Archive for March 3rd, 2008

Jose Guerra and the sale of structured notes: A US$ 1.5 billion scam

March 3, 2008

For those that speak Spanish, I have posted in the Spanish section the article by the former Chief Economist of the Venezuelan Central Bank Jose Guerra, which appeared in today’s Tal Cual on the biggest corruption scam in the country’s history, the sale of structured notes to friendly financial institutions. According to Guerra, those involved have made some US$ 1.5 billion in profits, certainly surpassing any corruption scam in the country’s history. Guerra’s description is quite similar to my recent repeat article on the subject.

Que Nota de Negocio por Jose Guerra en Tal Cual hoy

March 3, 2008

Que Nota de Negocio por Jose Guerra en Tal Cual hoy

Una de las enfermedades mas agudas de la administracion publica en Venezuela es la corrupcion. Hugo Chavez cabalga durante mucho tiempo sobre la denuncia de los gobiernos corruptos del pasado y en ello teni­a razon. El problema es que durante su gobierno se han roto los records de manejos dolosos que manteni­a Carlos Andres Perez, tanto en su primero como en su segundo gobierno.

Desde que Tobi­as Nobrega, a cargo del ministerio de Finanzas, comenzo a recurrir al expediente de realizar operaciones financieras con ciertos bancos para la colocacion de ti­tulos de deuda en condiciones ventajosas. Con una opacidad total, los ministros restantes no han hecho mas que replicar la experiencia nobregiana. Ahora todo ha empeorado desde el punto de vista de una sana y correcta poli­tica fiscal bajo la conduccion de Rafael Isea a la cabeza de las finanzas publicas. Agobiados por la amplia brecha existente entre el precio del mercado oficial para tipo de cambio y la cotizacion del mercado paralelo, Isea esta acudiendo al expediente de colocar notas estructuradas en el sistema financiero con el objeto de bajar el precio del dolar y lo ha logrado al enorme costo de propiciar la practica corrupta de utilizar y compartir la ganancia cambiaria con algunos operados cambiarios e instituciones financieras.

żQUe SON LAS NOTAS ESTRUCTURADAS ?

Se trata de un instrumento financiero surgido de la combinacion de bonos de deuda publica de Argentina, Ecuador y Venezuela, que fueron adquiridos por Fonden con las reservas internacionales que le confiscaron al BCV. Esos bonos se empaquetan en un ti­tulo con lo cual se conforma uno nuevo, llamado nota estructurada, que tiene como base los papeles de deuda de los tres pai­ses mencionados. De esta manera, el Ministerio de Finanzas ha venido realizando adjudicaciones de estas notas en las ultimas tres semanas con montos promedios de US$ 130 millones por operacion, que asigna a dedo a algunos bancos y operadores cambiarios sin que medie una subasta o cualquier otro mecanismo que haga transparente ese proceso. Estas entidades financieras adquieren estas notas con boli­vares al tipo de cambio oficial mes una prima, vale decir a un margen sobre el precio del mercado. Esto con el objetivo de cubrir la perdida en que incurria Fonden al desvalorizarse los ti­tulos de deuda de Ecuador cuando el presidente Rafael Correa anuncio una eventual moratoria de los pagos de la deuda externa. Los bancos y operadores compran las notas a un valor superior al del mercado porque luego dichas notas son negociadas en el mercado internacional, con lo cual se cambian las notas por dolares en efectivo. Con ese efectivo, los bancos y operadores se voltean al mercado paralelo de divisas y lo venden a un valor que excede al 100% del precio del dolar oficial, a quienes no pudieron adquirir los dolares oficiales por las restricciones impuestas por Cadivi. Posteriormente, la ganancia cambiaria de mas de 100% se reparte entre el gobierno que emitia las notas estructuradas y los bancos y operadores que participaron en la transaccion. Como se comprende, mientras mas notas se coloquen aumentara la oferta de dolares en el mercado y su precio tendera a disminuir como ha venido ocurriendo, pero tambien aumentara la rentabilidad de quienes participan en el negociado.

LA GANANCIA

Se estima que entre 2004 y lo que va de 2008 se han colocado mas de US$ 10.000 millones de esas notas y bonos argentinos, sin que se conozcan las condiciones financieras de esas colocaciones, con una ganancia para los operadores de mas de US$ 1.500 millones, lo que constituye el negocio mas rentable de Venezuela pero tambien el mas formidable ila­cito que se haya realizado en el pai­s y que deja atras de manera sobrancera los casos emblematicos de corruptelas como lo fueron el Sierra Nevada y Recadi, cuyas cifras ahora lucen como simples propinas al lado de estos montos gigantescos que se transan en el ministerio de Finanzas de Venezuela, entidad que se ha convertido en un enorme bazar donde concurren apostadores y tahures en la busqueda de la oportunidad de oro cuando resultan favorecidos por asignaciones de notas estructuradas o depositos oficiales a ser colocados en los bancos.

De esta forma se ha articulado un inmenso circuito de corrupcion como no se conoci­a en Venezuela, al menos en estas proporciones, en un gobierno que se dice revolucionario pero que esta minado por una burocracia ineficiente, inepta y corrupta. Nada de esto se hubiese podido realizar sin la venia y el consentimiento del presidente Hugo Chavez.

Colombia-Venezuela conflict so far a war of words, documents and denials, no signs of convoys and tanks

March 3, 2008

We woke up this morning to news of documents surfacing from the guerrilla camps which had severe implications for both Ecuador and Venezuela. In the first batch, documents obtained from the computer of the dead guerrilla leader Raul Reyes talk about contacts with the Ecuadorian Government in which an emissary of that government offers guarantees for a meeting which supposedly was going to take place in the capital of Ecuador. It even suggests that Ecuador is asking the FARC for training in mass events. Separately, it describes a meeting between Reyes and the Minister of Security of Ecuador, which the Ecuadorian Ambassador to Venezuela confirmed was happening n Venezuelan TV, but said it was all part of humanitarian efforts.

The documents suggest that the relations between Chavez and Correa are not enjoying their best moment. In the same set of documents, the FARC Secretariat explicitly says that the release of the hostages frees the FARC from that “load”while giving Hugo Chavez a leading role and there is some relief from the pressure to release the hostages.

In one of the most cynical statements, Reyes says that the Ingrid Betancourt remains the “dark” point in the whole affair and proceeds to call her “rude” and a “provoker”, because she has a volcanic character in dealing with the guerrillas in charge of talking care of her. What did he expect after the way she has been treated? Some sweetness?

Then in the afternoon, Colombian authorities revealed that other documents compromise the Venezuelan Minister of Justice and that there is a communication from guerrilla leader Ivan Marquez, who visited the Venezuelan Presidential Palace in very visible fashion last month and who says that Venezuela will finance the FARC to the tune of US$ 300 millions of dollars. The note also expresses that Chavez is quite grateful because the FARC contributed abut US$ 50,000 to Chavez when he was in jail at the Yare prison in the nineties after he sated his bloody coup in 1992. It also mentions the FARC acquiring 50 kilos of Uranium, but no details were given.

The Venezuelan Government declared all of that to be simply lies, while the Colombian Government said it would not mobilize any troops near the border.

Meanwhile the Venezuelan Government continued its strident speech, defending the FARC as if they were a humanitarian group, while condemning the Colombian Government for killing Raul Reyes. The French Government revealed that it had been Reyes who they had been in contact with in Colombia, releasing the news before it was known elsewhere.

There were of course no explanation from the outraged Ecuadorian as to why they had allowed the guerrilla groups inside that country after persistently denying their presence in that country. And there were clearly suspicions that Chavez was doing the same on this side of the border, protecting FARC leaders and even hostages.

Of course, Colombia did wrong by daring to attack the guerrilla camp inside of Ecuador, but that in the end is a sovereign problem between Colombia and Ecuador and has little to with our own country.

Curiously, there is absolutely no evidence of the so called mobilization ordered by president Chavez yesterday. Everyone has been on the lookout for military convoys and tanks but so far there is little evidence that any movement is in place, raising the issue of whether this was once again Chavez hot air, which was simply disregarded by the Venezuelan military.

But even worse is the fact that President Chavez irresponsibly announced these mobilizations and the possibility of a confrontation with Colombia, without any prior consultation and on National TV.

The truth is Venezuelans don’t want a war with anyone and the ties between the two countries are too sentimental and strong for this.

But this is the problem when a country elects a military officer as President. More so, when this man has shown that he does not understand that democracy is not the obliteration of your enemy with laws and maneuvers, but respecting and working with them so that everyone can live in peace and prosper in the country. But such is the adventure that having Chavez as President has become. As he has lost his popularity, his actions are becoming more questionable and dangerous to Venezuela and our future.

Note Added: Funny, one of the “lies” that appeared on the documents, that the Ecuadorian Minister of Security met with Reyes, has been confirmed by the Minister himself. Of course, everything else in the documents is fake. Does that include the presence of the FARC in Ecuador?

Inadmissible Reactions, Editorial in yesterday’s El Tiempo

March 3, 2008

It is always good to look at what they are saying on the other side of the confrontation, here is yesterday’s Editorial in Bogota’s El Tiempo:

Inadmissible Reactions, Editorial in yesterday’s El Tiempo

While in Colombia, in a funeral ceremony presided by President Alvaro Uribe, in the north Canton of Bogota, national honors were rendered on soldier Carlos Hernandez Leon, who died in the battle which killed Raul Reyes, in Venezuela, Chavez decreed a minute of silence in honor of a “consequent revolutionary”, victim of a “cowardly assassination” by the Colombian Government.

One has to be quite nutty to ignore in such a way the sensibility of the Colombian people, to so crudely ignore the sensibility of millions of Colombians who less than a month ago in the most massive mobilization in the history of the country, went into the streets to shout their repudiation to everything that Raul Reyes represents. The reaction by the Venezuelan President reveals also that his relationship with the leaders of the FARC is deeper and more sentimental that what we had feared. And that his influence over President Rafael Correa of Ecuador is much stronger than ever imagined.

Unheard of and paradoxical then that a fact received by millions of Colombians as somewhat legitimate-and without precedent-that the State gets a victory in the long confrontation with the FARC, generates at the same time a diplomatic clash with Ecuador and has taken Chavez to escalate his confrontation with Colombia and with President Uribe to levels without precedent.

Who would have said that the death in a military operation in the tough conditions of this irregular war, of the second in command of an armed organization responsible for the sorrow of hundred of thousands of people could be qualified by Chavez as a “cowardly assassination”�

It is a lack of connection with the realities and feelings that prevail in Colombia, very similar to that of the magazine Anncol, the news agency of the FARC, that entitled the death of Reyes as:”Uribe assassinates another union member”. But, beyond the eloquent demonstrations of proximity and sympathy, this weekend delicate tensions appeared between the two neighboring countries, that need to be managed with agility and intelligence.

Besides discharging Uribe with unheard of epithets, Chavez has ordered the militarization of the border with ten battalions and tanks and has closed the embassy in Bogota. He declared that what happened was a violation of the Ecuadorian sovereignty, saying that Colombia, with the backing of the US, is turning itself into the “Israel of America”and threatened with a war if a similar incursion took place in Venezuelan territory.

And President Rafael Correa of Ecuador-who initially had reacted more calmly, after Uribe’s call on Saturday morning, in which he explained the events-called his ambassador for consultations, send a note of protest because he considered the operation against Reyes and act of aggression and a violation of the Sovereignty of Ecuador and suspended his prior visit to Cuba to take care of the emergency. He said that he would go to the end to clarify the episode about which, his Colombian colleague is “badly informed or is shamelessly lying about”

Even if it is not easy, the first thing that needs to be done is to separate both crises. It is symptomatic of the change of attitude of President Correa that after his conversation with Chavez, which as was stated by an international analyst made him look like a “puppy of the …Venezuelan Empire”. Despite this, the Colombian Government has to make all of the efforts to clarify its position with the Ecuadorian Government and normalize relations. In Quito, they also have to consider the iron dilemma faced by the Colombian authorities when they were facing the opportunity of landing a decisive blow to a guerrilla movement that has been using the border for a long time as a revolving door.

With Venezuela, things have a different price (The same way, even if at a smaller size, with Nicaragua, whose President Daniel Ortega also talked about assassination and called Reyes a “brother”) the relationship Bogota-Caracas that was going badly, has received a mortal blow. The shutting down of the embassy is equivalent to a break in relations. This has no precedent in the interamerican system and on top of it, it happens due to a successful operation by a legitimate Government against an organization qualified as terrorist by half the world. To argue, as did the Venezuelan Foreign Minister Nicolas Maduro, that the death of Reyes is a “slap in the face” and a “tough blow” to the humanitarian exchange is not to recognize the armed confrontation taking place in Colombia, of which the drop by drop release of hostages and the exchange itself are eloquent episodes.

The fact is that in this case, Chavez really blew it in a very definitive manner. He is taking the side of the FARC in a more open fashion. Which is a product of his deeper affinities with the guerrilla and also, due to his tactical political needs, after his defeat in the December referendum and in the face of critical elections next November, in the middle of an economic situation that becomes each day more unmanageable. Chavez seems to be full of reasons to escalate his confrontation with Colombia.

His reaction in the face of Reyes’ death has another effect beyond the opposing position that exists in Colombia with respect to the Uribe Government, the large majority of the country closes ranks in the face of what it perceives as a hostile and inadmissible intervention by Chavez in internal Colombian matters.

We will see which steps are taken next, but, for now, we enter in a tense period of confrontation, hopefully only verbal and diplomatic, between Colombia and Venezuela, To the prudent silence with which the Government has responded so far, maybe it is time to add international mediation or to look for the interamerican system to begin looking for an active role in a crisis that can destabilize the whole region. Things with Venezuela are turning to a dark color and that can’t be good for anybody.

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