Bogota, October 5 2017 (venezuelanalysis.com) - Venezuelan authorities have made several arrests in connection to multi-million dollar corruption cases in the country’s state-oil sector and foreign currency exchange system, Attorney General William Tarek Saab has revealed.
In statements to press, Saab confirmed that eighteen businesses have been raided by Bolivarian Intelligence Services (SEBIN) since last week as part of an anti-corruption drive headed by his office.
The operation is aimed at rooting out companies that have fraudulently purchased government-subsidized dollars through the state’s foreign commerce bureau CENCOEX and its sub-office for the Administration of Foreign Currency CADIVI. Saab said that several of the businesses were exposed as shell companies during the raid.
“It was evidenced that thirteen of these businesses had no fiscal address. The total damage to state patrimony is US$85 million,” he told press.
CENCOEX and CADIVI are uniquely responsible for granting Venezuelan businesses access to buy state petro-dollars in order to import goods for national consumption. The state uses a tiered exchange rate system to calculate the price of the dollar to the Venezuelan Bolivar, depending on how essential the import is considered for the country. Importer businesses are granted massively subsidized rates to purchase products such as medicine, food and construction equipment.
Though the intricate system was initially created to prevent capital flight, it has become a honeypot for fraud over the last ten years. Many businesses have abused the scheme by selling subsidized dollars on the black market for astronomical profits or inflating the cost of imports to embezzle millions in state dollars. State bureaucrats are also accused of complicity, while the government has come under fire for not doing enough to audit the process.
Amongst the arrests made are José Wolgan, Director of the Construction company BJL, which received US$3.2 million from government coffers.
“Wogan has been charged with the illegal obtaining of foreign currency, money laundering and association to commit crime”, said Saab.
Likewise, company representatives María Margarita Muñoz and Gabriel Peña for the food company Azucarera Río Turbio were both arrested this Wednesday in Valencia as they tried to flee to Aruba. They are both accused of importer fraud and of inflating the prices of food products by 235% in order to embezzle state dollars of up to USD$60 million.
Several other arrests have been made, and authorities have seized and repatriated wrongfully acquired assets on behalf of the state, said Saab.
Meanwhile at least nineteen arrests have also been made in an ongoing crackdown on corruption in the Venezuelan oil sector, and specifically in relation to PDVSA companies PetroZamora, Pdvsa Monagas and PetroPiar.
According to Saab, nine managers were arrested at PetroZamora in Zulia for an array of crimes, including alleged sabotage, failing to fulfill agreements, internal security breaches, robbery and premeditated delays in carrying out maintenance.
Seven officials at PDVSA Monagas have also been detained in connection to the illegal sale of more than six hundred official PDVSA buses and wagons, while a further three people were arrested due to acts of corruption in PDVSA’s Orinoco Oil Belt, including the project’s former manager and two businesspeople.
One of the suspects under arrest is known to be Venezuelan soap actor and businessman Manuel Sosa, who is accused of embezzling at least US$2 million from Petropiar - a joint oil drilling venture between Chevron and the Venezuelan government in the Orinoco oil belt. The star is accused of acquiring lucrative Petropiar contracts at inflated prices under firms in his name.
Sosa is a close friend of Maria Gabriela Chavez, the daughter of former Venezuelan President Hugo Chavez Frias, and there is some speculation that the two were formerly in a relationship.
This week’s arrests come after nine high ranking PDVSA officials were detained earlier in September for allegedly illegally granting state oil contracts, sabotage and crude oil diversion.
Saab has said that a total of US$200 million had been embezzled from PDVSA between 2010 and 2016.
In further comments, the attorney general also confirmed that his office had also issued arrest warrants for prominent businesspeople currently outside the country.
“For those cases we have reached out to Interpol ... We believe that those involved in organized crime, which has caused serious damage to Venezuela, cannot disguise themselves as being politically persecuted,” he said.
The attorney general’s office began the anti-corruption operation two months ago, when Saab took over from former attorney general, Luisa Ortega.
Ortega fled the country in August, claiming that she was the victim of political persecution after breaking ranks with the national government.
Saab accuses her of covering up several multi-million dollar corruption cases and operating an extortion ring from within the organization during her almost ten year stint as chief state prosecutor.