Petróleos and investors of questionable origin related to PDVSA, including several from Russia. InSight Crime tried to contact Vega but didn't receive a response.
Neither Bukele, nor his government, have directly responded to the accusations, which have been echoed by Salvadoran newspapers and international media. The only commentary was made by the president’s legal secretary, Conan Castro, who denied ties between the government and Merino during a televised interview in mid-September.
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These new allegations round off a list of suspicions surrounding Bukele, including the alleged corruption of administration officials during the pandemic, possible deals with the MS13 gang in exchange for electoral support and calls for attention regarding his flouting of freedom of expression, among others.
Until now, most of these concerns were related to El Salvador’s internal political affairs, but this new report suggests that different types of structures have an influence over the Bukele government.
According to the IBI report, Alba Petróleos' illicit actions, including by Merino and Vega, began with million-dollar money transfers on Salvadoran soil through unusual real estate deals. These actions are being investigated in El Salvador, the United States and Venezuela, officials from all three countries confirmed to InSight Crime. In 2006, for example, a Venezuelan woman, registered as the owner of PDV Caribe - one of the front companies associated with Alba Petróleos - bought two lots for $84.2 million, a very unusual price for the local market, according to a financial analyst that previously worked in the Salvadoran Attorney General’s Office and who spoke with InSight Crime on the condition of anonymity.
According to sources within Panama's Financial Intelligence Unit consulted by Douglas Farah, author of the IBI report, Alba Petróleos then sent huge sums to bank accounts in Panama, Switzerland, Gibraltar, Luxembourg and Russia. One of the Panamanian auditors explained that Alba Petróleos window-dressed these transactions, passing them off as debts acquired by Panamanian companies and corporations based in Miami.
Vega and Merino also allegedly participated in an effort to ensure transactions involving millions of dollars with a Russian bank. The operation was never completed, but, according to Farah, “the Russians offered a way to launder money that could not be traced and that could circumvent possible sanctions from the United States or the European Union.”
“I think that there should be some serious concern about the level of involvement, within the highest ranks of the Bukele Administration, of individuals that are directly linked to José Luis Merino and Alba Petróleos… You cannot lead a clean and transparent government when individuals linked to these groups are in prominent positions of government,” Farah told InSight Crime.
*This article was written with information contributed by Alex Papadovassilakis.