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Petroleos de Venezuela Bled Dry

By Casto Ocando | The Miami Herald

Posted on Monday, 11 April 2005 | Upper-level personnel of state-owned conglomerate Petróleos de Venezuela S.A. (PdVSA) are authorizing payment of multimillion-dollar commissions for the sale of its products on the international market through a broad network of middlemen with banking connections in Caracas, Aruba, Panama, New York, Madeira and Switzerland, it was revealed by confidential documents.

The payment of these commissions may well present a serious violation of laws in Venezuela, including the Constitution of 1999 and the Anti-Corruption Law, so stated experts.

According to a dossier of contracts and documents in the possession of El Nuevo Herald, a list of 16 Venezuelans working on a commission basis and one Colombian are included as direct beneficiaries of multimillion-dollar commissions, secured through special contracts with international buyers, including North American firms.

The documents include detailed information about the beneficiaries, such as bank account numbers and, in some cases, access codes for transferring the money to secret numbered accounts in New York and in Lugano, Switzerland.

At least four of the middlemen maintain bank accounts at financial entities in southern Florida, such as Washington Mutual, Ocean Bank and Commerce Bank, this last one being a subsidiary of Venezuela’s Banco Mercantil.

The contracts bear the title of "Irrevocable Fee Protection Agreement, IFPA" (Acuerdo Irrevocable de Protección de Honorarios). Some of these documents have been notarized and apostilled at none other than the Embassy of the United States in Caracas, and others at the Consulate of Venezuela in Miami.

Also found among the beneficiaries are persons who have been part of the opposition to President Hugo Chávez since 2003.

Several of these contracts, which are of recent date, may well be in force, while others may be in the process of preparation.

Member of the Opposition and Middleman

According to the papers, one of the more active middlemen is Josué Moros Puentes, a businessman who supported the recall referendum against president Chávez and presently maintains political and economic connections in the Andean state of Táchira in southwestern Venezuela.

In one of the secret documents, Moros Puentes awards himself a commission of $2.70 per barrel of Mesa 30 light crude, in a contract for 1.5 million barrels per month during one year, signed toward the end of 2004, to be delivered to European and Asian customers of the North American firm Gulfstream Trading Limited, headquartered in Houston.

The commission, which slightly exceeds $4 million per month, was to be paid by means of an international transfer to an account in the name of Moros Puentes at Banco Lugano, in Switzerland, under number 109308561, through Citibank of New York, by means of access code BSILCH22.

In a different contract from December 2004, he appears as the beneficiary of a substantial commission for "consultation" in the sale of 150,000 metric tonnes of D-2 diesel to Gulfstream.

In a third contract, Moros Puentes appears alongside two other middlemen, allocating for himself 25 percent of the discount offered by PdVSA to Gulfstream, which, according to experts, may well be set at $4 per barrel of oil. In total, this commission amounted to $1.5 million monthly.

It became impossible for El Nuevo Herald to obtain Moros Puentes’ version. A questionnaire sent to Michael Foulard, president of Gulfstream Trading Limited in Houston, went unanswered.

An Account in Miami

In a document dated 27 November 2004 there is a description of the negotiation of 1.8 million barrels a month for one year for IFO No. 6, a fuel for vessels, with a commission of half a dollar per barrel.

According to the agreement, the payment was to be divided between two groups of middlemen. The first group was shown to have a joint secret numbered account on the island of Madeira, Portugal, in the name of Jhonny Gilbert Coll Gómez and Pedro José Saturno Páez at the Banco Internacional Do Funchal, Banif, under number 90-2183177. Transfer code: BNIFPTPL.

The second group was shown to have an account at Ocean Bank, in Miami, in the name of Isabel del Carmen González under number 0909095047-06 with transfer code OCBKUD3M.

Both groups agreed having to each share a total of $450,000 in commissions for each month, up until the expiration of the contract in December of 2005.

One of the most intriguing contracts deals with the delivery of 150,000 metric tonnes per month of D-2 diesel fuel during 12 months, renewable, under which a commission of 28 cents per gallon of fuel is established.

The contract shows how the 28 cents per gallon is distributed among a total of seven persons working on commission. One of them receives 13 cents, while the rest receive between 1 and 4 cents.

The apparently insignificant commission acquires cyclopean proportions when one multiplies each cent by the 46 million gallons which equal the agreed upon monthly shipment of 150,000 metric tonnes of diesel fuel.

The commission on one cent per gallon converts to $461,000 monthly, almost $5 million per year.

The Agreements Make History

Oil industry sources and experts consulted by El Nuevo Herald assure that these irrevocable fee protection agreements are being applied for the first time in the history of the Venezuelan petroleum industry and may well stand on the fringes of the standards of PdVSA and of the laws of Venezuela.

Two sources familiar with PdVSA operations, including an active high ranking employee, separately confirmed to El Nuevo Herald that these contracts meet with the approval of the firm's office of marketing management, which is under the responsibility of Asdrúbal Chávez, a cousin of Venezuelan president Hugo Chávez.

El Nuevo Herald made several calls to Asdrúbal Chávez’ cellular in Venezuela and sent him a questionnaire to his email address at PdVSA, but did not receive a response. A similar questionnaire was sent to the Embassy of Venezuela in Washington, but it was never returned with the answers.

Chávez’s Relative Denies Middlemen

Nevertheless, in a writing of his, published some weeks ago in a Caracas newspaper, Asdrúbal Chávez denied that it was the policy of his department to authorise middleman participation in the sale of crude to international PdVSA clients.

"Our policy for marketing crude is still aimed at direct delivery to refining firms, avoiding the participation of middlemen”, so stated the relative of the Venezuelan president in a letter published by the daily Tal Cual this past 28 March.

But despite the executive’s affirmation, the secret contracts indicate that high level personnel in the Venezuelan oil firm authorised discounts of up to $12 per barrel, with commissions totaling several million dollars a month.

“Since its creation in 1975, this is the first time that Petróleos de Venezuela has used middlemen to sell its products," said Humberto Calderón Berti, who served as president of PdVSA between 1983 and 1984, upon being consulted concerning its operatons.

“If this is occurring, it is on the fringes of the law. The norms of Petróleos de Venezuela do not permit anything like that to occur. These have got to be operations on the fringes of the law," so underscored Calderón Berti, who also was minister of Energy and Mines during the 1979-1983 period.

(Next installment: the modus operandi).

Translation by W.K.

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