[UPDATED with Chacon exit]
I should be writing extensive posts about the current Venezuelan so called banking crisis, but I think that 1) Miguel does a much better job than anyone in covering the events (including relevant links to his information such as the priceless Caracas Gringo) and 2) I have been writing so much about corruption that an "I told you so" post is just demeaning; thus I prefer to cover more positive news such as the Honduras vote and the formation of Lopez new political movement.
But still, I should write something, kind of a follow up of a previous post where I was discussing the Venezuelan triumvirate that rules over us and how at some point it had to come down crashing, as all triumvirates did through history. Power is not something easy to share: you got it or you do not. As a decent compromise a very brief summary of all that this mean:
- the corruption in a sector of the banking industry has been denounced for a few years already. Nothing ever came out of it even though spectacular new fortunes were there for all to see. For example Arne Chacon went in half a decade from a simple scribble to the proud owner of fine racing horses. Not even Bill Gates, who actually changed our lives, went that fast in riches.
- the basic system was very simple: front men were selected, were given nice state contracts with which they made a killing and thus could start buying small banks. Then government accomplices deposited in these small banks huge amounts of public money, instead of spending it for infrastructure, social programs and what not. The funds may or may not have come also from drug money, depending on the cases.
- regardless of the origins of the funds in these small banks, a fast laundering process was launched and included playing with the currency exchange rate and the purchase of public bonds of dubious value. This was helped along by the men hiding behind the front guys: they gave them the "insider" information they would need as to the government debt emission and assorted fiscal tools.
- all in all we might be talking here of amounts that might reach several BILLION American dollars, spread over the last six years and including interesting transfers to rogue countries through tax haven countries in addition of course to normal overvalued property purchase for which already folks like Tobias Nobrega are being investigated.
The only mystery here is why suddenly have that financial bubble burst, with Chavez pretending he knew nothing when it had been reported not only in blogs but in many major newspapers read at Miraflores Palace?
But before we speculate on this "delay" in taking actions we must observe two things.
First, the investigated people so far are only the front men. Nobody of real stature, nobody who had access to the information that allowed these guys to make it rich is, as of today, under judicial investigation. And this in spite of months of accusations. The names behind the front guys are: Diosdado Cabello, a several times Chavez minister and the ex governor of Miranda for which an accusation on corruption acts during his tenure has been formally submitted without any investigation taking place, that we know of; Jesse Chacon, permanent rotating minister of Chavez; Jose Vicente Rangel, ex Vice President; Rafael Isea, several times minster and currently governor of Aragua; and the latest one added to the crop, Chavez older brother himself, Adan Chavez. Here, I am only mentioning the big time players.
Second, even when investigated, the front men are protected from public scrutiny. We do not know what is it exactly covered by the investigation, nor any of the details associated with their deals. In fact, we can assume that their detention conditions are extremely favorable at least compared to those of chavismo political prisoners. We have not seen picture of Fernandez Barrueco going to tribunals to make his depositions; Nobrega is all but vanished in thin air; Arne Chacon arrest was a surprise for all due to the discretion that surrounded it. Others simply had plenty of time to escape such as the Banco Canarias director Gorrin who fled on his yacht while the Maritime Police waited 4 hours to make it to the harbor, instead of sending right away a helicopter or plane to tack down the yacht. Interesting, no?
These observations can only lead us to the following conclusion: it is all a political show happening now for ruthless expediency.
The war against Colombia fizzled as Chavez numbers never went up. Arresting bankers is always a good way to rouse the chavista rabble pretending that Chavez fights corruption. The chavista rabble might buy it but those who read newspapers will probably not buy it at all, even if chavista and even if they keep voting for Chavez. It is just too farcical, too late, to histrionic.
Also, as the economic woes of Chavez are likely to mount, the banking system might be not only a nice scape goat but also a source of money to pay for the electoral campaign, and maybe for some new media savvy social programs that will last until election day. We can sense that very little is holding Chavez from grabbing other banks, sound and safe, banks that never played the games the government would have allowed them to play had they wanted to grease a few palms. I am talking here of Banco Venezolano de Credito, Bancaribe, Banco Exterior, Banco Provincial and Banco Mercantil. They are the most solid banks of Venezuela, holding the accounts of all the big private companies remaining in Venezuela (1) and thus a big temptation for Chavez robber barons. They can only be seized with low political cost if Chavez manages to link them to the 7 banks already closed so far.
It is quite possible that this happened because: it could not be hidden anymore as troubles reached a critical mass; the internal power struggle to get closer to Chavez have certainly started a round of internal recriminations, accusations and sabotage; Chavez could not afford to have this explode next year, and thus the timing, to allow the country to forget about it through the coming holidays; maybe there is some truth about a rumor that Fidel told Chavez a socialist revolution could not afford such an apparent nouveau riche class; Chavez simply needs the money (he is also taking over a lot of the private assets of the arrested front men, even though they are not judged yet!).
Whatever you may want to speculate is fair game. As far as I am concerned I go for Chavez needing cash coupled with the perfect excuse to perform an internal purge among his followers. But be assured of one thing: THIS IS NOT GOING TO STOP CORRUPTION. For this to happen not only you would need to see Diosdado Cabello in jail, but also a comprehensive action against the middle level corruption such as the one that is apparent from, say, the nepotism of Nazional Assembly president, Cilia Flores. I see none of this taking place, just Chavez histrionics and robbery.
After I finished writing the above wordss I became aware that Jesse Chacon offered his resignation and Chavez seems to have accepted it. Does that change anything to the above written? Not at all really.
Chavez needed someone to be the fall guy. Jesse Chacon is a good candidate. Lately he was rather discredited, if this means something within chavismo. Having failed to win the Mayor seat of Sucre in Caracas, he went on to be minister of science where he kept a rather discrete profile, broken with significant blunders. For example he said that there would be no earthquake of more than 5 degrees for a thousand years, just to have a 5.4 a few weeks after he uttered such nonsense. His intervention in science trying to eliminate academic freedom was very ill received and an additional blotch on Venezuela reputation. His departure is in fact a boon for Chavez (and Diosdado Cabello!)
Nothing will happen to Jesse. He can probably chose the embassy where he can either comfortably retire or recover politically. He already had the nerve to state that he knew nothing of the business of Arne Chacon, his bother. I mean, he did not know about the quick fortune of his younger brother? They do not gather for family events? Please......
But for the rank and rabble chavismo, the one Chavez needs to vote next September, the one that Chavez needs to beat up on opposition candidates, the resignation of Jesse Chacon will look as an heroic sacrifice. Until by the end of next year, once the election is presumably won, he can return to a more high profile job. That is, if Chavez is the one pushing Chacon out....
For some reason I thought that Diosdado would go first (he might still go, let's wait some). Chavez needs Chacon who is very willing to do the dirty job needed. But maybe Chacon star was dimming within chavismo and Chavez could not resist removing someone who had gained too much power through his connections and his brother fortune. Thus putting an end to the triumvirate.
Now it remains to be seen who will get Chacon's share of power, Chavez or Diosdado. I doubt that Chavez will dare disposing of Diosdado so soon after the departure of Chacon. I mean, he has no one with Diosdado rotten skills or financial strength to replace Disodado. And I am not even addressing Diosdado potential role in drug trafficking and FARC support. But then again if Chavez is preparing himself to make his final coup Diosdado might be cumbersome, annoying, as he would see his chances of becoming president some day reduced to zero. Can Chavez afford such a risk? After all he does have some people who collectively could support Chavez coming anti democratic adventure and partially supply for Diosdado current role-s. I have in mind Jorge Rodriguez and the Caracas Gauleiter, or Socorro Hernandez preparing herself to take over the CNE, or Luisa Estela who this week end announced that separation of powers was not really within the 1999 constitutional frame.
Let's say that if Diosdado is defenestrated within the next three months it might mean that Chavez has made up his mind of ending even the slight formal democracy show that he still tolerates. He wants around him a compact team of devotees, looking towards Cuba for their methodology, without any signficant personal autonomy, and willing to take the fall if needed, as needed.
Interesting and dangerous days ahead.
1) Big companies also held accounts occasionally on small banks such as the ones seized, for minor activities or payroll; but to handle the main accounts of Polar, for example, you have to be as big as Provincial or Mercantil or as trustworthy as Bancaribe or Venezolano de Credito. We hear of a lot of people affected by the closing of Banco Canarias and Central but no big companies that I recall having read about in the papers on this subject.