Venezuela's nationalization of the scrap metal industry opened the doors to a state-sponsored free-for-all, with public officials, private companies, military personnel, and criminal groups illegally trading the valuable commodity.
When the government approved the law in 2021, it established a monopoly on scrap metal to be run through the Ezequiel Zamora Ecosocialist Corporation (Corpoez), a company attached to the Ministry of Industries and National Production. Corpoez became the only entity to grant licenses to private companies, allowing them to trade in scrap metal.
However, issues emerged quickly, and two cases in April showcased the scale of the problem. First, high-ranking officials working for the state-owned steel pipe manufacturer Enatub were accused of stealing nearly 6,500 pipes and illegally selling them, according to a report by Venezuelan media, La Tabla. The sales allegedly began in December 2020 with approval from the president of the industrial arm of Enatub's parent company, Petróleos de Venezuela (PDVSA), the report claimed.
Later that month, authorities seized 10 tons of steel pipes allegedly taken from PDSVA and sold illegally to Protocol Capital WLL, a company with a state license to acquire and handle scrap metal. Several employees were arrested on charges of trafficking and unlawfully selling strategic materials, according to Venezuela's attorney-general, Tarek William Saab.
Security forces have also sought to cash in. In November 2022, five police officers were arrested for stealing pipeline materials from Pequiven, a state-owned petrochemical company in the state of Carabobo, which they allegedly intended to sell as scrap metal. And in March 2022, five soldiers were detained in the eastern state of Sucre for reportedly being part of a gang that stole vehicles and scrap metal from the public electricity company, Corpoelec.
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One of the country's most influential criminal gangs, Tren de Aragua, may also be profiting. The group has been obtaining iron, steel, and copper materials in the state of Aragua and smuggling them across the Venezuela-Colombia border to be sold as contraband, according to two police officers in Aragua who spoke to InSight Crime on condition of anonymity since they were not authorized to speak. They added that security personnel at checkpoints were paid to let the shipments pass.
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Officially, the 2021 law was meant to prevent smuggling, and authorities rapidly went after criminal networks stealing scrap metal and private companies that trade it without permission. However, the law appears to have allowed officials within the administration of President Nicolás Maduro to control the illegal sale of scrap metal.
Government officials and executives of state-owned companies with access to steel mills and oil facilities have been involved in removing metal parts, which were then improperly granted legal documentation and sold to companies with a Corpoez license. The April 2023 case functioned this way, with PDVSA officials selling illegal scrap to Protocol Capital WLL, which had a Corpoez license.
This makes such licenses highly valuable. Companies looking to acquire a scrap metal license must pay a $20,000 fee to the government officials in charge of the process, a commissioner from Venezuela's investigative police force (Cuerpo de Investigaciones Científicas, Penales y Criminalísticas - CICPC), told InSight Crime on condition of anonymity.
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But simply being willing to pay up is not enough. To ensure their applications are successful, business owners must have high-level connections, according to multiple sources involved in the scrap metal business in the northeastern state of Anzoátegui, a petrochemical hub.
The owners of scrap metal companies also said that high-ranking military officers had charged them fees in exchange for signing safe-conduct permits that would allow shipments of scrap metal to travel without being seized.
"If [you have a safe-conduct] signed by a military official, nothing can stop the truck until it reaches Anzoátegui," said the owner of a transportation company in the state of Monagas, another petrochemical hub.