US authorities are charging a network of Venezuelan elites and international financial actors with laundering over a billion dollars stolen from the state-owned oil company, illustrating once again how corruption has ransacked the South American country, and why it can be considered a mafia state.
Businessmen who have been given the moniker “boliburgués” along with several Venezuelan officials allegedly embezzled more than $1.2 billion from Venezuela's state-owned oil company Petróleos de Venezuela S.A. (PdVSA) between 2014 and 2015, and later attempted to launder the funds through US and European banks, according to a July 23 criminal complaint filed in a federal court in Florida.
The PdVSA officials and businesspeople involved allegedly exploited Venezuela’s foreign currency exchange system to increase the value of company funds obtained from the oil company through bribery and fraud. Because of differences between the actual exchange rate and a government-set rate, connected individuals in Venezuela could steal huge amounts of money from the PdVSA.
“Essentially, in two transactions, [a] person could buy 100 million U.S. Dollars for 10 million U.S. Dollars,” the complaint states.
This is all possible thanks to the inconsistencies and complexities of Venezuela’s currency exchange system.
After allegedly obtaining $1.2 billion from PdVSA, the defendants laundered the money through a series of sophisticated schemes, including the purchase of real estate in Florida, fake bonds and false investment funds, in order to pay kickbacks to Venezuelan officials and elites.
SEE ALSO: Coverage of Money Laundering
Most of the defendants named in the complaint remain at large, and a number of them are presumably in Venezuela where there is little chance the government will cooperate with the US prosecution. However, the US Justice Department announced in a statement that two arrests had been made in connection with the case.
One was Matthias Krull, a Panama-based German national living in Venezuela who worked for a Swiss bank managing the accounts of Venezuelan elites. He allegedly conspired to launder part of the money embezzled from PdVSA, and was arrested in Miami on July 24.
Gustavo Adolfo Hernández Frieri, a Colombian national and naturalized US citizen who allegedly laundered part of the embezzled funds with false mutual fund investments, was arrested in Italy on July 25.
Venezuelan elite Francisco Convit Guruceaga, former legal counsel for Venezuela’s mining ministry Carmelo Urdaneta Aqui, Venezuelan “professional money launderer” José Vicente Amparan Croquer, former PdVSA finance director Abraham Eduardo Ortega, Portuguese banker Hugo Andre Ramalho Gois and Uruguayan banker Marcelo Federico Gutierrez Acosta y Lara have also been charged in the case.
In the criminal complaint, US authorities also describe several unnamed conspirators who are part of a Venezuelan elite class known as the "bolichicos" or "boliburgués," a name Venezuelans have given to the social class that has rapidly grown rich due to its political ties or the business it does with the Chavista government.
The list also includes a television network owner who could be Raúl Gorrín of Globovisión according to the Miami Herald, and the stepsons of an important Venezuelan official, who according to the same source could be President Nicolás Maduro himself and the children of his wife Cilia Flores. Members of the boliburgués have been implicated in a wide range of other corruption schemes throughout government institutions.
InSight Crime Analysis
The billion-dollar scheme to embezzle funds from Venezuela’s state-owned oil company and launder them through a sophisticated series of false investments abroad is the latest example of the pervasive corruption that has pillaged not only PdVSA, but much of the Venezuelan government’s coffers in recent years.
“It happens because this economic model was created precisely so that organized crime would have control of Venezuela,” Venezuelan lawyer and organized crime expert Alejandro Rebolledo told InSight Crime.
In Rebolledo’s opinion, the economic model led to certain people having the control to give authorization for the currency to leave the coffers of the PdVSA and the nation in general, justified by alleged purchases and payments to suppliers. This explains the sudden “enrichment” of the boliburgueses to the tune of $600 million or more.
Interestingly, the PdVSA negotiations that led to the US investigations into alleged money laundering began on December 23, 2014, just seven days before President Nicolás Maduro appointed former Treasurer of the Nation Carlos Erick Malpica Flores as vice president of finance for PdVSA. Malpica is also first lady Cilia Flores’ nephew. The Bolichicos’ transactions with the oil company continued into 2015, when Malpica ran the office where the transactions were made.
But the recently revealed money laundering case is not the first time PdVSA officials have been accused of involvement in billion-dollar kickback schemes. In 2015, US federal prosecutors brought a case against two US businessmen who allegedly paid bribes to PdVSA officials in exchange for help winning contracts from the oil company. That case was expanded in 2017 when prosecutors charged several former Venezuelan government officials with soliciting tens of millions of dollars in bribe payments in exchange for prioritizing payments from the failing oil company to certain contractors.
Moreover, PdVSA is not the only government institution in Venezuela subject to rampant corruption. As InSight Crime revealed in a recent investigation, virtually any potential avenue for graft is being exploited while the government of President Maduro turns a blind eye to secure the loyalty of those around him. Cases include members of the armed forces, members of the first family and possibly even the president, who according to the Miami Herald may have participated in the PdVSA money laundering operation, although he is not mentioned by name in the US investigation report.
Rebolledo, author of the book "How Money Is Laundered in Venezuela" (“Así se lava el dinero en Venezuela”), told InSight Crime that “these money laundering operations are only possible if someone in an important position of power allows them to happen. That is what leads to a network like the one identified by US authorities being formed.”