Why the Board of Petroleos de Venezuela Should Be Criminally Investigated

June 2, 2011 • Commentary

By Gustavo Coronel

This article appeared in The Latin American Herald Tribune on June 2, 2011.

A few days ago I read about former presidential candidate John Edwards being investigated for misuse of funds related to his campaign. As the story goes, part of the money received to finance Edwards’ campaign seems to have been utilized to keep the secret about his mistress and his love child. The amounts of money involved are significant but not enormous and it could be argued that Edwards simply exercised “poor judgment”. What is important is that the U.S. justice is already at work.

In Venezuela, for the last five to seven years the Board of the state‐owned petroleum company, Petroleos de Venezuela (PDVSA), has been involved, directly from some members, indirectly from the others, in a gigantic Ponzi scheme in which some $500 million of the employee retirement fund have disappeared.

The whole Board is responsible for the loss of about 800,000 barrels per day of oil production; for the fraudulent certification of “proven oil reserves” in the Orinoco heavy oil region; for the irregular contracting, with a ghost company, of the offshore drilling barge Aban Pearl for twice the amount really paid to the owners of the barge; for the importing of 180,000 tons of food that later went to rot in Venezuelan ports but provided some of the members of the board with millions of dollars in criminal profits; and in numerous other corrupt practices that are well documented.

And yet, they have remained there, unmolested, all these years.

Last week, PDVSA ousted several of the members of its board. They got rid of the Finance Director, Eudomario Carruyo, linked to the Ponzi scheme; of the directors responsible for the food disaster, Luis Pulido and Fadi Kabboul; of the inept Gas Director, Carlos Vallejo and of Hercilio Rivas, the Director who had presided over the collapse of the Research Institute.

But, at the same time, two ineffective and corrupt Chavez’s cabinet members, Nicolas Maduro and Jorge Giordani, have been added to PDVSA’s Board, as well as Wils Rangel, the leader of the Chavez’s controlled worker’s union. None of these people will bring true added value to the company but will only accelerate its collapse.

No criminal sanctions have, so far, been announced against the outgoing bunch. We doubt there will be.

The main culprit, the president of the company Rafael Ramirez, continues at his job. He knows too much about his boss and he probably has kept the records that incriminate Chavez in some overseas safe box.

This is the difference between a democracy and a dictatorship. In a democracy, transparency is required and, sooner or later, everybody is subject to accountability. In Chavez’s Venezuela no member of the regime is accountable. Perhaps some day we will be able to establish responsibilities for the waste of the better portion of the one trillion dollars received by Chavez during the last 12 years. But today Venezuela is the land of impunity, the land of crime, a land of gangsters.