Archive for May 24th, 2005

PDVSA becoming normal: An ordinary Venezuelan Government institution

May 24, 2005

Today I was at work and there was a TV on and I caught a phrase from the announcer who said “The MVR Deputy said that proof that things were normal in PDVSA was the announcement that PDVSA will hand over its reports to the SEC by the end of June”


Now, I could not believe my ears. I did not get the name of the Deputy who said this but I was completely flabbergasted that any thinking human being could have made such an idiotic statement. If anything, the announcement proves something does not work well in PDVSA. In fact, you have to wonder whether they want Posada Capriles so he can help them out with PDVSA’s financials. With his experience at the CIA or Venezuelan intelligence (sounds almost oxymoronic!) I am sure he could help them forge here and there.


 


But hey! Who am I to judge? Let’s look at PDVSA’s track record. The 2002 financials which were due in June 2003, were late. How late? Well, in a post on July 15th. 2003, I described how we were promised the 2002 financials weekly. In fact, in August of that year a joyous Minister of Energy and Mines even announced that they had handed them in, but it was the wrong report. They had only handed in the report for an affiliate, not for the whole company as required by SEC regulations. The whole thing was such a charade, that the Minister actually said that Venezuela should be “happy” and “proud”. But the whole thing was actually shameful. It was just another attempt to fool the people.


 


After that, we were told that it would be in August, when PDVSA would comply with the SEC. We even heard “We have until September to comply”. But August came and went. And September came and went. And it was not until October, four months late, that audited financials for PDVSA for the year 2002 were finally handed over to the SEC.


 


And things were so “normal”, that apparently nobody thought of that the 2003 financials had to be handed over too.  June 2004 came by, the “normal” deadline to hand over the financials to the SEC and nothing happened. If PDVSA had been a public company it would have been suspended. Then came one of the most bizarre transactions of the Chavez administration when PDVSA announced in late June 2004, that it would buy all of its debt. It was really strange, announcing a buyback at a very high price that would essentially bring the company’s debt to almost nothing, which did not make sense. The proposed explanation: Company Directors were protecting themselves from prosecution under Sarbanes Oaxley.


 


But see, it is now May 2005, and the financials are 11 months late! Is that normal? Obviously not. In 2003 they had the excuse of the strike, but these are now the 2003 financials for God’s sake! The same ones we were told in February that would be handed out in March. But it is now May. Quite normal? Only in the revolution.


 


But we also hear today, that the President of PDVSA has hired former Superintendent of Bank Simancas to get those financials done by June 30th. Good luck! I certainly hope they do, I want to see them and analyze them, but the whole thing is very far from normal. In fact, in my mind this simply confirms the fact that things are not well in PDVSA. Not well at all. Any company worth its salt has to be capable of being audited. PDVSA is simply joining the long list of dysfunctional Venezuelan Government institutions which are almost impossible to audit: Bandes, Banco Industrial Seguro Social, Centro Simon Bolivar, Fogade. I guess the Deputy is right, it is becoming normal, that is it is turning into what is  the ordinary, what is the norm in Venezuela.  God help us!

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