How a #Chinese venture in #Venezuela made millions while locals grew hungry - @Reuters SPECIAL REPORT

#Chavez's promises, "seemed like a revolutionary idea. Now we're starving."

Great investigative piece from Reuters on the corruption that developed from / led to the alliance between Venezuela and China... 

"The diversification [into Food production] made PDVSA the conduit through which contracts, and a growing sum of money administered by Venezuela's national development bank, were awarded. By 2010, the filings say, the bank had received $32 billion from the China Development Bank and another $6 billion from an infrastructure fund created by Chavez."

https://www.reuters.com/article/venezuela-china-food/special-report-how-a-chinese-venture-in-venezuela-made-millions-while-locals-grew-hungry-idUSL1N22D1E7

SPECIAL REPORT-How a Chinese venture in Venezuela made millions while locals grew hungry

(For more Reuters Special Reports, click on)

By Angus Berwick

TUCUPITA, Venezuela, May 7 (Reuters) - The project was meant to feed millions.

In Delta Amacuro, a remote Venezuelan state on the Caribbean Sea, a Chinese construction giant struck a bold agreement with the late President Hugo Chavez. The state-run firm would build new bridges and roads, a food laboratory, and the largest rice-processing plant in Latin America.

The 2010 pact, with China CAMC Engineering Co Ltd , would develop rice paddies twice the size of Manhattan and create jobs for the area's 110,000 residents, according to a copy of the contract seen by Reuters.

The underdeveloped state was an ideal locale to demonstrate the Socialist Venezuelan government's commitment to empower the poor. And the deal would show how Chavez and his eventual hand-picked successor, President Nicolas Maduro, could work with China and other allies to develop areas beyond Venezuela's bounteous oil beds.

"Rice Power! Agricultural power!" Chavez tweeted at the time.

Nine years later, locals are hungry. Few jobs have materialized and the plant is only half-built, running at less than one percent its projected output. It hasn't yielded a single grain of locally grown rice, according to a dozen people involved in or familiar with the development.

Yet CAMC and a select few Venezuelan partners prospered.

Venezuela paid CAMC at least $100 million for the stalled development, according to project contracts and sealed court documents from an investigation by prosecutors in Europe.

#Venezuela Moves Closer to Ridding Itself of #Maduro & Co., But It's Not Yet A Done Deal

Today has been pretty crazy in Venezuela.  

Caracas woke up to Juan Guaido announcing that #OperacionLibertad was under way.

En el marco de nuestra constitución. Y por el cese definitivo de la usurpación. https://t.co/3RD2bnQhxt

— Juan Guaidó (@jguaido) April 30, 2019

Venezuelans the world over were (pleasantly?) surprised that Leopoldo Lopez was beside him, and out of his house where he has been under house arrest since his transfer from prison last year. (He was released by SEBIN agents that turned on Maduro, along with some other Political Prisoners.)

Within hours, the streets of Caracas and other cities in the interior, especially those where major military installations are located, were filled with opposition members.  In Caracas, Guaido and his supporters went to the Carlota Airbase on the eastern side of the city. Soon enough the Colectivos showed up.  These are the local militias that Chavez and Maduro armed to "defend the revolution." 

I initially posted a tweet believing the shots were being fired by these Colectivos against the opposition demonstrators. But I quickly found out that this time, it wasn't the usual script playing out.  Instead, it was the national guard and SEBIN forces that had turned on Maduro to support Guaido, that were shooting at the Colectivos that had come to harass and intimidate the demonstrators. 

No sooner had I realized my mistake, I posted a Correction within the hour.

CORRECTION: I’ve been informed by reliable sources that this is actually a video of military supporters of @jguaido fending off an attack by the #Colectivos. So I got a taste of the power of Twitter!

— MasterFeeds (@MasterFeed) April 30, 2019

  It was too late, the power of Twitter had worked its magic.  It had gone (semi) viral.  The susbsequent tweet is still waiting to hit it big....

As opposition supporters gather near the #Carlota Airbase in #Caracas, National Guard troops now loyal to interim president @JGuaido fire on #Colectivos who’ve come to target the demonstrators. #Venezuela pic.twitter.com/qhVqbSD9sM

— MasterFeeds (@MasterFeed) April 30, 2019

Venezuela No Longer to Certify Oil Export and Production Numbers

21st century socialism at work.  From The Devil’s Excrement

Venezuela No Longer to Certify Oil Export and Production Numbers

March 30, 2011

Mas bien, Sin Rumbo

Just when Venezuela needs to send positive signals to world markets, as it intends to sell more and more debt internationally, the Venezuelan Government and PDVSA do exactly the opposite and decide to cancel the contract with the independent auditor Inspectorate that was hired two years ago to try to convince the world that Venezuela’s production and export numbers as reported by OPEC and the IEA are wrong. Both of these institutions have been reporting that Venezuela’s official oil numbers are significantly above those obtained by them from their independent analysis.

Neither PDVSA nor the Ministry of Energy and Oil gave much of an explanation for the cancellation of the contract. The auditing company is closing its offices in Venezuela.
What this will do is create further uncertainties in the country’s numbers which will not aid in reducing the so called credit risk of Venezuela at a time that the country needs to issue more and more debt. This means that issuance of the country’s debt will be more costly that the country’s numbers justify. Last week, Knight Securities suggested that the country’s handling of official news and statistics and the lack of a clear spokesman for the country on financial matters is making it more expensive for the country to issue debt. In a report entitled “The Monk’s exorcism boosts our faith in Venezuela” the company suggests it costs Venezuela 200 to 300 bps because of the way information is managed by Minister Giordani.
In the same report, PDVSA said that exports in February were 16% lower than those in January and this week international reserves at the Venezuelan Central Bank dropped to their lowest level since 2007, despite the Venezuelan oil basket averaging over US$ 100 per barrel last week.

Venezuela No Longer to Certify Oil Export and Production Numbers « The Devil’s Excrement

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Seeking cash, Chavez looks to sell Citgo

Market Commentary and Intraday News

Seeking cash, Chavez looks to sell Citgo

2 hours, 1 minute ago

By CHRISTOPHER TOOTHAKER
Associated Press

(AP:CARACAS, Venezuela) President Hugo Chavez is promising to build new public housing complexes, boost social programs and renovate the long-neglected Caracas subway _ and he needs money.

The ambitious plans will squeeze Venezuela's coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit. So he has raised a possibility that once seemed remote: selling off Venezuela's U.S.-based oil company, Citgo Petroleum Corp.

For Chavez, it's an idea driven both by hard-money realities and by politics.

Getting rid of the company and its refineries in the U.S. would give Chavez billions of dollars for domestic spending as he approaches his 2012 re-election bid and seeks to remedy problems including an acute shortage of affordable housing. A sale would also fit with the leftist leader's interest in distancing Venezuela from the U.S. while building stronger ties with allies such as Russia, China and Iran.

Citgo has delivered oil to Venezuela's No. 1 client for two decades, but judging by Chavez's complaints about Citgo not turning a profit, he seems more than ready to sell it, if a buyer can be found.

"Citgo is a bad business, and we haven't been able to get out of it," Chavez said in a televised speech late last month. He ordered his oil minister, Rafael Ramirez, to look at options for selling off the state oil company's assets in the United States.

Chavez says the Houston-based company could be worth at least $10 billion, but analysts say it would likely fetch much less _ perhaps half that _ and it might be hard to find a buyer in a difficult economic climate.

The government's budget next year _ not counting the additional spending often approved by Chavez's congressional allies _ is the equivalent of $47.5 billion, making the possible sale of Citgo a potential shot in the arm for the president's efforts to shore up support.

Critics say that selling Citgo could endanger Venezuela's long-term business interests since oil is the lifeblood of the economy and much of the earnings come from the U.S.

Chavez, meanwhile, has increasingly sold oil elsewhere under less profitable deals aimed at cementing relationships with friends abroad.

"It's hard for rational observers to understand that (Chavez) would take oil away from U.S. clients that pay cash for Venezuelan oil, in order to supply countries that consider Venezuelan oil almost as a right or as a political gift," said Gustavo Coronel, an energy consultant and former executive of state oil company Petroleos de Venezuela SA (PDVSA). "However, Chavez is no longer driven by economics but by ideology."

If Chavez were to go ahead with a sale, Venezuela would likely seek to negotiate a supply contract to keep selling crude to U.S. refineries.

Even so, Venezuela's oil exports to the U.S. have been declining while Chavez has sought to diversify the country's markets, shipping more crude under preferential deals to allies including Belarus, Cuba and other Caribbean islands. Some buyers are granted low-interest loans, decreasing upfront revenue.

Oil shipments to the U.S. declined from 49 million barrels in February 1999, when Chavez took office, to 31.9 million barrels during the same month last year.

Venezuela's overall oil output has also been declining due to lower OPEC quotas and _ experts say _ inadequate maintenance at some oil fields. While Venezuela says it produces about 3 million barrels of oil a day, the U.S. Energy Information Administration estimates 2.2 million barrels a day in 2009, down about 190,000 barrels from 2008.

Coronel said that when Venezuela bought Citgo, it was a good deal. PDVSA purchased 50 percent of the company in 1986 from Southland Corp. for $290 million as part of a drive to have its own refineries and other facilities in its key markets, the U.S. and Latin America. The state oil company purchased the remaining 50 percent of Southland's shares in Citgo in 1990 for $675 million.

Since then, Citgo has grown. It now operates three refineries in Texas, Louisiana and Illinois, and sells fuel through thousands of gas stations. Citgo has been used by Chavez to distribute discounted heating oil to poor American families in a high-profile program aimed at criticizing Washington's approach to the needy.

Another motive for selling Citgo could be to reduce Venezuela's exposure to U.S. court suits over Chavez's expropriations of U.S. company assets.

U.S.-based Exxon Mobil Corp. has sought international arbitration to claim billions of dollars in compensation after it refused to accept the government's terms for a 2007 nationalization of an oil project in which it had invested heavily.

Citgo, for its part, took a $201 million loss last year, and issued $3.5 billion in bonds this year as its profits plummeted. Profits were battered by lower world prices and a declining flow of heavy, sulfur-laden crude.

"I don't think there would be much interest now" in buying Citgo, said Lou Pugliaresi, president of the Energy Policy Research Foundation, a Washington-based think tank. "But Chavez might find a buyer at the right price."

None has publicly stepped forward yet. Exxon and other major U.S. refiners such as Chevron Corp. and ConocoPhillips might end up being interested in Citgo or some of its assets, said Guaicaipuro Lameda, a former PDVSA president and government critic.

"It has the potential to be a good business if it's well managed," Lameda said. "But it's not being well managed, and that's causing problems."

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

INO.com News - Seeking cash, Chavez looks to sell Citgo

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Chavez Crackdown on Brokerage `Thieves' Leaves Traders Jobless

Chavez Crackdown on Brokerage `Thieves' Leaves Traders Jobless

Venezuelan President Hugo Chavez. Photographer: Chris Ratcliffe/Bloomberg

Trader Jofmar Heredia was thrown out of work when Venezuelan President Hugo Chavez shut the unregulated currency market in May and seized about 40 brokerages, accusing them of setting artificial rates, capital flight and money laundering.

Heredia, 31, said she’s worried she may never find a job at a bank again because of Chavez’s crackdown.

“I’m unemployed and leaving my resume in banks but no one is calling,” said Heredia, who worked at Proinversion Sociedad de Corretaje CA in Caracas. “A lot of my friends in brokerages taken over by the government have been let go.”

The brokerage business is in danger of becoming obsolete in this socialist nation, said Noris Aguirre, a director at the clearing firm Caja Venezolana de Valores. Since November, Venezuela’s securities regulator has taken control of about 35 percent of the 112 trading firms and closed four after they were blamed for the 27 percent drop in the bolivar through May 18. That may leave up to 2,500 without jobs even as Chavez says his biggest economic priority is preserving employment.

Chavez, a 55-year-old former paratrooper who’s been in power for 11 years, says the country doesn’t need such companies and accuses them of exploiting loopholes to become rich. The government banned investment instruments known as mutuos in February -- which are akin to repurchase agreements, or repos -- and prohibited brokers from trading in a new currency market established last month. Securities firms use repos to borrow money to finance positions in bonds and other securities.

Chavez Takes Control

In a speech on May 23 to supporters, Chavez said his country should eliminate brokerages.

“We’re going to respond strongly against these thieves that are trying to wash their hands now,” Chavez said. “There’s no economic reason for the weakening of the bolivar. It’s a huge fraud against the republic.”

The government took control of the country’s largest brokerage, Econoinvest Casa de Bolsa, after raiding it on May 24, arresting four directors and ordering it to cease operations for a week pending an investigation. Of the 420 workers at the company, 126 have resigned, according to the nation’s regulator. The directors are being held at the national intelligence service in Caracas awaiting final charges against them for illegally trading foreign currency and association with delinquency.

Authorities are investigating “irregularities” at Econoinvest and are trying to guarantee the investments of its 44,000 clients, the Finance Ministry said today in a statement.

No Opportunities

Rene Buroz, the lawyer for the directors, declined to comment, as did an Econoinvest public relations official, who asked not to be identified in accordance with company policy.

The government took control of Finalca Casa de Bolsa today for failing to prove the origin of funds and putting its clients’ investments at risk after a raid on June 2, according to a resolution published in the Official Gazette.

Nelson Venero, a 32 year-old accountant, lost his job at the end of May after working for five years in the brokerage industry. After securing a job at AVC Valores Sociedad de Corretaje and a pay raise with a dollar bonus in October, he said he was fired after the government seized the company in May.

“This limits operations so much for brokerages that I don’t see any opportunities for them,” Aguirre of Caja Venezolana de Valores, which helps manage bonds and equities owned by brokerage houses, said in an interview. “They’re allowed to buy and sell company shares, but all of the companies that traded on the stock market have now been nationalized.”

Nationalizations

Chavez nationalized Cia Anonima Nacional Telefonos de Venezuela, the phone company known as Cantv, in 2007 to boost the state’s hold on the economy. The government has also taken over assets from Exxon Mobil Corp., ConocoPhillips, Ternium SA and Mexican cement maker Cemex SAB, which listed on the Caracas Stock Exchange.

The brokerage industry boomed between 2005 and 2010, growing 42 percent to more than 100 institutions, according to the securities regulator. Traders were hired to perform bond swaps as a means of obtaining dollars for companies that failed to receive government authorization to buy at the official exchange rate.

The bond trading set an implicit unregulated rate. That rate plunged to 8.2 per dollar on May 11, seven days before Chavez shut down that market.

‘Destined’

The central bank re-opened the market on June 9, setting the maximum rate and limiting the amount of dollars for purchase. The average rate is now about 5.3 bolivars per dollar. In addition, there are two official exchange rates of 2.6 bolivars per dollar and 4.3 per dollar for imports.

“This was destined to happen,” said Roberto Gonzalez, 39, a former partner at a Caracas-based brokerage who left the firm last year. He declined to identify the company.

Tomas Sanchez, president of the securities regulator known as CNV, said the number of brokerages will likely be cut to less than 20 and that most of the unemployed traders may be able to live off savings since they earned commissions in dollars.

“We know some workers will be affected by this situation but they enjoyed exorbitant benefits and have savings,” Sanchez said in an interview in Caracas on June 9. “Maybe the secretaries and couriers can be incorporated into the public banking system.”

‘Blackmail’

Heredia said that she wasn’t paid in dollars and received a commission of about 10 percent of the value of bolivar transactions.

Raul Maestres, a consultant at Korn/Ferry International, an executive search firm, said their offices in Caracas have been inundated with resumes.

“It’s not the best moment to find work,” Maestres said.

Venezuela’s unemployment rate rose to 8.1 percent in May, from 7.7 percent a year earlier, as the economy slid into the first recession in seven years. Gross domestic product shrank 3.3 percent last year and will likely contract 2.5 percent this year, according to the median forecast in a Bloomberg survey.

Brokers are “not going to blackmail us with the idea that this is going to hurt employment,” Ricardo Sanguino, the president of the congressional finance committee, said in an interview. “Many of them acted outside the law and created more problems than benefits.”

Venero, the unemployed accountant, said that he feels powerless to find work and that he may take a broker course in Panama, where Venezuelan banks have opened branches.

“I don’t think I’ll find work in the capital markets because they’ve been very hard hit,” he said in a phone interview. “A lot of friends are out of work.”

To contact the reporters on this story: Corina Rodriguez Pons in Caracas atcrpons@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net.

-- The MasterFeeds