Pudreval affair, bigger, more corrupt and inefficient than anyone imagined

July 29, 2010

(A container is worth more than one thousand words)

If people had thought that the Pudreval affair, involving the discovery of more than 130,000 tons of rotten food all around the country, was a demonstration of the corruption and inefficiency levels of the Chavez Government, the publication of Pdvsa’ s internal audit on PDVAL in today’s El Nacional and Reporte de la Economia, reveals that the whole affair is orders of magnitude larger than anyone could have ever imagined, with food never arriving in the country, PDVSA incurring in debt for food that never arrived and money advanced to bankrupt coops in Argentina.

The numbers revealed by the internal audit are simply staggering. It says that only 25% of the food purchased by Pdvsa ever arrived in Venezuela. Specifically, in 2008, Pdvsa purchased over one million Tons of food of which only 266 thousand Tons ever got to the country. The
cost of the one million Tons of food was 2.2 billion dollars for the period covered by the audit, implying over US$ 1.5 billion just “dissapeared”. Even more incredible, of the food that did arrive, only 54% was actually passed on to the Pdval distribution network, with the remainder found still at storage at the time of the audit. The report crudely concludes “the effective distribution of food was less han 14% of the total purchased and paid for, incurring in many cases with elevated costs of acquisition and shipping and despite this, they were not managed adequately nor distributed in efficient fashion to the Venezuelan population”

These high costs involved purchasing through only ten companies, six of which were inrermediaries, some of these were from Argentina and Brazil only because this was supposed to make things cheaper, not more expensive as it turned out at the end.

Separately, Deputies from the Podemos party have been carrying out their independent investigation of Pdval. They have determined that Pdvsa purchase food in the amount of eight billion us dollars total in 2008 and 2009. Pdval used at least 26 companies owned by Venezuelans, some military, who would buy the food abroad and the resell it at a higher price to other companies of their property which would then in turn sell it to Pdvsa at a higher price. In many cases lower quality food was passed on as higher quality in order to charge artificially high prices.

Thus, the order of magnitude of the embezzlement in Pdval is much larger than anyone thought. Food was purchased at the official rate of exchange of Bs. 2.15 per US$ but for a large fraction, it never even arrived in the country for a clean 100% gain or rip off. In the case where the food did arrive in many cases, it was overpriced and of lower quality, with Venezuelan intermediaries assigned some of these purchases by their buddies in Pdvsa (audit dixit) And even then, the food never arrived at the intended recipients.

The audit also reports higher prices per Ton for product than was commonly available in world markets, advancing US100 million to an Argentinean milk coop that was almost bankrupt with no guarantees, financing the import of food and clearly describes how a joint committee of Bariven and Cubans decided how much to import. That is called defending sovereingty under the revolution.

Despite the audit in 2008 and denunciations since that year of rotten food in storage, neither the authorities at Pdvsa, nor the Comptroller, nor the National Assembky did anything to investigate or bring those responsible to Justice. That alone is punished by Venezuelan Law. But beyond that, the Pudreval case is anoher incredible case of corruption and inefficiency, comparable to the sale of bonds into the swap market in size and which gives even more significance and meaning to the word robolution.

And there are other crimes associated, rotten and expired food has been sold as if they were fine in an attempt to to make a profit without regards or respect for the well being of Venezuelans. A Government that claims to care about the people has not even bothered with this. The robolution is indeed cynical and heartless, when it is likely to be the poor that could be affected the most by this.

Today, only three people have been detained for this case (one of which retains his seat as a Director of Pdvsa and collects salary every month), the National Assembly refuses to investigate it, the Comptroller says the opposition has overkilled the case and those truly responsible for the whole rotten mess remain in their positions of power. Impunity rules in the robolution. The Justice system only persecutes the enemies of the Government, while those raping the country roam free.

Poor Venezuela that it has had to suffer this fake revolution!!!

Thanks to Alek, the report is right here

42 Responses to “Pudreval affair, bigger, more corrupt and inefficient than anyone imagined”

  1. JOOG Says:

    The numbers, the magnitude of the corruption, it boggles the mind. But I suspect that PUDREVAL is just one of many areas with similar levels of corruption. The AN, the TSJ, so so many have sold their dignity for una locha.

    Whats going to happen when El Buche can’t get anymore milk out of the PDVSA cow? And Carlos Andres Perez was brought down for chump change, Go figure!

  2. Roger Says:

    The food we are talking about is not handed out free at the Mercal. The poor have to pay for it from their meager earning or from their welfare check. This we have been told is at cost and cutting out the Capitalist Food Baron! Considering most like Polar have trouble doing a 10% profit, the 85% loss is interesting. If the poor shopping at Mercal have been paying more than they should is a good question. We know for sure that those who come around here pay a lot for food in private markets if they can get it. Is there a relationship between the two food sources and markets?

  3. GWEH Says:

    CAP was nailed for USD$8M sent to Violeta Chamorro to pay for her personal protection. HUGE mistake to take down CAP.

  4. deananash Says:

    This is all going to end very, VERY badly. The ONLY question is thus: Will the end come quickly, or will it be a long, drawn out affair?

    My guess is the latter, because Chavez isn’t the sum of the problem, rather, he’s just a single part. Of far greater difficulty to resolve is the fact that some 20-25% of the Venezuelan population don’t understand squat about Democracy (Rights & Responsibilities) or Economics (Cause & Effect; Supply & Demand).

    This part of the problem is far greater – and therefore, more important – than the Chavez part. The opposition should have spent some time educating the people. Time spent educating is always time well spent.

  5. island canuck Says:

    This whole affair so exemplifies Chavismo & the so called revolution.

    But you know Miguel that you & others like you are to blame & you are picking on the poor Chavistas.

    Just ask the Minister of Comercio, Richard Canán,

    He says: ““Buscan cualquier error que hayamos cometido para magnificarlo (porque) contenido de campaña no tienen”, manifestó Canán.”

    The opposition is looking any error that we have commited the magnify it because they have no campaign content.

    This bobo has more to say.

    http://www.noticierodigital.com/2010/07/la-oposicion-busca-cualquier-error-que-hayamos-cometido-para-magnificarlo/

  6. island canuck Says:

    Sorry, it’s late & there is no edit feature :-)

    The opposition is looking for any error that we have committed to magnify it because they have no campaign content.

  7. Roy Says:

    Off with their heads!

  8. Gordo Says:

    Incompetence and corruption, thank God, can only cheat and steal until the money runs out! At that point, any reasonable opinion one should think that the whole shebang will come to a screeching stop!

    How can something like this be sustainable? All they can do is burn Rome and play music!

    On the positive side, I hear the Venezuelan public debt as a percent of GNP is among the lowest in the world. So, whatever the damage, Venezuela will be better off than most countries in that regard and maybe the public will have learned a lesson.

  9. GWEH Says:

    the wishful thinkers from washington to bogota think the implosion is coming soon. They don’t say but when they refuse to even consider scenarios of Chavez in power three years from now that tells me something. Personally I don’t care. Fuck Chavez Fuck Venezuela

  10. HalfEmpty Says:

    Sadly the only reason Washington has any concern about Chavez is his poor management of PDVSA, not so much the nation state that owns it. Keep exports at over a million bbl a day and no one outside will care. If exports drop beyond that even the Cubans will become annoyed.

    Only half joking….
    :(

  11. A_Antonio Says:

    Excellent post!!!, you hit the hot spot.

    MO, you read my mind, I was planning to make a comment about the problem of food not arrived and already paid (and provably never will arrive) that is in more scandalous quantities than rotten food, like Venezuelan newspapers are showing out.

    If Administrators of this Regime and their families are involve in the food import companies, its “comiciones” or frauds with this import food, this will say a lot about the real interest of the Regime in Venezuelan agro industries and lands, and its purpose of expropriation of productive lands and industries to make them desserts and abandon ruins.

  12. SJ Says:

    Gordo, I’m not at all optimistic about the Venezuelan “public” learning anything. If they didn’t learn after the economic debacle of the 1980’s, and then continue to support Chavez (by leaving him in office – same thing) for 11 years, … when?

  13. speed Gibson Says:

    i recently had the occasion to drive down thru Oregon to Fresno , California again for work. In the Imperial Valley the sheer magnitude of agricultural development and food production is staggering in a relatively arid climate. It comes from the work ethics of the citizens (and illegals) and proper water management.

    What’s Venezuela’s excuse? You have no winter, at least one large river that could be taped for region wide irrigation and an endless supply of money for infrastructure. The only reason you should have rotting food is because you have too much of it.

  14. Robert Says:

    Massive corruption and sheltering of terrorist, stealing of private property, arresting dissenters and judges and lawyers, highest inflation in the Americas, negative growth, and a long list of other sins has not brought down this evil regime. What will it take? Are the masses so protected from this news or are they aware of the news but so enamored with Hugo that they believe his paja? Is this simple a mirror of Cuba in the 60’s?

    Again, what will it take?

  15. Kepler Says:

    Gweh,

    I sense a certain disappointment in your words. Is it just my impression? What has led you to change opinion so radically? You were saying the end was nigh some time ago… Ramirez or Rodriguez taking over or something like that, if I recall well.

  16. A_Antonio Says:

    I must disagree with people that send to Hell Venezuela (or fuck it).

    Maybe you born in or live some in, some time ago.

    Maybe, you are angry because your experiences, you or people you know or family died meanwhile were robbed, or because you can not some get jobs because a black list, or had family that was denied better sanitary attention because the collapse of sanitary system.

    This is a Venezuela no body likes it, unless your become richer because you are part of Nomenclature of the Regime.

    Personally, It is better to think that the country simple died, is better to think that the Venezuela you studied, worked and have good experiences with family and friends is not longer with us anymore, “your Venezuela” no longer exist, and will not exist while is maintained this crazy Regime.

    Fuck the Regime, not the country, it was like a father that gave you the good it can be before been killed.

    Miracles exist and maybe in the future, all will be amazed about the reborn of a country that deserve better destiny. And some resources, after pillage, maybe will in place to help.

  17. Daniel Says:

    wow.. this means they paid 2.2 billion dollars for about 266 thousand Tons of food.. that’s just crazy.. think about it… they should be able to sustain themselves and export food, (columbia is a good example, mexico does too) and they are IMPORTING 266,000 tons of food for 2.2 BILLION!!! and on top of that get low quality too!!!! i want to know when will this implosion of a society going to happen.. totally not sustainable.

  18. Juan Cristobal Says:

    What I want to know is … man, how do I get on that food intermediation bandwagon! I guess it’s too late, but what a gig! Money for nothing and chicks for free…

    Increible hubiese sido que no fuese asi la vaina.

  19. moctavio Says:

    Juan, what is incedible is that Chavistas dont even want to do the work! We have gone from 10% commissions and the work got down to 100% and don’t even bother bringing the stuff, building it or whatever. It is truly incredible!!!

  20. An Interested Observer Says:

    Let’s hear it for food sovereignty!

  21. Roy Says:

    I was trying to come up with some way to express my utter contempt and disgust for this travesty, but words (in either language) just don’t seem to get me there.

  22. gd Says:

    Brings to mind the Fertinitro affair. They’re still forcing the fertilizer plant to sell roughly 15% of its production to the local market at – you guessed it – ridiculously below-market prices. Back in the day, Chavez said it was going to support “Plan Siembra”, the revolution’s plan to increase arable land and food production, but I think the real reason is someone’s making a killing on the arbitrage!

  23. Gordo Says:

    Researchers at the Gallup World Poll went about determining the happiest countries in the world by surveying thousands of respondents in 155 countries, between 2005 and 2009.
    Here are the top 50 countries on the list, as reported by Forbes.com.

    1. Denmark
    2. Finland
    3. Norway
    4. Sweden
    5. Netherlands
    6. Costa Rica
    7. New Zealand
    8. Canada
    9. Israel
    10. Australia
    11. Switzerland
    12. Panama
    13. Brazil
    14. United States
    15. Austria
    16. Belgium
    17. United Kingdom
    18. Mexico
    19. Turkmenistan
    20. United Arab Emirates
    21. Venezuela **
    22. Ireland
    23. Puerto Rico
    24. Kuwait
    25. Iceland
    26. Columbia
    27. Jamaica
    28. Cyprus
    29. Luxembourg
    30. Trinidad and Tobago
    31. Argentina
    32. Belize
    33. Germany
    34. El Salvador
    35. Chile
    36. Uruguay
    37. Qatar
    38. Guatemala
    39. Malta
    40. Czech Republic
    41. Italy
    42. Honduras
    43. Spain
    44. Dominican Republic
    45. France
    46. Bolivia
    47. Ecuador
    48. Paraguay
    49. Bahrain
    50. Guyana

    Venezuela ranked pretty good … I bet it’s crashing now.

  24. concerned Says:

    These clowns not only walk to the gallows, they climb up and put the noose around their own neck…It’s time to pull the lever.

    You just can’t make shit like this up…Incredible! And this is surely only a fraction of the graft within the Robolution.

  25. loroferoz Says:

    I can only HOPE…

    That they will not do anything about it. That they behave arrogantly about it.

    That everybody will see them as they are. Corrupt, arrogant, incompetent, uncaring.

    Because I lost hope that they would bring any good to Venezuela almost a decade ago. Now it’s time for them to be hated worse than Carlos Andres Perez.

  26. albionboy Says:

    Humour sometimes has a way of making a point better, than philosophical musings, so here we go, feel free to skip the punch-line if you heard it before.

    A Venezuelan politician on a junket to the US is being taken around, and shown some construction projects by a US politician. “See that new school says the US politico” “yes” says the Venezuelan, “10%” he says slapping his pocket, a little further on he points out a new hospital, “And see that, “10%” he say’s, again slapping his pocket, crossing a new bridge “another 10%” he says.

    The Venezuelan invites the US politician to Venezuela, to see a Bolivarian project “do you see that new hospital” he says to the American, “No” says the American “a 100%” he says slapping his pocket.

  27. HalfEmpty Says:

    Bridge Albion… it’s a Bridge….
    :)

  28. amieres Says:

    Miguel, do you have a link to that report?

  29. Fabio Bertozzi Says:

    Well, if this situation is not capable to release a break point in Venezuela I conclude we all venezuelans are a bunch of stupids and idiots…

  30. Gerry Says:

    Does anyone think, or have any idea, if “the ministers, senior managers” at the top of this (rotten and expensive) food chain will abandon ship or brazen it out?
    I suspect the president will – God willing. (Do not pass Go).

  31. moctavio Says:

    Mieres: There are a number of versions, I sent you one, anyone that wants it, please send email to devilexcrement@gmail.com

  32. Ira Says:

    I told you guys that when Chavez first started the agrarian expropriations, my brother-in-law was given a few hectares–a few hours outside of Caracas, where he lives.

    Well, everyone knows that it’s no problem for a “farmer” to commute three hours to work every day, especially when that farmer is a former bank employee, and doesn’t know a seed from a hoe.

    So, his contribution to VZ agricultural production has been zero so far.

    However, he remains optimistic, and looks forward to enjoying his first home-grown potato by Christmas.

  33. Hans Says:

    Some politician in Vzla said last week within 90 days the country will not be managable anymore..
    Lets wait and see – and sry for everyone who is inside.

    Best wishes from europe

  34. deananash Says:

    First, much more so than Cuba, Venezuela will always have enough production for the leeches to suck off of. So I expect Chavez to be around for at least another 20 years. Unless somebody proves me wrong.

    Second, MOST PEOPLE (I’m talking about you, dear commentator and friend) DO NOT understand that the core of Chavez supports (here I’m talking about the poor, not his corrupt cronies) were dirt poor to begin with and are QUITE SATISFIED with seeing the rest of the population share in their poverty. To them, the “rich” are getting their just desserts.

  35. Kepler Says:

    Hans,
    The country seems not be manageable for decades now. In fact, some say it all started on the 4th of August 1498, when an Italian seaman saw the coast of the Paria Peninsula and called it all La Tierra de Gracia. Of course, chaos is becoming now sheer madness harnessed at times by the military of the hour.

    About two centuries ago the first thing Miranda said when Bolívar betrayed him to escape was “Bochinche, bochinche, esta gente no sabe hacer sino bochinche”.

    Deananash,

    Many of those very poor could turn against Chavismo, but to do that we actually have to talk to them and present a plan that includes them. At this stage, after 10 years, there is very little of that, very little. You don’t reach them by going on Globovision. You don’t reach them by writing on Internet. You don’t reach them by organizing meetings in El Hatillo or Altamira or in Parque Negra Hipólita in Northern Valencia.

    And it is not just going to the slums in Caracas and Valencia. Somehow the opposition seems to think the rest is just “tiny villages”. Most Venezuelans live in secondary cities and the oppo is almost never there.

    We actually have some oppos within poor groups, but it is in spite of our political leaders, not because of them.

  36. Eduardo Says:

    I can recall a Bulgakov’s phrase: “Food with second grade freshness”.

    Wait and you’ll see this or other similar used by an government official.

  37. m_astera Says:

    I work as an agricultural chemist, in sustainable agriculture. When I first came to Venezuela I was invited to a large party of affluent people, and told “Don’t say anything about being involved in agriculture, it is considered very low class.” Nothing has changed since then.

    What will wake Venezuela up? Starvation. No food, no one with the interest and ability to grow food, no one who cares about food except that they have some.

    The Venezuelans who read this blog don’t grow food, most wouldn’t dream of putting their hands in the soil, and they consider those who do to be very low class. How it is. With that attitude, they deserve to starve. And likely will.

    In the USA, a small farmer has cachet, they grow a valuable crop that is in demand. Many, many of the people I work with are former or present IT professionals who have found an equal intellectual challenge in agriculture; they are creating new realities and super good food and being paid well for doing so.

    It’s the same in Europe. A small farmer growing a high-quality crop is respected. A master craftsman is what he is, and he is rewarded. In Venezuela, no craftsman and no grower gets the least respect; all respect goes to those who produce nothing of value, but only steal, cheat, and figure ways to play games with money.

    Do you have seeds to grow food? Probably not. Venezuela even imports the seeds to grow the few bits of food they produce. People who can’t figure out that food is important enough to grow their own deserve to starve.

  38. Kepler Says:

    Astera,

    There are references galore to this in Humboldt’s diaries in Venezuela.
    Just a piece:

    “The city of Nueva Valencia occupies a considerable extent of ground,
    but its population scarcely amounts to six or seven thousand souls.
    The streets are very broad, the market place, (plaza mayor,) is of
    vast dimensions; and, the houses being low, the disproportion between
    the population of the town, and the space that it occupies, is still
    greater than at Caracas. Many of the whites, (especially the poorest,)
    forsake their houses, and live the greater part of the year in their
    little plantations of indigo and cotton, where they can venture to
    work with their own hands; which, according to the inveterate
    prejudices of that country, would be a disgrace to them in the town.

  39. deananash Says:

    Kepler, you’re preaching to the choir. In fact, a careful reading of my comments over the past 6 years says EXACTLY the same thing – amongst many others.

    The opposition could reach out to the poor whenever they want, but what would be the fun in that? That is “power”. That doesn’t enhance opportunities to abuse power. Etc….

  40. Kepler Says:

    Deananash,

    Sorry, I don’t understand this “That doesn’t enhance opportunities to abuse power. Etc….”

    I often have wondered: how come so many – there are always exceptions- who grew up only in the wealthy east of Caracas or North of Valencia find it so hard to understand the rest of the country? I mean: yeah, it is VERY different, it can be frustrating to have to explain this and that, but there is no way around it unless they think Chacao-Baruta is going to drift apart from Venezuela and become an independent state in the Caribbean (with independent oil wells to easily tap from)

    You are from another country and you don’t live in Venezuela and you know it. Only a few of the Venezuela-born politicians in opposition we have are starting to slowly realise it…now, in the year 2010.

  41. deananash Says:

    Sorry, I was in a rush to complete that comment. The entire last paragraph is a mess.

    It should read like this:

    “The opposition could reach out to the poor whenever they want, but what would be the fun in that? That ISN’T “power” – i.e. that doesn’t enhance opportunities to abuse power, etc….”

  42. loroferoz Says:

    “It’s the same in Europe. A small farmer growing a high-quality crop is respected. A master craftsman is what he is, and he is rewarded. In Venezuela, no craftsman and no grower gets the least respect; all respect goes to those who produce nothing of value, but only steal, cheat, and figure ways to play games with money.”

    And any engineer or scientist with the ability to do sum and multiply beyond the simplest in sales is an egghead, not necessary and can as well go away if they insist on showing off.

    We don’t sow, we don’t produce, we don’t process, we don’t research, we don’t develop. Save in the past, before 2003, in oil. We only sell, if that.

    We have a “services” economy, minus the industrial management, shipping expertise, information technology, or real entrepreneurship. Grim indeed.


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