In another indication of either the incompetence or the corruption of the Chavez administration, CITGO and PDVSA were defrauded in the amount of US$ 200 to 560 million, depending on the source, by brokerage firm FTC Capital Markets. Both companies sent funds to FTC to be invested in fixed income securities and certificates of deposits, but instead the money was used to cover losses in FTC’s operations and/or invest in higher risk strategies.
Reportedly, Citgo has sued FTC Capital Markets to recover the funds, as FTC gave the company fake statements in order to hide the fraud. The company does not have the capital to respond for even a small fraction of the amount missing.
Where is the incompetence in all this? Simple, as noted by website Venepiramides, at the end of 2008 FTC Capital Markets had equity of barely US$ 1.1 million and it incurred in losses for 2008 of over four hundred thousand dollars. What was Citgo doing working with such a small outfit and sending hundred of millions of dollars to it? Either those managing the funds were extremely stupid and incompetent or they were getting paid to do so. Obviously, a lot of people failed to do their job and perform the required due diligence. Even local brokerage firms are required to have more capital than FTC did.
This is another example of what happens when there are no checks and balances. Chavez has allowed Rafael Ramirez to run PDVSA at will, losing the old controls and supervision. From suitcases to cases like this, Venezuelans get ripped off by the revolutionary Government everyday. Of course, nobody will be punished for this, so that the corruption, waste and mismanagement will continue.