US prosecutors have accused a shadowy Colombian businessman and Venezuelan officials of running a multimillion-dollar graft scheme, underscoring how foreign business elites facilitated the overt and rampant Venezuelan government corruption that helped plunge the nation into crisis.
Álex Nain Saab Morán, a Colombian businessman who is under investigation for numerous crimes in a number of countries, has been indicted on money-laundering charges that accuse him of transferring some $350 million out of Venezuela. The graft scheme included kickbacks to government officials in connection to a 2011 government contract to build low-income housing that was never actually constructed, the US Justice Department announced July 25.
Prosecutors allege that Saab and fellow Colombian businessman Alvaro Pulido-Vargas exploited Venezuela’s government-controlled exchange rate to obtain US dollars at a favorable price. They then bribed government officials who facilitated payments on false documents for construction materials that were never imported, according to the indictment.
To exploit Venezuela’s former currency control agency, known as CADIVI (Comisión de Administración de Divisas — CADIVI), Saab and Pulido-Vargas allegedly used a single shipment of construction materials to submit multiple false invoices identified as new shipments, according to prosecutors.
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Bribes were dolled out to members of CADIVI, the agency responsible for payment in US dollars for goods imported into Venezuela, in addition to officials from Venezuela’s tax authority and the Bolivarian National Guard (Guardia Nacional Bolivariana – GNB), who verified and took pictures of the imported goods and ensured everything was properly imported and inspected, according to authorities.
Authorities allege that the profits Saab and Pulido-Vargas earned from the scheme were then funneled out of Venezuela and into offshore accounts they either owned or controlled, according to the indictment.
Saab and Pulido-Vargas both face up to 40 years in prison for money laundering and conspiracy to commit money laundering.
InSight Crime Analysis
The case against Saab and Pulido-Vargas highlights how government officials within the administration of Venezuela President Nicolás Maduro have sought to form alliances not just with Venezuela’s elite but with power brokers outside the country. These partnerships let corrupt officials take advantage of business opportunities that allow them to steal and eventually launder the state’s money.
It is in this context that the pair wove together an intricate network of shell companies to enter into business agreements with the government. The first was a government plan to build housing. Following that deal, Saab and Pulido-Vargas entered into the food business with the Venezuelan government’s Local Storage and Production Committees (Comités Locales de Abastecimiento y Producción – CLAP) program.
Saab was later accused of being a part of a criminal network, which included companies in Mexico and Panama, that sent overpriced, inedible food aid packages to Venezuela. Saab’s Hong Kong-based food business, which bore all the hallmarks of a shell company, provided at least 11.5 million CLAP boxes, according to a Venezuelan Food Ministry spreadsheet reported on by the Associated Press.
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Saab is also involved in gold exports, and he has ties to Adrían Perdomo Mata, the director of Venezuela’s state-owned gold company, Minerven. Perdomo Mata has served as the director of companies linked to Saab and Pulido-Vargas.
The pair also popped up in a 2016 investigation into shell companies that allegedly received more than $11.5 million from Venezuela’s currency control agency at a lower than average rate. To access the money, Saab and Pulido-Vargas allegedly allied with young entrepreneurs that make up Venezuela’s economic elite.
Saab funneled the massive sums of money out of Venezuela, using his many companies and operations in other countries like Ecuador, Mexico, Panama, Turkey and Hong Kong. In addition, authorities in Mexico, Panama, Colombia and Israel are investigating companies linked to Saab and Pulido-Vargas for suspected money laundering, fraudulent imports and exports, overbilling, selling low-quality food and evading sanctions.
Alliances between international criminal elites and Venezuelan government officials have become common and widespread. In July 2018, operation “Money Flight” revealed how a network of Venezuelan elites and international bankers from Germany, Portugal, Uruguay and Colombia allegedly laundered more than $1 billion from the state-owned oil company Petróleos de Venezuela S.A. (PdVSA).