Corruption, Mismanagement, and Abuse of Power in Hugo Chávez’s Venezuela

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Executive Summary

Corruption has existed in Venezuela since at least1821, when it gained independence. In the 19thand20th centuries, the level of corruption fluctuated,depending on the government in power. During the governmentof President Hugo Chávez, however, corruption hasexploded to unprecedented levels. Billions of dollars are beingstolen or are otherwise unaccounted for, squanderingVenezuelan resources and enriching high-level officials andtheir cronies.

The windfall of oil revenues has encouraged the rise incorruption. In the approximately eight years Chávez hasbeen in power, his government has received between $175billion and $225 billion from oil and new debt. Along withthe increase in revenues has come a simultaneous reductionin transparency. For example, the state-owned oil companyceased publishing its consolidated annual financialstatements in 2003, and Chávez has created new state-runfinancial institutions, whose operations are also opaque,that spend funds at the discretion of the executive.

Corruption now permeates all levels of Venezuelan society.Bureaucrats now rarely follow existing bidding regulations, andordinary citizens must pay bribes to accomplish bureaucratictransactions and have to suffer rampant neglect of basic government services. All this has been encouraged by a general environment of impunity: officers implicated in major corruptionscandals have sometimes been removed from their posts, butthey have not otherwise been held legally accountable.

The dramatic rise in corruption under Chávez is ironicsince he came to power largely on an anti-corruption campaignplatform. To truly fight corruption, the governmentneeds to increase the transparency of its institutions andreduce its extensive involvement in the economy, somethingthat has placed Venezuela among the least economically freecountries in the world.

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Gustavo Coronel

Gustavo Coronel was a member of the Board of Directors of Petróleos de Venezuela (1976–79) and, as president of Agrupación Pro Calidad de Vida, was the Venezuelan representative to Transparency International (1996–2000).